Certified Annual Shareholder Report of a Management Investment Company — Form N-CSR
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1: N-CSR Certified Annual Shareholder Report of a 316 1.71M
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5: EX-99 Miscellaneous Exhibit -- PioneerLetter PDF 135K
N-CSR — Certified Annual Shareholder Report of a Management Investment Company
Document Table of Contents
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08786
Pioneer Variable Contracts Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, 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, 2014 through June 30, 2014
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 STOCKHOLDERS.
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Bond VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
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[Download Table]
Pioneer Bond VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 8
Financial Statements 25
Notes to Financial Statements 30
Trustees, Officers and Service Providers 37
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/14
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Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Government Securities 35.1%
U.S. Corporate Bonds 24.0%
Collateralized Mortgage Obligations 15.1%
International Corporate Bonds 7.3%
Senior Secured Loans 5.7%
Asset Backed Securities 5.3%
Municipal Bonds 3.9%
U.S. Preferred Stocks 1.9%
Warrants 0.6%
Convertible Preferred Stocks 0.5%
Convertible Corporate Bonds 0.5%
International Preferred Stocks 0.1%
Quality Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
AAA 41.0%
AA 4.0%
A 12.6%
BBB 22.6%
BB 9.7%
B 2.5%
CCC 0.5%
Cash Equivalent 6.7%
Not Rated 0.4%
Due to rounding, figures may not total 100%. Credit rating breakdown reflects
the average of available ratings across Moody's, Standard & Poor's (S&P) and
Fitch. Bond ratings are ordered highest to lowest in portfolio. Based on S&P's
measures, AAA (highest possible rating) through BBB are considered investment
grade. BB or lower ratings are considered non-investment grade. Cash equivalents
and some bonds may not be rated.
Five Largest Holdings
(As a percentage of total long--term holdings)*
[Download Table]
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1. Fannie Mae, 30YR Pool
5.0%, TBA 8.37%
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2. Fannie Mae, 30YR Pool,
4.5%, TBA 5.25
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3. Fannie Mae, 4.0%,
12/1/43 1.97
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4. U.S. Treasury Notes,
2.0%, 2/15/23 1.70
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5. Fannie Mae, 4.5%, 5/1/41 1.46
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* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
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PERFORMANCE UP DATE 6/30/14
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Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $11.25 $11.01
Class II $11.28 $11.03
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/13) Income Capital Gains Capital Gains
Class I $0.2014 $0.0058 $0.0549
Class II $0.1877 $0.0058 $0.0549
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Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Bond VCT Portfolio at net asset value during the
periods shown, compared to that of the Barclays 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 MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Bond VCT Pioneer Bond VCT Barclays Aggregate
Portfolio, Class I Portfolio, Class II Bond Index
6/30/2004 $ 10,000 $ 10,000 $ 10,000
6/30/2005 $ 10,636 $ 10,610 $ 10,680
6/30/2006 $ 10,561 $ 10,508 $ 10,594
6/30/2007 $ 11,213 $ 11,130 $ 11,243
6/30/2008 $ 12,039 $ 11,920 $ 12,043
6/30/2009 $ 12,724 $ 12,567 $ 12,772
6/30/2010 $ 14,625 $ 14,409 $ 13,985
6/30/2011 $ 15,603 $ 15,351 $ 14,530
6/30/2012 $ 16,617 $ 16,318 $ 15,616
6/30/2013 $ 17,236 $ 16,892 $ 15,509
6/30/2014 $ 18,335 $ 17,920 $ 16,187
The Barclays Aggregate Bond Index is an unmanaged, market value-weighted measure
of Treasury and agency issues, corporate bond issues and mortgage-backed
securities. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. It is not possible to invest directly in an index.
[Download Table]
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Average Annual Total Returns
(As of June 30, 2014)
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Barclays Aggregate
Class I Class II* Bond Index
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10 Years 6.25% 6.01% 4.93%
5 Years 7.58% 7.35% 4.85%
1 Year 6.38% 6.08% 4.37%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
* Class II shares commenced operations on November 9, 2007. Performance shown
for periods prior to the inception of Class II shares on November 9, 2007,
is based on the performance of Class I shares reduced to reflect the higher
expenses of Class II shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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COMPARING ONGOING PORTFOLIO EXPENSES
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As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
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Beginning Account Value on 1/1/14 $ 1,000.00 $ 1,000.00
Ending Account Value on 6/30/14 $ 1,045.90 $ 1,045.50
Expenses Paid During Period* $ 3.15 $ 4.46
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.62%
and 0.88% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
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Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,021.72 $1,020.43
Expenses Paid During Period* $ 3.11 $ 4.41
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.62%
and 0.88% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
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A Word About Risk:
When interest rates rise, the prices of fixed-income securities in the
Portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed-income securities in the Portfolio will generally rise. Investments in
the Portfolio are subject to possible loss due to the financial failure of the
issuers of the underlying securities and their inability to meet their debt
obligations. Prepayment risk is the chance that an issuer may exercise its right
to prepay its security, if falling interest rates prompt the issuer to do so.
Forced to reinvest the unanticipated proceeds at lower interest rates, the
Portfolio would experience a decline in income and lose the opportunity for
additional price appreciation. Investments in high-yield or lower-rated
securities are subject to greater-than-average price volatility, illiquidity and
possibility of default. The securities issued by U.S. Government-sponsored
entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S.
Government. The Portfolio may invest in mortgage-backed securities, which during
times of fluctuating interest rates may increase or decrease more than other
fixed-income securities. Mortgage-backed securities are also subject to
prepayments. At times, the Portfolio's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
Virtually all sectors of the bond market turned in positive performance during
the first six months of 2014, with the credit sectors outpacing Treasuries and
other government securities. In the following interview, Kenneth J. Taubes and
Charles Melchreit review the factors that affected the performance of Pioneer
Bond VCT Portfolio during the six-month period ended June 30, 2014. Mr. Taubes,
Chief Investment Officer, U.S., and a portfolio manager at Pioneer Investments,
is responsible for the daily management of the Portfolio, along with Charles
Melchreit, Director of Investment-Grade Management, a senior vice president and
a portfolio manager at Pioneer.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Bond VCT Portfolio's Class I shares returned 4.59% at net asset
value during the six-month period ended June 30, 2014, and Class II shares
returned 4.55%, while the Portfolio's benchmark, the Barclays Aggregate Bond
Index (the Barclays Index), returned 3.93%. During the same period, the
average return of the 21 variable portfolios in Lipper's Corporate Debt
A-Rated Underlying Funds category was 4.56%.
Q: How would you describe the investment environment in the fixed-income
markets during the six-month period ended June 30, 2014?
A: Against a backdrop of modest volatility in the capital markets, lower-rated,
more credit-sensitive bonds outperformed Treasuries and government
securities, but virtually all fixed-income investments produced positive
results over the six-month period. Investors sustained their confidence that
economies in the United States and Europe would continue to slowly improve,
helped by accommodative monetary policies. Although U.S. gross domestic
product (GDP) growth for the first quarter was disappointing (-2.9%),
investors focused on more encouraging economic indicators, including job
growth, industrial production, and the recovering housing market. In
addition, government fiscal policies - including spending cuts and tax hikes
- that restrained growth during 2013 seemed likely to be less of a drag on
the economy in 2014. Throughout the six-month period, markets demonstrated
their resiliency in the face of a succession of problems overseas, ranging
from slowing economic growth in China, turmoil in the Middle East, and
heightened tensions between Russia and the Ukraine.
In the U.S., while the Federal Reserve (the Fed) began tapering its
stimulative quantitative easing (QE) bond-purchasing program, it kept short-
term interest rates at exceptionally low levels. The Fed appeared
comfortable with maintaining its accommodative stance on interest rates
given the lack of any notable inflationary pressures during the period. In
Europe, economies continued to improve, led by solid growth in Germany and
gains in the peripheral European Union (E.U.) economies, where problems had
been the most severe. The European Central Bank (ECB) maintained
accommodative policies designed to keep European banks liquid and able to
lend. In Asia, the new government in China appeared determined not to allow
economic growth to slow by too much, while Japan continued to push forward
with monetary and fiscal stimulus programs designed to encourage economic
expansion and curb the nation's deflation problem. Emerging economies that
are highly dependent on growth in China did feel pressure, but even the
performance of emerging markets debt recovered during the period as many
governments moved aggressively to control inflation.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
In that environment, riskier, credit-sensitive securities outperformed the
overall fixed-income market, with high-yield and investment-grade corporate
bonds producing solid returns. Bank loans, asset-backed debt and convertible
securities also performed well. Meanwhile, longer-term Treasury yields
declined, leading to price appreciation for most longer-maturity Treasury
and government securities, although Treasuries lagged the credit sectors in
performance. The yield curve - which reflects the difference in yields of
fixed-income securities with longer and shorter maturities - flattened
somewhat as longer-maturity Treasury rates declined and shorter-maturity
yields rose slightly. The rally in longer-maturity Treasuries was somewhat
of a surprise to the markets, but fears of geopolitical risks and concerns
about mild inflationary pressures encouraged investments in Treasuries,
which are still considered by many as the safest investment haven during
"risk-averse" periods. In addition, the yield advantage that 10-year
Treasuries offered over sovereign-debt rates in other economies encouraged
some speculation in Treasuries. Government agency mortgages generated
healthy, positive performance over the six months, although they were
outpaced by non-agency mortgages and other more credit-sensitive sectors.
Q: How did you position the Portfolio during the six-month period ended June
30, 2014?
A: We maintained a consistent emphasis on the credit sectors in the Portfolio
during the six-month period, which helped to drive the Portfolio's
outperformance of the benchmark Barclays Index. We maintained a Portfolio
overweight to credit-sensitive debt, especially early in the six-month
period, with healthy exposures to investment-grade corporate bonds,
non-agency mortgages and commercial mortgage-backed securities, asset-backed
debt, and bank loans. We underweighted the Portfolio to Treasuries and
government mortgage securities, although we added to existing positions in
government agency mortgages as the period progressed when we began paring
back the Portfolio's credit positions. We also raised the Portfolio's
overall credit quality over the period as we reduced positions in high-yield
and investment-grade corporate bonds and bank loans. As we upgraded the
Portfolio's overall credit quality, we sold some credit-sensitive securities
that might become more difficult to trade should market volatility increase.
Nevertheless, we had maintained the Portfolio's overweight in the credit
sectors as of the end of the period.
Throughout the six months, we maintained a shorter-than-benchmark duration
positioning in the Portfolio. {Duration is measure of the sensitivity of the
price (the value of principal) of a fixed-income investment to a change in
interest rates, expressed as a number of years.} The short-duration position
was a modest detractor from the Portfolio's benchmark-relative performance
as longer-term Treasuries rallied and the yield curve flattened during the
period.
At the end of the six-month period on June 30, 2014, although the Portfolio
remained overweight in the credit sectors, government agency mortgages
represented the largest asset allocation. Exposure to the credit sectors was
led by U.S. investment-grade corporate bonds. The effective duration of the
Portfolio as of period end was 3.91 years.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
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Q: Which of your investment strategies or individual investments had the
biggest effect on the Portfolio's performance during the six-month period
end June 30, 2014?
A: As noted previously, the main driver of the Portfolio's outperformance
relative to the Barclays Index during the period was the overweight in the
credit sectors. The Portfolio's underweight to Treasuries also was a major
contributing factor in the Portfolio's relative outperformance. Within
corporates, we emphasized the debt securities of financial companies in the
Portfolio during the period, which made a notable contribution to
performance; small exposures to municipal bonds and convertible bonds also
supported results.
The main detractor from relative performance was the Portfolio's cash
position and, as noted previously, the shorter-than-benchmark duration
positioning also held back results when Treasury yields rallied. The
negative effects of the Portfolio's short-duration positioning were
partially offset by good positioning on the yield curve; specifically, the
Portfolio's exposures to 30-year and 10-year bonds.
Among individual investments, the Portfolio's holdings of some higher-coupon
Fannie Mae government agency mortgages performed very well when interest
rates rallied and mortgage prepayments remained low. However, the
Portfolio's investments in the preferred issues of regional bank PNC and
insurer Allstate both underperformed during the period, as did some holdings
of lower-coupon Fannie Mae mortgages.
Q: Did you invest the Portfolio derivative securities during the six-month
period ended June 30, 2014?
A: We did invest in Treasury futures to manage the Portfolio's interest-rate
sensitivity. Because the futures were part of our strategy to maintain a
lower-than-benchmark duration position, they tended to hold back the
Portfolio's results when interest rates declined during the period.
Q: What is your investment outlook and how have you positioned the Portfolio in
accordance with that outlook?
A: We believe the fundamental strengths in the credit sectors remain solid,
given the prospect of continuing economic growth and the general health of
corporate balance sheets.
We are generally positive about the investment outlook. We anticipate that
the Fed will continue to gradually lessen its accommodative monetary policy
as the economy grows, and we think credit-sensitive securities have the
potential to continue to perform well. At the same time, we do not
anticipate robust performance from any particular fixed-income asset class,
as the gradual increase of short-term Treasury yields to normal levels and
the resulting increase in market interest rates should have a modest
negative effect on most bond prices.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
As noted previously, we have maintained an overweight to credit in the
Portfolio, even though we have reduced exposure in light of the higher
valuations of some corporate debt; and we have increased the Portfolio's
investments in government agency mortgages, which have less credit risk.
Despite the increased allocation, government mortgages remained an
underweight relative to the Barclays Index at period end. In light of the
flattening of the yield curve (reflecting the narrowing differences between
yields of shorter and longer-maturity securities), we have reduced the
Portfolio's duration by reducing exposures to the 10-year and 30-year parts
of the curve.
Given the possibility of increases in market interest rates, we see some
value in floating-rate debt and have retained the Portfolio's allocations to
bank loans and event-linked (catastrophe) bonds.
As we have modestly reduced exposure to the credit sectors, we have improved
the overall credit quality of the Portfolio's assets.
Please refer to the Schedule of Investments on pages 8 to 24 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
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[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
CONVERTIBLE CORPORATE BOND - 0.5%
Semiconductors & Semiconductor Equipment - 0.5%
Semiconductors - 0.5%
175,000 A-/NR Intel Corp., 2.95%, 12/15/35 $ 217,547
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TOTAL CONVERTIBLE CORPORATE BOND
(Cost $175,398) $ 217,547
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Shares
PREFERRED STOCKS - 2.0%
Banks - 0.7%
Diversified Banks - 0.4%
1,800 6.50 A-/Baa1 US Bancorp, Floating Rate Note (Perpetual) $ 50,868
3,725 6.00 A-/Baa1 US Bancorp, Floating Rate Note (Perpetual) 102,102
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$ 152,970
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Regional Banks - 0.3%
1,000 6.25 A-/NR CoBank ACB, Floating Rate Note (Perpetual) (144A) $ 104,094
1,050 6.62 BBB-/Ba1 Fifth Third Bancorp, Floating Rate Note (Perpetual) 28,119
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$ 132,213
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Total Banks $ 285,183
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Diversified Financials - 0.6%
Other Diversified Financial Services - 0.6%
9,000 7.12 BB+/B1 Citigroup, Inc., Floating Rate Note (Perpetual) $ 248,841
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Total Diversified Financials $ 248,841
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Insurance - 0.7%
Life & Health Insurance - 0.3%
4,800 7.38 BBB-/NR Delphi Financial Group, Inc., Floating Rate Note, 5/15/37 $ 118,050
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Property & Casualty Insurance - 0.2%
2,900 5.10 BBB/Baa1 The Allstate Corp., Floating Rate Note, 1/15/53 $ 72,877
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Reinsurance - 0.2%
16,836 0.00 NR/NR Altair Re, Floating Rate Note, 4/30/16 (Cat Bond) $ 21,124
50,000 0.00 NR/NR Altair Re, Floating Rate Note, 6/30/16 (Cat Bond) 51,765
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$ 72,889
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Total Insurance $ 263,816
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TOTAL PREFERRED STOCKS
(Cost $750,349) $ 797,840
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CONVERTIBLE PREFERRED STOCK - 0.5%
Banks - 0.5%
Diversified Banks - 0.5%
155 BBB+/Baa3 Wells Fargo & Co., 7.5% (Perpetual) $ 188,170
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TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $152,770) $ 188,170
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The accompanying notes are an integral part of these financial statements.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
ASSET BACKED SECURITIES - 4.9%
Food & Staples Retailing - 0.1%
Food Retail - 0.1%
49,063 BBB-/NR CKE Restaurant Holdings, Inc., 4.474%, 3/20/43 (144A) $ 50,393
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Total Food & Staples Retailing $ 50,393
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Banks - 2.8%
Thrifts & Mortgage Finance - 2.8%
12,801 6.50 BB+/Baa2 ACE Securities Corp. Manufactured Housing Trust Series
2003-MH1, Floating Rate Note, 8/15/30 (144A) $ 12,809
105,000 AAA/A2 Bayview Financial Mortgage Pass-Through Trust 2006-A,
6.087%, 2/28/41 (Step) 108,118
11,828 NR/A1 BCMSC Trust 1998-A, 6.65%, 4/15/28 11,942
46,269 0.65 A+/Ba1 Bear Stearns Asset Backed Securities I Trust 2005-FR1, Floating
Rate Note, 6/25/35 45,382
27,402 0.64 A+/NR Bear Stearns Asset Backed Securities Trust 2006-SD2, Floating
Rate Note, 6/25/36 26,896
8,022 0.55 AA+/A1 Carrington Mortgage Loan Trust Series 2005-NC4, Floating Rate
Note, 9/25/35 7,919
55,044 B-/B1 Citicorp Residential Mortgage Trust Series 2006-3, 5.703%,
11/25/36 (Step) 57,813
89,204 4.00 AA/NR Citigroup Mortgage Loan Trust 2014-A, Floating Rate Note,
1/1/35 (144A) 92,866
121,971 5.07 BB+/Ba2 Countrywide Asset-Backed Certificates, Floating Rate Note, 2/25/36 124,285
64,201 AAA/Aaa Equifirst Mortgage Loan Trust 2003-1, 4.01%, 12/25/32 (Step) 64,729
3,382 1.23 AAA/NR First Franklin Mortgage Loan Trust 2004-FF10, Floating Rate
Note, 9/25/34 3,376
13,015 AAA/NR First Investors Auto Owner Trust 2012-2, 1.47%, 5/15/18 (144A) 13,072
20,712 0.40 B+/B3 GSAA Home Equity Trust 2005-11, Floating Rate Note, 10/25/35 20,617
22,195 0.45 A+/Baa1 GSRPM Mortgage Loan Trust 2006-2, Floating Rate Note,
9/25/36 (144A) 20,935
2,745 AAA/Aaa HSBC Home Equity Loan Trust USA 2006-3, 5.63%, 3/20/36 (Step) 2,746
23,834 0.85 AA+/A2 Irwin Whole Loan Home Equity Trust 2005-C, Floating Rate
Note, 3/25/25 23,770
15,373 BBB+/Baa1 Lehman ABS Manufactured Housing Contract Trust 2001-B,
5.873%, 4/15/40 16,207
33,105 0.40 A+/Aa1 Lehman Brothers Small Balance Commercial, Floating Rate
Note, 2/25/30 (144A) 29,394
63,724 0.85 AAA/Aaa New Century Home Equity Loan Trust 2005-1, Floating Rate
Note, 3/25/35 63,689
90,409 0.41 AA+/Aa3 Option One Mortgage Loan Trust 2005-4 Asset-Backed Certificates
Series 2005-4, Floating Rate Note, 11/25/35 88,833
21,922 5.46 AAA/Aa3 Origen Manufactured Housing Contract Trust 2004-B, Floating
Rate Note, 11/15/35 22,556
13,534 0.85 AAA/Aaa PFS Financing Corp., Floating Rate Note, 10/17/16 (144A) 13,541
19,945 1.65 A/NR PFS Financing Corp., Floating Rate Note, 10/17/16 (144A) 19,968
31,826 0.40 B/Baa2 RAAC Series 2006-RP2 Trust, Floating Rate Note, 2/25/37 (144A) 30,898
25,184 AAA/NR SNAAC Auto Receivables Trust, 3.11%, 6/15/17 (144A) 25,270
12,161 0.75 AA+/Aa1 Structured Asset Investment Loan Trust 2005-4, Floating Rate
Note, 5/25/35 12,158
The accompanying notes are an integral part of these financial statements.
9
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
44,405 0.37 B-/Baa3 Structured Asset Securities Corp Mortgage Loan Trust 2006-GEL4,
Floating Rate Note, 10/25/36 (144A) $ 43,051
11,031 A+/Baa2 Structured Asset Securities Corp., 4.77%, 10/25/34 (Step) 11,471
17,681 1.09 AA+/A1 Terwin Mortgage Trust Series TMTS 2003-8HE, Floating Rate
Note, 12/25/34 17,157
80,878 AA/A2 Terwin Mortgage Trust Series TMTS 2005-16HE, 4.60715%,
9/25/36 (Step) 84,294
-----------
$ 1,115,762
-----------
Total Banks $ 1,115,762
-----------
Diversified Financials - 2.0%
Other Diversified Financial Services - 0.5%
50,000 AA/Aa3 Capital Auto Receivables Asset Trust/ Ally, 1.74%, 10/22/18 $ 50,090
166,854 NR/NR TOPRE_13-LTR, 3.47%, 11/20/28 (144A) 167,037
-----------
$ 217,127
-----------
Specialized Finance - 0.7%
115,950 BBB+/Baa1 Domino's Pizza Master Issuer LLC, 5.216%, 1/25/42 (144A) $ 124,602
100,000 0.59 NR/Aaa GE Dealer Floorplan Master Note Trust, Floating Rate Note, 10/20/17 100,223
51,196 NR/Aaa JG Wentworth XXII LLC, 3.82%, 12/15/48 (144A) 54,060
-----------
$ 278,885
-----------
Consumer Finance - 0.5%
11,000 BBB+/NR American Credit Acceptance Receivables Trust 2012-2,
4.05%, 2/15/18 (144A) $ 11,183
12,344 A+/NR American Credit Acceptance Receivables Trust, 1.64%,
11/15/16 (144A) 12,369
25,000 A+/NR AmeriCredit Automobile Receivables Trust 2013-1, 1.57%, 1/8/19 25,099
25,000 A+/NR First Investors Auto Owner Trust 2013-1, 2.02%, 1/15/19 (144A) 25,054
3,482 NR/Aaa Santander Drive Auto Receivables Trust 2011-2, 2.66%, 1/15/16 3,485
40,000 AA/Aaa Santander Drive Auto Receivables Trust 2012-1, 3.78%, 11/15/17 41,063
25,000 A/Aaa Santander Drive Auto Receivables Trust 2012-5, 2.7%, 8/15/18 25,699
70,000 0.98 AAA/Aa1 SLM Student Loan Trust 2004-10, Floating Rate Note,
4/27/26 (144A) 70,551
-----------
$ 214,503
-----------
Asset Management & Custody Banks - 0.3%
98,958 A/NR Triton Container Finance LLC, 4.21%, 5/14/27 (144A) $ 98,958
-----------
Total Diversified Financials $ 809,473
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $1,932,445) $ 1,975,628
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 14.0%
Banks - 12.3%
Thrifts & Mortgage Finance - 12.3%
75,322 BBB+/NR Alternative Loan Trust 2003-21T1, 5.75%, 12/25/33 $ 78,843
19,160 BB-/B2 Alternative Loan Trust 2003-J1, 4.75%, 10/25/33 19,621
12,145 BB+/Ba2 Alternative Loan Trust 2004-4CB, 4.25%, 4/25/34 12,404
108,729 0.59 A+/Baa3 Alternative Loan Trust 2005-J4, Floating Rate Note, 7/25/35 105,299
42,428 A+/Baa2 Banc of America Alternative Loan Trust 2003-2, 5.75%, 4/25/33 43,995
The accompanying notes are an integral part of these financial statements.
10
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
89,022 NR/Baa2 Banc of America Alternative Loan Trust 2003-7, 5.5%, 9/25/33 $ 92,697
19,425 NR/B3 Banc of America Alternative Loan Trust 2004-2, 5.5%, 3/25/19 19,887
26,384 NR/Ba2 Banc of America Alternative Loan Trust 2004-2, 6.0%, 3/25/34 27,294
44,955 NR/B2 Banc of America Alternative Loan Trust 2004-4, 5.25%, 5/25/34 45,562
21,375 BBB+/NR Banc of America Funding 2003-3 Trust, 5.5%, 10/25/33 22,171
68,227 2.69 BBB/NR Banc of America Mortgage 2003-F Trust, Floating Rate Note, 7/25/33 69,083
22,523 A+/NR Banc of America Mortgage Trust 2004-11, 5.75%, 1/25/35 22,914
2,649 B-/NR Banc of America Mortgage Trust 2004-7, 4.5%, 8/25/19 2,688
62,256 A+/NR Banc of America Mortgage Trust 2004-9, 5.5%, 11/25/34 63,306
3,812 AA+/Baa1 Banc of America Mortgage Trust 2005-9, 4.75%, 10/25/20 3,838
602,526 NR/Caa2 Bayview Commercial Asset Trust, 7/25/37 (Step) (144A) (c) (d) 3,495
419,487 NR/Caa2 Bayview Commercial Asset Trust, 3.53033%, 9/25/37 (Step)
(144A) (c) 27,183
41,993 0.85 AAA/A3 Bear Stearns ALT-A Trust 2004-12, Floating Rate Note, 1/25/35 41,071
69,834 0.75 A+/Ba1 Bear Stearns ALT-A Trust 2004-4, Floating Rate Note, 6/25/34 67,126
20,149 2.33 AA+/Baa2 Bear Stearns ARM Trust 2003-5, Floating Rate Note, 8/25/33 20,232
46,571 0.85 AA+/Baa3 Bella Vista Mortgage Trust 2004-1, Floating Rate Note, 11/20/34 45,115
37,286 2.65 A+/Ba1 CHL Mortgage Pass-Through Trust 2003-56, Floating Rate
Note, 12/25/33 37,616
26,686 0.32 AA/Aaa Citigroup Commercial Mortgage Trust 2007-FL3, Floating Rate
Note, 4/15/22 (144A) 26,490
49,308 NR/Baa1 Citigroup Mortgage Loan Trust, Inc., 6.75%, 8/25/34 53,006
22,819 0.28 AA-/A1 COMM 2006-FL12 Mortgage Trust, Floating Rate Note,
12/15/20 (144A) 22,743
25,000 NR/Aaa COMM 2012-CCRE2 Mortgage Trust REMICS, 3.791%, 8/15/45 25,864
25,000 NR/Aaa COMM 2012-CCRE2 Mortgage Trust, 3.147%, 8/15/45 25,266
23,000 AAA/Aaa COMM 2012-CCRE4 Mortgage Trust, 2.436%, 10/15/45 22,898
100,000 NR/Aaa COMM 2012-LC4 Mortgage Trust, 4.063%, 12/10/44 105,779
50,000 AAA/Aaa COMM 2013-LC6 Mortgage Trust, 2.941%, 1/10/46 49,376
90,968 2.09 AAA/NR Commercial Mortgage Pass Through Certificates, Floating Rate
Note, 11/17/26 (144A) 91,602
76,113 NR/Baa1 Credit Suisse Commercial Mortgage Trust Series 2007-C1,
5.361%, 2/15/40 81,681
14,447 2.57 BBB+/Ba2 Credit Suisse First Boston Mortgage Securities Corp., Floating
Rate Note, 11/25/33 14,442
45,369 5.01 NR/Aaa Credit Suisse First Boston Mortgage Securities Corp., Floating
Rate Note, 2/15/38 45,722
12,713 2.45 BBB+/B1 Credit Suisse First Boston Mortgage Securities Corp., Floating
Rate Note, 6/25/34 12,782
6,222 0.85 AA+/Baa3 Credit-Based Asset Servicing and Securitization LLC, Floating
Rate Note, 5/25/50 (144A) 6,260
82,352 0.42 BB/Ba2 Global Mortgage Securitization, Ltd., Floating Rate Note, 4/25/32 79,074
26,140 5.30 AAA/Aa3 GMAC Commercial Mortgage Securities, Inc. Series 2004-C2
Trust, Floating Rate Note, 8/10/38 26,181
28,419 3.39 BBB/Baa3 GMACM Mortgage Loan Trust 2003-AR1, Floating Rate
Note, 10/19/33 28,096
99,493 AA+/Aaa Government National Mortgage Association REMICS, 2.1%, 2/16/48 99,378
50,000 NR/Aaa GS Mortgage Securities Corp. II, 3.377%, 5/10/45 51,670
The accompanying notes are an integral part of these financial statements.
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
25,000 AA-/NR GS Mortgage Securities Corp. II, 3.682%, 2/10/46 (144A) $ 25,098
50,000 AAA/NR GS Mortgage Securities Trust 2013-GCJ12, 3.135%, 6/10/46 49,970
29,619 0.87 BBB-/Baa2 Impac CMB Trust Series 2004-5, Floating Rate Note, 10/25/34 28,845
12,920 0.95 B-/Ba1 Impac CMB Trust Series 2004-6, Floating Rate Note, 10/25/34 12,378
58,001 0.89 BBB+/A3 Impac CMB Trust Series 2004-7, Floating Rate Note, 11/25/34 55,822
56,979 0.95 AAA/Aaa Impac Secured Assets CMN Owner Trust, Floating Rate Note, 11/25/34 55,619
26,608 0.35 BB+/Baa2 Impac Secured Assets Trust 2006-5, Floating Rate Note, 12/25/36 24,738
50,000 3.28 AAA/NR Irvine Core Office Trust 2013-IRV, Floating Rate Note, 5/15/48 (144A) 49,854
100,000 2.52 A/A2 JP Morgan Chase Commercial Mortgage Securities Corp., Floating
Rate Note, 10/15/25 (144A) 100,167
15,779 2.03 A+/Baa1 JP Morgan Mortgage Trust 2003-A1, Floating Rate Note, 10/25/33 15,914
32,736 2.49 A+/Baa1 JP Morgan Mortgage Trust 2003-A1, Floating Rate Note, 10/25/33 32,926
56,355 2.49 AA+/Baa3 JP Morgan Mortgage Trust 2004-A1, Floating Rate Note, 2/25/34 58,114
39,856 2.49 AA+/Baa1 JP Morgan Mortgage Trust 2004-A1, Floating Rate Note, 2/25/34 40,846
24,259 2.28 AA+/Baa2 JP Morgan Mortgage Trust 2004-A5, Floating Rate Note, 12/25/34 24,384
123,085 B-/Ba2 JP Morgan Mortgage Trust 2004-S1, 6.0%, 9/25/34 125,086
98,940 3.50 AAA/NR JP Morgan Mortgage Trust 2014-1 REMICS, Floating Rate Note,
1/25/44 (144A) 98,096
235,000 3.00 AAA/NR JP Morgan Mortgage Trust 2014-2, Floating Rate Note,
6/25/29 (144A) 240,251
71,015 2.75 NR/NR La Hipotecaria Panamanian Mortgage Trust 2010-1, Floating Rate
Note, 9/8/39 (144A) 73,611
6,095 AAA/Aaa LB-UBS Commercial Mortgage Trust 2004-C1, 4.568%, 1/15/31 6,299
8,433 1.10 A+/Aa1 Lehman Brothers Small Balance Commercial Mortgage Trust
2007-3 Class 1A4, Floating Rate Note, 10/25/37 (144A) 8,375
54,988 2.13 A+/Baa2 MASTR Adjustable Rate Mortgages Trust 2003-3, Floating
Rate Note, 9/25/33 54,974
29,629 BB+/NR MASTR Alternative Loan Trust 2004-10, 5.5%, 10/25/19 30,358
142,189 B-/NR MASTR Alternative Loan Trust 2004-6, 6.0%, 7/25/34 144,673
98,627 A+/NR MASTR Alternative Loan Trust 2005-1, 5.5%, 2/25/35 100,155
48,907 6.62 A-/NR MASTR Seasoned Securitization Trust 2005-1, Floating Rate
Note, 9/25/32 51,127
15,616 0.63 AA+/Baa1 Mellon Residential Funding Corp. Mortgage Pass-Through Trust
Series 2000 TBC2, Floating Rate Note, 6/15/30 15,441
141,318 1.35 AAA/Aaa NorthStar 2012-1 Mortgage Trust, Floating Rate Note, 8/25/29 (144A) 141,441
134,061 3.25 AAA/NR NRP Mortgage Trust 2013-1, Floating Rate Note, 7/25/43 (144A) 136,780
26,279 NR/A2 PHH Mortgage Capital LLC, 6.6%, 12/25/27 (Step) (144A) 26,663
103,836 BBB+/Baa3 RALI Series 2003-QR24 Trust REMICS, 4.0%, 7/25/33 104,657
36,066 BB/Ba3 RALI Series 2003-QS15 Trust, 5.5%, 8/25/33 37,517
138,204 NR/B1 RALI Series 2004-QS13 Trust, 5.0%, 9/25/19 141,467
35,823 BB+/Ba3 RALI Series 2004-QS5 Trust, 4.75%, 4/25/34 36,873
62,636 0.47 A+/Baa3 Sequoia Mortgage Trust 2004-10, Floating Rate Note, 11/20/34 59,735
79,474 0.37 BBB+/Ba1 Sequoia Mortgage Trust 2005-2, Floating Rate Note, 3/20/35 73,714
95,669 3.00 AAA/NR Sequoia Mortgage Trust 2013-7, Floating Rate Note, 6/25/43 91,390
56,127 2.22 AAA/NR Springleaf Mortgage Loan Trust 2012-2, Floating Rate Note,
10/25/57 (144A) 56,842
The accompanying notes are an integral part of these financial statements.
12
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[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
10,188 4.59 BBB+/Ba2 Structured Adjustable Rate Mortgage Loan Trust, Floating Rate
Note, 11/25/34 $ 10,071
102,678 0.84 AA+/Baa1 Structured Asset Mortgage Investments II Trust 2004-AR8, Floating
Rate Note, 5/19/35 100,615
27,282 0.90 A+/Ba1 Structured Asset Mortgage Investments Trust 2003-AR2, Floating
Rate Note, 12/19/33 26,138
18,771 2.17 NR/Baa2 Thornburg Mortgage Securities Trust 2003-3, Floating Rate
Note, 6/25/43 18,786
19,730 1.77 AAA/Baa3 Thornburg Mortgage Securities Trust Class II4A, Floating Rate
Note, 3/25/44 19,608
40,000 AA/Aa3 TimberStar Trust 1, 5.7467%, 10/15/36 (144A) 43,552
359,118 AAA/Aaa Wachovia Bank Commercial Mortgage Trust Series 2004-C15,
4.803%, 10/15/41 360,068
113,968 2.41 BBB/NR WaMu Mortgage Pass-Through Certificates Series 2005-AR3 Trust,
Floating Rate Note, 3/25/35 114,352
31,529 2.40 BBB+/NR WaMu Mortgage Pass-Through Certificates, Floating Rate Note, 1/25/35 31,670
16,026 2.49 AA+/Baa1 Wells Fargo Mortgage Backed Securities 2003-L Trust, Floating
Rate Note, 11/25/33 16,265
21,114 2.62 A+/Ba1 Wells Fargo Mortgage Backed Securities 2004-K Trust, Floating
Rate Note, 7/25/34 21,399
18,445 AA+/Baa1 Wells Fargo Mortgage Backed Securities 2006-16 Trust,
5.0%, 11/25/36 19,123
-----------
$ 4,951,597
-----------
Total Banks $ 4,951,597
-----------
Diversified Financials - 0.6%
Other Diversified Financial Services - 0.6%
100,000 1.65 AA-/Aa3 Hilton USA Trust 2013-HLF, Floating Rate Note, 11/5/30 (144A) $ 100,252
24,657 2.55 NR/NR Jefferies Resecuritization Trust 2009-R2, Floating Rate Note,
5/26/37 (144A) 24,594
50,000 BBB-/NR Morgan Stanley Capital I Trust 2007-HQ13, 5.569%, 12/15/44 54,449
32,300 0.25 AA+/Aaa Morgan Stanley Capital I, Inc., Floating Rate Note, 10/15/20 (144A) 32,263
-----------
$ 211,558
-----------
Total Diversified Financials $ 211,558
-----------
Government - 1.1%
83,561 AA+/NR Federal Home Loan Mortgage Corp. REMICS, 4.0%, 6/15/22 $ 89,138
6,545 AA+/Aaa Federal Home Loan Mortgage Corp. REMICS, 5.0%, 6/15/34 6,608
25,000 AA+/Baa2 Federal Home Loan Mortgage Corp., 4.304%, 9/25/44 (144A) 26,161
22,168 AA+/Aaa Federal National Mortgage Association REMICS, 4.5%, 6/25/29 24,035
3,830 AA+/Aaa Federal National Mortgage Association REMICS, 5.0%, 9/25/39 4,010
50,000 NR/A3 FREMF Mortgage Trust 2011-K702, 4.936%, 4/25/44 (144A) 54,282
50,000 AA+/A3 FREMF Mortgage Trust 2011-K703, 5.051%, 7/25/44 (144A) 54,516
35,000 AA+/Aaa FREMF Mortgage Trust 2012-K708, 3.891%, 2/25/45 (144A) 35,995
25,000 3.61 NR/A2 FREMF Mortgage Trust Class B, Floating Rate Note, 11/25/46 (144A) 25,904
25,000 3.95 AA+/Aaa FREMF Mortgage Trust Class B, Floating Rate Note, 6/25/47 (144A) 26,206
336,480 AA+/Aaa Government National Mortgage Association, 1.015%, 2/16/53 (c) 26,053
The accompanying notes are an integral part of these financial statements.
13
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Government - (continued)
44,768 AA+/Aaa Government National Mortgage Association, 3.0%, 4/20/41 $ 46,527
23,826 AA+/Aaa Government National Mortgage Association, 5.25%, 8/16/35 26,667
-----------
$ 446,102
-----------
Total Government $ 446,102
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $5,599,075) $ 5,609,257
-----------
CORPORATE BONDS - 29.0%
Energy - 3.3%
Oil & Gas Drilling - 0.2%
50,000 BBB+/Baa1 Pride International, Inc., 6.875%, 8/15/20 $ 60,757
-----------
Oil & Gas Equipment & Services - 0.1%
50,000 BBB-/Baa3 Weatherford International, Ltd. Bermuda, 5.95%, 4/15/42 $ 56,705
-----------
Oil & Gas Exploration & Production - 0.7%
100,000 BBB-/Ba1 Newfield Exploration Co., 5.625%, 7/1/24 $ 109,750
100,000 BBB-/Baa1 Rosneft Finance SA, 6.625%, 3/20/17 (144A) 109,500
65,000 BBB-/Baa1 Rosneft Finance SA, 7.5%, 7/18/16 (144A) 71,175
-----------
$ 290,425
-----------
Oil & Gas Refining & Marketing - 0.6%
200,000 BBB-/Baa2 Spectra Energy Capital LLC, 6.2%, 4/15/18 $ 229,532
-----------
Oil & Gas Storage & Transportation - 1.7%
90,000 BBB-/Baa3 Buckeye Partners LP, 6.05%, 1/15/18 $ 101,694
75,000 5.85 BB/Baa3 DCP Midstream LLC, Floating Rate Note, 5/21/43 (144A) 71,250
265,000 A/A3 Questar Pipeline Co., 5.83%, 2/1/18 299,516
50,000 BBB-/Baa2 Spectra Energy Capital LLC, 6.75%, 7/15/18 57,385
70,000 BBB-/Baa3 Sunoco Logistics Partners Operations LP, 6.1%, 2/15/42 80,766
69,000 BB+/Baa3 The Williams Companies, Inc., 7.75%, 6/15/31 83,143
-----------
$ 693,754
-----------
Total Energy $ 1,331,173
-----------
Materials - 1.0%
Diversified Chemicals - 0.1%
30,000 BBB/Baa2 Eastman Chemical Co., 4.8%, 9/1/42 $ 30,461
-----------
Construction Materials - 0.5%
166,000 B+/NR CEMEX Espana SA, 9.875%, 4/30/19 (144A) $ 190,485
-----------
Diversified Metals & Mining - 0.3%
60,000 BB+/Baa3 AngloGold Ashanti Holdings Plc, 5.375%, 4/15/20 $ 60,934
45,000 BBB/Baa3 Freeport-McMoRan, Inc., 3.875%, 3/15/23 44,863
-----------
$ 105,797
-----------
Gold - 0.1%
40,000 BBB+/Baa2 Goldcorp, Inc., 3.7%, 3/15/23 $ 39,453
-----------
Steel - 0.0%+
25,000 BBB/Baa2 Glencore Funding LLC, 4.125%, 5/30/23 (144A) $ 25,109
-----------
Total Materials $ 391,305
-----------
The accompanying notes are an integral part of these financial statements.
14
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Capital Goods - 1.5%
Aerospace & Defense - 0.1%
50,000 BB-/Ba3 Bombardier, Inc., 4.25%, 1/15/16 (144A) $ 51,625
-----------
Building Products - 0.5%
25,000 BBB-/Ba3 Masco Corp., 5.95%, 3/15/22 $ 27,625
110,000 BBB-/Ba3 Masco Corp., 7.125%, 3/15/20 129,439
50,000 5.75 BBB+/Baa2 Stanley Black & Decker, Inc., Floating Rate Note, 12/15/53 54,000
-----------
$ 211,064
-----------
Construction & Farm Machinery & Heavy Trucks - 0.4%
70,000 A/A3 Cummins, Inc., 5.65%, 3/1/98 $ 79,263
65,000 A/A3 Cummins, Inc., 6.75%, 2/15/27 81,203
-----------
$ 160,466
-----------
Trading Companies & Distributors - 0.5%
170,000 BB+/NR Aviation Capital Group Corp., 6.75%, 4/6/21 (144A) $ 191,237
-----------
Total Capital Goods $ 614,392
-----------
Consumer Services - 0.4%
Education Services - 0.4%
50,000 AAA/Aaa President and Fellows of Harvard College, 2.3%, 10/1/23 $ 46,970
100,000 AA-/Aa2 Tufts University, 5.017%, 4/15/12 101,544
-----------
$ 148,514
-----------
Total Consumer Services $ 148,514
-----------
Media - 0.3%
Cable & Satellite - 0.3%
100,000 BBB+/Baa1 British Sky Broadcasting Group Plc, 6.1%, 2/15/18 (144A) $ 113,466
-----------
Total Media $ 113,466
-----------
Food & Staples Retailing - 0.3%
Drug Retail - 0.3%
43,064 BBB+/Baa1 CVS Pass-Through Trust, 5.298%, 1/11/27 (144A) $ 47,977
82,325 BBB+/Baa1 CVS Pass-Through Trust, 5.773%, 1/10/33 (144A) 92,154
-----------
$ 140,131
-----------
Total Food & Staples Retailing $ 140,131
-----------
Food, Beverage & Tobacco - 0.5%
Packaged Foods & Meats - 0.5%
85,000 BBB/Baa2 Kraft Foods Group, Inc., 3.5%, 6/6/22 $ 87,275
84,000 BBB-/Baa1 Mondelez International, Inc., 6.5%, 2/9/40 107,564
-----------
$ 194,839
-----------
Tobacco - 0.0%+
25,000 BBB-/Baa2 Lorillard Tobacco Co., 3.75%, 5/20/23 $ 24,690
-----------
Total Food, Beverage & Tobacco $ 219,529
-----------
Health Care Equipment & Services - 0.2%
Health Care Services - 0.2%
75,000 A+/A1 Catholic Health Initiatives, 4.35%, 11/1/42 $ 71,874
-----------
Total Health Care Equipment & Services $ 71,874
-----------
The accompanying notes are an integral part of these financial statements.
15
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Pharmaceuticals, Biotechnology & Life Sciences - 0.4%
Life Sciences Tools & Services - 0.4%
135,000 BBB+/Baa2 Agilent Technologies, Inc., 6.5%, 11/1/17 $ 154,358
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 154,358
-----------
Banks - 4.5%
Diversified Banks - 2.2%
220,000 BBB/Baa3 Barclays Bank Plc, 6.05%, 12/4/17 (144A) $ 249,571
150,000 NR/A2 BBVA Bancomer SA Texas, 4.375%, 4/10/24 (144A) 152,812
90,000 AA-/Aa2 Cooperatieve Centrale Raiffeisen-Boerenleenbank BA
Netherlands, 3.875%, 2/8/22 95,338
150,000 A/A2 HSBC Bank Plc, 7.65%, 5/1/25 196,852
100,000 BBB/Baa2 Intesa Sanpaolo S.p.A., 6.5%, 2/24/21 (144A) 118,275
60,000 4.50 NR/Baa3 Scotiabank Peru SA, Floating Rate Note, 12/13/27 (144A) 57,450
-----------
$ 870,298
-----------
Regional Banks - 1.8%
145,000 A/A2 Mellon Funding Corp., 5.5%, 11/15/18 $ 164,764
250,000 4.45 BBB/Baa3 The PNC Financial Services Group, Inc., Floating Rate
Note (Perpetual) 250,000
75,000 6.75 BBB/Baa3 The PNC Financial Services Group, Inc., Floating Rate
Note (Perpetual) 83,625
210,000 A+/A1 Wells Fargo Bank NA, 6.0%, 11/15/17 240,598
-----------
$ 738,987
-----------
Thrifts & Mortgage Finance - 0.5%
75,000 BBB-/Baa2 Astoria Financial Corp., 5.0%, 6/19/17 $ 81,478
125,000 BBB/Baa2 Santander Holdings USA, Inc. Pennsylvania, 3.45%, 8/27/18 132,463
-----------
$ 213,941
-----------
Total Banks $ 1,823,226
-----------
Diversified Financials - 5.2%
Other Diversified Financial Services - 2.5%
125,000 BBB+/Baa2 Alterra Finance LLC, 6.25%, 9/30/20 $ 144,051
125,000 A-/NR Carlyle Holdings II Finance LLC, 5.625%, 3/30/43 (144A) 138,270
95,000 5.95 BB+/Ba3 Citigroup, Inc., Floating Rate Note (Perpetual) 95,950
140,000 AA/A2 General Electric Capital Corp., 5.3%, 2/11/21 159,197
100,000 7.12 AA-/Baa1 General Electric Capital Corp., Floating Rate Note (Perpetual) 118,020
200,000 5.15 BBB/Ba1 JPMorgan Chase & Co., Floating Rate Note (Perpetual) 191,750
40,000 6.75 BBB/Ba1 JPMorgan Chase & Co., Floating Rate Note, 8/29/49 43,050
100,000 A/NR KKR Group Finance Co. II LLC, 5.5%, 2/1/43 (144A) 106,246
-----------
$ 996,534
-----------
Consumer Finance - 1.0%
415,000 4.00 BB/Ba3 Navient Corp., Floating Rate Note, 7/25/14 $ 415,004
-----------
Asset Management & Custody Banks - 0.6%
150,000 A+/NR Blackstone Holdings Finance Co. LLC, 6.25%, 8/15/42 (144A) $ 181,252
30,000 BBB/Baa1 Legg Mason, Inc., 5.625%, 1/15/44 32,609
25,000 4.50 BBB/Baa2 The Bank of New York Mellon Corp., Floating Rate
Note (Perpetual) 23,250
-----------
$ 237,111
-----------
The accompanying notes are an integral part of these financial statements.
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Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Investment Banking & Brokerage - 1.1%
190,000 BBB/A3 Macquarie Group, Ltd., 6.0%, 1/14/20 (144A) $ 215,239
125,000 BBB+/Baa3 Morgan Stanley, 4.1%, 5/22/23 126,802
85,000 A-/Baa2 Morgan Stanley, 5.5%, 1/26/20 97,288
-----------
$ 439,329
-----------
Total Diversified Financials $ 2,087,978
-----------
Insurance - 3.8%
Life & Health Insurance - 1.6%
75,000 BBB+/NR Delphi Financial Group, Inc., 7.875%, 1/31/20 $ 91,028
160,000 BBB/Baa2 MetLife, Inc., 10.75%, 8/1/69 254,200
145,000 A-/Baa2 Protective Life Corp., 7.375%, 10/15/19 179,410
100,000 5.88 BBB+/Baa2 Prudential Financial, Inc., Floating Rate Note, 9/15/42 108,625
-----------
$ 633,263
-----------
Multi-line Insurance - 0.3%
90,000 BBB/A3 AXA SA, 8.6%, 12/15/30 $ 120,938
-----------
Property & Casualty Insurance - 1.1%
145,000 6.50 BBB/Baa1 The Allstate Corp., Floating Rate Note, 5/15/57 $ 158,050
50,000 BBB-/Baa3 The Hanover Insurance Group, Inc., 7.5%, 3/1/20 59,739
185,000 BBB-/Baa3 The Hanover Insurance Group, Inc., 7.625%, 10/15/25 226,363
-----------
$ 444,152
-----------
Reinsurance - 0.8%
65,000 BBB/NR Montpelier Re Holdings, Ltd., 4.7%, 10/15/22 $ 67,176
100,000 BBB/Baa3 Sirius International Group, Ltd., 6.375%, 3/20/17 (144A) 110,598
100,000 7.51 BB+/Ba2 Sirius International Group, Ltd., Floating Rate Note (Perpetual) (144A) 105,000
30,000 5.88 NR/NR Wilton Re Finance LLC, Floating Rate Note, 3/30/33 (144A) 31,275
-----------
$ 314,049
-----------
Total Insurance $ 1,512,402
-----------
Real Estate - 1.5%
Diversified REIT - 0.5%
35,000 BBB-/Baa2 DCT Industrial Operating Partnership LP, 4.5%, 10/15/23 $ 36,058
60,000 BBB/Baa2 Digital Realty Trust LP, 4.5%, 7/15/15 61,711
45,000 BBB/Baa2 Digital Realty Trust LP, 5.875%, 2/1/20 50,013
35,000 BBB-/Baa2 WP Carey, Inc., 4.6%, 4/1/24 36,375
-----------
$ 184,157
-----------
Office REIT - 0.4%
45,000 BBB-/Baa2 Alexandria Real Estate Equities, Inc., 4.6%, 4/1/22 $ 47,581
25,000 BBB/Baa3 BioMed Realty LP, 4.25%, 7/15/22 25,776
35,000 BBB-/Baa3 Corporate Office Properties LP, 3.6%, 5/15/23 33,467
60,000 BBB/Baa2 Piedmont Operating Partnership LP, 3.4%, 6/1/23 57,036
-----------
$ 163,860
-----------
Specialized REIT - 0.6%
20,000 BBB-/Baa3 CubeSmart LP, 4.8%, 7/15/22 $ 21,524
25,000 BBB/Baa2 Health Care Real Estate Investment Trust, Inc., 4.5%, 1/15/24 26,342
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Specialized REIT - (continued)
150,000 BBB-/Baa3 Healthcare Realty Trust, Inc., 6.5%, 1/17/17 $ 168,648
45,000 BBB-/Baa2 Hospitality Properties Trust, 5.0%, 8/15/22 47,607
-----------
$ 264,121
-----------
Total Real Estate $ 612,138
-----------
Telecommunication Services - 1.6%
Integrated Telecommunication Services - 0.9%
100,000 NR/A2 GTP Acquisition Partners I LLC, 4.347%, 6/15/16 (144A) $ 103,424
24,588 NR/NR GTP Cellular Sites LLC, 3.721%, 3/15/17 (144A) 25,755
100,000 A-/A2 Ooredoo International Finance, Ltd., 3.375%, 10/14/16 (144A) 104,854
90,000 BBB+/Baa1 Verizon Communications, Inc., 6.55%, 9/15/43 113,260
-----------
$ 347,293
-----------
Wireless Telecommunication Services - 0.7%
180,000 NR/A2 Crown Castle Towers LLC, 4.883%, 8/15/20 (144A) $ 198,824
75,000 NR/NR WCP Wireless Site Funding, 6.829%, 11/15/15 (144A) 78,148
-----------
$ 276,972
-----------
Total Telecommunication Services $ 624,265
-----------
Utilities - 4.5%
Electric Utilities - 2.3%
30,000 A-/A2 Commonwealth Edison Co., 6.15%, 9/15/17 $ 34,473
67,103 BBB-/Baa3 Crockett Cogeneration LP, 5.869%, 3/30/25 (144A) 72,339
100,000 A+/Aa3 Electricite de France SA, 6.0%, 1/22/14 (144A) 112,926
6,105 B-/B1 FPL Energy National Wind Portfolio LLC, 6.125%, 3/25/19 (144A) 6,004
200,000 BB+/Baa3 Israel Electric Corp., Ltd., 7.25%, 1/15/19 (144A) 227,250
24,899 NR/NR Orcal Geothermal, Inc., 6.21%, 12/30/20 (144A) 25,397
100,000 BBB/Baa2 Public Service Co. of New Mexico, 7.95%, 5/15/18 120,060
75,000 6.25 BBB-/Baa1 Southern California Edison Co., Floating Rate Note (Perpetual) 81,375
225,000 BBB+/A3 West Penn Power Co., 5.95%, 12/15/17 (144A) 254,305
-----------
$ 934,129
-----------
Gas Utilities - 0.6%
233,089 A+/A1 Nakilat, Inc., 6.267%, 12/31/33 (144A) $ 254,941
-----------
Multi-Utilities - 0.6%
215,000 BBB+/A3 New York State Electric & Gas Corp., 6.15%, 12/15/17 (144A) $ 235,389
-----------
Independent Power Producers & Energy Traders - 1.0%
82,915 BBB-/NR Alta Wind Holdings LLC, 7.0%, 6/30/35 (144A) $ 91,969
129,323 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 140,383
140,457 BBB-/Baa3 Panoche Energy Center LLC, 6.885%, 7/31/29 (144A) 156,791
-----------
$ 389,143
-----------
Total Utilities $ 1,813,602
-----------
TOTAL CORPORATE BONDS
(Cost $10,499,424) $11,658,353
-----------
The accompanying notes are an integral part of these financial statements.
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[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 32.5%
1,800,000 AAA/Aaa Fannie Mae, 30YR Pool, 4.5%, TBA $ 1,949,344
2,800,000 AAA/Aaa Fannie Mae, 30YR Pool 5.0%, TBA 3,109,306
699,909 AAA/Aaa Fannie Mae, 3.0%, 8/1/42-12/1/42 692,572
492,916 NR/NR Fannie Mae, 3.5%, 7/1/43-5/1/44 508,188
769,951 AAA/Aaa Fannie Mae, 4.0%, 12/1/40-12/1/43 818,458
788,219 NR/NR Fannie Mae, 4.5%, 4/1/41-12/1/43 855,890
256,334 NR/NR Fannie Mae, 5.0%, 7/1/19-7/1/40 283,703
84,524 AAA/Aaa Fannie Mae, 5.5%, 3/1/18-12/1/34 93,026
90,458 AAA/Aaa Fannie Mae, 5.9%, 7/1/28 103,438
175,044 AA+/Aaa Fannie Mae, 6.0%, 6/1/15-7/1/38 197,744
103,310 AA+/Aaa Fannie Mae, 6.5%, 1/1/15-7/1/34 116,623
27,301 AA+/Aaa Fannie Mae, 7.0%, 9/1/18-1/1/32 30,284
2,762 AAA/Aaa Fannie Mae, 7.5%, 2/1/31 3,294
63,462 AAA/Aaa Fannie Mae, 8.0%, 2/1/29-5/1/31 73,457
3,714 AAA/Aaa Fannie Mae, 9.5%, 2/1/21 3,773
51,921 NR/NR Federal Home Loan Mortgage Corp., 3.5%, 11/1/28 55,105
149,609 NR/NR Federal Home Loan Mortgage Corp., 4.0%, 5/1/44 158,709
45,149 AA+/Aaa Federal Home Loan Mortgage Corp., 5.0%, 12/1/21-10/1/38 49,621
32,721 AA+/Aaa Federal Home Loan Mortgage Corp., 5.5%, 9/1/33 36,783
73,762 AA+/Aaa Federal Home Loan Mortgage Corp., 6.0%, 10/1/32-12/1/36 83,703
77,429 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 1/1/29-7/1/32 87,383
56,368 AAA/Aaa Federal Home Loan Mortgage Corp., 7.0%, 8/1/22-10/1/46 63,017
2,197 AAA/Aaa Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 2,511
248,698 NR/NR Government National Mortgage Association I, 4.0%, 7/21/14-8/15/43 266,100
120,128 AAA/Aaa Government National Mortgage Association I, 4.5%,
12/15/18-8/15/41 127,948
90,610 AAA/Aaa Government National Mortgage Association I, 5.0%, 7/15/17-9/15/33 97,240
147,914 AAA/Aaa Government National Mortgage Association I, 5.5%,
3/15/33-10/15/34 166,533
72,930 AAA/Aaa Government National Mortgage Association I, 5.72%, 10/15/29 81,446
385,788 AAA/Aaa Government National Mortgage Association I, 6.0%, 5/15/17-8/15/34 437,239
207,538 AAA/Aaa Government National Mortgage Association I, 6.5%,
4/15/17-12/15/32 236,813
158,015 AAA/Aaa Government National Mortgage Association I, 7.0%, 1/15/26-5/15/32 175,253
8,027 AAA/Aaa Government National Mortgage Association I, 7.5%, 6/15/23-1/15/31 8,888
30,748 AAA/Aaa Government National Mortgage Association II, 4.5%, 9/20/41 33,638
54,598 AA+/Aaa Government National Mortgage Association II, 5.0%,
11/20/19-1/20/20 58,220
114,221 AAA/Aaa Government National Mortgage Association II, 5.9%, 2/20/28 127,428
57,612 AAA/Aaa Government National Mortgage Association II, 6.0%,
6/20/16-11/20/33 63,547
17,372 AAA/Aaa Government National Mortgage Association II, 6.5%,
8/20/28-9/20/31 20,181
25,507 AA+/Aaa Government National Mortgage Association II, 7.0%,
5/20/26-1/20/31 30,006
1,374 AAA/Aaa Government National Mortgage Association II, 7.5%, 8/20/27 1,652
563 AAA/Aaa Government National Mortgage Association II, 8.0%, 8/20/25 664
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - (continued)
350,000 AA+/Aaa U.S. Treasury Bonds, 4.375%, 5/15/41 $ 420,766
250,000 AA+/Aaa U.S. Treasury Bonds, 4.5%, 2/15/36 303,633
400,000 NR/Aaa U.S. Treasury Notes, 0.75%, 2/28/18 393,719
650,000 NR/Aaa U.S. Treasury Notes, 2.0%, 2/15/23 631,110
------------
$ 13,057,956
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $12,683,903) $ 13,057,956
------------
MUNICIPAL BONDS - 3.7%
Municipal Airport - 0.2%
75,000 BBB/Baa1 Indianapolis Airport Authority, 5.1%, 1/15/17 $ 82,663
------------
Municipal Development - 0.4%
135,000 BBB/Baa2 Selma Industrial Development Board, 5.8%, 5/1/34 $ 150,275
------------
Municipal Education - 0.0%+
10,000 AA+/Aaa Amherst College, 3.794%, 11/1/42 $ 9,132
------------
Municipal General - 0.8%
90,000 AA/A2 JobsOhio Beverage System, 3.985%, 1/1/29 $ 90,730
25,000 AA/A2 JobsOhio Beverage System, 4.532%, 1/1/35 25,872
75,000 A/A2 New Jersey Transportation Trust Fund Authority, 5.5%, 6/15/41 83,214
25,000 AAA/Aa1 New York City Transitional Finance Authority Future Tax
Secured Revenue, 5.0%, 11/1/33 28,431
25,000 BBB/A3 Texas Municipal Gas Acquisition & Supply Corp. III, 5.0%, 12/15/30 26,686
50,000 BBB/A3 Texas Municipal Gas Acquisition & Supply Corp. III, 5.0%, 12/15/31 53,078
------------
$ 308,011
------------
Higher Municipal Education - 2.0%
25,000 A+/NR Baylor University, 4.313%, 3/1/42 $ 24,254
45,000 AAA/Aaa California Educational Facilities Authority, 5.0%, 6/1/43 57,214
75,000 AAA/Aaa Houston Higher Education Finance Corp., 5.0%, 5/15/40 83,774
70,000 AAA/Aaa Massachusetts Development Finance Agency, 5.0%, 10/15/40 79,869
75,000 AAA/Aaa Massachusetts Health & Educational Facilities Authority, 5.5%, 7/1/32 99,692
60,000 AAA/Aaa Massachusetts Health & Educational Facilities Authority, 6.0%, 7/1/36 70,862
25,000 AAA/Aaa Massachusetts Institute of Technology, 5.6%, 7/1/11 31,372
50,000 AA/Aa1 New York State Dormitory Authority Series A, 5.0%, 7/1/40 56,549
50,000 AAA/Aaa Permanent University Fund, 5.0%, 7/1/30 59,883
105,000 AAA/Aaa President and Fellows of Harvard College, 6.3%, 10/1/37 115,494
50,000 A+/A1 The George Washington University, 1.827%, 9/15/17 49,925
15,000 AAA/Aaa The University of Texas System, 5.0%, 8/15/43 16,770
50,000 AA/Aa2 University of California, 3.38%, 5/15/28 47,182
------------
$ 792,840
------------
Municipal Medical - 0.1%
50,000 AA-/A1 Massachusetts Development Finance Agency, 5.25%, 4/1/37 $ 54,810
------------
Municipal Pollution - 0.2%
60,000 A-/Baa1 County of Sweetwater Wyoming, 5.6%, 12/1/35 $ 61,368
------------
The accompanying notes are an integral part of these financial statements.
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[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Municipal Transportation - 0.0%+
10,000 AA-/Aa3 Port Authority of New York & New Jersey, 4.458%, 10/1/62 $ 10,193
-----------
Municipal Obligation - 0.0%+
10,000 AA+/Aa1 State of Washington, 3.0%, 7/1/28 $ 9,975
-----------
TOTAL MUNICIPAL BONDS
(Cost $1,365,465) $ 1,479,267
-----------
SENIOR FLOATING RATE LOAN INTERESTS - 5.3%**
Energy - 0.3%
Oil & Gas Refining & Marketing - 0.3%
104,981 3.75 BB/Ba2 Pilot Travel Centers LLC, Refinancing Tranche B Term Loan, 3/30/18 $ 105,307
-----------
Total Energy $ 105,307
-----------
Capital Goods - 0.0%
Trading Companies & Distributors - 0.0%
13,730 3.75 BB/Ba3 WESCO Distribution, Inc., Tranche B-1 Loan, 12/12/19 $ 13,760
-----------
Total Capital Goods $ 13,760
-----------
Automobiles & Components - 1.3%
Auto Parts & Equipment - 0.8%
137,467 3.75 B+/Ba3 Allison Transmission, Inc., Term B-3 Loan, 8/23/19 $ 138,003
201,968 3.75 BB/Ba2 Gates Investments LLC, Term B-2 Loan, 9/29/16 202,423
-----------
$ 340,426
-----------
Tires & Rubber - 0.5%
205,000 4.75 BB/Ba1 The Goodyear Tire & Rubber Co., Term Loan (Second Lien), 3/27/19 $ 206,536
-----------
Total Automobiles & Components $ 546,962
-----------
Consumer Services - 0.3%
Restaurants - 0.3%
112,988 3.75 BB/Ba3 Burger King Corp., Tranche B Term Loan (2012), 9/28/19 $ 113,544
-----------
Total Consumer Services $ 113,544
-----------
Media - 0.9%
Broadcasting - 0.4%
138,026 4.00 B+/NR Univision Communications, Inc., Replacement First-Lien
Term Loan, 3/1/20 $ 138,091
-----------
Movies & Entertainment - 0.4%
87,976 3.75 NR/Baa3 Cinedigm Digital Funding I LLC, Term Loan, 2/28/18 $ 88,141
83,370 3.50 BB/Ba2 Live Nation Entertainment, Inc., Term B-1 Loan, 8/17/20 83,492
-----------
$ 171,633
-----------
Publishing - 0.1%
46,909 4.75 B+/B2 Interactive Data, Corp., 1st Lien Term Loan B, 4/24/21 $ 47,371
-----------
Total Media $ 357,095
-----------
Household & Personal Products - 0.8%
Personal Products - 0.8%
96,143 4.75 B/B1 Federal Mogul Corp., 1st Lien Term Loan C, 4/15/21 $ 96,304
215,357 3.50 BB-/Ba3 NBTY, Inc., Term B-2 Loan, 10/1/17 215,997
-----------
$ 312,301
-----------
Total Household & Personal Products $ 312,301
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
S&P/
Principal Floating Moody's
Amount ($) Rate (b) Ratings Value
Health Care Equipment & Services - 1.1%
Health Care Facilities - 0.5%
30,721 2.98 BB/Ba3 HCA, Inc., Tranche B-4 Term Loan, 5/1/18 $ 30,797
73,674 2.90 BB/Ba3 HCA, Inc., Tranche B-5 Term Loan, 3/31/17 73,931
85,937 2.40 BB+/Ba2 Universal Health Services, Inc., Tranche B-1 Term Loan, 11/15/16 86,349
-----------
$ 191,077
-----------
Health Care Technology - 0.6%
240,051 3.50 BB-/Ba3 IMS Health, Inc., Term B Dollar Loan, 3/17/21 $ 238,971
-----------
Total Health Care Equipment & Services $ 430,048
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 0.1%
Life Sciences Tools & Services - 0.1%
62,055 4.50 BB-/Ba3 Catalent Pharma Solutions, Inc., 1st Lien Term Loan B, 5/8/21 $ 62,501
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 62,501
-----------
Diversified Financials - 0.2%
Investment Banking & Brokerage - 0.2%
97,763 3.25 BB-/Ba2 LPL Holdings, Inc., 2013 Incremental Tranche B Term Loan, 3/29/19 $ 97,762
-----------
Total Diversified Financials $ 97,762
-----------
Software & Services - 0.3%
IT Consulting & Other Services - 0.2%
58,387 3.90 BB/Ba3 SunGard Data Systems, Inc., Tranche C Term Loan, 2/28/17 $ 58,594
-----------
Data Processing & Outsourced Services - 0.1%
44,590 4.15 B+/B1 First Data Corp., 2018 Dollar Term Loan, 3/23/18 $ 44,738
3,383 4.24 B/B1 First Data Corp., 2021 New Dollar Term Loan, 3/24/21 3,395
-----------
$ 48,133
-----------
Total Software & Services $ 106,727
-----------
TOTAL SENIOR FLOATING RATE LOAN INTERESTS
(Cost $2,087,984) $ 2,146,007
-----------
Shares
RIGHT / WARRANT - 0.0%+
Automobiles & Components - 0.0%+
Auto Parts & Equipment - 0.0%+
37 Lear Corp., 11/9/14 $ 6,557
-----------
TOTAL RIGHT / WARRANT
(Cost $1,998) $ 6,557
-----------
TOTAL INVESTMENT IN SECURITIES - 92.4%
(Cost $35,248,811) (a) $37,136,582
-----------
OTHER ASSETS & LIABILITIES - 7.6% $ 3,044,290
-----------
TOTAL NET ASSETS - 100.0% $40,180,872
===========
The accompanying notes are an integral part of these financial statements.
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TBA To-be announced.
+ Amount rounds to less than 0.1%.
NR Not rated by either S&P or Moody's.
(Perpetual) Security with no stated maturity date.
(Cat Bond) Catastrophe bond is a high-yield debt instrument that is usually
insurance linked and meant to raise money in case of a catastrophe.
(Step) Bond issued with an initial coupon rate which converts to a higher
rate at a later date.
REIT Real Estate Investment Trust.
(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, 2014, the value of these securities
amounted to $7,097,443 or 17.7% of total net assets.
** Senior floating rate loan interests in which the Portfolio invests
generally pay interest at rates that are periodically redetermined
by reference to a base lending rate plus a premium. These base
lending rates are generally (i) the lending rate offered by one or
more major European banks, such as LIBOR (London InterBank Offered
Rate), (ii) the prime rate offered by one or more major U.S. banks,
(iii) the certificate of deposit or (iv) other base lending rates
used by commercial lenders. The rate shown is the coupon rate at
period end.
(a) At June 30, 2014, the net unrealized appreciation on investments
based on cost for federal income tax purposes of $35,308,400 was as
follows:
[Enlarge/Download Table]
Aggregate gross unrealized appreciation for all investments in which there is an
excess of value over tax cost $2,018,821
Aggregate gross unrealized depreciation for all investments in which there is an
excess of tax cost over value (190,639)
----------
Net unrealized appreciation $1,828,182
==========
(b) Debt obligation with a variable interest rate. Rate shown is rate at
end of period.
(c) Security represents the interest only portion payments on a pool of
underlying mortgages or mortgage-backed securities.
(d) Security issued with a zero coupon. Income is recognized through
accretion of discount.
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 were as follows:
[Download Table]
Purchases Sales
Long-Term U.S. Government Securities $13,059,432 $4,027,881
Other Long-Term Securities $ 2,361,239 $7,417,453
CREDIT DEFAULT SWAP AGREEMENTS - BUY PROTECTION
[Enlarge/Download Table]
Net Unrealized
Notional Expiration Premiums Appreciation
Principal ($) Counterparty Obligation Entity/Index Coupon Date Received (Paid) (Depreciation)
(198,000) JP Morgan Securities LLC MARKIT CME North America
High Yield 5.00% 6/20/19 $(15,159) $(2,363)
-------- -------
$(15,159) $(2,363)
======== =======
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
are categorized as Level 3. See Notes to Financial Statements -- Note 1A.
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Enlarge/Download Table]
Level 1 Level 2 Level 3 Total
Convertible Corporate Bond $ -- $ 217,547 $ -- $ 217,547
Preferred Stocks
Banks
Regional Banks 28,119 104,094 -- 132,213
Insurance
Reinsurance -- -- 72,889 72,889
All Other Preferred Stocks 592,738 -- -- 592,738
Convertible Preferred Stock 188,170 -- -- 188,170
Asset Backed Securities -- 1,975,628 -- 1,975,628
Collateralized Mortgage Obligations -- 5,609,257 -- 5,609,257
Corporate Bonds -- 11,658,353 -- 11,658,353
U.S. Government Agency Obligations -- 13,057,956 -- 13,057,956
Municipal Bonds -- 1,479,267 -- 1,479,267
Senior Floating Rate Loan Interests -- 2,146,007 -- 2,146,007
Right/Warrant 6,557 -- -- 6,557
----------- ----------- ---------- -----------
Total $ 815,584 $36,248,109 $ 72,889 $37,136,582
----------- ----------- ---------- -----------
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
[Enlarge/Download Table]
Other Financial Instruments
Unrealized appreciation on futures contracts $ 18,328 $ -- $ -- $ 18,328
Unrealized depreciation on swap contracts -- (2,363) -- (2,363)
----------- ----------- ---------- -----------
Total Other Financial Instruments $ 18,328 $ (2,363) $ -- $ 15,965
----------- ----------- ---------- -----------
The following is a reconciliation of assets valued using significant observable
inputs (Level 3):
[Download Table]
Preferred
Stocks
Balance as of 12/31/13 $111,878
Realized gain (loss)(1) 2,546
Change in unrealized appreciation (depreciation)(2) (755)
Purchases 19,930
Sales (60,710)
Transfers in to Level 3* --
Transfers out of Level 3* --
--------
Balance as of 6/30/14 $ 72,889
--------
(1) Realized gain (loss) on these securities is included in the net realized
gain (loss) from investments in the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized appreciation (depreciation) on investments in the
Statement of Operations.
* Transfers are calculated on the beginning of period values. During the six
months ended June 30, 2014, there were no transfers between Levels 1, 2 and
3.
[Enlarge/Download Table]
Net change in unrealized appreciation (depreciation) of investments still held as of 6/30/14 $(755)
-----
The accompanying notes are an integral part of these financial statements.
24
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 11.01 $ 11.49 $ 11.89 $ 11.84 $ 11.39 $ 10.24
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.21 $ 0.46 $ 0.50 $ 0.61 $ 0.57 $ 0.60
Net realized and unrealized gain (loss) on investments 0.29 (0.34) 0.49 0.03 0.46 1.15
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.50 $ 0.12 $ 0.99 $ 0.64 $ 1.03 $ 1.75
Distributions to shareowners:
Net investment income $ (0.20) $ (0.48) $ (0.55) $ (0.59) $ (0.58) $ (0.60)
Net realized gain (0.06) (0.12) (0.84) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.26) $ (0.60) $ (1.39) $ (0.59) $ (0.58) $ (0.60)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.24 $ (0.48) $ (0.40) $ 0.05 $ 0.45 $ 1.15
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 11.25 $ 11.01 $ 11.49 $ 11.89 $ 11.84 $ 11.39
======= ======= ======= ======= ======= =======
Total return* 4.59% 1.02% 8.75% 5.53% 9.21% 17.58%
Ratio of net expenses to average net assets 0.62%** 0.62% 0.62% 0.62% 0.62% 0.62%
Ratio of net investment income to average net assets 3.69%** 4.07% 4.29% 5.12% 4.83% 5.53%
Portfolio turnover rate 65%** 33% 26% 38% 51% 42%
Net assets, end of period (in thousands) $25,813 $26,689 $32,367 $33,151 $39,247 $40,031
Ratios with no waiver of fees by the Adviser:
Total expenses 1.06%** 1.08% 1.07% 0.86% 0.74% 0.76%
Net investment income 3.25%** 3.61% 3.83% 4.88% 4.71% 5.39%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
25
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 11.03 $ 11.50 $ 11.90 $ 11.84 $ 11.39 $ 10.24
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.17 $ 0.41 $ 0.45 $ 0.58 $ 0.54 $ 0.57
Net realized and unrealized gain (loss) on investments 0.33 (0.31) 0.50 0.05 0.46 1.16
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.50 $ 0.10 $ 0.95 $ 0.63 $ 1.00 $ 1.73
Distributions to shareowners:
Net investment income $ (0.19) $ (0.45) $ (0.51) $ (0.57) $ (0.55) $ (0.58)
Net realized gain (0.06) (0.12) (0.84) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.25) $ (0.57) $ (1.35) $ (0.57) $ (0.55) $ (0.58)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.25 $ (0.47) $ (0.40) $ 0.06 $ 0.45 $ 1.15
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 11.28 $ 11.03 $ 11.50 $ 11.90 $ 11.84 $ 11.39
======= ======= ======= ======= ======= =======
Total return* 4.55% 0.83% 8.43% 5.37% 8.94% 17.29%
Ratio of net expenses to average net assets 0.88%** 0.90% 0.91% 0.87% 0.87% 0.87%
Ratio of net investment income to average net assets 3.37%** 3.69% 3.99% 4.63% 4.57% 5.27%
Portfolio turnover rate 65%** 33% 26% 38% 51% 42%
Net assets, end of period (in thousands) $14,368 $ 8,313 $ 5,027 $ 4,281 $35,854 $32,021
Ratios with no waiver of fees by the Adviser:
Total expenses 1.31%** 1.36% 1.36% 1.04% 0.99% 1.01%
Net investment income 2.93%** 3.23% 3.54% 4.46% 4.45% 5.13%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
26
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
ASSETS:
Investment in securities (cost $35,248,811) $37,136,582
Cash 7,676,058
Futures Collateral 38,035
Receivables --
Investment securities sold 209,381
Portfolio shares sold 238,868
Interest 233,137
Dividends 4,615
Net unrealized appreciation on futures contracts 18,328
Due from Pioneer Investment Management, Inc. 18,563
Other assets 14,173
-----------
Total assets $45,587,740
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 5,324,355
Portfolio shares repurchased 2,370
Trustee fees 105
Variation margin 344
Swap contracts, premiums paid 15,159
Unrealized depreciation on swap contracts 2,363
Due to affiliates 15,747
Accrued expenses 46,425
-----------
Total liabilities $ 5,406,868
-----------
NET ASSETS:
Paid-in capital $37,798,261
Undistributed net investment income 150,689
Accumulated net realized gain on investments, futures contracts
and swap contracts 328,186
Net unrealized appreciation on investments 1,887,771
Net unrealized depreciation on swap contracts (2,363)
Net unrealized appreciation on futures contracts 18,328
-----------
Total net assets $40,180,872
===========
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $25,812,821/2,293,736 shares) $ 11.25
===========
Class II (based on $14,368,051/1,274,247 shares) $ 11.28
===========
The accompanying notes are an integral part of these financial statements.
27
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Interest $ 760,594
Dividends 28,460
---------
Total investment income $ 789,054
----------
EXPENSES:
Management fees $ 92,025
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 13,770
Administrative reimbursement 14,610
Custodian fees 24,332
Professional fees 24,058
Printing expense 6,846
Fees and expenses of nonaffiliated Trustees 3,415
Miscellaneous 27,508
---------
Total expenses $ 208,064
Less fees waived and expenses reimbursed by Pioneer Investment Management, Inc. (80,165)
----------
Net expenses $ 127,899
----------
Net investment income $ 661,155
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAP CONTRACTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments $ 363,437
Swap contracts (4,039)
Futures contracts (470) $ 358,928
--------- ----------
Change in net unrealized appreciation (depreciation) on:
Investments $ 632,054
Swap contracts (2,363)
Futures contracts (11,797) $ 617,894
--------- ----------
Net gain on investments and futures contracts $ 976,822
----------
Net increase in net assets resulting from operations $1,637,977
==========
The accompanying notes are an integral part of these financial statements.
28
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 661,155 $ 1,472,058
Net realized gain on investments, swap contracts and futures contracts 358,928 230,795
Change in net unrealized appreciation (depreciation) on investments, swap contracts
and futures contracts 617,894 (1,386,224)
----------- ------------
Net increase in net assets resulting from operations $ 1,637,977 $ 316,629
----------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.20 and $0.48 per share, respectively) $ (468,473) $ (1,262,611)
Class II ($0.19 and $0.45 per share, respectively) (182,658) (278,010)
Net realized gains:
Class I ($0.06 and $0.12 per share, respectively) $ (137,932) $ (305,519)
Class II ($0.06 and $0.12 per share, respectively) (73,598) (72,156)
----------- ------------
Total distributions to shareowners $ (862,661) $ (1,918,296)
----------- ------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,820,251 $ 10,086,139
Reinvestment of distributions 862,661 1,918,296
Cost of shares repurchased (4,278,425) (12,795,516)
----------- ------------
Net increase (decrease) in net assets resulting from
Portfolio share transactions $ 4,404,487 $ (791,081)
----------- ------------
Net increase (decrease) in net assets $ 5,179,803 $ (2,392,748)
NET ASSETS:
Beginning of period $35,001,069 $ 37,393,817
----------- ------------
End of period $40,180,872 $ 35,001,069
=========== ============
Undistributed net investment income $ 150,689 $ 140,665
=========== ============
[Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 92,250 $ 1,054,217 174,770 $ 1,973,821
Reinvestment of distributions 54,114 606,405 140,062 1,568,130
Less shares repurchased (277,130) (3,099,552) (706,627) (7,946,771)
-------- ------------ -------- ------------
Net decrease (130,766) $ (1,438,930) (391,795) $ (4,404,820)
======== ============ ======== ============
CLASS II
Shares sold 603,079 $ 6,766,034 716,983 $ 8,112,318
Reinvestment of distributions 22,802 256,256 31,933 350,166
Less shares repurchased (105,213) (1,178,873) (432,363) (4,848,745)
-------- ------------ -------- ------------
Net increase 520,668 $ 5,843,417 316,553 $ 3,613,739
======== ============ ======== ============
The accompanying notes are an integral part of these financial statements.
29
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Bond VCT Portfolio (the Portfolio) is one of 10 portfolios comprising
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust. The
Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is to provide current income from an investment grade portfolio
with due regard to preservation of capital and prudent investment risk. The
Portfolio also seeks a relatively stable level of dividends; however, the level
of dividends will be maintained only if consistent with preserving the
investment grade quality of the Portfolio.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Class II shares commenced operations on November 9, 2007. Each class of
shares represents an interest in the same schedule of investments of the
Portfolio and has identical rights (based on relative net asset values) to
assets and liquidation proceeds. Share classes can bear different rates of
class-specific fees and expenses such as transfer agent and distribution fees.
Differences in class-specific fees and expenses will result in differences in
net investment income and, therefore, the payment of different dividends from
net investment income earned by each class. The Amended and Restated Declaration
of Trust of the Portfolio gives the Board the flexibility to specify either
per-share voting or dollar-weighted voting when submitting matters for
shareholder approval. Under per-share voting, each share of a class of the
Portfolio is entitled to one vote. Under dollar-weighted voting, a shareholder's
voting power is determined not by the number of shares owned, but by the dollar
value of the shares on the record date. Each share class has exclusive voting
rights with respect to matters affecting only that class, including with respect
to the distribution plan for that class. There is no distribution plan for Class
I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE.
Senior floating rate loan interests (senior loans) are valued in accordance
with guidelines established by the Board of Trustees at the mean between the
last available bid and asked prices from one or more brokers or dealers as
obtained from Loan Pricing Corporation, an independent pricing service. If
price information is not available from Loan Pricing Corporation, or if the
price information is deemed to be unreliable, price information will be
obtained from an alternative loan interest pricing service. If no reliable
price quotes are available from either the primary or alternative pricing
service, broker quotes will be solicited. Fixed income securities with
remaining maturity of more than sixty days are valued at prices supplied by
independent pricing services, which consider such factors as market prices,
market events, quotations from one or more brokers, Treasury spreads,
yields, maturities and ratings. Valuations may be supplemented by dealers
and other sources, as required. Equity securities that have traded on an
exchange are valued at the last sale price on the principal exchange where
they are traded. Equity securities that have not traded on the date of
valuation, or securities for which sale prices are not available, generally
are valued using the mean between the last bid and asked prices. Short-term
fixed income securities with remaining maturities of sixty days or less
generally are valued at amortized cost. Shares of money market mutual funds
are valued at such funds' net asset value.
Securities or senior loans for which independent pricing services are unable
to supply prices or for which market prices and/or quotations are not
readily available or are considered to be unreliable are valued by a fair
valuation team comprised of certain personnel of Pioneer Investment
Management, Inc. (PIM), the Portfolio's investment adviser, pursuant to
procedures adopted by the Portfolio's Board of Trustees. PIM's fair
valuation team uses fair value methods approved by the Valuation Committee
of Board of Trustees. PIM's fair valuation team is responsible for
monitoring developments that may impact fair valued securities
30
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
and for discussing and assessing fair values on an ongoing basis, and at
least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include
credit ratings, the financial condition of the company, current market
conditions and comparable securities. The Portfolio may use fair value
methods if it is determined that a significant event has occurred after the
close of the exchange or market on which the security trades and prior to
the determination of the Portfolio's net asset value. Examples of a
significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, there were no securities that were valued using fair value
methods (other than securities valued using prices supplied by independent
pricing services or broker-dealers).
Principal amounts of mortgage-backed securities are adjusted for monthly
paydowns. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly paydowns.
All discounts/premiums on debt securities are accreted/amortized for
financial reporting purposes over the life of the respective securities, and
such accretion/amortization is included in interest income.
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. Dividend
and interest income are reported net of unrecoverable foreign taxes withheld
at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no provision for federal income taxes is required.
As of December 31, 2013, the Portfolio did not accrue any interest or
penalties with respect to uncertain tax positions, which, if applicable,
would be recorded as an income tax expense in the Statement of Operations.
Tax returns filed within the prior three years remain subject to examination
by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the current taxable year. The tax character of distributions
paid during the year ended December 31, 2013 and the components of
distributable earnings (accumulated losses) on a federal income tax basis at
December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $1,677,688
Long-term capital gain 240,608
----------
Total distributions 1,918,296
==========
Distributable Earnings:
Undistributed ordinary income 220,159
Undistributed long-term gain 191,008
Net unrealized appreciation 1,196,128
----------
Total $1,607,295
==========
The difference between book-basis and tax-basis net unrealized appreciation
is attributable to the tax adjustments relating to the tax treatment of
premium and amortization, the mark-to-market of futures contracts and
catastrophe bonds and interest accruals on preferred stock.
C. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the
31
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
average daily net asset value attributable to Class II shares of the
Portfolio (see Note 4). Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses (see
Note 3). Income, common expenses (excluding transfer agent and distribution
fees) and realized and unrealized gains and losses are calculated at the
Portfolio level and allocated daily to each class of shares based on its
respective percentage of the adjusted net assets at the beginning of the
day.
The Portfolio declares as daily dividends substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner and at the same time, except that
net investment income dividends to Class I and Class II shares can reflect
different transfer agent and distribution expense rates. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
D. Risks
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making the Portfolio
more susceptible to any economic, political, or regulatory developments or
other risks affecting those industries and sectors. The Portfolio's
prospectus contains unaudited information regarding the Portfolio's
principal risks. Please refer to that document when considering the
Portfolio's principal risks.
E. Futures Contracts
The Portfolio may enter into futures transactions in order to attempt to
hedge against changes in interest rates, securities prices and currency
exchange rates or to seek to increase total return. Futures contracts are
types of derivatives. All futures contracts entered into by the Portfolio
are traded on a futures exchange. The amount of cash deposited with a broker
as collateral at June 30, 2014 was $38,035. 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 appreciation or depreciation. 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 as well as any
fluctuation in foreign currency exchange rates where applicable. Futures
contracts are subject to market risk, interest rate risk and currency
exchange rate risk. Changes in value of the contracts may not directly
correlate to the changes in value of the underlying securities. The average
value of contracts open during the six months ended June 30, 2014 was
$7,709,491.
At June 30, 2014, open futures contracts were as follows:
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------
Number of Unrealized
Contracts Settlement Appreciation
Type Long/(Short) Month Value (Depreciation)
------------------------------------------------------------------------------------------------------------------------
U.S. 10 Year Note (CBT) 1 9/14 $ 125,172 $ (687)
U.S. Ultra Bond (CBT) 9 9/14 1,349,438 (8,930)
U.S. 5 Year Note (CBT) (46) 9/14 (5,495,203) 20,125
U.S. Long Bond Note (CBT) (11) 9/14 (1,509,063) 7,820
------------------------------------------------------------------------------------------------------------------------
$(5,529,656) $18,328
------------------------------------------------------------------------------------------------------------------------
32
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest,
is required to be equal to or in excess of the repurchase price. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of the
Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
G. Credit Default Swap Agreements
A credit default swap is a contract between a buyer of protection and a
seller of protection against a predefined credit event. The Portfolio may
buy or sell credit default swap contracts to seek to increase the
Portfolio's income, or to attempt to hedge the risk of default on portfolio
securities. A credit default swap index is used to hedge risk or take a
position on a basket of credit entities or indices. As a seller of
protection, the Portfolio would be required to pay the notional (or other
agreed-upon) value of the referenced debt obligation to the counterparty in
the event of a default by a U.S. or foreign corporate issuer of a debt
obligation, which would likely result in a loss to the Portfolio. In return,
the Portfolio would receive from the counterparty a periodic stream of
payments during the term of the contract provided that no event of default
occurred. The maximum exposure of loss to the seller would be the notional
value of the credit default swaps outstanding. If no default occurs, the
Portfolio would keep the stream of payments and would have no payment
obligation. The Portfolio may also buy credit default swap contracts in
order to hedge against the risk of default of debt securities, in which case
the Portfolio would function as the counterparty referenced above.
When the Portfolio enters into a credit default swap contract, the
protection buyer makes an upfront or periodic payment to the protection
seller in exchange for the right to receive a contingent payment. An upfront
payment made by the Portfolio, as the protection buyer, is recorded as an
asset in the Statement of Assets and Liabilities. Periodic payments received
or paid by the Portfolio are recorded as realized gains or losses in the
Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations
supplied by independent sources and the change in value, if any, is recorded
as unrealized appreciation or depreciation in the Statement of Assets and
Liabilities. Payments received or made as a result of a credit event or upon
termination of the contract are recognized, net of the appropriate amount of
the upfront payment, as realized gains or losses in the Statement of
Operations.
Credit default swap contracts involving the sale of protection may involve
greater risks than if the Portfolio had invested in the referenced debt
instrument directly. Credit default swap contracts are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the
Portfolio is a protection buyer and no credit event occurs, it will lose its
investment. If the Portfolio is a protection seller and a credit event
occurs, the value of the referenced debt instrument received by the
Portfolio, together with the periodic payments received, may be less than
the amount the Portfolio pays to the protection buyer, resulting in a loss
to the Portfolio.
Open credit default swap contracts at June 30, 2014 are listed in the
Schedule of Investments. The average value of swap contracts open during the
six months ended June 30, 2014 was $122,808.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.40% of the
Portfolio's average daily net assets.
PIM has contractually agreed to limit ordinary operating expenses of the
Portfolio to the extent required to reduce Portfolio expenses to 0.62% of the
average daily net assets attributable to Class I shares. Class II shares
expenses will be reduced only to the extent portfolio-wide expenses are reduced
for Class I shares. Fees waived and expenses reimbursed during the six months
ended June 30, 2014, are reflected on the Statement of Operations. This expense
limitation is in effect through May 1, 2015. There can be no assurance that PIM
will extend the expense limitation agreement for a class of shares beyond the
date referred to above.
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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$15,108 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
33
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $250 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to its Class II shares. Pursuant to
the Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average
daily net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $389 in distribution fees payable to PFD at June 30, 2014.
5. Assets and Liabilities Offsetting
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities of the Portfolio as of June 30, 2014.
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------------
Assets:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the ----------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Assets Liabilities Liabilities Instruments Received Net Amount
--------------------------------------------------------------------------------------------------------------------------
Futures Contracts $27,945 $ (9,617) $ -- $ -- $ -- $18,328
Swap contracts -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
$27,945 $ (9,617) $ -- $ -- $ -- $18,328
--------------------------------------------------------------------------------------------------------------------------
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the ----------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Liabilities Liabilities Liabilities Instruments Received Net Amount
---------------------------------------------------------------------------------------------------------------------------
Futures Contracts $ 9,617 $ (9,617) $ -- $ -- $ -- $ --
Swap contracts 2,363 -- -- -- -- 2,363
---------------------------------------------------------------------------------------------------------------------------
$11,980 $ (9,617) $ -- $ -- $ -- $ 2,363
---------------------------------------------------------------------------------------------------------------------------
34
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
6. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of June 30, 2014 were as follows:
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments ----------------------------------- ------------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Location Value Location Value
----------------------------------------------------------------------------------------------------------------------------
Futures contracts* Net unrealized appreciation $18,328 Net unrealized depreciation $ --
on futures contracts on futures contracts
Swap contracts Net unrealized appreciation -- Net unrealized depreciation 2,363
on swap contracts on swap contracts
----------------------------------------------------------------------------------------------------------------------------
Total $18,328 $2,363
----------------------------------------------------------------------------------------------------------------------------
* Reflects the unrealized appreciation (depreciation) on futures contracts
(see Note 1E). The current day's variation margin is disclosed on the
Statement of Assets and Liabilities.
The effect of derivative instruments on the Statement of Operations for the six
months ended June 30, 2014 was as follows:
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------
Change in
Unrealized
Realized Gain Appreciation or
Derivatives Not Accounted for or (Loss) on (Depreciation)
as Hedging Instruments Under Location of Gain or (Loss) Derivatives on Derivatives
Accounting Standards on Derivatives Recognized Recognized Recognized in
Codification (ASC) 815 in Income in Income Income
------------------------------------------------------------------------------------------------------------------------------
Futures contracts Net realized gain (loss) on futures contracts $ (470)
Futures contracts Change in unrealized appreciation
(depreciation) on futures contracts $(11,797)
Swap Contracts Net realized gain (loss) on swap contracts $(4,039)
Swap Contracts Change in unrealized appreciation
(depreciation) on swap contracts $ (2,363)
------------------------------------------------------------------------------------------------------------------------------
7. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
35
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
8. Subsequent Event
As of July 1, 2014, Pioneer's management fees have been reduced to 0.40% of the
Portfolio's average daily net assets. Prior to July 1, 2014, Pioneer's
management fees were calculated daily at the rate of 0.50% of the Portfolio's
average daily net assets.
36
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios.
*** Retired effective July 15, 2014.
37
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19617-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Disciplined Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Disciplined Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 10
Notes to Financial Statements 14
Trustees, Officers and Service Providers 17
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Common Stocks 94.4%
International Common Stocks 5.6%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Financials 25.1%
Health Care 18.7%
Energy 17.3%
Industrials 15.0%
Consumer Staples 8.0%
Information Technology 7.5%
Consumer Discretionary 4.3%
Materials 2.6%
Utilities 1.5%
Five Largest Holdings
(As a percentage of equity holdings)*
[Download Table]
--------------------------------------------------------------------------------
1. Johnson & Johnson, Inc. 3.52%
-------------------------------------------------------------------------------
2. Merck & Co., Inc. 3.17
-------------------------------------------------------------------------------
3. Apache Corp. 3.14
-------------------------------------------------------------------------------
4. Eaton Corp., Plc 3.11
-------------------------------------------------------------------------------
5. Occidental Petroleum Corp. 3.05
-------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class II $13.52 $14.29
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class II $0.1615 $0.4197 $0.9840
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class II
shares of Pioneer Disciplined Value VCT Portfolio at net asset value during the
periods shown, compared to that of the Russell 1000 Value Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Disciplined Value Russell 1000
VCT Portfolio, Class II Value Index
3/31/2005 $10,000 $10,000
6/30/2005 $10,131 $10,167
6/30/2006 $11,702 $11,398
6/30/2007 $13,740 $13,890
6/30/2008 $12,395 $11,281
6/30/2009 $ 9,047 $ 8,006
6/30/2010 $ 9,865 $ 9,361
6/30/2011 $12,270 $12,070
6/30/2012 $11,961 $12,433
6/30/2013 $14,121 $15,581
6/30/2014 $16,998 $19,291
The Russell 1000 Value Index is an unmanaged index that measures the performance
of large-cap U.S. Value stocks. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
Russell 1000
Class II Value Index
--------------------------------------------------------------------------------
Life-of-Class
(3/18/05) 5.81% 7.23%
5 Years 13.44% 19.23%
1 Year 20.37% 23.81%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, performance would be lower. Waivers may
not be in effect for all portfolios. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number in
the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Disciplined Value VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00
Ending Account Value on 6/30/14 $1,055.50
Expenses Paid During Period* $ 5.10
* Expenses are equal to the Portfolio's annualized net expense ratio of 1.00%
for Class II shares multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Disciplined Value VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00
Ending Account Value on 6/30/14 $1,019.84
Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized net expense ratio of 1.00%
for Class II shares multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
The Portfolio invests in a limited number of securities and, as a result, the
Portfolio's performance may be more volatile than the performance of other
portfolios holding more securities. Investing in small and mid-sized companies
may offer the potential for higher returns, but are also subject to greater
short-term price fluctuations than larger, more established companies. At times,
the Portfolio's investments may represent industries or industry sectors that
are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, John Peckham, CFA, Co-Head of Equity Research, U.S.,
at Pioneer, Ashesh (Ace) Savla, senior quantitative research analyst at Pioneer,
and Brian Popiel, fundamental research analyst at Pioneer, discuss the market
environment for stocks during the six-month period ended June 30, 2014, and the
performance of Pioneer Disciplined Value VCT Portfolio in that environment. Mr.
Peckham, Mr. Savla, and Mr. Popiel are responsible for the day-to-day management
of the Portfolio.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Disciplined Value VCT Portfolio's Class II shares returned 5.55% at
net asset value during the six-month period ended June 30, 2014, while the
Portfolio's benchmark, the Russell 1000 Value Index, returned 8.28%. During
the same period, the average return of the 131 variable portfolios in
Lipper's Large Cap Value Underlying Funds category was 7.08%.
Q: How would you describe the investment environment within the equity markets
during the six-month period ended June 30, 2014?
A: As the new year of 2014 began, the U.S. stock market as measured by the
Portfolio's benchmark, the Russell 1000 Value Index (the Russell Index),
paused after its strong advance in 2013, treaded water for a couple of
weeks, and then took a sharp plunge into early February. After that,
though, the market staged a strong recovery. By the end of the period, the
Russell Index showed a gain for the full six months. So, while volatile,
the market was positive during the period, and patient investors were able
to reap rewards. Value stocks, as measured by the Russell Index (+8.28%),
on balance outperformed growth stocks, as measured by Russell 1000 Growth
Index (+6.31%), but bookend to bookend, the period was a good one for most
stocks.
Q: What were the main reasons for the Portfolio's underperformance of its
benchmark, the Russell Index, during the six-month period ended
June 30, 2014?
A: Stock selection in the financials sector was, by far, the primary reason for
the Portfolio's benchmark-relative underperformance during the six-month
period. Stock selection in information technology also detracted from
relative returns, as did a Portfolio underweight in utilities, a sector that
returned more than 18% during the period, making it the top-performing
sector in the Russell Index. With interest rates remaining at very low
levels, good returns on bond investments have become a little hard to come
by; as a result, utilities stocks, which are sometimes viewed as an equity
"proxy" for bonds, rallied during the six-month period.
In financials, the Portfolio's results were dragged down by holdings of
Bank of America and Citigroup, and by not owning Wells Fargo, which
performed well during the period. Bank of America's performance was hurt
after the company disclosed a calculation error which necessitated the
resubmission of its capital plan for the Federal Reserve's (the Fed's)
Comprehensive Capital Analysis and Review (CCAR)--an element of Fed's
"stress test" requirements for domestic banks. Citigroup also had CCAR
issues during the period as the company's capital plan was rejected by the
Fed, which stated that Citigroup had not done enough to improve certain
areas of its operations that the Fed had previously called into question.
Large money center banks, in general,
4
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
experienced a rough six-month period as trading died down and
year-over-year comparisons were disappointing. With that said, we still
hold Citigroup and Bank of America in the Portfolio. The companies continue
to generate capital and we believe they will eventually return some of that
capital to shareholders once the CCAR issues have been resolved. The
Portfolio also was underweight in real estate investment trusts (REITs), a
sub-sector within financials that experienced strong performance due to the
continued low-interest-rate environment. The underweight in REITs hurt the
Portfolio's relative returns.
In information technology, the Portfolio's position in Yahoo! detracted
from performance as the company struggled during the period. Also in
information technology, not owning Intel, which announced strong earnings
during the period, detracted from the Portfolio's benchmark-relative
returns.
Q: Which of your investment strategies or individual investments aided the
Portfolio's benchmark-relative returns during the six-month period ended
June 30, 2014?
A: Stock selection in the energy sector was the biggest contributor to the
Portfolio's relative performance during the period. The Portfolio position
in the sector that contributed the most to returns was Halliburton, which
has been a successful value play on the North American shale energy boom.
Energy stocks in general performed well during the period, especially in
the exploration and production area, where patient investors in value
stocks have been rewarded by a solid turnaround in those companies'
fortunes.
The Portfolio's holdings in the industrials sector also fared well during
the period, with a position in American Airlines Group leading the way.
American Airlines Group was created out of a merger between AMR, American's
former corporate entity, and US Airways. Airlines in general are a focus in
the Portfolio right now, as the industry's dynamics have improved a great
deal in the wake of many high-profile consolidations in recent years, such
as the AMR/US Airways merger and the United/Continental union (United
Continental, too, is a Portfolio holding).
One other strong individual performer for the Portfolio during the period
was a position in chemicals firm LyondellBasell Industries (materials
sector), which continues to benefit from low North American natural gas
prices.
With regard to asset allocation, a Portfolio overweight to health care
aided relative returns as the sector returned nearly 12% during the period,
making it the third-best performer in the Russell Index.
Q: What is your outlook heading into the second half of 2014?
A: We think U.S. economic growth should remain stable for the rest of 2014,
perhaps coming in a little better than 2013's final numbers. There should
be less of a drag on growth from the government sector as compared with
2013, which featured the negative impact of continued spending constraints,
including the sequester, and there were significant tax increases that may
have had an effect on consumer spending.
5
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
The Fed's tapering of its quantitative easing program, which is slated to
end by the end of this year, may result in some additional volatility in
the equity markets; however, we expect financial conditions to remain
benign, as there does not appear to be significant enough inflationary
pressure to cause the Fed to further tighten monetary policy this year.
There certainly are risks to our outlook, especially with regard to
emerging markets such as China and Russia. Economic growth in China has
been slowing as the government tries to curtail credit growth, which had
been exceptionally strong in recent years. Russia's continuing conflict
with the Ukraine also presents risks to global stability, as tougher
economic sanctions could have a detrimental effect on growth. Recent
developments in the Middle East, particularly Iraq, could also adversely
affect the financial markets, either directly through the price of oil, or
indirectly in terms of risk premiums associated with various asset classes.
Assuming the situation in the emerging markets does not get worse, however,
we are optimistic about the prospects for U.S. equities for the remainder
of the year.
Valuations remain reasonable in most areas of the equity market,
particularly when compared with other asset classes. In addition, corporate
balance sheets and cash flows are strong, which may lead to increased
merger-and-acquisition activity, share repurchases and dividend* increases.
*Dividends are not guaranteed.
Please refer to the Schedule of Investments on pages 7 to 9 for a full
listing of Portfolio securities.
Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
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 opinion as of the date of this report. These
statements should not be relied upon for any other purposes.
6
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
COMMON STOCKS - 99.3%
Energy - 17.2%
Oil & Gas Equipment &
Services - 2.2%
74,190 Halliburton Co. $ 5,268,232
------------
Integrated Oil & Gas - 4.5%
35,947 Hess Corp. $ 3,554,799
70,096 Occidental Petroleum Corp. 7,193,952
------------
$ 10,748,751
------------
Oil & Gas Exploration &
Production - 10.5%
73,691 Apache Corp. $ 7,414,788
70,132 Cabot Oil & Gas Corp. 2,394,306
76,892 ConocoPhillips 6,591,951
26,026 EOG Resources, Inc. 3,041,398
137,926 Marathon Oil Corp. 5,506,006
------------
$ 24,948,449
------------
Total Energy $ 40,965,432
------------
Materials - 2.6%
Commodity Chemicals - 2.6%
64,351 LyondellBasell Industries NV $ 6,283,875
------------
Total Materials $ 6,283,875
------------
Capital Goods - 9.9%
Aerospace & Defense - 2.5%
62,564 Honeywell International, Inc. $ 5,815,324
------------
Electrical Components &
Equipment - 3.1%
95,033 Eaton Corp. Plc $ 7,334,647
------------
Construction & Farm
Machinery & Heavy
Trucks - 1.5%
23,032 Cummins, Inc. $ 3,553,607
------------
Industrial Machinery - 2.8%
108,211 Ingersoll-Rand Plc $ 6,764,270
------------
Total Capital Goods $ 23,467,848
------------
Transportation - 5.0%
Airlines - 5.0%
165,888 American Airlines Group, Inc. $ 7,126,548
118,125 United Continental Holdings, Inc.* 4,851,394
------------
$ 11,977,942
------------
Total Transportation $ 11,977,942
------------
Automobiles &
Components - 2.2%
Automobile
Manufacturers - 2.2%
301,741 Ford Motor Co. $ 5,202,015
------------
Total Automobiles
& Components $ 5,202,015
------------
Consumer Durables &
Apparel - 2.1%
Household Appliances - 1.1%
18,325 Whirlpool Corp. $ 2,551,206
------------
Apparel, Accessories &
Luxury Goods - 1.0%
21,360 PVH Corp. $ 2,490,576
------------
Total Consumer Durables
& Apparel $ 5,041,782
------------
Food & Staples Retailing - 2.0%
Drug Retail - 2.0%
62,272 CVS Caremark Corp. $ 4,693,441
------------
Total Food & Staples Retailing $ 4,693,441
------------
Food, Beverage &
Tobacco - 5.0%
Brewers - 1.8%
57,851 Molson Coors Brewing Co. (Class B) $ 4,290,230
------------
Soft Drinks - 1.1%
55,811 Coca-Cola Enterprises, Inc. $ 2,666,650
------------
Tobacco - 2.1%
80,083 Lorillard, Inc. $ 4,882,661
------------
Total Food, Beverage
& Tobacco $ 11,839,541
------------
Household & Personal
Products - 1.0%
Personal Products - 1.0%
33,671 Nu Skin Enterprises, Inc. $ 2,490,307
------------
Total Household &
Personal Products $ 2,490,307
------------
Health Care Equipment
& Services - 8.1%
Health Care Equipment - 2.3%
84,473 Medtronic, Inc. $ 5,385,998
------------
Health Care Services - 1.8%
63,082 Express Scripts Holding Co.* $ 4,373,475
------------
Managed Health Care - 4.0%
75,392 Aetna, Inc. $ 6,112,783
26,842 Humana, Inc. 3,428,260
------------
$ 9,541,043
------------
Total Health Care Equipment
& Services $ 19,300,516
------------
Pharmaceuticals,
Biotechnology & Life
Sciences - 10.5%
Biotechnology - 1.1%
30,061 Gilead Sciences, Inc.* $ 2,492,358
------------
The accompanying notes are an integral part of these financial statements.
7
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Pharmaceuticals - 9.4%
79,487 Johnson & Johnson $ 8,315,933
129,551 Merck & Co., Inc. 7,494,525
221,375 Pfizer, Inc. 6,570,410
------------
$ 22,380,868
------------
Total Pharmaceuticals,
Biotechnology & Life
Sciences $ 24,873,226
------------
Banks - 6.3%
Regional Banks - 6.3%
213,902 KeyCorp $ 3,065,216
500,158 Regions Financial Corp. 5,311,678
73,504 The PNC Financial Services Group, Inc. 6,545,531
------------
$ 14,922,425
------------
Total Banks $ 14,922,425
------------
Diversified Financials - 13.0%
Other Diversified Financial
Services - 7.1%
388,012 Bank of America Corp. $ 5,963,744
126,182 Citigroup, Inc. 5,943,172
137,462 Voya Financial, Inc. 4,995,369
------------
$ 16,902,285
------------
Specialized Finance - 1.3%
82,475 The NASDAQ OMX Group, Inc. $ 3,185,184
------------
Consumer Finance - 2.4%
91,606 Discover Financial Services, Inc. $ 5,677,740
------------
Investment Banking &
Brokerage - 2.2%
157,420 Morgan Stanley Co. $ 5,089,389
------------
Total Diversified Financials $ 30,854,598
------------
Insurance - 5.7%
Life & Health Insurance - 2.9%
78,996 Lincoln National Corp. $ 4,063,554
80,157 Unum Group 2,786,257
------------
$ 6,849,811
------------
Multi-line Insurance - 1.7%
114,757 The Hartford Financial Services
Group, Inc. $ 4,109,448
------------
Property & Casualty
45,495 The Allstate Corp. $ 2,671,466
------------
Total Insurance $ 13,630,725
------------
Software & Services - 2.0%
Internet Software &
Services - 2.0%
138,937 Yahoo!, Inc.* $ 4,880,857
------------
Total Software & Services $ 4,880,857
------------
Technology Hardware &
Equipment - 4.3%
Computer Hardware - 2.0%
51,735 Apple, Inc. $ 4,807,734
------------
Computer Storage &
Peripherals - 1.2%
109,754 EMC Corp. $ 2,890,920
------------
Office Electronics - 1.1%
196,676 Xerox Corp. $ 2,446,649
------------
Total Technology Hardware
& Equipment $ 10,145,303
------------
Semiconductors &
Semiconductor
Equipment - 1.2%
Semiconductors - 1.2%
50,868 Analog Devices, Inc. $ 2,750,433
------------
Total Semiconductors &
Semiconductor Equipment $ 2,750,433
------------
Utilities - 1.2%
Electric Utilities - 1.2%
28,118 NextEra Energy, Inc.* $ 2,881,533
------------
Total Utilities $ 2,881,533
------------
TOTAL COMMON STOCKS
(Cost $196,936,057) $236,201,799
------------
TOTAL INVESTMENT IN
SECURITIES - 99.3%
(Cost $196,936,057) (a) $236,201,799
------------
OTHER ASSETS &
LIABILITIES - 0.7% $ 1,590,484
------------
TOTAL NET ASSETS - 100.0% $237,792,283
============
* Non-income producing security.
(A.D.R.) American Depositary Receipts.
(a) At June 30, 2014, the net unrealized appreciation on
investments based on cost for federal income tax
purposes of $197,060,016 was as follows:
[Download Table]
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost $41,029,215
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value (1,887,432)
-----------
Net unrealized appreciation $39,141,783
===========
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $79,710,735 and $99,384,400,
respectively.
The accompanying notes are an integral part of these financial statements.
8
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3. See Notes to Financial Statements -- Note 1A.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $236,201,799 $ -- $ -- $236,201,799
------------ ------ ------- ------------
Total $236,201,799 $ -- $ -- $236,201,799
============ ====== ======= ============
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
9
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 14.29 $ 11.79 $ 10.77 $ 11.26 $ 10.37 $ 9.03
-------- -------- -------- -------- -------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.07 $ 0.16 $ 0.17 $ 0.12 $ 0.08 $ (0.03)
Net realized and unrealized gain (loss)
on investments 0.72 3.09 0.96 (0.53) 0.87 1.44(a)
-------- -------- -------- -------- -------- -------
Net increase from investment operations $ 0.79 $ 3.25 $ 1.13 $ (0.41) $ 0.95 $ 1.41
Distributions to shareowners:
Net income $ (0.16) $ (0.20) $ (0.11) $ (0.08) $ (0.06) $ (0.07)
Net realized gain (1.40) (0.55) $ -- $ -- $ -- $ --
-------- -------- -------- -------- -------- -------
Total distributions $ (1.56) $ (0.75) $ (0.11) $ (0.08) $ (0.06) $ (0.07)
-------- -------- -------- -------- -------- -------
Net investment increase (decrease) in net asset value $ (0.77) $ 2.50 $ 1.02 $ (0.49) $ 0.89 $ 1.34
-------- -------- -------- -------- -------- -------
Net asset value, end of period $ 13.52 14.29 11.79 10.77 11.26 $ 10.37
======== ======== ======== ======== ======== =======
Total return* 5.55% 28.59% 10.60% (3.66)% 9.26% 15.73%
Ratio of net expenses to average net assets 1.00%** 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets 0.91%** 1.12% 1.78% 1.48% 1.10% 1.36%
Portfolio turnover rate 68%** 97% 74% 18% 21% 21%
Net assets, end of period (in thousands) $237,792 $247,243 $208,122 $155,712 $113,821 $68,132
Ratios assuming no waiver of fees and assumption of
expenses by the Adviser and no reduction for
fees paid indirectly:
Total expenses 1.01%** 1.02% 1.03% 1.04% 1.09% 1.20%
Net investment income 0.90%** 1.11% 1.74% 1.44% 1.01% 1.16%
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of the period.
** Annualized.
(a) The amount shown for a share outstanding does not correspond with the
aggregate gain (loss) on investments for the period due to the timing of
sales and repurchases of shares in relation to fluctuating market values
of the investments of the Portfolio.
Note: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges and sales
charges.
The accompanying notes are an integral part of these financial statements.
10
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
ASSETS:
Investment in securities (cost $196,936,057) $236,201,799
Cash 828,455
Receivables --
Investment securities sold 4,710,868
Portfolio shares sold 1,237
Dividends 231,509
Due from Pioneer Investment Management, Inc. 1,472
------------
Total assets $241,975,340
------------
LIABILITIES:
Payables --
Investment securities purchased $ 4,086,269
Portfolio shares repurchased 48,710
Trustee fee 239
Due to affiliates 26,438
Accrued expenses 21,401
------------
Total liabilities $ 4,183,057
------------
NET ASSETS:
Paid-in capital $182,045,026
Undistributed net investment income 1,085,091
Accumulated net realized gain on investments 15,396,424
Net unrealized appreciation on investments 39,265,742
------------
Total net assets $237,792,283
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class II (based on $237,792,283/17,582,867 shares) $ 13.52
============
The accompanying notes are an integral part of these financial statements.
11
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Dividends $ 2,275,136
Interest 311
-----------
Total investment income $ 2,275,447
-----------
EXPENSES:
Management fees $ 832,929
Transfer agent fees 750
Distribution fees 297,474
Administrative reimbursements 40,634
Custodian fees 5,023
Professional fees 19,831
Printing expense 3,738
Fees and expenses of nonaffiliated Trustees 3,946
Miscellaneous 1,263
-----------
Total expenses $ 1,205,588
Less fees waived and expenses reimbursed
by Pioneer Investment Management, Inc. (15,690)
-----------
Net expenses $ 1,189,898
-----------
Net investment income $ 1,085,549
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND CLASS ACTIONS
Net realized gain on:
Investments $15,520,270
Class actions 1,756 $15,522,026
-----------
Change in net unrealized appreciation on investments $(4,026,736)
-----------
Net loss on investments $11,495,290
-----------
Net decrease in net assets resulting from operations $12,580,839
===========
The accompanying notes are an integral part of these financial statements.
12
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 1,085,549 $ 2,561,057
Net realized gain on investments and class actions 15,522,026 22,613,074
Change in net unrealized appreciation (depreciation) on investments (4,026,736) 32,107,491
------------ ------------
Net increase in net assets resulting from operations $ 12,580,839 $ 57,281,622
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class II ($0.16 and $0.20 per share, respectively) $ (2,560,911) $ (3,434,499)
Net realized gains:
Class II ($1.40 and $0.55 per share, respectively) (22,258,522) (9,381,177)
------------ ------------
Total distributions to shareowners $(24,819,433) $(12,815,676)
------------ ------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 1,066,876 $ 6,856,758
Reinvestment of distributions 24,819,433 12,815,676
Cost of shares repurchased (23,097,944) (25,018,367)
------------ ------------
Net increase (decrease) in net assets resulting from Portfolio share transactions $ 2,788,365 $ (5,345,933)
------------ ------------
Net increase (decrease) in net assets $ (9,450,229) $ 39,120,013
NET ASSETS:
Beginning of period $247,242,512 $208,122,499
------------ ------------
End of period $237,792,283 $247,242,512
============ ============
Undistributed net investment income $ 1,085,091 $ 2,560,453
============ ============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS II
Shares sold 74,253 $ 1,066,876 513,791 $ 6,856,758
Reinvestment of distributions 1,833,045 24,819,433 1,035,192 12,815,676
Less shares repurchased (1,621,799) (23,097,944) (1,898,192) (25,018,367)
----------- ------------ ---------- ------------
Net increase (decrease) 285,499 $ 2,788,365 (349,209) $ (5,345,933)
=========== ============ ========== ============
The accompanying notes are an integral part of these financial statements.
13
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Disciplined Value VCT Portfolio, (the Portfolio) formerly Pioneer
Fundamental Value VCT Portfolio is one of 10 portfolios comprising Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust. The Portfolio
is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The investment objective of the
Portfolio is capital appreciation. Current income is a secondary objective.
The Portfolio offers one class of shares designated as Class II shares. The
Portfolio commenced operations on March 18, 2005.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
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 available, generally are valued at
the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such funds' net asset value.
Trading in foreign securities is substantially completed each day at various
times prior to the close of the NYSE. The values of such securities used in
computing the net asset value of the Portfolio's shares are determined as of
such times.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted
by the Portfolio's Board of Trustees. PIM's fair valuation team uses fair
value methods approved by the Valuation Committee of the Board of Trustees.
PIM's fair valuation team is responsible for monitoring developments that
may impact fair valued securities and for discussing and assessing fair
values on an ongoing basis, and at least quarterly, with the Valuation
Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers).
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
is recorded on the accrual basis. Dividend and interest income are
reported net of unrecoverable foreign taxes withheld at the applicable
country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
14
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject
to examination by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the current taxable year. The tax character of distributions
paid during the year ended December 31, 2013 and the components of
distributable earnings (accumulated losses) on a federal income tax basis
at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 3,434,499
Long-term capital gain 9,381,177
-----------
Total distributions $12,815,676
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 9,215,403
Undistributed long-term
capital gain 15,601,929
Net unrealized appreciation 43,168,519
-----------
Total $67,985,851
===========
--------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
C. Portfolio Shares
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees are calculated based on the average daily net asset value attributable
to Class II shares of the Portfolio (see Note 4). Dividends and
distributions to shareowners are recorded on the ex-dividend date. During
the six months ended June 30, 2014, the Portfolio reorganized gains of
$1,756 in settlement of class action lawsuits from several different
companies as reflected on the Statement of Operations.
D. Risks
Investments in mid-sized companies may offer the potential for higher
returns, but are also subject to greater short-term price fluctuations than
larger, more established companies. At times, the Portfolio's investments
may represent industries or industry sectors that are interrelated or have
common risks, making the Portfolio more susceptible to any economic,
political, or regulatory developments or to other risks affecting those
industries and sectors. The Portfolio's prospectus contains unaudited
information regarding the Portfolio's principal risks. Please refer to that
document when considering the Portfolio's principal risks.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of the
Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the portfolio.
Management fees are calculated daily at the annual rate of 0.70% of the
Portfolio's average daily net assets.
Prior to August 1, 2012, Cullen Capital Management LLC served as the Portfolio's
subadviser.
PIM, and not the Portfolio, paid a portion of the fee it received from the
Portfolio to Cullen Capital Management LLC as compensation for Cullen's
subadvisory services to the Portfolio.
On August 1, 2012 PIM assumed responsibility for day-to-day management of the
Portfolio.
15
Pioneer Disciplined Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
Through May 1, 2014, PIM has contractually agreed to limit ordinary operating
expenses to the extent required to reduce Class II expenses to 1.00% of the
average daily net assets attributable to Class II shares. Fees waived and
expenses reimbursed during the six months ended June 30, 2014, are reflected on
the Statement of Operations. There can be no assurance that PIM will extend the
expense limitation agreement beyond the date referred to above.
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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$19,797 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredit, provides substantially all transfer
agent and shareowner services to the Portfolio at negotiated rates. Included in
"Due to affiliates" reflected on the Statement of Assets and Liabilities is $124
in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $6,517 in distribution fees payable to PFD at June 30, 2014.
5. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Fund's financial statements for
the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
16
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
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This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19637-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Emerging Markets VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
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[Download Table]
Pioneer Emerging Markets VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 13
Notes to Financial Statements 18
Trustees, Officers and Service Providers 25
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/14
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Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
International Common Stocks 79.9%
Depository Receipts for International Stocks 16.0%
Warrants 2.5%
International Preferred Stocks 1.4%
International Corporate Bonds 0.2%
Geographical Distribution
(As a percentage of long-term holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Cayman Islands 15.4%
China 9.9%
Brazil 9.1%
Russia 7.9%
India 7.2%
Italy 7.1%
Egypt 6.8%
Mexico 6.5%
South Korea 6.4%
South Africa 3.8%
Philippines 3.5%
United Kingdom 3.4%
Bermuda 2.8%
Jersey Channel Islands 2.3%
Taiwan 2.3%
United Arab Emirates 1.2%
Nigeria 1.0%
Other (individually less than 1%) 3.4%
Five Largest Holdings
(As a percentage of long-term holdings)*
[Download Table]
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1. Global Telecom Holding SAE (G.D.R.)* 6.84%
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2. Tata Motors, Ltd. 6.70
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3. Astaldi S.p.A. 6.63
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4. Phosagro OAO (G.D.R.) 5.25
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5. OHL Mexico SAB de CV* 5.22
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* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
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PERFORMANCE UPDATE 6/30/14
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Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $26.31 $25.10
Class II $26.00 $24.73
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.1749 $ -- $0.1396
Class II $0.0491 $ -- $0.1396
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Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Emerging Markets VCT Portfolio at net asset value
during the periods shown, compared to that of the Morgan Stanley Capital
International (MSCI) Emerging Markets ND 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 MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Emerging Markets Pioneer Emerging Markets MSCI Emerging
VCT Portfolio, Class I VCT Portfolio, Class II Markets ND Index
6/30/2004 $ 10,000 $ 10,000 $ 10,000
6/30/2005 $ 13,192 $ 13,155 $ 13,438
6/30/2006 $ 18,835 $ 18,745 $ 18,205
6/30/2007 $ 28,322 $ 28,118 $ 26,395
6/30/2008 $ 29,447 $ 29,159 $ 27,618
6/30/2009 $ 18,866 $ 18,639 $ 19,866
6/30/2010 $ 22,522 $ 22,174 $ 24,466
6/30/2011 $ 27,609 $ 27,098 $ 31,266
6/30/2012 $ 21,956 $ 21,498 $ 26,279
6/30/2013 $ 20,888 $ 20,391 $ 27,032
6/30/2014 $ 25,255 $ 24,597 $ 30,901
The Morgan Stanley Capital International (MSCI) Emerging Markets ND Index is an
unmanaged index that measures the performance of emerging markets stocks. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. It is not
possible to invest directly in an index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
MSCI Emerging
Class I Class II Markets ND Index
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10 Years 9.71% 9.42% 11.94%
5 Years 6.01% 5.70% 9.24%
1 Year 20.90% 20.63% 14.31%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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COMPARING ONGOING PORTFOLIO EXPENSES
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As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Emerging Markets VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,060.70 $1,059.00
Expenses Paid During Period* $ 7.92 $ 9.04
* Expenses are equal to the Portfolio's annualized expense ratio of 1.55% and
1.77% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Emerging Markets VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,017.11 $1,016.02
Expenses Paid During Period* $ 7.75 $ 8.85
* Expenses are equal to the Portfolio's annualized expense ratio of 1.55% and
1.77% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
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Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
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A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
To the extent the Portfolio invests in issuers located within specific countries
or regions, the Portfolio may be particularly affected by adverse markets,
rates, and events which may occur in those countries and regions. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, Mauro Ratto, Marco Mencini, and Andrea Salvatori,
portfolio managers of Pioneer Emerging Markets VCT Portfolio, discuss the
investment environment and the Portfolio's performance during the six-month
period ended June 30, 2014. Mr. Ratto, Head of Emerging Markets Investment
Management at Pioneer, Mr. Mencini, Head of Equities, Emerging Markets at
Pioneer, and Mr. Salvatori, Head of Global Emerging Markets & Latin American
Equities, Head of Emerging Market Equity Research at Pioneer, are responsible
for the day-to-day management of the Portfolio.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Emerging Markets VCT Portfolio's Class I shares returned 6.07% at
net asset value during the six-month period ended June 30, 2014, and Class
II shares returned 5.90%, while the Portfolio's benchmark, the Morgan
Stanley Capital International (MSCI) Emerging Markets ND Index (the MSCI
Index)(1), returned 6.14%. During the same period, the average return of the
85 variable portfolios in Lipper's Emerging Markets Underlying Funds
category was 4.96%.
Q: Which of your investment strategies contributed to or detracted from the
Portfolio's performance during the six-month period ended June 30, 2014?
A: Individual stock selection results made a positive contribution to the
Portfolio's performance during the past six months, particularly among
holdings in South Africa and Mexico. The Portfolio's best-performing
positions in those countries were Sibanye Gold (South Africa) and the
transportation infrastructure company OHL Mexico. Outside of those
countries, top contributors included the Portfolio's positions in Tata
Motors (India), Pacific Rubiales Energy (Colombia), and SK Hynix (Korea).
Detractors from the Portfolio's benchmark-relative performance included
underweight positions in certain outperforming Asian countries, including
Taiwan and Thailand, as well as an underweight in South Africa. The
Portfolio's currency positioning also detracted from returns during the
period, with exposure to the Russian ruble the biggest negative factor.
Among individual stocks, the worst performers in the Portfolio during the
period were Goodbaby International (China), China ITS, China Conch Venture,
Able C&C (Korea), and Sberbank (Russia).
-------------------
(1) The MSCI information may only be used for your internal use, may not be
reproduced or redisseminated in any form and may not be used as a basis for
or a component of any financial instruments or products or indices. None of
the MSCI information is intended to constitute investment advice or a
recommendation to make (or refrain from making) any kind of investment
decision and may not be relied on as such. Historical data and analysis
should not be taken as an indication or guarantee of any future performance
analysis, forecast or prediction. The MSCI information is provided on an "as
is" basis and the user of this information assumes the entire risk of any
use made of this information. MSCI, each of its affiliates and each other
person involved in or related to compiling, computing or creating any MSCI
information (collectively, the "MSCI Parties") expressly disclaims all
warranties (including, without limitation, any warranties of originality,
accuracy, completeness, timeliness, non-infringement, merchantability and
fitness for a particular purpose) with respect to this information. Without
limiting any of the foregoing, in no event shall any MSCI Party have any
liability for any direct, indirect, special, incidental, punitive,
consequential (including, without limitation, lost profits) or any other
damages.
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Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Q: What are some noteworthy elements of the Portfolio's positioning as of June
30, 2014?
A: With respect to positioning, it's important to keep in mind that our
strategy focuses on bottom-up, individual stock research more so than
country or regional selection. This bottom-up methodology represents a
departure from the traditional approach to emerging markets investing, which
focuses on geographic selection first and individual stock selection second.
With that said, we continue to find a wealth of compelling opportunities in
India. The country's new administration is expected to enact pro-growth
policies that we believe could propel economic growth closer to 7% from its
current level (in the 4% to 5% range). That would provide a meaningful boost
to bottom-line corporate earnings, especially for companies with a domestic
focus. We increased the Portfolio's weighting in India during the past six
months, and had moved the Portfolio to an overweight position as of June
30th.
The Portfolio's largest overweight as of period end is in China, where we
believe concerns about economic growth are both exaggerated and already
factored into stock prices. Many of the Portfolio's holdings in the country
are in stocks of companies that we believe can benefit if the Chinese
government continues to enact economic reforms.
The Portfolio also has meaningful positions in the smaller "frontier"
markets that aren't represented in the MSCI Index benchmark, such as Egypt,
Qatar, United Arab Emirates (UAE), and Nigeria. As of June 30, the Portfolio
held nine investments in those countries, representing approximately 10% of
total assets. We have not made a "top-down" call on the frontier markets;
instead, the investments reflect our favorable bottom-up view of the
Portfolio's individual holdings. In fact, two of the positions in the
frontier markets made significant contributions the Portfolio's six-month
results: Global Telecom Holdings, an Egyptian company, and Emaar Properties,
based in the UAE. We remain on the lookout for companies whose domiciles in
the frontier markets may have caused them to be overlooked by the global
investment community.
We are less enthusiastic about South Africa, where we don't believe the
government is committed to bringing about the necessary economic reforms; we
also have reservations about the more established Asian markets, where we
simply have not been able to identify an abundance of attractively valued
investment ideas. We also hold a skeptical view on Russia, where we have
seen deteriorating prospects for economic growth, even before the
possibility of economic sanctions related to the Ukrainian situation became
a limiting factor.
Q: What's your outlook for the emerging markets?
A: During the first half of the year, investors responded favorably to signs of
stabilizing economic growth trends, the supportive policies of developed-
market central banks, and the generally positive environment for higher-risk
assets. We, too, have grown increasingly optimistic as 2014 has progressed.
We believe the outlook for reforms in some of the key markets such as India
and China should help to support the economic growth outlook in those
countries, which would be a positive for emerging markets assets as a whole.
Further, it has become increasingly apparent that even though the U.S.
Federal Reserve is tapering its quantitative easing policy, any future
increase
5
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
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in the key Federal funds rate likely will not occur until 2015. As for
Europe, the European Central Bank is becoming increasingly accommodative,
and that should help to offset the possible negative effects the Fed's
monetary tightening might have on the markets.
The current environment has helped global asset flows to stabilize and
enabled investors to return their attention to the positive fundamentals and
favorable valuations exhibited by many companies domiciled in the emerging
markets. Against that backdrop, we believe our bottom-up investment approach
- highlighted by our emphasis on fundamentals and valuations - has helped us
construct a portfolio of higher-quality companies that are positioned for
solid performance.
Please refer to the Schedule of Investments on pages 7 to 12 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
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Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
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[Download Table]
Shares Value
PREFERRED STOCKS - 1.4%
Energy - 0.4%
Integrated Oil & Gas - 0.4%
21,018 Petroleo Brasileiro SA $ 164,268
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Total Energy $ 164,268
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Materials - 0.9%
Steel - 0.9%
45,442 Bradespar SA $ 415,957
-----------
Total Materials $ 415,957
-----------
Food & Staples Retailing - 0.1%
Hypermarkets & Super Centers - 0.1%
1,132 Cia Brasileira de Distribuicao $ 52,700
-----------
Total Food & Staples Retailing $ 52,700
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TOTAL PREFERRED STOCKS
(Cost $620,553) $ 632,925
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COMMON STOCKS - 90.8%
Energy - 5.2%
Oil & Gas Equipment & Services - 0.8%
126,550 Dayang Enterprise Holdings Bhd $ 141,551
8,149 Saipem S.p.A. 219,652
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$ 361,203
-----------
Integrated Oil & Gas - 2.0%
763,200 China Petroleum & Chemical Corp. $ 728,416
24,265 Gazprom OAO (A.D.R.)* 211,469
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$ 939,885
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Oil & Gas Refining & Marketing - 2.4%
61,646 Cosan SA Industria e Comercio $ 1,117,416
-----------
Total Energy $ 2,418,504
-----------
Materials - 9.0%
Fertilizers & Agricultural Chemicals - 5.0%
185,344 Phosagro OAO (G.D.R.) $ 2,320,609
-----------
Specialty Chemicals - 0.3%
490,000 Tianhe Chemicals Group, Ltd.* $ 131,501
-----------
Construction Materials - 2.3%
36,612 Cemex SAB de CV* $ 48,389
11,072,000 West China Cement, Ltd. 1,029,075
-----------
$ 1,077,464
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Metal & Glass Containers - 0.7%
102,603 Nampak, Ltd. $ 354,735
-----------
Aluminum - 0.3%
217,500 China Hongqiao Group, Ltd. $ 156,387
-----------
Diversified Metals & Mining - 0.1%
2,088 Grupo Mexico SAB de CV $ 6,958
120,000 MMG, Ltd.* 35,959
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$ 42,917
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The accompanying notes are an integral part of these financial statements.
7
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Download Table]
Shares Value
Steel - 0.3%
2 POSCO $ 599
15,520 Severstal OAO (G.D.R.) 126,684
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$ 127,283
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Total Materials $ 4,210,896
-----------
Capital Goods - 9.6%
Construction & Engineering - 6.3%
257,911 Astaldi S.p.A. $ 2,929,881
-----------
Industrial Conglomerates - 1.1%
20,347 Bidvest Group, Ltd. $ 540,416
-----------
Construction & Farm Machinery & Heavy Trucks - 0.3%
164,000 CSR Corp., Ltd.* $ 123,356
-----------
Trading Companies & Distributors - 1.9%
825,000 Noble Group, Ltd. $ 907,143
-----------
Total Capital Goods $ 4,500,796
-----------
Transportation - 6.3%
Airlines - 0.8%
1,092,244 Air Arabia PJSC $ 368,871
-----------
Marine - 0.0%+
30,000 China Shipping Container Lines Co., Ltd.* $ 7,743
-----------
Trucking - 0.4%
218,647 Aramex PJSC $ 178,612
-----------
Highways & Railtracks - 5.1%
7,291 Arteris SA $ 60,642
757,196 OHL Mexico SAB de CV* 2,308,098
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$ 2,368,740
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Total Transportation $ 2,923,966
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Automobiles & Components - 10.7%
Auto Parts & Equipment - 4.4%
235,478 Tupy SA $ 2,043,701
-----------
Automobile Manufacturers - 6.3%
602,143 Tata Motors, Ltd. $ 2,959,254
-----------
Total Automobiles & Components $ 5,002,955
-----------
Consumer Durables & Apparel - 4.8%
Leisure Products - 4.8%
4,567,000 Goodbaby International Holdings, Ltd. $ 2,251,322
-----------
Total Consumer Durables & Apparel $ 2,251,322
-----------
Consumer Services - 0.6%
Casinos & Gaming - 0.6%
289,339 NagaCorp, Ltd. $ 255,004
-----------
Total Consumer Services $ 255,004
-----------
Media - 0.9%
Cable & Satellite - 0.9%
3,358 Naspers, Ltd. $ 395,025
-----------
Total Media $ 395,025
-----------
Retailing - 0.8%
Department Stores - 0.4%
6,200 Matahari Department Store Tbk PT* $ 7,219
23,072 Woolworths Holdings, Ltd. 169,469
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$ 176,688
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The accompanying notes are an integral part of these financial statements.
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Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
Shares Value
Specialty Stores - 0.4%
4,812 Folli Follie SA* $ 191,783
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Total Retailing $ 368,471
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Food, Beverage & Tobacco - 0.3%
Packaged Foods & Meats - 0.3%
286,492 Flour Mills of Nigeria Plc $ 131,880
-----------
Total Food, Beverage & Tobacco $ 131,880
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 0.9%
Pharmaceuticals - 0.9%
14,216 Hikma Pharmaceuticals Plc $ 407,738
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 407,738
-----------
Banks - 9.7%
Diversified Banks - 9.7%
32 Banco Santander Brasil SA (A.D.R.) $ 221
77,300 Bank Rakyat Indonesia Persero Tbk PT 67,362
492,000 China Construction Bank Corp. 372,252
2,174 Credicorp, Ltd. 337,992
9,361 ICICI Bank, Ltd. 220,718
773,000 Industrial & Commercial Bank of China, Ltd. 489,017
5,814 Itau Unibanco Holding SA (A.D.R.) 83,605
128,775 Mega Financial Holding Co., Ltd. 106,913
754,337 Philippine National Bank* 1,564,952
81,730 Sberbank of Russia (A.D.R.) 826,119
12,943 TBC Bank JSC (G.D.R.)* 183,143
6,200,885 United Bank for Africa Plc 293,015
-----------
$ 4,545,309
-----------
Total Banks $ 4,545,309
-----------
Diversified Financials - 5.3%
Other Diversified Financial Services - 4.3%
785,000 China Conch Venture Holdings, Ltd.* $ 1,728,555
62,244 FirstRand, Ltd. 238,350
42,000 Fubon Financial Holding Co., Ltd. 60,657
-----------
$ 2,027,562
-----------
Consumer Finance - 0.4%
87,159 Credito Real SAB de CV $ 194,899
-----------
Investment Banking & Brokerage - 0.6%
173,600 Haitong Securities Co., Ltd. $ 269,565
-----------
Total Diversified Financials $ 2,492,026
-----------
Insurance - 1.0%
Life & Health Insurance - 1.0%
187,000 China Life Insurance Co., Ltd./Taiwan $ 172,432
35,500 Ping An Insurance Group Co. of China, Ltd. 274,913
-----------
$ 447,345
-----------
Total Insurance $ 447,345
-----------
Real Estate - 0.9%
Diversified REIT - 0.6%
141,546 Mexico Real Estate Management SA de CV $ 292,981
-----------
The accompanying notes are an integral part of these financial statements.
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Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Shares Value
Real Estate Development - 0.3%
54,000 China Overseas Land & Investment, Ltd. $ 130,980
-----------
Total Real Estate $ 423,961
-----------
Software & Services - 5.0%
Internet Software & Services - 0.5%
6,401 Yandex NV* $ 228,132
-----------
IT Consulting & Other Services - 4.5%
10,265,000 China ITS Holdings Co., Ltd. $ 2,106,854
-----------
Total Software & Services $ 2,334,986
-----------
Technology Hardware & Equipment - 1.4%
Electronic Manufacturing Services - 1.4%
199,920 Hon Hai Precision Industry Co., Ltd. $ 669,135
-----------
Total Technology Hardware & Equipment $ 669,135
-----------
Semiconductors & Semiconductor Equipment - 6.7%
Semiconductor Equipment - 5.3%
27,700 ASM Pacific Technology, Ltd. $ 302,754
188,727 Wonik IPS Co., Ltd.* 2,162,770
-----------
$ 2,465,524
-----------
Semiconductors - 1.4%
13,961 SK Hynix, Inc. $ 669,541
-----------
Total Semiconductors & Semiconductor Equipment $ 3,135,065
-----------
Telecommunication Services - 6.5%
Wireless Telecommunication Services - 6.5%
847,376 Global Telecom Holding SAE (G.D.R.)* $ 3,023,485
250 Millicom International Cellular SA 22,887
-----------
$ 3,046,372
-----------
Total Telecommunication Services $ 3,046,372
-----------
Utilities - 5.2%
Electric Utilities - 0.7%
18,573 Enersis SA (A.D.R.) $ 312,955
-----------
Independent Power Producers & Energy Traders - 4.5%
6,383,000 Huaneng Renewables Corp, Ltd.* $ 2,108,121
-----------
Total Utilities $ 2,421,076
-----------
TOTAL COMMON STOCKS
(Cost $37,998,417) $42,381,832
-----------
S&P/Moody's
Principal Ratings
Amount ($) (unaudited)
CORPORATE BONDS - 0.2%
Household & Personal Products - 0.2%
Personal Products - 0.2%
BRL 136,000 NR/NR Hypermarcas SA,, 11.3%, 10/15/18 (b) $ 34,656
BRL 136,000 NR/NR Hypermarcas SA,, 3.0%, 10/15/15 (b) 67,745
-----------
$ 102,401
-----------
Total Household & Personal Products $ 102,401
-----------
TOTAL CORPORATE BONDS
(Cost $143,053) $ 102,401
-----------
The accompanying notes are an integral part of these financial statements.
10
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
S&P/Moody's
Ratings
Shares (unaudited) Value
RIGHTS / WARRANTS - 2.3%
Household & Personal Products - 0.0%
Personal Products - 0.0%
136 Hypermarcas SA,, 10/15/15 (b) $ --
-----------
Total Household & Personal Products $ --
-----------
Banks - 2.3%
Diversified Banks - 2.3%
25,991 NR/NR HSBC Bank Plc, 2/10/15 $ 274,436
6,635 NR/NR HSBC Bank Plc, 2/23/15 337,022
17,243 NR/NR HSBC Bank Plc, 4/13/15 471,258
-----------
$ 1,082,716
-----------
Total Banks $ 1,082,716
-----------
TOTAL RIGHTS / WARRANTS
(Cost $899,593) $ 1,082,716
-----------
TOTAL INVESTMENT IN SECURITIES - 94.7%
(Cost $39,661,616) (a) (c) $44,199,874
-----------
OTHER ASSETS & LIABILITIES - 5.3% $ 2,464,315
-----------
TOTAL NET ASSETS - 100.0% $46,664,189
===========
+ Amount rounds to less than 0.1%.
* Non-income producing security.
REIT Real Estate Investment Trust.
NR Not rated by either S&P or Moody's.
(A.D.R.) American Depositary Receipts.
(G.D.R.) Global Depositary Receipts.
(a) At June 30, 2014, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $39,994,021 was as follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 5,310,120
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (1,104,267)
-----------
Net unrealized appreciation $ 4,205,853
===========
(b) Security is valued using fair value methods (other than prices supplied
by independent pricing services or broker-dealers). See Notes to
Financial Statements -- Notes 1A.
(c) Distributions of investments by country of issue (excluding temporary
cash investments) as a percentage of total investment in securities, is
as follows:
[Download Table]
Cayman Islands 15.4%
China 9.9%
Brazil 9.1%
Russia 7.9%
India 7.2%
Italy 7.1%
Egypt 6.8%
Mexico 6.5%
South Korea 6.4%
South Africa 3.8%
Philippines 3.5%
United Kingdom 3.4%
Bermuda 2.8%
Jersey Channel Islands 2.3%
Taiwan 2.3%
United Arab Emirates 1.2%
Nigeria 1.0%
Other (individually less than 1%) 3.4%
------
100.0%
======
NOTE: Principal amounts are denominated in U.S. Dollars unless otherwise
noted:
BRL Brazilian Real
The accompanying notes are an integral part of these financial statements.
11
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $37,744,061 and $72,414,435,
respectively.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (Including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (Including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
are categorized as Level 3. See Notes to Financial Statements -- Note 1A.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's assets:
[Enlarge/Download Table]
Level 1 Level 2 Level 3 Total
Preferred Stocks $ 632,925 $ -- $ -- $ 632,925
Common Stocks (Foreign) -- -- -- --
Energy
Integrated Oil & Gas 211,469 728,416 -- 939,885
Oil & Gas Refining & Marketing 1,117,416 -- -- 1,117,416
Materials
Construction Materials 48,389 1,029,075 -- 1,077,464
Diversified Metals & Mining 6,958 35,959 -- 42,917
Transportation
Highways & Railtracks 2,368,740 -- -- 2,368,740
Automobiles & Components
Auto Parts & Equipment 2,043,701 -- -- 2,043,701
Food, Beverage & Tobacco
Packaged Foods & Meats 131,880 -- -- 131,880
Banks
Diversified Banks 714,833 3,830,476 -- 4,545,309
Diversified Financials
Consumer Finance 194,899 -- -- 194,899
Real Estate
Diversified REIT 292,981 -- -- 292,981
Software & Services
Internet Software & Services 228,132 -- -- 228,132
Utilities
Electric Utilities 312,955 -- -- 312,955
All Other Common Stocks (Foreign) -- 29,085,553 -- 29,085,553
Corporate Bonds -- -- 102,401 102,401
Warrants 1,082,716 -- --* 1,082,716
------------ ---------------- --------------- -----------
Total $ 9,387,994 $ 34,709,479 $ 102,401 $44,199,874
============ ================ =============== ===========
Other Financial Instruments
Net unrealized appreciation on forward foreign currency contracts $ -- $ 58,682 $ -- $ 58,682
------------ ---------------- --------------- -----------
Total Other Financial Instruments $ -- $ 58,682 $ -- 58,682
============ ================ =============== ===========
* Security is valued at $0.
The following is a reconciliation of assets valued using significant observable
inputs (Level 3):
[Download Table]
Corporate
Bonds Warrants Total
Balance as of 12/31/13 $ 93,485 $ --** $ 93,485
Realized gain (loss)(1) -- -- --
Change in unrealized appreciation (depreciation)(2) 8,916 -- 8,916
Net purchases (sales) -- -- --
Transfers in and out of Level 3* -- -- --
-------- ----- --------
Balance as of 6/30/14 $102,401 $ --** $102,401
======== ===== ========
(1) Realized gain (loss) on these securities is included in the net realized
gain (loss) from investments in the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized appreciation (depreciation) on investments in the
Statement of Operations.
* Transfers are calculated on the beginning of period values. During the six
months ended June 30, 2014, there were no transfers between Levels 1, 2 and
3.
** Security is valued at $0.
[Enlarge/Download Table]
Net change in unrealized appreciation (depreciation) of investments still held as of 6/30/14 $ 8,916
-------
12
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 25.10 $ 25.95 $ 24.08 $ 31.52 $ 27.34 $ 15.84
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.16 $ 0.25 $ 0.24 $ 0.35 $ 0.17 $ 0.10
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 1.36 (0.81) 2.53 (7.71) 4.15 11.65
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.52 $ (0.56) $ 2.77 $ (7.36) $ 4.32 $ 11.75
Distributions to shareowners:
Net investment income $ (0.17) $ (0.29) $ (0.13) $ (0.08) $ (0.14) $ (0.25)
Net realized gain (0.14) -- (0.77) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.31) $ (0.29) $ (0.90) $ (0.08) $ (0.14) $ (0.25)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.21 $ (0.85) $ 1.87 $ (7.44) $ 4.18 $ 11.50
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 26.31 $ 25.10 $ 25.95 $ 24.08 $ 31.52 $ 27.34
======= ======= ======= ======= ======= =======
Total return* 6.07% (1.96)% 11.97% (23.40)% 15.89% 74.64%
Ratio of total expenses to average net assets 1.55%** 1.45% 1.45% 1.47% 1.45% 1.45%
Ratio of net investment income to average net assets 1.12%** 0.96% 0.93% 1.13% 0.66% 0.72%
Portfolio turnover rate 123%** 87% 143% 215% 97% 60%
Net assets, end of period (in thousands) $21,981 $32,531 $42,517 $43,727 $65,958 $54,690
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
Note: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
13
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--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 24.73 $ 25.55 $ 23.71 $ 31.04 $ 26.94 $ 15.62
------- ------- ------- --------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.15 $ 0.19 $ 0.18 $ 0.27 $ 0.13 $ 0.07
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 1.31 (0.79) 2.48 (7.60) 4.06 11.44
------- ------- ------- --------- ------- -------
Net increase (decrease) from investment operations $ 1.46 $ (0.60) $ 2.66 $ (7.33) $ 4.19 $ 11.51
Distributions to shareowners:
Net investment income $ (0.05) $ (0.22) $ (0.05) $ -- $ (0.09) $ (0.19)
Net realized gain (0.14) -- (0.77) -- -- --
------- ------- ------- --------- ------- -------
Total distributions $ (0.19) $ (0.22) $ (0.82) $ -- $ (0.09) $ (0.19)
------- ------- ------- --------- ------- -------
Net increase (decrease) in net asset value $ 1.27 $ (0.82) $ 1.84 $ (7.33) $ 4.10 $ 11.32
------- ------- ------- --------- ------- -------
Net asset value, end of period $ 26.00 $ 24.73 $ 25.55 $ 23.71 $ 31.04 $ 26.94
======= ======= ======= ========= ======= =======
Total return* 5.90% (2.19)% 11.66% (23.62)% 15.61% 74.02%
Ratio of total expenses to average net assets 1.77%** 1.70% 1.70% 1.72% 1.70% 1.69%
Ratio of net investment income to average net assets 0.55%** 0.69% 0.71% 0.86% 0.40% 0.45%
Portfolio turnover rate 123%** 87% 143% 215% 97% 60%
Net assets, end of period (in thousands) $24,683 $45,217 $53,514 $ 52,403 $83,293 $82,930
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
Note: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
14
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
ASSETS:
Investment in securities (cost $39,661,616) $44,199,874
Foreign currencies, at value (cost $1,055,112) 1,056,746
Receivables --
Investment securities sold 4,091,266
Portfolio shares sold 213,512
Dividends (net of foreign taxes withheld of $4,555) 218,729
Interest 1,263
Net unrealized appreciation on forward foreign currency contracts 58,682
Other 4,292
-----------
Total assets $49,844,364
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 1,587,788
Portfolio shares repurchased 51,988
Trustee fees 161
Payable to Custodian 1,471,254
Due to affiliates 7,245
Accrued expenses 39,164
Reserve for repatriation taxes 22,575
-----------
Total liabilities $ 3,180,175
-----------
NET ASSETS:
Paid-in capital $39,011,187
Undistributed net investment income 178,855
Accumulated net realized gain on investments and foreign currency transactions 2,882,074
Net unrealized appreciation on investments 4,538,258
Net unrealized appreciation on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies 53,815
-----------
Total net assets $46,664,189
-----------
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $21,981,122/835,477 shares) $ 26.31
===========
Class II (based on $24,683,067/949,281 shares) $ 26.00
===========
The accompanying notes are an integral part of these financial statements.
15
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--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $87,346) $ 793,754
Interest (net of foreign taxes withheld of $505) 2,423
----------
Total investment income $ 796,177
----------
EXPENSES:
Management fees $ 352,931
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 43,250
Administrative reimbursements 17,805
Custodian fees 73,636
Professional fees 30,451
Printing expense 7,341
Fees and expenses of nonaffiliated Trustees 3,528
Miscellaneous 4,965
----------
Total expenses $ 535,407
----------
Net investment income $ 260,770
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments (net of foreign capital gains taxes of $5,161) $3,286,296
Futures contracts (77,511)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 5,770 $3,214,555
---------- ----------
Change in net unrealized appreciation (depreciation) on:
Investments (net increase in reserve for capital gains taxes of $22,575) $ (742,579)
Futures contracts (15,124)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (18,171) $ (775,874)
---------- ----------
Net gain on investments and foreign currency transactions $2,438,681
----------
Net increase in net assets resulting from operations $2,699,451
==========
The accompanying notes are an integral part of these financial statements.
16
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 260,770 $ 667,720
Net realized gain on investments, futures contracts
and foreign currency transactions 3,214,555 3,121,534
Change in net unrealized appreciation (depreciation) on investments
and foreign currency transactions (775,874) (6,569,020)
------------- -------------
Net increase (decrease) in net assets resulting from operations $ 2,699,451 $ (2,779,766)
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.17 and $0.29 per share, respectively) $ (204,295) $ (451,200)
Class II ($0.05 and $0.22 per share, respectively) (46,453) (442,636)
Net realized gain:
Class I ($0.14 and $0.00 per share, respectively) (163,062) --
Class II ($0.14 and $0.00 per share, respectively) (132,075) --
------------- -------------
Total distributions to shareowners $ (545,885) $ (893,836)
------------- -------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,896,898 $ 18,415,763
Reinvestment of distributions 545,885 893,836
Cost of shares repurchased (41,679,923) (33,918,899)
------------- -------------
Net decrease in net assets resulting from Portfolio share transactions $ (33,237,140) $ (14,609,300)
------------- -------------
Net decrease in net assets $ (31,083,574) $ (18,282,902)
NET ASSETS:
Beginning of period $ 77,747,763 $ 96,030,665
------------- -------------
End of period $ 46,664,189 $ 77,747,763
============= =============
Undistributed net investment income $ 178,855 $ 168,833
============= =============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 61,214 $ 1,526,255 207,043 $ 4,980,500
Reinvestment of distributions 13,931 367,357 20,996 451,200
Less shares repurchased (535,550) (13,797,193) (570,778) (13,614,916)
---------- ------------- -------- ------------
Net decrease (460,405) $ (11,903,581) (342,739) $ (8,183,216)
========== ============= ======== ============
CLASS II
Shares sold 266,432 $ 6,370,643 559,290 $ 13,435,263
Reinvestment of distributions 6,851 178,528 20,889 442,636
Less shares repurchased (1,152,582) (27,882,730) (846,236) (20,303,983)
---------- ------------- -------- ------------
Net decrease (879,299) $ (21,333,559) (266,057) $ (6,426,084)
========== ============= ======== ============
The accompanying notes are an integral part of these financial statements.
17
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--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Emerging Markets VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is to seek long-term capital growth.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per-share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per-share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
are valued using 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 available, generally are valued
using the mean between the last bid and asked prices. Short-term fixed
income securities with remaining maturities of sixty days or less generally
are valued at amortized cost. Shares of money market mutual funds are valued
at such Funds' net asset value.
The Portfolio invests primarily in securities of non-U.S. issuers. The
principal exchanges and markets for such securities have closing times prior
to the close of the NYSE. However, the value of these securities may be
influenced by changes in global markets occurring after the closing times of
the local exchanges and markets up to the time the Portfolio determines its
net asset value. Consequently, the Board of Trustees of the Portfolio has
determined that daily adjustments to the valuation of securities of non-U.S.
issuers by utilizing an independent pricing service that supplies an
appropriate fair value factor is appropriate for the Portfolio.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted by
the Portfolio's Board of Trustees. PIM's fair valuation team uses fair value
methods approved by the Valuation Committee of the Board of Trustees. PIM's
fair valuation team is responsible for monitoring developments that may
impact fair valued securities and for discussing and assessing fair values
on an ongoing basis, and at least quarterly, with the Valuation Committee of
the Board of Trustees.
Inputs used when applying fair value methods to value a security may include
credit ratings, the financial condition of the company, current market
conditions and comparable securities. The Portfolio may use fair value
methods if it is determined that a significant event has
18
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
occurred after the close of the exchange or market on which the security
trades and prior to the determination of the Portfolio's net asset value.
Examples of a significant event might include political or economic news,
corporate restructurings, natural disasters, terrorist activity or trading
halts. Thus, the valuation of the Portfolio's securities may differ
significantly from exchange prices and such differences could be material.
At June 30, 2014 there were three securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers) representing 0.2% of net
assets.
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. Dividend
and interest income are reported net of unrecoverable foreign taxes withheld
at the applicable country rates.
Gains and losses on 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, if any,
represent, among other things, 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 the market prices of those securities but are included
with the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation
are recorded in the Portfolio's financial statements. The Portfolio records
realized gains and losses at the time a contract 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 5).
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no provision for federal income taxes is required.
As of December 31, 2013, the Portfolio did not accrue any interest or
penalties with respect to uncertain tax positions, which, if applicable,
would be recorded as an income tax expense in the Statement of Operations.
Tax returns filed within the prior three years remain subject to examination
by Federal and State tax authorities.
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, 2014, the Portfolio paid $5,161 in such taxes.
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
period of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. As of June 30, 2014, the Portfolio
had $22,575 in reserve related to capital gains.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting
19
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
principles. Distributions in excess of net investment income or net realized
gains are temporary overdistributions for financial statement purposes
resulting from differences in the recognition or classification of income or
distributions for financial statement and tax purposes. Capital accounts
within the financial statements are adjusted for permanent book/tax
differences to reflect tax character, but are not adjusted for temporary
differences.
The tax character of current year distributions payable will be determined
at the end of the Portfolio's taxable year. The tax character of
distributions paid during the years ended December 31, 2013 and the
components of distributable earnings (accumulated losses) on a federal
income tax basis at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 893,836
Long-term capital gain --
----------
Total distributions $ 893,836
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 250,632
Undistributed long-term capital gain 295,061
Unrealized appreciation 4,953,743
----------
Total $5,499,436
==========
The difference between book-basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales, adjustments
relating to PFIC and the mark to market of forward contracts.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the average daily net asset
value attributable to Class II shares of the Portfolio (see Note 4). Class I
shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its 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 and at the
same time, except that net investment income dividends to Class I and Class
II shares can reflect different transfer agent and distribution expense
rates.
F. Risks
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 investments in a developed market. Risks associated with these
developing markets include political, social and 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. The Portfolio's prospectus contains unaudited information regarding
the Portfolio's principal risks. Please refer to that document when
considering the Portfolio's principal risks.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest,
is required to be
20
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
equal to or in excess of the repurchase price. The collateral for all
repurchase agreements is held in safekeeping in the customer-only account of
the Portfolio's custodian or a subcustodian of the Portfolio. PIM is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
H. Futures Contracts
The Portfolio may enter into futures transactions in order to attempt to
hedge against changes in interest rates, securities prices and currency
exchange rates or to seek to increase total return. Futures contracts are
types of derivatives. All futures contracts entered into by the Portfolio
are traded on a futures exchange. 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 appreciation or depreciation. 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, interest rate
and counterparty risks, which may exceed the amounts recognized by the
Portfolio. Changes in value of the contracts may not directly correlate to
the changes in value of the underlying securities. The average value of
contracts open during the six months ended June 30, 2014 was $254,711. There
are no open futures contacts at six months ended June 30, 2014.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Effective December 1, 2013, Management fees are calculated daily at the annual
rate of 1.10% of the Portfolio's average daily net assets. Prior to December 1,
2013, management fees were calculated daily at the annual rate of 1.15% of the
Portfolio's average daily net asset.
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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$6,324 in management fees, administrative costs and certain other reimbursements
payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $249 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $672 in distribution fees payable to PFD at June 30, 2014.
5. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized appreciation or depreciation are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a contract 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
21
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
to meet the terms of the contract and from unanticipated movements in the value
of foreign currencies relative to the U.S. dollar. The average value of
contracts open during the six months ended June 30, 2014 was $106,728. As of
June 30, 2014, open contracts were as follows.
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------
Net
Unrealized
Net Contracts In Exchange Settlement Appreciation
Currency to Deliver for Date Value (Depreciation)
--------------------------------------------------------------------------------------------
BRL (Brazilian Real) (101,830) $ 46,030 7/1/14 $ 46,234 $ 204
BRL (Brazilian Real) (315,537) 142,632 7/1/14 143,263 631
BRL (Brazilian Real) (201,944) 91,284 7/1/14 91,688 404
BRL (Brazilian Real) 1,201,793 547,638 7/1/14 543,244 (4,394)
BRL (Brazilian Real) 205,050 93,438 7/1/14 92,688 (750)
BRL (Brazilian Real) 2,288,000 1,000,000 9/10/14 1,013,465 13,465
CAD (Canadian Dollar) (121,115) 113,584 7/2/14 113,223 (361)
EUR (Euro) (99,930) 136,864 7/2/14 136,225 (639)
EUR (Euro) (2,141,765) 2,933,548 7/17/14 2,976,551 43,003
HKD (Hong Kong Dollar) (711,864) 91,847 7/2/14 91,845 (2)
HKD (Hong Kong Dollar) (58,725) 7,576 7/2/14 7,576 --
HKD (Hong Kong Dollar) (706,794) 91,193 7/2/14 91,191 (2)
HKD (Hong Kong Dollar) (709,487) 91,540 7/2/14 91,525 (15)
HKD (Hong Kong Dollar) 2,527,451 326,093 7/2/14 326,101 8
JPY (Japanese Yen) (125,550) 1,240 7/1/14 1,237 (3)
JPY (Japanese Yen) (125,280) 1,237 7/1/14 1,232 (5)
JPY (Japanese Yen) (652,744) 6,444 7/2/14 6,430 (14)
JPY (Japanese Yen) (41,475,88) 405,847 7/17/14 409,548 3,701
JPY (Japanese Yen) 41,475,88 409,548 7/17/14 407,368 (2,180)
KRW (South Korean Won) (3,014,841) 2,979 7/1/14 2,977 (2)
KRW (South Korean Won) (135,308,708) 133,704 7/1/14 133,636 (68)
MXN (Mexican Peso) (1,344,531) 103,495 7/1/14 103,242 (253)
MXN (Mexican Peso) (3,409,358) 262,436 7/1/14 261,795 (641)
MXN (Mexican Peso) (178,314) 13,725 7/1/14 13,703 (22)
MXN (Mexican Peso) (1,818,404) 139,972 7/1/14 139,630 (342)
MXN (Mexican Peso) 3,893,184 298,946 7/1/14 299,678 732
MXN (Mexican Peso) 1,205,912 92,922 7/2/14 92,825 (97)
PHP (Philippines Peso) 4,101,926 93,736 7/1/14 94,026 290
SGD (Singapore Dollar) (109,533) 87,855 7/2/14 87,612 (243)
TWD (New Taiwan Dollar) (2,751,185) 92,097 7/1/14 92,092 (5)
TWD (New Taiwan Dollar) (11,289,663) 377,928 7/1/14 377,909 (19)
TWD (New Taiwan Dollar) (1,354,210) 45,332 7/1/14 45,330 (2)
ZAR (South African Rand) (2,344,105) 220,283 7/1/14 221,866 1,583
ZAR (South African Rand) (1,484,975) 139,548 7/1/14 139,259 (289)
ZAR (South African Rand) (2,510,728) 235,941 7/1/14 235,452 (489)
ZAR (South African Rand) (1,192,072) 112,023 7/1/14 112,828 805
ZAR (South African Rand) (884,446) 83,114 7/1/14 83,711 597
ZAR (South African Rand) (1,457,633) 136,979 7/1/14 136,695 (284)
ZAR (South African Rand) (975,980) 91,716 7/3/14 91,470 (246)
ZAR (South African Rand) (1,003,199) 94,274 7/3/14 94,047 (227)
ZAR (South African Rand) 11,528,697 1,075,687 7/17/14 1,080,531 4,844
ZAR (South African Rand) (731,052) 68,643 7/17/14 68,652 9
--------------------------------------------------------------------------------------------
Total $ 58,682
--------------------------------------------------------------------------------------------
22
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
6. Offsetting Assets and Liabilities
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities of the Portfolio as of June 30, 2014.
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------
Assets:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the -------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Assets Liabilities Liabilities Instruments Received Net Amount
----------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $ 70,276 $(11,594) $ 58,682 $ -- $ -- $58,682
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Liabilities:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the -------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Assets Liabilities Liabilities Instruments Pledged Net Amount
----------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $ 11,594 $(11,594) $ -- $ -- $ -- $ --
----------------------------------------------------------------------------------------------------------
7. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of June 30, 2014 were as follows:
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments ----------------------------------------------------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Value Location Value
-----------------------------------------------------------------------------------------------------------------
Forward foreign currency contracts Net unrealized Net unrealized
appreciation on forward depreciation on forward
foreign currency contracts $58,682 foreign currency contracts $ --
------- ------
Total $58,682 $ --
-----------------------------------------------------------------------------------------------------------------
23
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
The effect of derivative instruments on the Statement of Operations for the six
months ended June 30, 2014 was as follows:
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------------------
Change in
Unrealized
Realized Gain Appreciation or
Derivatives Not Accounted for or (Loss) on (Depreciation) on
as Hedging Instruments Under Location of Gain or (Loss) Derivatives Derivatives
Accounting Standards on Derivatives Recognized Recognized Recognized in
Codification (ASC) 815 in Income in Income Income
-----------------------------------------------------------------------------------------------------------------------------
Forward foreign currency contracts Net realized gain (loss) on forward foreign
currency contracts and other assets and
liabilities denominated in foreign currencies $ 5,770
Forward foreign currency contracts Change in unrealized appreciation
(depreciation) on forward foreign currency
contracts and other assets and liabilities
denominated in foreign currencies $ 18,171
Futures contracts Net realized gain (loss) on futures contracts $(77,511)
Futures contracts Change in unrealized appreciation
(depreciation) on futures contracts $(15,124)
-----------------------------------------------------------------------------------------------------------------------------
8. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v)of Regulation S-K under the
Securities Exchange Act of 1934.
24
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
25
This page for your notes.
26
This page for your notes.
27
This page for your notes.
28
This page for your notes.
29
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19618-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity Income VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 8
Financial Statements 12
Notes to Financial Statements 17
Trustees, Officers and Service Providers 29
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Common Stocks 88.8%
International Common Stocks 9.1%
Depositary Receipts for International Stocks 2.1%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Financials 19.3%
Consumer Staples 15.0%
Health Care 14.0%
Utilities 10.5%
Information Technology 8.7%
Materials 8.5%
Consumer Discretionary 8.2%
Industrials 7.6%
Energy 6.2%
Telecommunication Services 2.0%
Five Largest Holdings
(As a percentage of equity holdings)*
[Download Table]
--------------------------------------------------------------------------------
1. The Valspar Corp. 3.47%
--------------------------------------------------------------------------------
2. US Bancorp 2.01
--------------------------------------------------------------------------------
3. Wells Fargo & Co. 2.00
--------------------------------------------------------------------------------
4. Cedar Fair LP 1.95
--------------------------------------------------------------------------------
5. The Chubb Corp. 1.93
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different. The
holdings listed should not be considered recommendations to buy or sell any
security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $28.90 $27.04
Class II $29.06 $27.20
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.3600 $- $-
Class II $0.3300 $- $-
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Equity Income VCT Portfolio at net asset value during
the periods shown, compared to that of the Russell 1000 Value Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Equity Income Pioneer Equity Income Russell 1000
VCT Portfolio, Class I VCT Portfolio, Class II Value Index
6/30/2004 $10,000 $10,000 $10,000
6/30/2005 $11,416 $11,390 $11,406
6/30/2006 $12,857 $12,794 $12,786
6/30/2007 $15,663 $15,542 $15,582
6/30/2008 $13,531 $13,393 $12,656
6/30/2009 $ 9,641 $ 9,520 $ 8,982
6/30/2010 $11,396 $11,223 $10,501
6/30/2011 $15,104 $14,835 $13,541
6/30/2012 $15,445 $15,130 $13,948
6/30/2013 $18,524 $18,100 $17,479
6/30/2014 $22,718 $22,145 $21,641
The Russell 1000 Value Index is an unmanaged index that measures the performance
of large-cap U.S. value stocks. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
Russell 1000
Class I Class II Value Index
--------------------------------------------------------------------------------
10 Years 8.55% 8.28% 8.03%
5 Years 18.70% 18.39% 19.23%
1 Year 22.65% 22.35% 23.81%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number in
the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,082.50 $1,080.90
Expenses Paid During Period* $ 3.72 $ 5.00
* Expenses are equal to the Portfolio's annualized expense ratio of 0.72% and
0.97% for Class I and II respectively, multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year
period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,021.22 $1,019.98
Expenses Paid During Period* $ 3.61 $ 4.86
* Expenses are equal to the Portfolio's annualized expense ratio of 0.72% and
0.97% for Class I and II respectively, multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year
period).
3
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, John Carey, Executive Vice President and Head of
U.S. Core Value at Pioneer Investments, discusses the investment environment
during the six-month period ended June 30, 2014, and Pioneer Equity Income VCT
Portfolio's performance during the period. Mr. Carey is responsible for the
day-to-day management of the Portfolio.
Q: How would you describe the market for equities during the six-month period
ended June 30, 2014, particularly for the types of equities deemed
appropriate for the Portfolio?
A: As the new year of 2014 began, the U.S. stock market as measured by the
Portfolio's benchmark, the Russell 1000 Value Index (the Russell Index),
paused after its strong advance in 2013, treaded water for a couple of
weeks, and then took a sharp plunge into early February. After that,
though, the market staged a strong recovery. By the end of the period, the
Russell Index showed a gain for the full six months. So, while volatile,
the market was positive during the period, and patient investors were able
to reap rewards. Value stocks, as measured by the Russell Index (+8.28%),
on balance outperformed growth stocks, as measured by Russell 1000 Growth
Index (+6.31%), but bookend to bookend, the period was a good one for most
stocks.
While general economic data and corporate earnings have continued to trace
an upward course, geopolitical events have caused the market some concerns.
The conflict in the Ukraine, tensions between China and its neighbors, and
continued chaos in several of the countries in the Middle East have all
caught the attention of investors and led them to worry about potential
disruptions to trade and to supply of certain raw materials. The prospect
for higher interest rates as we move through 2014 and into 2015 has
likewise remained an anxiety. And, while inflation numbers have stayed
modest, a rise in the price of several commodities as well as increasing
costs of services have led to a view that inflation could at some point
ramp up. The correction we saw in the stock market during the second half
of January 2014 resulted, we think, from those jitters, and also from
pessimism about first calendar quarter 2014 corporate earnings due to the
cold, snowy weather conditions in much of the U.S. over the winter months.
In the event, the "macroeconomic" risks stayed contained through the end of
the six-month reporting period, and first-quarter earnings came in
meaningfully above expectations. So, after the sinking spell, it was off to
the races for stocks once again. However, we would keep a weather eye and
stay cognizant of risks.
4
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Q: How did the Portfolio perform in that environment during the six-month
period ended June 30, 2014?
A: The Portfolio's Class I shares returned 8.25% at net asset value during
the six-month period ended June 30, 2014, and Class II shares returned
8.09%, while the Portfolio's benchmark, the Russell Index, returned 8.28%.
During the same period, the average return of the 65 variable portfolios in
Lipper's Equity Income Underlying Funds category was 6.87%.
Q: Could you please talk in more detail about the Portfolio's performance
during the six-month period ended June 30, 2014?
A: While the Portfolio's absolute results were positive, they slightly
lagged relative to the benchmark during the period. The reason for the
Portfolio's underperformance was stock selection, primarily in three
sectors: energy, industrials, and financials. Sector allocation decisions
were positive with respect to performance results, with slight performance
advantages deriving from the Portfolio's overweight in the
strong-performing utilities sector and an underweight in the
below-average-performing financials sector; and slight performance
disadvantages attributable to the Portfolio's overweight to the
below-average-performing consumer staples sector and an underweight in the
strong-performing energy sector.
With regard to stock selection, the Portfolio lost relative performance due
to its overweight positions in the underperforming energy stock Marathon
Petroleum and the underperforming financials Chubb and Swedbank. The
Portfolio benefited from an overweight position in consumer staples stock
Hillshire Brands, which received premium takeover offers from two different
companies, and from a large underweight to the weak-performing energy stock
ExxonMobil.
After reviewing the Portfolio, we elected to retain the long-term positions
in the underperformers noted (Marathon, Chubb, and Swedbank), due to our
estimates of continued good business prospects for all of the companies
over the longer term.
Q: Could you please discuss the changes you made to the Portfolio during
the six-month period ended June 30, 2014?
A: We added eighteen positions to the Portfolio and eliminated thirteen
during the six-month period. Additions included: Glaxo Smith Kline and
Roche in pharmaceuticals; Randstad Holding, a temporary-help company with
offices worldwide; Cameco, an important uranium miner; Bank of America and
JPMorgan Chase in diversified financials; Prudential in life insurance;
State Street, a prominent provider of services to the financial industry
and also a large money manager; and Chesapeake Lodging Trust, a real estate
investment trust (REIT) focused, as its name suggests, on hotels. Also new
were: MeadWestvaco, a global packaging and paper company; Rexel, a French-
based electrical equipment distributor; CBS Outdoor and Meredith in media;
Pinnacle Foods in consumer staples; Camden Property Trust, a REIT
specializing in apartments; AT&T, the worldwide telecom services provider;
and Macy's and Foot Locker, successful retailers.
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--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
Sales during the six-month period included one big winner, Hillshire
Brands, recipient of takeover offers at a premium to the Portfolio's
original cost. On the basis of our relative-value analysis, we sold
Chevron, Seadrill, and Conoco (energy). Other liquidations were of the
Portfolio's positions in LyondellBasell Industries, BHP Billiton, Freeport
McMoRan, Rio Tinto, International Paper, Apple, Maxim Integrated Products,
Vodafone, and Consolidated Edison. In each case, we judged that other new
or existing Portfolio holdings represented better long-term value.
Q: The Portfolio typically places an emphasis on dividend-paying stocks.
Would you describe the environment for dividends as positive or negative
during the six-month period ended June 30, 2014?
A: Companies in the U.S. and Europe, the Portfolio's two principal
investment "hunting grounds," continue to place significant emphasis on
dividend* payments and increases in the rate of dividend payments as ways
to keep current investors "on board" while attracting new investors. With
the very low short-term interest rates in both the U.S. and Europe,
investors desiring current income can potentially find worthwhile
income-generating opportunities in the stock market. Secondly, with the
still moderate rate of capital spending and high levels of profit
generation, a lot of companies are finding themselves with cash that they
feel they do not need for their day-to-day operations, and they are both
paying higher dividends and repurchasing their own stock in order to reduce
their cash balances. A note of caution, though: with capacity utilization
nudging higher and worker productivity no longer increasing, many companies
may find that they do, afterall, have to spend more money on new plant and
equipment. Strategic mergers and acquisitions in a growing, but
historically relatively slowly growing, economy may also make more and more
sense to companies. Hence, other uses for excess cash may lead to lower
rates of dividend growth as we continue moving through this business cycle.
Q: With the Federal Reserve's (Fed's) tapering of its QE (quantitative
easing) program underway and the harsh winter of 2013-14 behind us, what is
your outlook on the U.S economy and the equity markets for the remainder of
the Portfolio's fiscal year ending December 31, 2014?
A: Intermediate and longer-term interest rates had actually come down a bit
by the end of the Portfolio's June 30, 2014, semiannual reporting period.
The bond market reflected an apparent investor view that too much pessimism
about interest rates had come into that market after the Fed's initial talk
of QE tapering in May 2013. There has just not been the inflation, the
borrowing demand, or the rate of economic growth that would naturally push
rates higher, and so even with the Fed's tapering, investors have come back
into bonds. As we noted previously, we would be wary of complacency in
regard to inflation in particular, and we would not view the current,
almost ideal conditions for borrowers, almost no matter what their capacity
for repayment, as a permanent state of affairs. Time will tell. Otherwise,
in regard to stocks, we are also of the mind that investors have become
complacent about the ability of companies to maintain their current, high
profit margins, especially without an .increase in worker productivity.
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Our approach, as always, is to favor companies we believe have strong
balance sheets, astute and committed managements, industry-leading
positions, positive long-term earnings trends, and attractive valuations.
In this time of possibly significant geopolitical risks we are also
steering away from investing in companies that are unusually exposed to one
or another of the world's potential flash points. It is our intention to
keep the Portfolio broadly diversified** and invested in companies with
experience in working through challenging times and conditions.
Thank you very much for your support.
* Dividends are not guaranteed.
** Diversification does not assure a profit nor protect against loss in a
declining market.
Please refer to the Schedule of Investments on pages 8 to 11 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that the market forecast discussed will be realized.
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 opinion as of the date of this report. These opinions should not
be relied upon for any other purposes.
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
COMMON STOCKS - 98.3%
Energy - 6.1%
Integrated Oil & Gas - 2.6%
40,331 Exxon Mobil Corp. $ 4,060,525
21,941 Occidental Petroleum Corp. 2,251,805
-----------
$ 6,312,330
-----------
Oil & Gas Exploration &
Production - 0.8%
48,349 Marathon Oil Corp. $ 1,930,092
-----------
Oil & Gas Refining &
Marketing - 1.0%
31,984 Marathon Petroleum Corp.* $ 2,496,991
-----------
Oil & Gas Storage &
Transportation - 1.3%
72,516 Spectra Energy Corp. $ 3,080,480
-----------
Coal & Consumable Fuels - 0.4%
52,334 Cameco Corp. $ 1,026,270
-----------
Total Energy $14,846,163
-----------
Materials - 8.4%
Diversified Chemicals - 1.2%
17,245 EI du Pont de Nemours & Co. $ 1,128,513
33,584 The Dow Chemical Co. 1,728,233
-----------
$ 2,856,746
-----------
Specialty Chemicals - 4.5%
665 Givaudan SA $ 1,109,521
30,143 Johnson Matthey Plc 1,598,488
108,606 The Valspar Corp. 8,274,691
-----------
$10,982,700
-----------
Paper Packaging - 1.2%
27,243 MeadWestvaco Corp. $ 1,205,775
41,913 Sonoco Products Co. 1,841,238
-----------
$ 3,047,013
-----------
Diversified Metals &
Mining - 1.5%
37,048 Compass Minerals International, Inc. $ 3,546,976
-----------
Total Materials $20,433,435
-----------
Capital Goods - 5.6%
Aerospace & Defense - 1.0%
21,128 United Technologies Corp. $ 2,439,228
-----------
Electrical Components &
Equipment - 0.7%
21,588 Eaton Corp. Plc $ 1,666,162
-----------
Industrial Conglomerates - 1.5%
139,465 General Electric Co. $ 3,665,140
-----------
Industrial Machinery - 1.4%
95,518 The Gorman-Rupp Co. $ 3,378,472
-----------
Trading Companies &
Distributors - 1.0%
34,452 Rexel SA $ 805,928
27,863 Wolseley Plc 1,526,673
-----------
$ 2,332,601
-----------
Total Capital Goods $13,481,603
-----------
Commercial Services &
Supplies - 2.0%
Office Services &
Supplies - 0.7%
31,086 MSA Safety, Inc. $ 1,786,823
-----------
Diversified Support
Services - 0.9%
43,434 G&K Services, Inc. $ 2,261,608
-----------
Human Resource &
Employment Services - 0.4%
15,712 Randstad Holding NV $ 851,943
-----------
Total Commercial Services
& Supplies $ 4,900,374
-----------
Automobiles &
Components - 0.7%
Automobile Manufacturers - 0.7%
98,192 Ford Motor Co. $ 1,692,830
-----------
Total Automobiles
& Components $ 1,692,830
-----------
Consumer Durables &
Apparel - 0.6%
Household Appliances - 0.6%
58,170 Electrolux AB $ 1,470,433
-----------
Total Consumer Durables
& Apparel $ 1,470,433
-----------
Consumer Services - 2.9%
Hotels, Resorts & Cruise
Lines - 1.0%
46,176 InterContinental Hotels Group Plc $ 1,912,371
12,220 InterContinental Hotels Group
Plc (A.D.R.) 507,252
-----------
$ 2,419,623
-----------
Leisure Facilities - 1.9%
88,203 Cedar Fair LP $ 4,665,939
-----------
Total Consumer Services $ 7,085,562
-----------
Media - 1.9%
Advertising - 0.4%
30,088 CBS Outdoor Americas, Inc. $ 983,276
-----------
Movies & Entertainment - 0.6%
67,717 Regal Entertainment Group $ 1,428,829
-----------
The accompanying notes are an integral part of these financial statements.
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[Download Table]
Shares Value
Publishing - 0.9%
15,281 John Wiley & Sons, Inc. $ 925,876
23,644 Meredith Corp. 1,143,424
-----------
$ 2,069,300
-----------
Total Media $ 4,481,405
-----------
Retailing - 2.1%
Distributors - 1.0%
27,959 Genuine Parts Co. $ 2,454,800
-----------
Department Stores - 0.8%
33,896 Macy's, Inc. $ 1,966,646
-----------
Apparel Retail - 0.3%
12,089 Foot Locker, Inc. $ 613,154
-----------
Total Retailing $ 5,034,600
-----------
Food & Staples Retailing - 0.3%
Food Retail - 0.3%
136,413 J Sainsbury Plc $ 736,235
-----------
Total Food & Staples Retailing $ 736,235
-----------
Food, Beverage &
Tobacco - 12.0%
Soft Drinks - 1.6%
51,947 Dr. Pepper Snapple Group, Inc. $ 3,043,055
8,865 PepsiCo., Inc. 791,999
-----------
$ 3,835,054
-----------
Packaged Foods &
Meats - 10.4%
66,001 Campbell Soup Co. $ 3,023,506
58,882 General Mills, Inc. 3,093,660
10,131 John B Sanfilippo & Son, Inc. 268,168
49,249 Kellogg Co. 3,235,659
66,349 Kraft Foods Group, Inc.* 3,977,623
13,718 McCormick & Co., Inc. 982,072
111,746 Mondelez International, Inc. 4,202,767
76,711 Pinnacle Foods, Inc. 2,523,792
41,736 The Hershey Co. 4,063,834
-----------
$25,371,081
-----------
Total Food, Beverage & Tobacco $29,206,135
-----------
Household & Personal
Products - 2.4%
Household Products - 2.4%
19,774 Kimberly-Clark Corp. $ 2,199,264
28,075 The Clorox Co. 2,566,055
14,246 The Procter & Gamble Co. 1,119,593
-----------
$ 5,884,912
-----------
Total Household & Personal Products $ 5,884,912
-----------
Health Care Equipment
& Services - 6.0%
Health Care Equipment - 4.3%
43,811 Abbott Laboratories $ 1,791,870
36,365 Becton Dickinson and Co. 4,301,980
25,374 Medtronic, Inc. 1,617,846
156,356 Smith & Nephew Plc 2,779,017
-----------
$10,490,713
-----------
Health Care Distributors - 1.7%
23,774 Cardinal Health, Inc. $ 1,629,945
74,964 Owens & Minor, Inc. 2,547,277
-----------
$ 4,177,222
-----------
Total Health Care Equipment
& Services $14,667,935
-----------
Pharmaceuticals,
Biotechnology & Life
Sciences - 7.7%
Pharmaceuticals - 7.7%
45,027 AbbVie, Inc. $ 2,541,324
25,888 AstraZeneca Plc (A.D.R.) 1,923,737
38,225 Eli Lilly & Co. 2,376,448
11,226 GlaxoSmithKline Plc (A.D.R.) 600,366
36,964 Johnson & Johnson 3,867,174
77,585 Merck & Co., Inc. 4,488,292
11,323 Novartis AG (A.D.R.) 1,025,071
23,775 Pfizer, Inc. 705,642
15,744 Roche Holding AG (A.D.R.) 587,251
19,999 Zoetis, Inc. 645,368
-----------
$18,760,673
-----------
Total Pharmaceuticals,
Biotechnology & Life Sciences $18,760,673
-----------
Banks - 10.6%
Diversified Banks - 6.8%
38,703 Canadian Imperial Bank
of Commerce $ 3,524,394
133,704 Swedbank AB 3,543,788
110,674 US Bancorp 4,794,398
90,710 Wells Fargo & Co. 4,767,718
-----------
$16,630,298
-----------
Regional Banks - 2.3%
67,168 BB&T Corp. $ 2,648,434
32,428 The PNC Financial Services Group, Inc. 2,887,713
-----------
$ 5,536,147
-----------
Thrifts & Mortgage
Finance - 1.5%
149,164 New York Community Bancorp, Inc. $ 2,383,641
83,044 People's United Financial, Inc. 1,259,777
-----------
$ 3,643,418
-----------
Total Banks $25,809,863
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Diversified Financials - 2.9%
Other Diversified Financial
Services - 1.1%
85,926 Bank of America Corp. $ 1,320,683
23,641 JPMorgan Chase & Co. 1,362,194
-----------
$ 2,682,877
-----------
Asset Management &
Custody Banks - 1.8%
42,702 Federated Investors, Inc. (Class B) $ 1,320,346
9,141 Northern Trust Corp. 586,944
35,972 State Street Corp. 2,419,477
-----------
$ 4,326,767
-----------
Total Diversified Financials $ 7,009,644
-----------
Insurance - 3.8%
Life & Health Insurance - 0.5%
14,326 Prudential Financial, Inc. $ 1,271,719
-----------
Property & Casualty
Insurance - 3.3%
49,901 The Chubb Corp. $ 4,599,375
36,829 The Travelers Companies, Inc. 3,464,504
-----------
$ 8,063,879
-----------
Total Insurance $ 9,335,598
-----------
Real Estate - 1.7%
Office REIT - 0.3%
10,036 Alexandria Real Estate Equities, Inc. $ 779,195
-----------
Residential REIT - 0.6%
19,332 Camden Property Trust $ 1,375,472
-----------
Specialized REIT - 0.8%
65,980 Chesapeake Lodging Trust $ 1,994,575
-----------
Total Real Estate $ 4,149,242
-----------
Software & Services - 1.4%
IT Consulting & Other
Services - 0.4%
14,532 Leidos Holdings, Inc. $ 557,157
9,980 Science Applications International
Corp.* 440,717
-----------
$ 997,874
-----------
Systems Software - 1.0%
58,823 Microsoft Corp. $ 2,452,919
-----------
Total Software & Services $ 3,450,793
-----------
Technology Hardware &
Equipment - 1.0%
Computer Hardware - 0.4%
30,455 Hewlett-Packard Co. $ 1,025,724
-----------
Technology Distributors - 0.6%
13,368 Anixter International, Inc.* $ 1,337,736
-----------
Total Technology Hardware
& Equipment $ 2,363,460
-----------
Semiconductors &
Semiconductor Equipment - 6.3%
Semiconductor Equipment - 0.2%
11,607 Cabot Microelectronics Corp.* $ 518,253
-----------
Semiconductors - 6.1%
45,088 Analog Devices, Inc. $ 2,437,908
82,564 Intel Corp. 2,551,228
43,428 Linear Technology Corp. 2,044,156
79,564 Microchip Technology, Inc. 3,883,519
71,402 NVIDIA Corp. 1,323,793
50,898 Xilinx, Inc. 2,407,984
-----------
$14,648,588
-----------
Total Semiconductors &
Semiconductor Equipment $15,166,841
-----------
Telecommunication
Services - 1.5%
Integrated Telecommunication
Services - 1.5%
27,063 AT&T, Inc. $ 956,948
329,620 Singapore Telecommunications, Ltd. 1,017,876
34,861 Verizon Communications, Inc. 1,705,749
-----------
$ 3,680,573
-----------
Total Telecommunication
Services $ 3,680,573
-----------
Utilities - 10.3%
Electric Utilities - 3.6%
42,450 American Electric Power Co., Inc. $ 2,367,436
13,699 Duke Energy Corp.* 1,016,329
17,033 NextEra Energy, Inc.* 1,745,542
28,485 Northeast Utilities 1,346,486
28,580 The Southern Co. 1,296,960
28,773 Westar Energy, Inc. 1,098,841
-----------
$ 8,871,594
-----------
Gas Utilities - 3.3%
54,227 AGL Resources, Inc. $ 2,984,112
34,835 National Fuel Gas Co. 2,727,580
95,900 Questar Corp. 2,378,320
-----------
$ 8,090,012
-----------
Multi-Utilities - 2.8%
61,173 Alliant Energy Corp. $ 3,722,989
73,246 Ameren Corp. 2,994,296
-----------
$ 6,717,285
-----------
The accompanying notes are an integral part of these financial statements.
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[Download Table]
Shares Value
Water Utilities - 0.6%
28,485 American Water Works Co., Inc. $ 1,408,583
------------
Total Utilities $ 25,087,474
------------
TOTAL COMMON STOCKS
(Cost $169,838,085) $238,735,783
------------
TOTAL INVESTMENT IN
SECURITIES - 98.3%
(Cost $169,838,085) (a) $238,735,783
------------
OTHER ASSETS &
LIABILITIES - 1.7% $ 4,062,343
------------
TOTAL NET ASSETS - 100.0% $242,798,126
------------
* Non-income producing security.
(A.D.R.) American Depositary Receipts.
REIT Real Estate Investment Trust.
(a) At June 30, 2014, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $168,584,178 was as
follows:
[Download Table]
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost $ 71,273,236
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over value (1,121,631)
------------
Net unrealized appreciation $ 70,151,605
============
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $44,629,119 and $50,690,897,
respectively.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3. See Notes to Financial Statements -- Note 1A.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $238,735,783 $ -- $ -- $238,735,783
------------ ------- ------- ------------
Total $238,735,783 $ -- $ -- $238,735,783
============ ======= ======= ============
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
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FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 27.04 $ 21.48 $ 20.26 $ 19.57 $ 16.75 $ 15.18
-------- -------- ------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.51 $ 0.64 $ 0.94 $ 0.55 $ 0.44 $ 0.47
Net realized and unrealized gain on investments 1.71 5.55 1.13 0.62 2.79 1.60
-------- ------- ------- ------- ------- -------
Net increase from investment operations $ 2.22 $ 6.19 $ 2.07 $ 1.17 $ 3.23 $ 2.07
Distributions to shareowners:
Net investment income $ (0.36) $ (0.63) $ (0.85) $ (0.48) $ (0.41) $ (0.50)
-------- ------- ------- ------- ------- -------
Net increase in net asset value $ 1.86 $ 5.56 $ 1.22 $ 0.69 $ 2.82 $ 1.57
-------- ------- ------- ------- ------- -------
Net asset value, end of period $ 28.90 $ 27.04 $ 21.48 $ 20.26 $ 19.57 $ 16.75
======== ======= ======= ======= ======= =======
Total return* 8.25% 29.10% 10.30% 6.03% 19.56% 14.14%
Ratio of net expenses to average net assets 0.72%** 0.72% 0.75% 0.75% 0.76% 0.77%
Ratio of net investment income to average net assets 3.72%** 2.47% 4.10% 2.58% 2.29% 3.02%
Portfolio turnover rate 39%** 22% 47% 34% 18% 33%
Net assets, end of period (in thousands) $101,723 $96,986 $85,168 $91,876 $95,224 $92,714
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption
of the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
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FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 27.20 $ 21.60 $ 20.39 $ 19.68 $ 16.85 $ 15.26
-------- -------- ------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.49 $ 0.49 $ 0.68 $ 0.48 $ 0.37 $ 0.69
Net realized and unrealized gain on investments 1.70 5.68 1.34 0.64 2.83 1.36
-------- -------- ------- ------- ------- -------
Net increase (decrease) from
investment operations $ 2.19 $ 6.17 $ 2.02 $ 1.12 $ 3.20 $ 2.05
Distributions to shareowners:
Net investment income $ (0.33) $ (0.57) $ (0.81) $ (0.41) $ (0.37) $ (0.46)
-------- -------- ------- ------- ------- -------
Net increase in net asset value $ 1.86 $ 5.60 $ 1.21 $ 0.71 $ 2.83 $ 1.59
-------- -------- ------- ------- ------- -------
Net asset value, end of period $ 29.06 $ 27.20 $ 21.60 $ 20.39 $ 19.68 $ 16.85
======== ======= ======= ======= ======= =======
Total return* 8.09% 28.83% 9.97% 5.77% 19.23% 13.89%
Ratio of net expenses to average net assets 0.97%** 0.97% 1.00% 1.00% 1.01% 1.01%
Ratio of net investment income to average net assets 3.48%** 2.23% 3.80% 2.34% 2.04% 2.75%
Portfolio turnover rate 39%** 22% 47% 34% 18% 33%
Net assets, end of period (in thousands) $141,075 $134,979 $83,657 $57,460 $56,700 $50,249
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption
of the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
13
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
ASSETS:
Investment in securities (cost $169,838,085) $238,735,783
Cash 4,253,355
Foreign currency (cost $66,010) 65,552
Receivables --
Investment securities sold 1,120,765
Portfolio shares sold 677,181
Dividends 508,828
Net unrealized appreciation on forward foreign currency contracts 799
Prepaid Expenses 30
------------
Total assets $245,362,293
------------
LIABILITIES:
Payables --
Investment securities purchased $ 2,487,879
Portfolio shares repurchased 32,740
Trustee fees 223
Due to affiliates 23,710
Accrued expenses 19,615
------------
Total liabilities $ 2,564,167
------------
NET ASSETS:
Paid-in capital $171,177,355
Undistributed net investment income 3,227,242
Accumulated net realized loss on investments and foreign currency transactions (502,911)
Net unrealized appreciation on investments 68,897,698
Net unrealized depreciation on foreign currency transactions (1,258)
------------
Total net assets $242,798,126
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $101,723,370/3,520,077 shares) $ 28.90
============
Class II (based on $141,074,756/4,854,856 shares) $ 29.06
============
The accompanying notes are an integral part of these financial statements.
14
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $22,642) $ 5,176,886
Interest 347
-----------
Total investment income $ 5,177,233
-----------
EXPENSES:
Management fees $ 756,738
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 171,490
Administrative reimbursements 43,238
Custodian fees 5,059
Professional fees 21,433
Printing expense 4,082
Fees and expenses of nonaffiliated Trustees 3,864
Miscellaneous 1,225
-----------
Total expenses $ 1,008,629
-----------
Net investment income $ 4,168,604
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments $ 8,994,200
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (5,598) $ 8,988,602
----------- -----------
Change in net unrealized appreciation (depreciation) on:
Investments $ 5,254,090
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,607) $ 5,250,483
----------- -----------
Net gain on investments and foreign currency transactions $14,239,085
-----------
Net increase in net assets resulting from operations $18,407,689
===========
The accompanying notes are an integral part of these financial statements.
15
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 4,168,604 $ 4,724,560
Net realized gain on investments 8,988,602 14,087,454
Change in net unrealized appreciation on investments 5,250,483 31,389,250
------------ ------------
Net increase in net assets resulting from operations $ 18,407,689 $ 50,201,264
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.36 and $0.63 per share, respectively) $ (1,251,959) $ (2,340,116)
Class II ($0.33 and $0.57 per share, respectively) (1,650,577) (2,582,834)
------------ ------------
Total distributions to shareowners $ (2,902,536) $ (4,922,950)
------------ ------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 25,314,027 $ 46,671,176
Reinvestment of distributions 2,902,536 4,922,950
Cost of shares repurchased (32,888,574) (33,732,760)
------------ ------------
Net increase (decrease) in net assets resulting from
Portfolio share transactions $ (4,672,011) $ 17,861,366
------------ ------------
Net increase in net assets $ 10,833,142 $ 63,139,680
NET ASSETS:
Beginning of period $231,964,984 $168,825,304
------------ ------------
End of period $242,798,126 $231,964,984
============ ============
Undistributed net investment income $ 3,227,242 $ 1,961,174
============ ============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 118,405 $ 3,294,274 213,345 $ 5,214,280
Reinvestment of distributions 44,604 1,251,959 94,100 2,340,116
Less shares repurchased (229,292) (6,235,646) (686,705) (16,813,213)
--------- ------------ --------- ------------
Net decrease (66,283) $ (1,689,413) (379,260) $ (9,258,817)
========= ============ ========= ============
CLASS II
Shares sold 795,039 $ 22,019,753 1,669,715 $ 41,456,896
Reinvestment of distributions 58,611 1,650,577 102,735 2,582,834
Less shares repurchased (961,956) (26,652,928) (682,178) (16,919,547)
--------- ------------ --------- ------------
Net increase (decrease) (108,306) $ (2,982,598) 1,090,272 $ 27,120,183
========= ============ ========= ============
The accompanying notes are an integral part of these financial statements.
16
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Equity Income VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objectives
of the Portfolio are current income and long-term growth of capital from a
portfolio consisting primarily of income producing equity securities of U.S.
corporations.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset
value of the Portfolio is computed once daily, on each day the New York
Stock Exchange (NYSE) is open, as of the close of regular trading on the
NYSE. In computing the net asset value, securities that have traded on an
exchange 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 available, generally are valued
at the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such fund's net asset value.
Trading in foreign securities is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities
used in computing the net asset value of the Portfolio's shares are
determined as of such times.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted
by the Portfolio's Board of Trustees. PIM's fair valuation team uses fair
value methods approved by the Valuation Committee of the Board of Trustees.
PIM's fair valuation team is responsible for monitoring developments that
may impact fair valued securities and for discussing and assessing fair
values on an ongoing basis, and at least quarterly, with the Valuation
Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
17
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers).
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
is recorded on the accrual basis. Dividend and interest income are
reported net of unrecoverable foreign taxes withheld at the applicable
country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject to
examination by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the Portfolio's taxable year. The tax character of
distributions paid during the years ended December 31, 2013 and the
components of distributable earnings (accumulated losses) on a federal
income tax basis at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 4,922,950
-----------
Total distributions $ 4,922,950
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 1,851
Capital loss carryforward (8,786,097)
Net unrealized appreciation 64,899,864
-----------
Total $56,115,618
===========
The difference between book-basis and tax-basis net unrealized appreciation
is attributable to the tax deferral of losses on wash sales, the tax-basis
adjustment on partnerships and the tax treatment of Real Estate Investment
Trust (REIT) holdings.
C. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the average daily net
asset value attributable to Class II shares of the Portfolio (see Note 4).
Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-ofpocket expenses (see
Note 3). Income, common expenses (excluding transfer agent and distribution
fees) and realized and unrealized gains and losses are calculated at the
Portfolio level and allocated daily to each class of shares based on its
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 and at the same time,
18
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
except that net investment income dividends to Class I and Class II shares
can reflect different transfer agent and distribution expense rates.
D. Risks
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making the Portfolio
more susceptible to any economic, political, or regulatory developments or
other risks affecting those industries and sectors. The Portfolio's
prospectus contains unaudited information regarding the Portfolio's
principal risks. Please refer to that document when considering the
Portfolio's principal risks.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of the
Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
F. 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, if any,
represent, among other things, 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 the market prices of those securities but are
included with the net realized and unrealized gain or loss on investments.
G. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation
are recorded in the Portfolio's financial statements. The Portfolio records
realized gains and losses at the time a contract is offset by entry into a
closing transaction or extinguished by delivery of the currency. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
The average value of contracts open during the six months ended June 30,
2014 was $286,648. As of June 30, 2014, open contracts were as follows:
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------------
In Net Unrealized
Contracts to Exchange Settlement Appreciation/
Currency Receive for Date Value (Depreciation)
--------------------------------------------------------------------------------------------------------------------------
CAD (Canadian Dollar) 40,722 38,111 7/2/14 $38,190 $ 79
CHF (Swiss Franc) 10,302 11,568 7/2/14 11,622 54
EUR (Euro) 6,854 9,356 7/2/14 9,387 31
EUR (Euro) 6,397 8,733 7/2/14 8,762 29
GBP (British Pound Sterling) 17,720 30,208 7/2/14 30,313 105
GBP (British Pound Sterling) 12,270 20,917 7/2/14 20,990 73
GBP (British Pound Sterling) 4,736 8,073 7/2/14 8,101 28
GBP (British Pound Sterling) 10,186 17,364 7/2/14 17,425 61
GBP (British Pound Sterling) 9,826 16,818 7/2/14 16,809 (9)
SEK (Swedish Krona) 257,885 38,341 7/2/14 38,573 232
SEK (Swedish Krona) 106,891 15,892 7/2/14 15,988 96
SGD (Singapore Dollar) 15,564 12,463 7/2/14 12,483 20
--------------------------------------------------------------------------------------------------------------------------
Total $ 799
--------------------------------------------------------------------------------------------------------------------------
19
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.65% of the
Portfolio's average daily net assets up to $1 billion and 0.60% on assets over
$1 billion. For the six months ended June 30, 2014, the effective management
fee (excluding waivers and/or assumption of expenses) was equivalent to 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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$19,617 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $250 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $3,843 in distribution fees payable to PFD at June 30, 2014.
5. Offsetting Assets and Liabilities
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities of the Fund as of June 30, 2014.
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------------------
Assets:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the --------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral Net
Description Assets Liabilities Liabilities Instruments Received Amount
----------------------------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $808 $(9) $799 $-- $-- $799
----------------------------------------------------------------------------------------------------------------------------
Total $808 $(9) $799 $-- $-- $799
----------------------------------------------------------------------------------------------------------------------------
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------------------
Liabilities:
Net Gross Amounts
Amounts of Not Offset in the
Gross Liabilities Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the --------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral Net
Description Liabilities Liabilities Liabilities Instruments Received Amount
----------------------------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $9 $(9) $-- $-- $-- $--
----------------------------------------------------------------------------------------------------------------------------
Total $9 $(9) $-- $-- $-- $--
----------------------------------------------------------------------------------------------------------------------------
20
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
6. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of June 30, 2014 were as follows:
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments --------------------------------- ------------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Value Location Value
----------------------------------------------------------------------------------------------------------------------------
Forward foreign Net unrealized appreciation Net unrealized depreciation
currency contracts on forward foreign on forward foreign
currency contracts $-- currency contracts $799
----------------------------------------------------------------------------------------------------------------------------
Total $-- $799
----------------------------------------------------------------------------------------------------------------------------
The effect of derivative instruments on the Statement of Operations for the six
months ended June 30, 2014 was as follows:
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------------------
Change in
Derivatives Not Unrealized
Accounted for as Realized Gain Appreciation or
Hedging Instruments or (Loss) on (Depreciation)
Under Accounting Location of Gain or (Loss) Derivatives on Derivatives
Standards Codification on Derivatives Recognized Recognized Recognized in
(ASC) 815 in Income in Income Income
----------------------------------------------------------------------------------------------------------------------------
Forward foreign Net realized gain (loss) on forward foreign
currency contracts currency contracts and other assets and
liabilities denominated in foreign currencies $(5,598)
Forward foreign Change in unrealized appreciation
currency contracts (depreciation) on forward foreign currency
contracts and other assets and liabilities
denominated in foreign currencies $(3,607)
----------------------------------------------------------------------------------------------------------------------------
7. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting. principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
21
This page for your notes.
22
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23
This page for your notes.
24
This page for your notes.
25
This page for your notes.
26
This page for your notes.
27
This page for your notes.
28
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective
August 8, 2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
29
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19610-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Fund VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 11
Notes to Financial Statements 16
Trustees, Officers and Service Providers 19
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Common Stocks 95.9%
International Common Stocks 3.5%
Depository Receipts for International Stocks 0.6%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Health Care 16.8%
Financials 16.4%
Information Technology 15.4%
Consumer Discretionary 13.6%
Consumer Staples 11.9%
Industrials 11.8%
Energy 9.5%
Materials 2.6%
Telecommunication Services 1.1%
Utilities 0.9%
Five Largest Holdings
(As a percentage of equity holdings)*
[Download Table]
--------------------------------------------------------------------------------
1. John Wiley & Sons, Inc. 3.08%
--------------------------------------------------------------------------------
2. Wells Farge & Co. 2.53
--------------------------------------------------------------------------------
3. The Hershey Co. 2.29
--------------------------------------------------------------------------------
4. Microsoft Corp. 2.27
--------------------------------------------------------------------------------
5. Walgreen Co. 2.14
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
[Download Table]
Prices and Distributions
Net Asset Value per Share 6/30/14 12/31/13
Class I $25.96 $26.25
Class II $25.99 $26.28
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.1500 $0.0591 $1.8407
Class II $0.1100 $0.0591 $1.8407
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Fund VCT Portfolio at net asset value during the
periods shown, compared to that of the Standard & Poor's 500 Index (the S&P
500). 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 MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Fund VCT Pioneer Fund VCT
Portfolio, Class I Portfolio, Class II S&P 500
6/30/2004 $ 10,000 $ 10,000 $ 10,000
6/30/2005 $ 10,829 $ 10,797 $ 10,632
6/30/2006 $ 12,168 $ 12,108 $ 11,549
6/30/2007 $ 14,570 $ 14,461 $ 13,925
6/30/2008 $ 12,778 $ 12,667 $ 12,099
6/30/2009 $ 9,515 $ 9,415 $ 8,929
6/30/2010 $ 10,731 $ 10,589 $ 10,218
6/30/2011 $ 14,168 $ 13,941 $ 13,352
6/30/2012 $ 13,563 $ 13,315 $ 14,077
6/30/2013 $ 16,266 $ 15,934 $ 16,975
6/30/2014 $ 20,311 $ 19,830 $ 21,148
The Standard & Poor's 500 Index (the S&P 500) is an unmanaged, commonly used
measure of the broad U.S. stock market. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not reflect
any fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
[Download Table]
Average Annual Total Returns
(As of June 30, 2014)
--------------------------------------------------------------------------------
Class I Class II S&P 500 Index
--------------------------------------------------------------------------------
10 Years 7.34% 7.09% 7.78%
5 Years 16.38% 16.07% 18.82%
1 Year 24.86% 24.46% 24.58%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,067.20 $1,065.50
Expenses Paid During Period* $ 3.74 $ 5.07
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.73%
and 0.99% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,021.17 $1,019.89
Expenses Paid During Period* $ 3.66 $ 4.96
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.73%
and 0.99% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
3
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, John Carey, Executive Vice President and Head of
U.S. Core Value at Pioneer Investments, discusses the investment environment
during the six-month period ended June 30, 2014, and Pioneer Fund VCT
Portfolio's performance during the period. Mr. Carey is responsible for the
day-to-day management of Pioneer Fund VCT Portfolio.
Q: How would you describe the market for equities during the six-month period
ended June 30, 2014?
A: As the new year of 2014 began, the U. S. stock market, as measured by the
Portfolio's benchmark, the Standard & Poor's 500 Index (the S&P 500),
paused. After its strong advance of 2013, the market treaded water for a
couple of weeks. Then it took a sharp plunge into early February. After
that, though, the market staged a strong recovery. By the end of the period
the S&P 500 showed a gain for the full six months. So, while volatile, the
market was positive during the period as a whole, and patient investors were
able to reap rewards.
While general economic data and corporate earnings have continued to be
relatively strong, geopolitical events have caused concerns among investors.
The conflict in the Ukraine, the fighting between Israel and the group
Hamas, tensions between China and its neighbors, and continued chaos in
several other countries in the Middle East and Africa have all caught the
attention of investors and led them to worry about potential disruptions to
trade and to the supply of certain raw materials. The prospect for higher
interest rates as we move through 2014 and into 2015 has likewise remained a
source of anxiety. And, while inflation numbers have stayed modest, a rise
in the price of several commodities as well as increasing costs of services
have led to a view that inflation could at some point accelerate. The
correction we saw in the stock market during the second half of January 2014
resulted, we think, from some of those jitters, and also from pessimism
about first calendar quarter 2014 corporate earnings due to cold, snowy
weather conditions in much of the U. S. over the winter months. In the
event, the "macroeconomic" risks stayed contained through the end of the
six-month reporting period, and earnings for the first quarter came in
meaningfully above expectations. So, after the sinking spell, the market
rallied. As we write, earnings reports for the second quarter are also
coming in at the high end of expectations. Nonetheless, we are keeping a
weather eye, recognizing the risks to the positive situation.
Q: How did the Portfolio perform in that environment during the six-month
period ended June 30, 2014?
A: Pioneer Fund VCT Portfolio's Class I shares returned 6.72% at net asset
value during the six-month period ended June 30, 2014, and Class II shares
returned 6.55%, while the Portfolio's benchmark, the S&P 500 Index, returned
7.12%. During the same period, the average return of the 230 variable
portfolios in Lipper's Large Cap Core Underlying Funds category was 6.39%.
4
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Q: What were some of the key reasons for the Portfolio's slight
underperformance of the S&P 500 Index during the six-month period ended June
30, 2014, and which of your investment decisions or individual security
selections aided benchmark-relative performance?
A: The primary reasons for the Portfolio's benchmark-relative underperformance
during the period were an underweight to the top-performing utilities sector
and stock selection in information technology and energy. We felt that
valuation levels in utilities were rich, due to the great interest among
investors in higher dividend-paying* stocks, and so we had not emphasized
holding them in the Portfolio. In information technology, the Portfolio did
hold shares of the strong-performing Apple, but the position weight in the
Portfolio was less than that in the benchmark S&P 500. In energy, two of the
Portfolio's holdings, Cabot Oil & Gas and Marathon Petroleum, actually
showed declines in price, while the energy sector in the S&P 500 had a
positive return during the period, second only to that of the utilities. In
the case of Cabot, investors grew frustrated over the length of time it
would take to build a pipeline enabling the company to get all of its
potential natural-gas production to market. Marathon Petroleum, a refiner of
petroleum products, declined as investors worried about near-term trends in
profit margins in the refining industry. We elected to retain both stocks,
viewing the longer-term prospects more favorably.
On the positive side, the Portfolio showed solid performance attribution
from stock selection in consumer discretionary, consumer staples, and
industrials. The Portfolio's long-term holding in John Wiley & Sons,
publisher of scientific journals and books, fared very well within consumer
discretionary; in consumer staples, Walgreen was a stand-out performer; and
in industrials the Portfolio's railroad stocks, Norfolk Southern and Union
Pacific, both showed gains during the period. The Portfolio's performance
also benefited from not owning any shares of the underperforming Amazon.com
in consumer discretionary, and Wal-Mart in consumer staples. While we admire
both companies, we have not been able to justify in our mind the very high
price-to-earnings multiple at which Amazon's stock sells; regarding
Wal-Mart, we have wanted to see progress with respect to operational issues
that appear to have arisen over the past couple of years.
Q: Could you highlight some of the key purchases and sales that you made in the
Portfolio over the course of the six-month period ended June 30, 2014?
A: The Portfolio showed ten new holdings during the period and also exited ten
positions. Roche is a leading, worldwide pharmaceuticals company, based in
Switzerland, with strong positions in cardiovascular, oncological, and
respiratory drugs, among many others. Mead Johnson provides nutritional
products for infants and children and for their mothers. Health insurer
Humana appears to be prospering under the new, Affordable Care Act. Regions
Financial and State Street expand the Portfolio's exposure to financial
services; Scripps Networks Interactive and CBS offer growth potential in the
entertainment and broadcasting industries; and American Airlines Group helps
the Portfolio participate in consumer travel. In addition to the new
purchases, the Portfolio received shares of NOW, which was spun out from an
existing holding in National Oilwell Varco and is a distributor of oil-
drilling equipment; and shares of Time, the well-known magazine publisher,
which spun out from Portfolio holding Time Warner.
* Dividends are not guaranteed.
5
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
Liquidated from the Portfolio during the six-month period were positions in
stocks we felt had reached fair value or that no longer seemed to us to
offer above-average opportunities for appreciation. Among the exited
positions during the period was Covidien, which received a premium takeover
offer from another company and reached what we considered to be a full
valuation. Other stocks eliminated, for a variety of reasons, were Chevron,
International Paper, Coach, Comcast, Target, Amgen, Citigroup, Mastercard,
and Oracle.
Q: Economic signals appeared generally positive as of June 30, 2014, though
worries persisted among investors about any number of issues. What is your
outlook for the market and the domestic economy as we move into the second
half of 2014?
A: The daily headlines about events in such diverse and far-flung places as the
Ukraine, Nigeria, Iraq, the Gaza strip, Afghanistan, China, and Venezuela,
among many others, remind us that we are in an interconnected and even
interdependent world. Whether, for example, Europe does continue in its
apparent, if very slow, economic recovery, whether the Middle East remains a
reliable source of oil, and whether China does resume a brisk pace of
economic expansion are all matters of speculative interest to today's
investor. Likewise, the course of political developments here at home in the
United States, the condition of our employment markets, and the pace of our
productivity and industrial innovation are consequential to the fortunes of
numerous companies. Of utmost importance to investors in stocks are of
course corporate earnings, and so far earnings have remained strong.
However, from one day and week and month to the next, headline stories about
economic trends and political events can either give investors pause or
provide them with encouragement.
Our own view is that the underlying economy in the U.S. is still growing and
that companies with astute managements, sound finances, and good industry
positions should be able to achieve continued earnings growth at least for a
while. We do worry, though, about the chaos creeping, even bounding, into
parts of the world where territorial and other types of disputes are
prevalent. What we would say, then, in regard to our forecast is that
barring potential geopolitical shocks we generally like what we see in
regard to business conditions. We are hopeful for the market in an
environment where trade and commerce can take place and investors can plan
for the future.
Thank you as always for your support.
Please refer to the Schedule of Investments on pages 7 to 10 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that the market forecast discussed will be realized.
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 opinion as of the date of this report. These opinions should not
be relied upon for any other purposes.
6
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
[Download Table]
Shares Value
COMMON STOCKS - 99.8%
Energy - 9.5%
Oil & Gas Drilling - 0.8%
16,326 Ensco Plc $ 907,236
4,844 Helmerich & Payne, Inc. 562,437
------------
$ 1,469,673
------------
Oil & Gas Equipment &
Services - 2.6%
11,143 Cameron International Corp.* $ 754,493
5,760 FMC Technologies, Inc.* 351,763
10,420 Halliburton Co. 739,924
10,992 National Oilwell Varco, Inc. 905,191
16,037 Schlumberger, Ltd. 1,891,564
------------
$ 4,642,935
------------
Integrated Oil & Gas - 1.2%
16,562 Exxon Mobil Corp. $ 1,667,462
4,324 Occidental Petroleum Corp. 443,772
------------
$ 2,111,234
------------
Oil & Gas Exploration &
Production - 3.7%
12,524 Apache Corp. $ 1,260,165
38,983 Cabot Oil & Gas Corp. 1,330,880
15,003 ConocoPhillips 1,286,207
35,748 Marathon Oil Corp. 1,427,060
28,390 Southwestern Energy Co.* 1,291,461
------------
$ 6,595,773
------------
Oil & Gas Refining &
Marketing - 1.2%
13,863 Marathon Petroleum Corp.* $ 1,082,284
14,892 Phillips 66 1,197,764
------------
$ 2,280,048
------------
Total Energy $ 17,099,663
------------
Materials - 2.7%
Fertilizers & Agricultural
Chemicals - 0.8%
6,489 Monsanto Co. $ 809,438
11,298 The Mosaic Co. 558,686
------------
$ 1,368,124
------------
Industrial Gases - 0.8%
13,035 Airgas, Inc. $ 1,419,642
------------
Specialty Chemicals - 1.1%
18,252 Ecolab, Inc. $ 2,032,178
------------
Total Materials $ 4,819,944
------------
Capital Goods - 9.3%
Aerospace & Defense - 1.8%
27,712 United Technologies Corp. $ 3,199,350
------------
Building Products - 0.3%
9,705 Allegion Plc $ 550,079
------------
Electrical Components &
Equipment - 0.9%
11,342 Eaton Corp. Plc $ 875,376
5,707 Rockwell Automation, Inc. 714,288
------------
$ 1,589,664
------------
Industrial Conglomerates - 3.0%
22,609 3M Co. $ 3,238,513
81,614 General Electric Co. 2,144,816
------------
$ 5,383,329
------------
Construction & Farm
Machinery & Heavy
Trucks - 1.5%
10,955 Cummins, Inc. $ 1,690,247
15,460 PACCAR, Inc. 971,352
------------
$ 2,661,599
------------
Industrial Machinery - 1.8%
29,120 Ingersoll-Rand Plc $ 1,820,291
13,030 SPX Corp. 1,409,976
------------
$ 3,230,267
------------
Trading Companies &
Distributors - 0.0%+
2,747 NOW, Inc./DE $ 99,469
------------
Total Capital Goods $ 16,713,757
------------
Transportation - 2.5%
Airlines - 0.4%
16,868 American Airlines Group, Inc. $ 724,649
------------
Railroads - 2.1%
17,721 Norfolk Southern Corp. $ 1,825,795
19,255 Union Pacific Corp. 1,920,686
------------
$ 3,746,481
------------
Total Transportation $ 4,471,130
------------
Automobiles &
Components - 2.6%
Auto Parts & Equipment - 1.4%
16,534 BorgWarner, Inc. $ 1,077,851
27,969 Johnson Controls, Inc. 1,396,492
------------
$ 2,474,343
------------
Automobile
Manufacturers - 1.2%
123,343 Ford Motor Co. $ 2,126,433
------------
Total Automobiles
& Components $ 4,600,776
------------
The accompanying notes are an integral part of these financial statements.
7
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Consumer Services - 1.2%
Restaurants - 1.2%
11,994 McDonald's Corp. $ 1,208,276
11,506 Starbucks Corp. 890,334
------------
$ 2,098,610
------------
Total Consumer Services $ 2,098,610
------------
Media - 6.6%
Broadcasting - 1.4%
12,266 CBS Corp. (Class B) $ 762,209
22,084 Scripps Networks Interactive, Inc. 1,791,896
------------
$ 2,554,105
------------
Movies & Entertainment - 2.1%
36,398 The Walt Disney Co. $ 3,120,765
8,734 Time Warner, Inc. 613,564
------------
$ 3,734,329
------------
Publishing - 3.1%
90,955 John Wiley & Sons, Inc. $ 5,510,964
1,091 Time, Inc. 26,424
------------
$ 5,537,388
------------
Total Media $ 11,825,822
------------
Retailing - 3.3%
Department Stores - 1.1%
25,527 Macy's, Inc. $ 1,481,077
7,005 Nordstrom, Inc. 475,850
------------
$ 1,956,927
------------
Apparel Retail - 1.5%
18,245 Ross Stores, Inc. $ 1,206,542
28,704 The TJX Companies, Inc. 1,525,618
------------
$ 2,732,160
------------
Home Improvement Retail - 0.7%
10,940 Lowe's Companies, Inc. $ 525,011
8,286 The Home Depot, Inc. 670,835
------------
$ 1,195,846
------------
Total Retailing $ 5,884,933
------------
Food & Staples Retailing - 3.1%
Drug Retail - 3.1%
23,878 CVS Caremark Corp. $ 1,799,685
51,663 Walgreen Co. 3,829,778
------------
$ 5,629,463
------------
Total Food & Staples Retailing $ 5,629,463
------------
Food, Beverage &
Tobacco - 6.5%
Soft Drinks - 0.9%
11,622 Coca-Cola Enterprises, Inc. $ 555,299
12,960 Dr. Pepper Snapple Group, Inc. 759,197
4,371 PepsiCo., Inc. 390,505
------------
$ 1,705,001
------------
Packaged Foods & Meats - 5.6%
10,451 Campbell Soup Co. $ 478,760
22,357 General Mills, Inc. 1,174,637
13,290 Kraft Foods Group, Inc.* 796,736
18,250 Mead Johnson Nutrition Co. 1,700,352
48,099 Mondelez International, Inc. 1,809,003
42,064 The Hershey Co. 4,095,772
------------
$ 10,055,260
------------
Total Food, Beverage
& Tobacco $ 11,760,261
------------
Household & Personal
Products - 2.2%
Household Products - 2.2%
36,480 Colgate-Palmolive Co. $ 2,487,206
7,631 The Clorox Co. 697,473
10,263 The Procter & Gamble Co. 806,569
------------
$ 3,991,248
------------
Total Household &
Personal Products $ 3,991,248
------------
Health Care Equipment &
Services - 7.3%
Health Care Equipment - 4.3%
37,303 Abbott Laboratories $ 1,525,693
16,084 Becton Dickinson and Co. 1,902,737
22,238 CR Bard, Inc. 3,180,256
63,729 Smith & Nephew Plc 1,132,697
------------
$ 7,741,383
------------
Health Care Distributors - 1.2%
11,966 McKesson Corp. $ 2,228,189
------------
Health Care Services - 0.8%
11,244 DaVita HealthCare Partners, Inc.* $ 813,166
8,636 Express Scripts Holding Co.* 598,734
------------
$ 1,411,900
------------
Managed Health Care - 1.0%
15,294 Aetna, Inc. $ 1,240,038
4,170 Humana, Inc. 532,592
------------
$ 1,772,630
------------
Total Health Care Equipment
& Services $ 13,154,102
------------
Pharmaceuticals,
Biotechnology & Life
Sciences - 9.5%
Biotechnology - 1.6%
17,114 Celgene Corp.* $ 1,469,750
17,605 Gilead Sciences, Inc.* 1,459,631
------------
$ 2,929,381
------------
The accompanying notes are an integral part of these financial statements.
8
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
Shares Value
Pharmaceuticals - 7.0%
38,266 AbbVie, Inc. $ 2,159,733
12,676 Eli Lilly & Co. 788,067
34,176 Johnson & Johnson 3,575,493
2,856 Mallinckrodt Plc* 228,537
33,679 Merck & Co., Inc. 1,948,330
35,434 Pfizer, Inc. 1,051,681
3,181 Roche Holding AG 949,151
55,141 Zoetis, Inc. 1,779,400
------------
$ 12,480,392
------------
Life Sciences Tools &
Services - 0.9%
14,218 Thermo Fisher Scientific, Inc. $ 1,677,724
------------
Total Pharmaceuticals,
Biotechnology & Life
Sciences $ 17,087,497
------------
Banks - 7.7%
Diversified Banks - 4.3%
8,396 Canadian Imperial Bank of Commerce $ 764,561
55,267 US Bancorp/MN 2,394,166
86,305 Wells Fargo & Co. 4,536,191
------------
$ 7,694,918
------------
Regional Banks - 3.4%
33,264 BB&T Corp. $ 1,311,600
65,113 KeyCorp 933,069
33,016 Regions Financial Corp. 350,630
39,537 The PNC Financial Services Group, Inc. 3,520,770
------------
$ 6,116,069
------------
Total Banks $ 13,810,987
------------
Diversified Financials - 5.5%
Other Diversified Financial
Services - 1.2%
71,889 Bank of America Corp. $ 1,104,934
19,048 JPMorgan Chase & Co. 1,097,546
------------
$ 2,202,480
------------
Consumer Finance - 1.5%
14,126 American Express Co. $ 1,340,134
22,325 Discover Financial Services, Inc. 1,383,704
------------
$ 2,723,838
------------
Asset Management & Custody
Banks - 2.5%
23,514 Franklin Resources, Inc. $ 1,360,050
24,273 Invesco, Ltd. 916,306
15,594 State Street Corp. 1,048,852
13,595 T. Rowe Price Group, Inc. 1,147,554
------------
$ 4,472,762
------------
Investment Banking &
Brokerage - 0.3%
17,350 Morgan Stanley Co. $ 560,926
------------
Total Diversified Financials $ 9,960,006
------------
Insurance - 3.2%
Life & Health Insurance - 0.7%
21,238 Aflac, Inc. $ 1,322,066
------------
Property & Casualty
Insurance - 2.5%
32,262 The Chubb Corp. $ 2,973,589
15,202 The Travelers Companies, Inc. 1,430,052
------------
$ 4,403,641
------------
Total Insurance $ 5,725,707
------------
Software & Services - 9.6%
Internet Software &
Services - 2.7%
16,599 eBay, Inc.* $ 830,946
23,105 Facebook, Inc.* 1,554,735
1,647 Google, Inc. 947,486
1,647 Google, Inc.* 962,951
15,965 Yahoo!, Inc.* 560,850
------------
$ 4,856,968
------------
IT Consulting & Other
Services - 0.7%
6,992 International Business Machines Corp. $ 1,267,440
------------
Data Processing & Outsourced
Services - 2.4%
12,916 Automatic Data Processing, Inc. $ 1,023,980
11,427 DST Systems, Inc. 1,053,227
20,904 Fiserv, Inc.* 1,260,929
4,178 Visa, Inc. 880,346
------------
$ 4,218,482
------------
Application Software - 1.1%
26,254 Adobe Systems, Inc.* $ 1,899,739
------------
Systems Software - 2.7%
97,442 Microsoft Corp. $ 4,063,331
37,824 Symantec Corp. 866,170
------------
$ 4,929,501
------------
Total Software & Services $ 17,172,130
------------
Technology Hardware &
Equipment - 3.3%
Communications
Equipment - 0.8%
8,259 F5 Networks, Inc.* $ 920,383
9,297 Motorola Solutions, Inc. 618,901
------------
$ 1,539,284
------------
The accompanying notes are an integral part of these financial statements.
9
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Computer Hardware - 2.1%
39,826 Apple, Inc. $ 3,701,030
------------
Computer Storage &
Peripherals - 0.4%
24,837 EMC Corp. $ 654,207
------------
Total Technology Hardware
& Equipment $ 5,894,521
------------
Semiconductors &
Semiconductor
Equipment - 2.6%
Semiconductor
Equipment - 0.5%
9,052 ASML Holding NV (A.D.R.) $ 844,280
------------
Semiconductors - 2.1%
29,691 Analog Devices, Inc. $ 1,605,392
23,330 Intel Corp. 720,897
29,937 Xilinx, Inc. 1,416,319
------------
$ 3,742,608
------------
Total Semiconductors &
Semiconductor Equipment $ 4,586,888
------------
Telecommunication
Services - 0.6%
Integrated Telecommunication
Services - 0.6%
21,105 Verizon Communications, Inc. $ 1,032,668
------------
Total Telecommunication
Services $ 1,032,668
------------
Utilities - 1.0%
Electric Utilities - 1.0%
15,321 American Electric Power Co., Inc. $ 854,452
19,029 The Southern Co. 863,536
------------
$ 1,717,988
------------
Total Utilities $ 1,717,988
------------
TOTAL COMMON STOCKS
(Cost $101,251,825) $179,038,101
------------
TOTAL INVESTMENT IN
SECURITIES - 99.8%
(Cost $101,251,825) (a) $179,038,101
------------
OTHER ASSETS &
LIABILITIES - 0.2% $ 347,085
------------
TOTAL NET ASSETS - 100.0% $179,385,186
============
+ Amount rounds to less than 0.1%.
* Non-income producing security.
(A.D.R.) American Depositary Receipts.
(a) At June 30, 2014, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $101,861,720 was as
follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $77,306,602
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (130,221)
-----------
Net unrealized appreciation $77,176,381
===========
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $15,513,778 and $63,841,058,
respectively.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3. See Notes to Financial Statements - Note 1A.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $179,038,101 $ -- $ -- $179,038,101
------------ ------ ------ ------------
Total $179,038,101 $ -- $ -- $179,038,101
============ ====== ====== ============
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
10
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 26.25 $ 20.90 $ 19.96 $ 22.43 $ 19.60 $ 15.94
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.16 $ 0.31 $ 0.33 $ 0.33 $ 0.28 $ 0.30
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 1.60 6.42 1.65 (1.22) 2.83 3.66
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment
operations $ 1.76 $ 6.73 $ 1.98 $ (0.89) $ 3.11 $ 3.96
Distributions to shareowners:
Net investment income $ (0.15) $ (0.30) $ (0.33) $ (0.34) $ (0.28) $ (0.30)
Net realized gain (1.90) (1.08) (0.71) (1.24) -- --
-------- -------- -------- -------- -------- --------
Total Distributions $ (2.05) $ (1.38) $ (1.04) $ (1.58) $ (0.28) $ (0.30)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.29) $ 5.35 $ 0.94 $ (2.47) $ 2.83 $ 3.66
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 25.96 $ 26.25 $ 20.90 $ 19.96 $ 22.43 $ 19.60
======== ======== ======== ======== ======== ========
Total return* 6.72% 33.28% 10.24% (4.30)% 16.02% 25.20%
Ratio of net expenses to average net assets 0.73%** 0.72% 0.74% 0.73% 0.72% 0.74%
Ratio of net investment income to average net assets 1.17%** 1.27% 1.50% 1.48% 1.39% 1.79%
Portfolio turnover rate 15%** 7% 44% 10% 25% 21%
Net assets, end of period (in thousands) $159,064 $194,609 $178,900 $205,739 $257,193 $249,439
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
Note: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and
sales charges.
The accompanying notes are an integral part of these financial statements.
11
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 26.28 $ 20.92 $ 19.97 $ 22.42 $ 19.59 $ 15.93
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.12 $ 0.25 $ 0.27 $ 0.32 $ 0.24 $ 0.27
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 1.60 6.43 1.66 (1.27) 2.81 3.65
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations $ 1.72 $ 6.68 $ 1.93 $ (0.95) $ 3.05 $ 3.92
Distributions to shareowners:
Net investment income $ (0.11) $ (0.24) $ (0.27) $ (0.26) $ (0.22) $ (0.26)
Net realized gain (1.90) (1.08) (0.71) (1.24) -- --
------- ------- ------- ------- ------- -------
Total Distributions $ (2.01) $ (1.32) $ (0.98) $ (1.50) $ (0.22) $ (0.26)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.29) $ 5.36 $ 0.95 $ (2.45) $ 2.83 $ 3.66
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 25.99 $ 26.28 $ 20.92 $ 19.97 $ 22.42 $ 19.59
======= ======= ======= ======= ======= =======
Total return* 6.55% 32.98% 9.95% (4.55)% 15.72% 24.91%
Ratio of net expenses to average net assets 0.99%** 0.98% 0.99% 0.98% 0.97% 0.99%
Ratio of net investment income to average net assets 0.91%** 1.01% 1.25% 1.16% 1.14% 1.56%
Portfolio turnover rate 15%** 7% 44% 10% 25% 21%
Net assets, end of period (in thousands) $20,321 $21,563 $21,156 $24,393 $63,142 $68,112
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
Note: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and
sales charges.
The accompanying notes are an integral part of these financial statements.
12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
ASSETS:
Investment in securities (cost $101,251,825) $179,038,101
Receivables --
Investment securities sold 742,006
Portfolio shares sold 184,281
Dividends 195,168
------------
Total assets $180,159,556
------------
LIABILITIES:
Payables --
Portfolio shares repurchased $ 71,317
Investment securities purchased 412,156
Trustee fees 206
Due to custodian 251,432
Due to affiliates 15,799
Accrued expenses 23,460
------------
Total liabilities $ 774,370
------------
NET ASSETS:
Paid-in capital $ 77,834,685
Undistributed net investment income 122,460
Accumulated net realized gain on investments and foreign currency transactions 23,641,728
Net unrealized appreciation on investments 77,786,276
Net unrealized appreciation on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies 37
------------
Total net assets $179,385,186
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $159,063,943/6,128,143 shares) $ 25.96
============
Class II (based on $20,321,243/781,770 shares) $ 25.99
============
The accompanying notes are an integral part of these financial statements.
13
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $3,874) $ 1,932,443
Interest 64
-------------
Total investment income $ 1,932,507
-------------
EXPENSES:
Management fees $ 663,693
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 25,110
Administrative reimbursements 39,021
Custodian fees 10,458
Professional fees 20,335
Printing expense 3,766
Fees and expenses of nonaffiliated Trustees 3,724
Miscellaneous 1,030
-------------
Total expenses $ 768,637
-------------
Net investment income $ 1,163,870
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments $ 24,269,836
Other assets and liabilities denominated in foreign currencies (2,078) $ 24,267,758
------------- -------------
Change in net unrealized appreciation (depreciation) on:
Investments $ (12,128,981)
Other assets and liabilities denominated in foreign currencies 56 $ (12,128,925)
------------- -------------
Net gain on investments and foreign currency transactions $ 12,138,833
-------------
Net increase in net assets resulting from operations $ 13,302,703
=============
The accompanying notes are an integral part of these financial statements.
14
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 1,163,870 $ 2,602,074
Net realized gain on investments and foreign currency transactions 24,267,758 14,543,189
Change in net unrealized appreciation (depreciation) on investments
and foreign currency transactions (12,128,925) 42,912,321
------------- -------------
Net increase in net assets resulting from operations $ 13,302,703 $ 60,057,584
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.15 and $0.30 per share, respectively) $ (1,038,722) $ (2,322,999)
Class II ($0.11 and $0.24 per share, respectively) (82,002) (215,031)
Net realized gain:
Class I ($1.90 and $1.08 per share, respectively) $ (12,977,962) $ (8,148,805)
Class II ($1.90 and $1.08 per share, respectively) (1,387,566) (965,936)
------------- -------------
Total distributions to shareowners $ (15,486,252) $ (11,652,771)
------------- -------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,355,585 $ 7,292,799
Reinvestment of distributions 15,486,252 11,652,771
Cost of shares repurchased (53,445,313) (51,234,675)
------------- -------------
Net decrease in net assets resulting from
Portfolio share transactions $ (34,603,476) $ (32,289,105)
------------- -------------
Net increase (decrease) in net assets $ (36,787,025) $ 16,115,708
NET ASSETS:
Beginning of period $ 216,172,211 $ 200,056,503
------------- -------------
End of period $ 179,385,186 $ 216,172,211
============= =============
Undistributed net investment income $ 122,460 $ 79,314
============= =============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 103,368 $ 2,731,670 255,993 $ 6,029,775
Reinvestment of distributions 539,597 14,016,684 461,150 10,471,804
Less shares repurchased (1,927,347) (50,308,151) (1,865,980) (44,237,366)
---------- ------------- ---------- -------------
Net decrease (1,284,382) $ (33,559,797) (1,148,837) $ (27,735,787)
========== ============= ========== =============
CLASS II
Shares sold 23,815 $ 623,915 52,797 $ 1,263,024
Reinvestment of distributions 56,496 1,469,568 52,062 1,180,967
Less shares repurchased (118,905) (3,137,162) (295,636) (6,997,309)
---------- ------------- ---------- -------------
Net decrease (38,594) $ (1,043,679) (190,777) $ (4,553,318)
========== ============= ========== =============
The accompanying notes are an integral part of these financial statements.
15
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Fund VCT Portfolio (the Portfolio) is one of 10 portfolios comprising
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust. The
Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objectives
of the Portfolio are reasonable income and capital growth.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
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 available, generally are valued at
the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such funds' net asset value.
Trading in foreign securities is substantially completed each day at various
times prior to the close of the NYSE. The values of such securities used in
computing the net asset value of the Portfolio's shares are determined as of
such times.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted by
the Portfolio's Board of Trustees. PIM's fair valuation team uses fair value
methods approved by the Valuation Committee of the Board of Trustees. PIM's
fair valuation team is responsible for monitoring developments that may
impact fair valued securities and for discussing and assessing fair values
on an ongoing basis, and at least quarterly, with the Valuation Committee of
the Board of Trustees.
Inputs used when applying fair value methods to value a security may include
credit ratings, the financial condition of the company, current market
conditions and comparable securities. The Portfolio may use fair value
methods if it is determined that a significant event has occurred after the
close of the exchange or market on which the security trades and prior to
the determination of the Portfolio's net asset value. Examples of a
significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
16
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
At June 30, 2014, there were no securities that were valued using fair value
methods (other than securities that were valued using prices supplied by
independent pricing services or broker-dealers).
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. Dividend
and interest income are reported net of unrecoverable foreign taxes withheld
at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
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, if any,
represent, among other things, 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 the market prices of those securities, but are
included with the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation is
recorded in the Portfolio's financial statements. The Portfolio records
realized gains and losses at the time a contract is offset by entry into a
closing transaction or extinguished by delivery of the currency. Risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
At, and for the six months ended June 30, 2014, the Portfolio had no
outstanding forward foreign currency contracts.
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no provision for federal income taxes is required.
As of December 31, 2013, the Portfolio did not accrue any interest or
penalties with respect to uncertain tax positions, which, if applicable,
would be recorded as an income tax expense in the Statement of Operations.
Tax returns filed within prior three years remain subject to examination by
Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the current taxable year. The tax character of distributions
paid during the year ended December 31, 2013 and the components of
distributable earnings (accumulated losses) on a federal income tax basis at
December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 2,538,030
Long-term capital gain 9,114,741
------------
Total distributions $ 11,652,771
============
Distributable Earnings
Undistributed ordinary income $ 510,324
Undistributed long-term gain 13,918,383
Net unrealized appreciation 84,305,343
------------
Total $103,734,050
============
The difference between book-basis and tax-basis net unrealized appreciation is
attributable to the tax deferral of losses on wash sales and the treatment of
non-taxable dividends.
17
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
E. Portfolio Shares and Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly-owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the average daily net asset
value attributable to Class II shares of the Portfolio (see Note 4). Class I
shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated among the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its respective percentage of the adjusted net assets at the
beginning of the day.
Distributions paid by the Portfolio with respect to each class of shares are
calculated in the same manner and at the same time, except that net
investment income dividends to Class I and Class II shares can reflect
different transfer agent and distribution expense rates. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
F. Risks
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making the Portfolio
more susceptible to any economic, political, or regulatory developments or
other risks affecting those industries and sectors. The Portfolio's
prospectus contains unaudited information regarding the Portfolio's
principal risks. Please refer to that document when considering the
Portfolio's principal risks.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.65% of the
Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$14,994 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $249 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to its Class II shares. Pursuant to
the Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average
daily net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $556 in distribution fees payable to PFD at June 30, 2014.
5. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
18
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
19
This page for your notes.
20
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19611-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer High Yield VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 26
Notes to Financial Statements 31
Trustees, Officers, and Service Providers 35
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Corporate Bonds 56.4%
Convertible Corporate Bonds 16.2%
International Corporate Bonds 9.2%
U.S. Common Stocks 7.2%
Senior Secured Loans 4.6%
Convertible Preferred Stocks 2.9%
U.S. Preferred Stocks 1.6%
International Common Stocks 0.7%
Collateralized Mortgage Obligations 0.7%
Warrants 0.4%
Asset Backed Securities 0.1%
Quality Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
A 0.0%*
BBB 3.1%
BB 25.5%
B 42.9%
CCC 12.6%
Not Rated 12.3%
Cash Equivalent 3.6%
*Amount is less than 0.1%.
Due to rounding, figures may not total 100%. Credit rating breakdown reflects
the average of available ratings across Moody's, Standard & Poor's (S&P) and
Fitch. Bond ratings are ordered highest to lowest in portfolio. Based on S&P's
measures, AAA (highest possible rating) through BBB are considered investment
grade. BB or lower ratings are considered non-investment grade. Cash equivalents
and some bonds may not be rated.
Five Largest Holdings
(As a percentage of long-term holdings)*
[Download Table]
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1. Alere, Inc., 3.0% (Perpetual) 1.05%
--------------------------------------------------------------------------------
2. Crown Cork & Seal Co., Inc., 7.375%, 12/15/26 0.99
--------------------------------------------------------------------------------
3. Frontier Communications Corp., 8.75%, 4/15/22 0.99
--------------------------------------------------------------------------------
4. CHS, Inc., 7.125%, 7/15/20 0.92
--------------------------------------------------------------------------------
5. ON Semiconductor Corp., 2.625%, 12/15/26 0.86
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $10.42 $10.49
Class II $10.37 $10.44
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.2550 $0.0339 $0.3585
Class II $0.2406 $0.0339 $0.3585
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer High Yield VCT Portfolio at net asset value during the
periods shown, compared to that of the Bank of America (BofA) Merrill Lynch (ML)
High Yield Master II Index and the BofA ML All-Convertibles Speculative Quality
Index. Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[Download Table]
Pioneer High Pioneer High BofA ML High BofA ML All-
Yield VCT Portfolio, Yield VCT Yield Master Convertibles
Class I Portfolio, II Index Speculative
Class II Quality Index
6/30/2004 $10,000 $10,000 $10,000 $10,000
6/30/2005 $10,700 $10,674 $10,271 $11,062
6/30/2006 $11,154 $11,088 $11,484 $11,582
6/30/2007 $12,624 $12,530 $13,722 $12,940
6/30/2008 $12,380 $12,259 $12,399 $12,671
6/30/2009 $10,598 $10,441 $9,919 $12,223
6/30/2010 $13,147 $12,925 $12,790 $15,587
6/30/2011 $16,276 $15,997 $16,194 $17,988
6/30/2012 $16,251 $15,871 $15,413 $19,156
6/30/2013 $18,495 $18,006 $18,445 $20,992
6/30/2014 $20,870 $20,274 $22,698 $23,469
The BofA ML High Yield Master II Index is an unmanaged, commonly accepted
measure of the performance of high-yield securities. The BofA ML All-
Convertibles Speculative Quality Index is an unmanaged index of high-yield U.S.
convertible securities. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
BofA ML
BofA ML All-Convertibles
High Yield Speculative
Class I Class II Master II Index Quality Index
--------------------------------------------------------------------------------
10 Years 7.63% 7.32% 8.91% 8.54%
5 Years 14.51% 14.19% 13.94% 18.01%
1 Year 12.85% 12.60% 11.80% 23.06%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12B-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,055.90 $1,054.70
Expenses Paid During Period* $ 4.28 $ 5.55
* Expenses are equal to the Portfolio's annualized expense ratio of 0.84% and
1.09% for Class I and Class II respectively, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,020.63 $1,019.39
Expenses Paid During Period* $ 4.21 $ 5.46
* Expenses are equal to the Portfolio's annualized expense ratio of 0.84% and
1.09% for Class I and Class II respectively, multiplied by the average
account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
3
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
Investments in high-yield or lower-rated securities are subject to
greater-than-average price volatility, illiquidity and possibility of default.
When interest rates rise, the prices of fixed-income securities in the Portfolio
will generally fall. Conversely, when interest rates fall the prices of fixed
income securities in the Portfolio will generally rise. Investments in the
Portfolio are subject to possible loss due to the financial failure of the
issuers of underlying securities and their inability to meet their debt
obligations. Prepayment risk is the chance that an issuer may exercise its right
to prepay its security, if falling interest rates prompt the issuer to do so.
Forced to reinvest the unanticipated proceeds at lower interest rates, the
Portfolio would experience a decline in income and lose the opportunity for
additional price appreciation. The Portfolio may invest in mortgage-backed
securities, which during times of fluctuating interest rates may increase or
decrease more than other fixed-income securities. Mortgage-backed securities are
also subject to prepayments. The Portfolio may use derivatives, such as options,
futures, inverse floating rate obligations, swaps, and others, which can be
illiquid, may disproportionately increase losses, and have a potentially large
impact on Portfolio performance. Derivatives may have a leveraging effect on the
Portfolio. At times, the Portfolio's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
High-yield bonds continued to post solid gains during the six-month period ended
June 30, 2014, sustaining a multi-year rally in the asset class. In the
following discussion, lead portfolio manager Tracy Wright discusses the reasons
for the strong performance of the high-yield market, and for Pioneer High Yield
VCT Portfolio, during the six-month period. Ms. Wright, a senior vice president
and portfolio manager at Pioneer, and Andrew Feltus, CFA, Director of High Yield
and Bank Loans, and a senior vice president and portfolio manager at Pioneer,
are responsible for the day-to-day management of the Portfolio.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: The Portfolio's Class I shares returned 5.59% at net asset value during the
six-month period ended June 30, 2014, and Class II shares returned 5.47%,
while the Portfolio's benchmarks, the Bank of America Merrill Lynch (BofA
ML) High Yield Master II Index and the BofA ML All-Convertibles Speculative
Quality Index, returned 5.64% and 9.63%, respectively. During the same
period, the average return of the 112 variable portfolios in Lipper's High
Yield Underlying Funds category was 4.72%.
Q: How would you describe the market environment for investment in high-yield
bonds during the six-month period ended June 30, 2014?
A: The environment for high-yield investments was very good, steady and
uneventful, as returns were positive during each month of the period. The
U.S. economy continued to improve despite a tough revised gross domestic
product number for the first quarter of -2.9%, mainly caused by harsh
winter weather. The U.S. Federal Reserve (the Fed) began tapering its
stimulative quantitative easing (QE) program by reducing its monthly bond
purchases at the beginning of 2014, and continued to do so through the end
of the period. At the same time, Fed officials made it quite clear that
they didn't intend to raise the benchmark Federal funds target interest
rate from its historically low range of zero to 0.25% until several months
after the tapering of QE is completed, roughly the second half of 2015.
Corporate profits remained strong and bond default rates continued to
decline--and were expected to remain well below long-term averages.
High-yield bonds benefited from this backdrop during the six-month period,
as yield spreads, or the yield advantage of high-yield bonds over
comparable-maturity U.S. Treasuries, tightened. Increased tensions between
Russia and the Ukraine, coupled with concern that the winter weather was
likely to dampen economic growth in the first quarter, produced some
short-lived volatility at times during the period, but at each juncture the
market quickly recovered.
Q: Which of your investment strategies had the greatest influence on the
Portfolio's performance relative to its primary benchmark, the BofA ML High
Yield Master II Index (the BofA ML Index), during the six-month period
ended June 30, 2014, and which individual holdings either contributed or
detracted from results?
A: The Portfolio's benchmark-relative performance during the six-month period
was aided by positive security selection within high-yield investments,
specifically in basic materials, services and health care. Relative
performance also benefited from the Portfolio's out-of-benchmark positions
in convertible securities and equities. With regard to sector allocation,
performance was helped by a Portfolio overweight in energy and underweights
in consumer cyclicals and financial services; conversely, underweights in
media, utilities and banking hurt relative returns. The Portfolio's stake
in floating-rate bank loans issued by high-yield companies also was a
slight drag on performance relative to the BofA ML Index.
4
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
With regard to individual holdings, the Portfolio's performance benefited
from positions in the convertible preferred shares of PetroQuest Energy and
Alere, a medical diagnostics company. Rising oil prices helped the former
perform well, and both companies were buoyed by improved results and
considerable increases in acquisition activity in their sectors. A position
in the common stock of LyondellBasell Industries, a chemicals manufacturer,
also proved helpful to Portfolio returns, as the company continued to
benefit from the low price of natural gas - which it uses in production -
along with strong demand. Holdings of the convertible bonds of Salix
Pharmaceuticals rose in value during the period on the strength of a
promising drug pipeline and synergies from a recent acquisition. Finally,
the Portfolio's holdings of the convertible bonds of technology firm Lam
Research appreciated in value during the period due to improved demand for
the company's products.
Securities that detracted from the Portfolio's performance during the
six-month period included the common stock of General Cable, which
decreased in value after the firm missed its financial expectations by a
wide margin. A position in Marathon Petroleum also declined after rule
changes governing the export of refined products were expected to be a
negative for U.S. refiners. Portfolio holding Kennametal, an industrial
company, lagged after lowering its earnings expectations; and finally, the
convertible bonds of Mentor Graphics, a technology firm, underperformed
early in the period due to fears that a competitor would take market share,
and because of rising expectations that the company's customers might cut
research and development spending.
Q: What is your outlook?
A: We remain positive about the prospects for the high-yield market, despite
low overall yields and credit spreads that also are below historical
averages. We believe steady growth in the U.S. economy will continue to
support high-yield bonds by keeping default rates well below average
through at least 2015. Employment growth has been steady, which should lead
to continued economic expansion, helped by the Fed's still-accommodative
monetary policy. While most of this positive outlook is already reflected
in high-yield bond prices, we feel that strong corporate business
fundamentals should continue to support asset values.
Please refer to the Schedule of Investments on pages 6 to 25 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
5
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
CONVERTIBLE CORPORATE BONDS - 15.6%
Energy - 0.8%
Oil & Gas Equipment & Services - 0.1%
85,000 NR/NR SEACOR Holdings, Inc., 3.0%, 11/15/28 (144A) $ 83,512
-----------
Oil & Gas Exploration & Production - 0.4%
400,000 NR/NR Cobalt International Energy, Inc., 2.625%, 12/1/19 $ 369,000
-----------
Oil & Gas Storage & Transportation - 0.3%
200,000 NR/NR Golar LNG, Ltd., 3.75%, 3/7/17 $ 269,580
-----------
Total Energy $ 722,092
-----------
Materials - 0.3%
Diversified Metals & Mining - 0.2%
135,000 NR/NR RTI International Metals, Inc., 1.625%, 10/15/19 $ 135,506
-----------
Steel - 0.1%
100,000 BB-/B1 United States Steel Corp., 2.75%, 4/1/19 $ 124,188
-----------
Total Materials $ 259,694
-----------
Capital Goods - 0.5%
Electrical Components & Equipment - 0.5%
459,000 B/B3 General Cable Corp., 4.5%, 11/15/29 (Step) $ 454,410
-----------
Total Capital Goods $ 454,410
-----------
Transportation - 0.3%
Airlines - 0.3%
120,000 B/B2 United Airlines, Inc., 4.5%, 1/15/15 $ 263,175
-----------
Total Transportation $ 263,175
-----------
Automobiles & Components - 0.8%
Automobile Manufacturers - 0.8%
361,000 BBB-/Baa3 Ford Motor Co., 4.25%, 11/15/16 $ 721,323
-----------
Total Automobiles & Components $ 721,323
-----------
Consumer Durables & Apparel - 1.5%
Homebuilding - 1.1%
450,000 B/B2 KB Home, 1.375%, 2/1/19 $ 452,250
109,000 BB-/Ba3 Lennar Corp., 2.75%, 12/15/20 (144A) 208,122
185,000 B+/B2 Standard Pacific Corp., 1.25%, 8/1/32 232,522
100,000 BB-/B1 The Ryland Group, Inc., 0.25%, 6/1/19 91,375
-----------
$ 984,269
-----------
Housewares & Specialties - 0.4%
365,000 BB-/B1 Jarden Corp., 1.125%, 3/15/34 (144A) $ 372,756
-----------
Total Consumer Durables & Apparel $ 1,357,025
-----------
Consumer Services - 0.2%
Specialized Consumer Services - 0.2%
100,000 NR/NR Ascent Capital Group, Inc., 4.0%, 7/15/20 $ 93,188
65,000 NR/NR Carriage Services, Inc., 2.75%, 3/15/21 (144A) 67,600
-----------
$ 160,788
-----------
Total Consumer Services $ 160,788
-----------
The accompanying notes are an integral part of these financial statements.
6
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Media - 0.2%
Broadcasting - 0.2%
175,000 NR/NR Liberty Media Corp., 1.375%, 10/15/23 (144A) $ 177,406
-----------
Total Media $ 177,406
-----------
Retailing - 0.4%
Internet Retail - 0.4%
380,000 NR/NR Shutterfly, Inc., 0.25%, 5/15/18 $ 381,662
-----------
Total Retailing $ 381,662
-----------
Health Care Equipment & Services - 1.7%
Health Care Equipment - 0.9%
460,000 B+/NR Hologic, Inc., 2.0%, 12/15/37 (Step) $ 577,012
40,000 B/B2 Insulet Corp., 2.0%, 6/15/19 44,225
170,000 NR/NR NuVasive, Inc., 2.75%, 7/1/17 194,438
-----------
$ 815,675
-----------
Health Care Supplies - 0.6%
400,000 CCC+/NR Alere, Inc., 3.0%, 5/15/16 $ 442,750
85,000 NR/NR Endologix, Inc., 2.25%, 12/15/18 84,788
-----------
$ 527,538
-----------
Managed Health Care - 0.2%
150,000 NR/NR Molina Healthcare, Inc., 1.125%, 1/15/20 $ 187,500
-----------
Total Health Care Equipment & Services $ 1,530,713
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 2.9%
Biotechnology - 2.0%
90,000 NR/NR ARIAD Pharmaceuticals, Inc., 3.625%, 6/15/19 (144A) $ 87,572
75,000 NR/NR BioMarin Pharmaceutical, Inc., 0.75%, 10/15/18 77,578
75,000 NR/NR BioMarin Pharmaceutical, Inc., 1.5%, 10/15/20 78,984
215,000 NR/NR Cubist Pharmaceuticals, Inc., 1.125%, 9/1/18 (144A) 241,875
305,000 NR/NR Cubist Pharmaceuticals, Inc., 1.875%, 9/1/20 (144A) 347,700
313,000 NR/NR Emergent Biosolutions, Inc., 2.875%, 1/15/21 (144A) 327,281
200,000 NR/NR PDL BioPharma, Inc., 4.0%, 2/1/18 229,000
320,000 NR/NR Theravance, Inc., 2.125%, 1/15/23 461,400
-----------
$ 1,851,390
-----------
Pharmaceuticals - 0.9%
429,000 NR/NR Auxilium Pharmaceuticals, Inc., 1.5%, 7/15/18 $ 464,392
165,000 NR/NR Salix Pharmaceuticals, Ltd., 1.5%, 3/15/19 323,916
-----------
$ 788,308
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 2,639,698
-----------
Real Estate - 0.5%
Specialized REIT - 0.3%
265,000 NR/NR Corsicanto, Ltd., 3.5%, 1/15/32 $ 216,306
-----------
Real Estate Operating Companies - 0.2%
180,000 NR/NR Forest City Enterprises, Inc., 3.625%, 8/15/20 (144A) $ 189,900
-----------
Total Real Estate $ 406,206
-----------
The accompanying notes are an integral part of these financial statements.
7
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Software & Services - 2.6%
Internet Software & Services - 0.5%
205,000 NR/NR Akamai Technologies, Inc., 2/15/19 (144A) (c) $ 209,100
200,000 NR/NR WebMD Health Corp., 1.5%, 12/1/20 (144A) 222,625
-----------
$ 431,725
-----------
Data Processing & Outsourced Services - 0.3%
330,000 NR/NR Cardtronics, Inc., 1.0%, 12/1/20 (144A) $ 301,538
-----------
Application Software - 1.6%
105,000 BBB/NR Citrix Systems, Inc., 0.5%, 4/15/19 (144A) $ 111,169
360,000 NR/NR Mentor Graphics Corp., 4.0%, 4/1/31 440,775
700,000 BB-/NR Nuance Communications, Inc., 2.75%, 11/1/31 699,125
145,000 NR/NR TIBCO Software, Inc., 2.25%, 5/1/32 146,359
-----------
$ 1,397,428
-----------
Systems Software - 0.2%
165,000 NR/NR ServiceNow, Inc., 11/1/18 (144A) (c) $ 181,088
-----------
Total Software & Services $ 2,311,779
-----------
Technology Hardware & Equipment - 1.3%
Communications Equipment - 0.3%
125,000 NR/NR Emulex Corp., 1.75%, 11/15/18 (144A) $ 114,766
160,000 NR/NR Finisar Corp., 0.5%, 12/55/33 (144A) 156,400
-----------
$ 271,166
-----------
Computer Storage & Peripherals - 0.1%
75,000 BB+/NR SanDisk Corp., 0.5%, 10/15/20 (144A) $ 94,359
-----------
Electronic Components - 0.9%
310,000 BB+/NR Vishay Intertechnology, Inc., 2.25%, 5/15/41 (144A) $ 299,731
350,000 BB+/NR Vishay Intertechnology, Inc., 2.25%, 6/1/42 (144A) 482,125
-----------
$ 781,856
-----------
Total Technology Hardware & Equipment $ 1,147,381
-----------
Semiconductors & Semiconductor Equipment - 1.6%
Semiconductor Equipment - 0.8%
146,000 BBB/Baa1 Lam Research Corp., 1.25%, 5/15/18 $ 199,472
225,000 BBB/NR Novellus Systems, Inc., 2.625%, 5/15/41 455,344
-----------
$ 654,816
-----------
Semiconductors - 0.8%
628,000 BB+/NR ON Semiconductor Corp., 2.625%, 12/15/26 $ 736,722
-----------
Total Semiconductors & Semiconductor Equipment $ 1,391,538
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $11,856,152) $13,924,890
-----------
PREFERRED STOCKS - 1.6%
Energy - 0.1%
Oil & Gas Storage & Transportation - 0.1%
4,500 7.62 B+/Ba2 NuStar Logistics LP, Floating Rate Note, 1/15/43 $ 121,140
-----------
Total Energy $ 121,140
-----------
The accompanying notes are an integral part of these financial statements.
8
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Consumer Services - 0.1%
Hotels, Resorts & Cruise Lines - 0.1%
500 NR/NR Perseus Holding Corp., 14.0%, 9/15/14 $ 41,000
-----------
Total Consumer Services $ 41,000
-----------
Banks - 0.2%
Regional Banks - 0.2%
5,950 6.62 BBB-/Ba1 Fifth Third Bancorp, Floating Rate Note (Perpetual) $ 159,341
-----------
Total Banks $ 159,341
-----------
Diversified Financials - 1.0%
Other Diversified Financial Services - 0.8%
16,000 7.12 BB+/B1 Citigroup, Inc., Floating Rate Note (Perpetual) $ 442,384
10,350 8.12 B/B3 GMAC Capital Trust I, Floating Rate Note, 2/15/40 282,555
-----------
$ 724,939
-----------
Investment Banking & Brokerage - 0.2%
7,000 7.12 BB+/Ba3 Morgan Stanley, Floating Rate Note (Perpetual) $ 195,090
-----------
Total Diversified Financials $ 920,029
-----------
Utilities - 0.2%
Electric Utilities - 0.2%
8,000 BB+/Ba1 PPL Capital Funding, Inc., 5.9%, 4/30/73 $ 196,240
-----------
Total Utilities $ 196,240
-----------
TOTAL PREFERRED STOCKS
(Cost $1,291,399) $ 1,437,750
-----------
CONVERTIBLE PREFERRED STOCKS - 2.8%
Energy - 0.9%
Oil & Gas Exploration & Production - 0.9%
900 NR/NR Penn Virginia Corp., 6.0% (Perpetual) (144A) $ 107,649
13,170 NR/NR PetroQuest Energy, Inc., 6.875% (Perpetual) 570,426
1,054 CCC/NR SandRidge Energy, Inc., 7.0% (Perpetual) 116,796
-----------
$ 794,871
-----------
Total Energy $ 794,871
-----------
Consumer Durables & Apparel - 0.5%
Home Furnishings - 0.5%
5,000 NR/NR Sealy Corp., 8.0%, 7/15/16 (4.0% cash, 4.0% PIK) (PIK) $ 396,250
-----------
Total Consumer Durables & Apparel $ 396,250
-----------
Food, Beverage & Tobacco - 0.3%
Packaged Foods & Meats - 0.3%
2,700 NR/NR Post Holdings, Inc., 2.5% (Perpetual) (144A) $ 275,231
-----------
Total Food, Beverage & Tobacco $ 275,231
-----------
Health Care Equipment & Services - 1.0%
Health Care Supplies - 1.0%
2,797 CCC/NR Alere, Inc., 3.0% (Perpetual) $ 900,436
-----------
Total Health Care Equipment & Services $ 900,436
-----------
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Diversified Financials - 0.1%
Asset Management & Custody Banks - 0.1%
2,000 BB+/NR AMG Capital Trust II, 5.15%, 10/15/37 $ 126,125
-----------
Total Diversified Financials $ 126,125
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,264,927) $ 2,492,913
-----------
Shares
COMMON STOCKS - 7.7%
Energy - 0.5%
Oil & Gas Drilling - 0.0%+
4,720 Hercules Offshore, Inc.* $ 18,974
-----------
Oil & Gas Exploration & Production - 0.3%
5,400 Marathon Oil Corp. $ 215,568
-----------
Oil & Gas Refining & Marketing - 0.2%
2,700 Marathon Petroleum Corp.* $ 210,789
-----------
Total Energy $ 445,331
-----------
Materials - 1.4%
Commodity Chemicals - 0.8%
6,590 Axiall Corp. $ 311,509
4,417 LyondellBasell Industries NV 431,320
-----------
$ 742,829
-----------
Diversified Metals & Mining - 0.6%
14,658 Freeport-McMoRan, Inc. $ 535,017
-----------
Total Materials $ 1,277,846
-----------
Capital Goods - 1.5%
Aerospace & Defense - 0.2%
6,585 Orbital Sciences Corp.* $ 194,587
-----------
Electrical Components & Equipment - 0.6%
20,112 General Cable Corp. $ 516,074
-----------
Construction & Farm Machinery & Heavy Trucks - 0.4%
15,596 Commercial Vehicle Group, Inc.* $ 156,584
3,800 Joy Global, Inc. 234,004
-----------
$ 390,588
-----------
Industrial Machinery - 0.3%
1,142 ESCO Technologies, Inc. $ 39,559
4,579 Kennametal, Inc. 211,916
-----------
$ 251,475
-----------
Total Capital Goods $ 1,352,724
-----------
Transportation - 0.1%
Marine - 0.1%
161,006 Horizon Lines, Inc.* $ 64,386
-----------
Total Transportation $ 64,386
-----------
The accompanying notes are an integral part of these financial statements.
10
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Floating Moody's
Rate (b) Ratings
Shares (unaudited) (unaudited) Value
Consumer Services - 0.2%
Hotels, Resorts & Cruise Lines - 0.0%+
952 NR/NR Perseus Holding Corp.* $ 1,428
-----------
Restaurants - 0.2%
2,314 Starbucks Corp. $ 179,057
-----------
Total Consumer Services $ 180,485
-----------
Household & Personal Products - 0.2%
Personal Products - 0.2%
1,769 Nu Skin Enterprises, Inc. $ 130,835
-----------
Total Household & Personal Products $ 130,835
-----------
Health Care Equipment & Services - 1.0%
Health Care Supplies - 0.1%
2,700 Alere, Inc.* $ 101,034
-----------
Health Care Services - 0.1%
9,932 BioScrip, Inc.* $ 82,833
-----------
Managed Health Care - 0.8%
4,000 Aetna, Inc. $ 324,320
4,200 Cigna Corp. 386,274
-----------
$ 710,594
-----------
Total Health Care Equipment & Services $ 894,461
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 1.3%
Biotechnology - 0.3%
4,256 Cubist Pharmaceuticals, Inc.* $ 297,154
-----------
Life Sciences Tools & Services - 1.0%
1,866 Bio-Rad Laboratories, Inc.* $ 223,379
4,006 Thermo Fisher Scientific, Inc. 472,708
1,607 Waters Corp.* 167,835
-----------
$ 863,922
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 1,161,076
-----------
Real Estate - 0.5%
Real Estate Operating Companies - 0.5%
24,050 Forest City Enterprises, Inc.* $ 477,874
-----------
Total Real Estate $ 477,874
-----------
Technology Hardware & Equipment - 0.7%
Computer Hardware - 0.2%
4,443 NCR Corp.* $ 155,905
-----------
Computer Storage & Peripherals - 0.1%
3,800 EMC Corp. $ 100,092
-----------
Electronic Equipment Manufacturers - 0.2%
4,884 Itron, Inc.* $ 198,046
-----------
Electronic Manufacturing Services - 0.2%
2,822 TE Connectivity, Ltd. $ 174,512
-----------
Total Technology Hardware & Equipment $ 628,555
-----------
The accompanying notes are an integral part of these financial statements.
11
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Rate (b) Ratings
Shares (unaudited) (unaudited) Value
Telecommunication Services - 0.3%
Integrated Telecommunication Services - 0.3%
25,476 Windstream Holdings, Inc. $ 253,741
-----------
Total Telecommunication Services $ 253,741
-----------
TOTAL COMMON STOCKS
(Cost $4,816,299) $ 6,867,314
-----------
Principal
Amount ($)
ASSET BACKED SECURITIES - 0.1%
Banks - 0.1%
Thrifts & Mortgage Finance - 0.1%
100,000 CCC/C Citicorp Residential Mortgage Trust Series 2006-2, 5.918%,
9/25/36 (Step) $ 90,375
-----------
Total Banks $ 90,375
-----------
Diversified Financials - 0.0%+
Other Diversified Financial Services - 0.0%+
19,465 A/NR Mid-State Capital Trust 2010-1, 7.0%, 12/15/45 (144A) $ 20,223
-----------
Total Diversified Financials $ 20,223
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $112,117) $ 110,598
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.7%
Banks - 0.7%
Thrifts & Mortgage Finance - 0.7%
59,865 CCC/Caa3 Global Mortgage Securitization, Ltd., 5.25%, 4/25/32 (144A) $ 45,618
100,000 6.05 BB+/Ba2 GS Mortgage Securities Corp. II Commercial Mortgage Pass Through
Certificates Series 2004-GG2, Floating Rate Note, 8/10/38 99,902
36,066 BB/Ba3 RALI Series 2003-QS15 Trust, 5.5%, 8/25/33 37,517
450,000 BB/B1 TimberStar Trust 1, 7.5296%, 10/15/36 (144A) 478,037
-----------
$ 661,074
-----------
Total Banks $ 661,074
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $643,423) $ 661,074
-----------
CORPORATE BONDS - 63.0%
Energy - 18.5%
Oil & Gas Drilling - 1.8%
350,000 BB/Ba3 Atwood Oceanics, Inc., 6.5%, 2/1/20 $ 373,188
200,000 NR/NR North Atlantic Drilling, Ltd., 6.25%, 2/1/19 (144A) 197,500
190,000 CCC+/Caa1 Ocean Rig UDW, Inc., 7.25%, 4/1/19 (144A) 188,100
150,000 B-/B3 Offshore Group Investment, Ltd., 7.125%, 4/1/23 152,250
200,000 B-/B3 Offshore Group Investment, Ltd., 7.5%, 11/1/19 211,500
150,000 B+/B1 Pacific Drilling SA, 5.375%, 6/1/20 (144A) 147,000
310,000 B+/B1 Shelf Drilling Holdings, Ltd., 8.625%, 11/1/18 (144A) 331,700
-----------
$ 1,601,238
-----------
The accompanying notes are an integral part of these financial statements.
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S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Oil & Gas Equipment & Services - 2.2%
160,000 BB-/Ba3 Bristow Group, Inc., 6.25%, 10/15/22 $ 172,000
95,000 BB-/B1 Calfrac Holdings LP, 7.5%, 12/1/20 (144A) 102,125
225,000 B/B1 Exterran Partners LP, 6.0%, 10/1/22 228,375
398,000 B/B1 Exterran Partners LP, 6.0%, 4/1/21 401,980
350,000 BB/Ba3 Forum Energy Technologies, Inc., 6.25%, 10/1/21 (144A) 371,000
155,000 B-/B2 FTS International, Inc., 6.25%, 5/1/22 (144A) 158,488
2,000 NR/NR Green Field Energy Services, Inc., %, 11/15/16 (144A) (c) (d) 160
60,000 B/B2 Hiland Partners LP, 5.5%, 5/15/22 (144A) 60,750
165,000 B/B2 Hiland Partners LP, 7.25%, 10/1/20 (144A) 179,850
165,000 BB/B1 McDermott International, Inc., 8.0%, 5/1/21 (144A) 169,538
105,000 B/B3 Seitel, Inc., 9.5%, 4/15/19 112,875
-----------
$ 1,957,141
-----------
Integrated Oil & Gas - 0.4%
135,000 CCC+/B3 Athlon Holdings LP, 6.0%, 5/1/22 (144A) $ 139,725
155,000 B/B3 Energy XXI Gulf Coast, Inc., 7.5%, 12/15/21 165,850
50,000 B-/B3 Jones Energy Holdings LLC, 6.75%, 4/1/22 (144A) 52,750
-----------
$ 358,325
-----------
Oil & Gas Exploration & Production - 11.2%
120,000 BB-/B1 Antero Resources Finance Corp., 6.0%, 12/1/20 $ 128,700
300,000 B-/B3 Approach Resources, Inc., 7.0%, 6/15/21 312,750
150,000 BB-/B1 Berry Petroleum Co., LLC, 6.375%, 9/15/22 159,750
55,000 B-/B3 Bonanza Creek Energy, Inc., 6.75%, 4/15/21 58,850
130,000 B-/B3 BreitBurn Energy Partners LP, 7.875%, 4/15/22 140,725
520,000 B-/B3 Carrizo Oil & Gas, Inc., 8.625%, 10/15/18 547,950
100,000 BB+/Ba1 Cimarex Energy Co., 5.875%, 5/1/22 110,500
255,000 B-/B3 Comstock Resources, Inc., 7.75%, 4/1/19 271,575
150,000 BB+/Ba3 Concho Resources, Inc., 5.5%, 4/1/23 161,250
195,000 BB/B1 Denbury Resources, Inc., 4.625%, 7/15/23 189,191
205,000 BB/B1 Denbury Resources, Inc., 5.5%, 5/1/22 209,612
200,000 B/B2 EP Energy LLC, 7.75%, 9/1/22 225,500
400,000 B/B2 EP Energy LLC, 9.375%, 5/1/20 458,000
195,000 B/B3 EPL Oil & Gas, Inc., 8.25%, 2/15/18 208,650
245,000 B-/B3 Gulfport Energy Corp., 7.75%, 11/1/20 265,212
225,000 CCC+/Caa1 Halcon Resources Corp., 8.875%, 5/15/21 241,875
100,000 B/B3 Kodiak Oil & Gas Corp., 5.5%, 1/15/21 104,250
100,000 B/B3 Kodiak Oil & Gas Corp., 5.5%, 2/1/22 103,750
355,000 B/B3 Kodiak Oil & Gas Corp., 8.125%, 12/1/19 393,162
150,000 B/Caa1 Legacy Reserves LP, 6.625%, 12/1/21 152,250
400,000 B+/NR Linn Energy LLC, 6.25%, 11/1/19 419,000
135,000 B-/Caa1 Memorial Production Partners LP, 7.625%, 5/1/21 141,244
160,000 CCC+/Caa1 Midstates Petroleum Co., Inc., 10.75%, 10/1/20 181,600
535,000 B-/Caa1 Northern Oil and Gas, Inc., 8.0%, 6/1/20 571,112
80,000 B+/B2 Oasis Petroleum, Inc., 6.5%, 11/1/21 86,000
210,000 CCC/Caa2 Parsley Energy LLC, 7.5%, 2/15/22 (144A) 224,175
185,000 B-/B3 PDC Energy, Inc., 7.75%, 10/15/22 206,275
190,000 B-/Caa1 Penn Virginia Corp., 7.25%, 4/15/19 201,400
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Oil & Gas Exploration & Production - (continued)
150,000 B-/Caa1 Penn Virginia Corp., 8.5%, 5/1/20 $ 167,625
160,000 B-/Caa1 QR Energy LP, 9.25%, 8/1/20 174,800
350,000 CCC+/B3 Resolute Energy Corp., 8.5%, 5/1/20 364,875
145,000 CCC+/B3 Rice Energy, Inc., 6.25%, 5/1/22 (144A) 148,625
385,000 B+/B1 Rosetta Resources, Inc., 5.625%, 5/1/21 396,069
155,000 B+/B1 Rosetta Resources, Inc., 5.875%, 6/1/22 161,975
325,000 CCC+/B3 Samson Investment Co., 10.5%, 2/15/20 (144A) 342,469
360,000 B-/B3 Sanchez Energy Corp., 7.75%, 6/15/21 (144A) 390,600
85,000 BB/Ba2 SM Energy Co., 6.5%, 11/15/21 92,012
265,000 B-/B3 Stone Energy Corp., 7.5%, 11/15/22 292,162
595,000 B/B3 Swift Energy Co., 7.875%, 3/1/22 621,775
105,000 CCC+/Caa1 Talos Production LLC, 9.75%, 2/15/18 (144A) 111,300
100,000 B/B3 Vanguard Natural Resources LLC, 7.875%, 4/1/20 108,250
200,000 BB+/Ba2 Whiting Petroleum Corp., 5.75%, 3/15/21 219,000
-----------
$10,065,845
-----------
Oil & Gas Refining & Marketing - 1.2%
525,000 B+/B2 Calumet Specialty Products Partners LP, 6.5%, 4/15/21 (144A) $ 535,500
235,000 BB+/Ba2 Tesoro Corp., 5.375%, 10/1/22 245,575
300,000 B+/B3 Western Refining, Inc., 6.25%, 4/1/21 313,500
-----------
$ 1,094,575
-----------
Oil & Gas Storage & Transportation - 1.2%
225,000 B+/B2 Global Partners LP, 6.25%, 7/15/22 (144A) $ 225,000
150,000 BB-/B1 Holly Energy Partners LP, 6.5%, 3/1/20 161,625
395,000 BB+/Ba3 Sabine Pass Liquefaction LLC, 5.625%, 2/1/21 417,712
220,000 BB/Ba3 Targa Resources Partners LP, 4.25%, 11/15/23 218,625
-----------
$ 1,022,962
-----------
Coal & Consumable Fuels - 0.5%
110,000 B/B2 Alpha Natural Resources, Inc., 7.5%, 8/1/20 (144A) $ 106,425
100,000 B-/Caa1 Murray Energy Corp., 8.625%, 6/15/21 (144A) 108,250
200,000 B+/B1 SunCoke Energy Partners LP, 7.375%, 2/1/20 (144A) 213,500
-----------
$ 428,175
-----------
Total Energy $16,528,261
-----------
Materials - 6.1%
Commodity Chemicals - 1.3%
500,000 BB/Ba3 Axiall Corp., 4.875%, 5/15/23 $ 497,500
200,000 CCC+/Caa1 Hexion US Finance Corp., 8.875%, 2/1/18 208,000
225,000 BB-/B2 Rain CII Carbon LLC, 8.0%, 12/1/18 (144A) 236,250
200,000 BB-/B2 Tronox Finance LLC, 6.375%, 8/15/20 206,500
-----------
$ 1,148,250
-----------
Specialty Chemicals - 0.2%
200,000 B/B1 Rentech Nitrogen Partners LP, 6.5%, 4/15/21 (144A) $ 202,000
-----------
Metal & Glass Containers - 1.9%
215,000 BB+/Ba1 Ball Corp., 4.0%, 11/15/23 $ 204,788
50,000 CCC+/Caa2 Beverage Packaging Holdings Luxembourg II SA, 6.0%,
6/15/17 (144A) 51,250
The accompanying notes are an integral part of these financial statements.
14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Metal & Glass Containers - (continued)
765,000 B+/Ba3 Crown Cork & Seal Co., Inc., 7.375%, 12/15/26 $ 848,194
225,000 CCC+/Caa2 Reynolds Group Issuer, Inc., 8.25%, 2/15/21 244,688
350,000 CCC+/Caa2 Reynolds Group Issuer, Inc., 8.5%, 5/15/18 366,188
-----------
$ 1,715,108
-----------
Paper Packaging - 0.6%
200,000 B-/NR Exopack Holding Corp., 10.0%, 6/1/18 (144A) $ 215,000
285,000 B/B3 Packaging Dynamics Corp., 8.75%, 2/1/16 (144A) 292,695
-----------
$ 507,695
-----------
Diversified Metals & Mining - 0.7%
70,000 BB/Ba3 Amsted Industries, Inc., 5.0%, 3/15/22 (144A) $ 70,000
200,000 B+/B1 First Quantum Minerals, Ltd., 7.25%, 5/15/22 (144A) 208,500
250,000 B/B3 Global Brass & Copper, Inc., 9.5%, 6/1/19 285,000
55,000 B/Caa1 Prince Mineral Holding Corp., 12.0%, 12/15/19 (144A) 62,012
-----------
$ 625,512
-----------
Gold - 0.3%
100,000 BB/Ba3 Eldorado Gold Corp., 6.125%, 12/15/20 (144A) $ 101,000
240,000 BB-/B1 IAMGOLD Corp., 6.75%, 10/1/20 (144A) 222,000
-----------
$ 323,000
-----------
Steel - 0.3%
230,000 B-/Caa1 JMC Steel Group, Inc., 8.25%, 3/15/18 (144A) $ 234,600
-----------
Paper Products - 0.8%
150,000 BB/Ba2 Clearwater Paper Corp., 4.5%, 2/1/23 $ 145,500
220,000 BB/Ba3 Neenah Paper, Inc., 5.25%, 5/15/21 (144A) 223,300
265,000 BB-/Ba3 Resolute Forest Products, Inc., 5.875%, 5/15/23 261,025
80,000 B-/Caa1 Unifrax I LLC, 7.5%, 2/15/19 (144A) 83,600
-----------
$ 713,425
-----------
Total Materials $ 5,469,590
-----------
Capital Goods - 5.0%
Aerospace & Defense - 1.3%
300,000 CCC+/Caa1 Accudyne Industries Borrower, 7.75%, 12/15/20 (144A) $ 321,000
200,000 BB-/Ba3 Bombardier, Inc., 4.75%, 4/15/19 203,500
275,000 BB-/Ba3 Bombardier, Inc., 6.0%, 10/15/22 281,875
110,000 BB-/Ba3 Bombardier, Inc., 6.125%, 1/15/23 (144A) 113,300
210,000 BB/B1 DigitalGlobe, Inc., 5.25%, 2/1/21 207,900
-----------
$ 1,127,575
-----------
Building Products - 0.7%
200,000 BB/Ba3 Calcipar SA, 6.875%, 5/1/18 (144A) $ 211,000
100,000 BB-/NR Gibraltar Industries, Inc., 6.25%, 2/1/21 104,000
330,000 BB-/B1 Griffon Corp., 5.25%, 3/1/22 327,938
-----------
$ 642,938
-----------
Industrial Conglomerates - 0.3%
240,000 B+/B2 JB Poindexter & Co., Inc., 9.0%, 4/1/22 (144A) $ 267,000
-----------
The accompanying notes are an integral part of these financial statements.
15
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Construction & Farm Machinery & Heavy Trucks - 0.8%
370,000 CCC-/B3 Navistar International Corp., 8.25%, 11/1/21 $ 386,188
350,000 B+/NR Titan International, Inc., 6.875%, 10/1/20 355,250
-----------
$ 741,438
-----------
Industrial Machinery - 1.1%
400,000 B-/Caa1 BC Mountain LLC, 7.0%, 2/1/21 (144A) $ 387,000
100,000 B/B3 Boart Longyear Management Pty, Ltd., 10.0%, 10/1/18 (144A) 104,500
200,000 B/B1 Mcron Finance Sub LLC, 8.375%, 5/15/19 (144A) 219,000
235,000 B/B3 Xerium Technologies, Inc., 8.875%, 6/15/18 249,688
-----------
$ 960,188
-----------
Trading Companies & Distributors - 0.8%
175,000 BB+/NR Aviation Capital Group Corp., 6.75%, 4/6/21 (144A) $ 196,862
200,000 BB/Ba3 Rexel SA, 5.25%, 6/15/20 (144A) 208,000
125,000 BB-/B2 United Rentals North America, Inc., 5.75%, 11/15/24 129,844
200,000 B+/B1 WESCO Distribution, Inc., 5.375%, 12/15/21 (144A) 204,500
-----------
$ 739,206
-----------
Total Capital Goods $ 4,478,345
-----------
Commercial Services & Supplies - 0.8%
Environmental & Facilities Services - 0.1%
110,000 B/B3 Safway Group Holding LLC, 7.0%, 5/15/18 (144A) $ 116,600
-----------
Diversified Support Services - 0.3%
230,000 B/Caa2 NANA Development Corp., 9.5%, 3/15/19 (144A) $ 224,250
-----------
Security & Alarm Services - 0.4%
165,000 BB+/Ba2 Allegion US Holding Co., Inc., 5.75%, 10/1/21 (144A) $ 173,662
200,000 B-/Caa1 Garda World Security Corp., 7.25%, 11/15/21 (144A) 210,250
-----------
$ 383,912
-----------
Total Commercial Services & Supplies $ 724,762
-----------
Transportation - 1.7%
Airlines - 0.8%
96,159 BB+/Ba3 Air Canada 2013-1 Class B Pass Through Trust, 5.375%,
11/15/22 (144A) $ 99,524
320,000 BB-/B1 Allegiant Travel Co., 5.5%, 7/15/19 325,200
14,259 BB+/Ba2 Continental Airlines 1997-4 Class B Pass Through
Trust, 6.9%, 1/2/17 15,275
125,000 NR/NR Intrepid Aviation Group Holdings LLC, 6.875%, 2/15/19 (144A) 131,875
100,000 B/B2 United Continental Holdings, Inc., 6.375%, 6/1/18 108,000
-----------
$ 679,874
-----------
Railroads - 0.5%
185,000 B/B3 Florida East Coast Holdings Corp., 6.75%, 5/1/19 (144A) $ 195,406
245,000 CCC/Caa3 Florida East Coast Holdings Corp., 9.75%, 5/1/20 (144A) 258,781
-----------
$ 454,187
-----------
Trucking - 0.2%
200,000 CCC+/Caa1 syncreon Group BV, 8.625%, 11/1/21 (144A) $ 203,000
-----------
Airport Services - 0.2%
150,000 B/B2 Aguila 3 SA, 7.875%, 1/31/18 (144A) $ 158,250
-----------
Total Transportation $ 1,495,311
-----------
The accompanying notes are an integral part of these financial statements.
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S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Automobiles & Components - 0.7%
Auto Parts & Equipment - 0.4%
145,000 BB+/B2 Dana Holding Corp., 6.0%, 9/15/23 $ 153,700
115,000 B-/B3 Meritor, Inc., 6.75%, 6/15/21 123,694
95,000 B+/B2 Stackpole International Intermediate, 7.75%, 10/15/21 (144A) 99,275
-----------
$ 376,669
-----------
Automobile Manufacturers - 0.3%
200,000 B/B1 Chrysler Group LLC, 8.25%, 6/15/21 $ 226,000
-----------
Total Automobiles & Components $ 602,669
-----------
Consumer Durables & Apparel - 1.5%
Homebuilding - 1.5%
100,000 BB-/B2 Brookfield Residential Properties, Inc., 6.5%, 12/15/20 (144A) $ 105,750
250,000 B/B2 KB Home, 7.0%, 12/15/21 272,500
190,000 B/B2 KB Home, 7.5%, 9/15/22 210,900
175,000 BB-/Ba3 Lennar Corp., 4.5%, 6/15/19 179,156
225,000 BB-/Ba3 Lennar Corp., 4.75%, 11/15/22 223,875
115,000 BB-/Ba3 Meritage Homes Corp., 7.0%, 4/1/22 126,644
75,000 B/B2 Rialto Holdings LLC, 7.0%, 12/1/18 (144A) 78,750
105,000 BB-/B1 The Ryland Group, Inc., 5.375%, 10/1/22 104,212
-----------
$ 1,301,787
-----------
Total Consumer Durables & Apparel $ 1,301,787
-----------
Consumer Services - 1.3%
Casinos & Gaming - 0.5%
520,330 NR/NR Mashantucket Western Pequot Tribe, 6.5%, 7/1/36 (1.0% cash,
5.50% PIK) (PIK) $ 72,846
200,000 B+/B3 MGM Resorts International, Inc., 6.75%, 10/1/20 223,250
200,000 B/B3 Scientific Games International, Inc., 6.25%, 9/1/20 197,000
-----------
$ 493,096
-----------
Hotels, Resorts & Cruise Lines - 0.3%
210,000 B+/B3 Viking Cruises, Ltd., 8.5%, 10/15/22 (144A) $ 232,050
-----------
Education Services - 0.1%
130,000 CCC+/Caa1 Cambium Learning Group, Inc., 9.75%, 2/15/17 $ 132,925
-----------
Specialized Consumer Services - 0.4%
330,000 BB-/Ba3 Sotheby's, 5.25%, 10/1/22 (144A) $ 320,925
-----------
Total Consumer Services $ 1,178,996
-----------
Media - 3.9%
Advertising - 0.2%
175,000 B-/B3 MDC Partners, Inc., 6.75%, 4/1/20 (144A) $ 184,625
-----------
Broadcasting - 0.9%
125,000 B-/Caa2 Intelsat Luxembourg SA, 7.75%, 6/1/21 $ 132,344
350,000 B+/B2 Quebecor Media, Inc., 5.75%, 1/15/23 359,625
150,000 B/B1 Sinclair Television Group, Inc., 6.375%, 11/1/21 159,562
145,000 B/B3 Townsquare Radio LLC, 9.0%, 4/1/19 (144A) 160,588
-----------
$ 812,119
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Cable & Satellite - 1.5%
200,000 BB-/B1 CCO Holdings LLC, 5.25%, 3/15/21 $ 205,000
250,000 BB-/B1 CCO Holdings LLC, 6.5%, 4/30/21 266,250
225,000 B+/B3 Intelsat Jackson Holdings SA, 7.25%, 4/1/19 239,344
240,000 BB/B1 Sirius XM Radio, Inc., 4.625%, 5/15/23 (144A) 229,800
375,000 BB/Ba2 Videotron, Ltd., 5.375%, 6/15/24 (144A) 384,375
-----------
$ 1,324,769
-----------
Movies & Entertainment - 0.9%
220,000 BB-/B2 Cinemark USA, Inc., 4.875%, 6/1/23 $ 219,450
100,000 B-/B3 Regal Entertainment Group, 5.75%, 3/15/22 103,750
180,000 B-/B3 Regal Entertainment Group, Inc., 5.75%, 2/1/25 182,250
325,000 B/Caa1 WMG Acquisition Corp., 6.75%, 4/15/22 (144A) 325,000
-----------
$ 830,450
-----------
Publishing - 0.4%
280,000 BB+/Ba1 Gannett Co., Inc., 6.375%, 10/15/23 (144A) $ 298,900
-----------
Total Media $ 3,450,863
-----------
Food & Staples Retailing - 0.2%
Food Retail - 0.2%
140,000 NR/B1 C&S Group Enterprises LLC, 5.375%, 7/15/22 (144A) $ 140,700
-----------
Total Food & Staples Retailing $ 140,700
-----------
Retailing - 0.5%
Distributors - 0.1%
100,000 BB-/Ba3 LKQ Corp., 4.75%, 5/15/23 $ 98,600
-----------
Computer & Electronics Retail - 0.1%
100,000 B+/B1 Rent-A-Center, Inc., 4.75%, 5/1/21 $ 94,500
-----------
Automotive Retail - 0.3%
230,000 BB/Ba3 CST Brands, Inc., 5.0%, 5/1/23 $ 230,000
-----------
Total Retailing $ 423,100
-----------
Food, Beverage & Tobacco - 1.9%
Distillers & Vintners - 0.4%
145,000 BB+/Ba1 Constellation Brands, Inc., 3.75%, 5/1/21 $ 144,094
180,000 BB+/Ba1 Constellation Brands, Inc., 4.25%, 5/1/23 180,675
-----------
$ 324,769
-----------
Agricultural Products - 0.2%
200,000 BB+/B1 Darling Ingredients, Inc., 5.375%, 1/15/22 (144A) $ 207,500
-----------
Packaged Foods & Meats - 0.9%
100,000 BB-/B1 B&G Foods, Inc., 4.625%, 6/1/21 $ 100,250
93,000 B/B1 Chiquita Brands International, Inc., 7.875%, 2/1/21 101,254
200,000 CCC+/Caa1 Dole Food Co., Inc., 7.25%, 5/1/19 (144A) 202,500
290,000 B/B2 Post Holdings, Inc., 6.75%, 12/1/21 (144A) 308,125
75,000 B/B2 Post Holdings, Inc., 7.375%, 2/15/22 81,094
-----------
$ 793,223
-----------
Tobacco - 0.4%
365,000 B-/Caa1 Alliance One International, Inc., 9.875%, 7/15/21 $ 372,300
-----------
Total Food, Beverage & Tobacco $ 1,697,792
-----------
The accompanying notes are an integral part of these financial statements.
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S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Household & Personal Products - 0.2%
Personal Products - 0.2%
200,000 B/B2 Revlon Consumer Products Corp., 5.75%, 2/15/21 $ 205,500
-----------
Total Household & Personal Products $ 205,500
-----------
Health Care Equipment & Services - 2.7%
Health Care Equipment - 0.3%
285,000 B+/B2 Physio-Control International, Inc., 9.875%, 1/15/19 (144A) $ 314,925
-----------
Health Care Services - 0.2%
150,000 CCC/Caa2 BioScrip, Inc., 8.875%, 2/15/21 (144A) $ 156,750
-----------
Health Care Facilities - 1.9%
350,000 B/B3 Capella Healthcare, Inc., 9.25%, 7/1/17 $ 367,500
730,000 B-/B3 CHS, Inc., 7.125%, 7/15/20 790,225
105,000 BB/Ba3 HCA, Inc., 5.875%, 3/15/22 113,794
75,000 B-/B3 Kindred Healthcare, Inc., 6.375%, 4/15/22 (144A) 75,375
370,000 B/B3 Universal Hospital Services, Inc., 7.625%, 8/15/20 387,575
-----------
$ 1,734,469
-----------
Managed Health Care - 0.3%
225,000 BB/Ba2 WellCare Health Plans, Inc., 5.75%, 11/15/20 $ 239,625
-----------
Total Health Care Equipment & Services $ 2,445,769
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 1.2%
Biotechnology - 0.5%
393,000 B-/Caa1 Lantheus Medical Imaging, Inc., 9.75%, 5/15/17 $ 408,229
-----------
Pharmaceuticals - 0.7%
200,000 B+/B1 Endo Finance LLC, 5.75%, 1/15/22 (144A) $ 204,000
140,000 B+/B1 Endo Finance LLC & Endo Finco, Inc., 5.375%, 1/15/23 (144A) 139,825
165,000 CCC+/Caa2 JLL, 7.5%, 2/1/22 (144A) 170,775
155,000 B/B1 Valeant Pharmaceuticals International, Inc., 5.625%,
12/1/21 (144A) 159,456
-----------
$ 674,056
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 1,082,285
-----------
Diversified Financials - 1.2%
Other Diversified Financial Services - 0.2%
185,000 5.65 BB/Ba1 Voya Financial, Inc., Floating Rate Note, 5/15/53 $ 188,238
-----------
Specialized Finance - 0.6%
130,000 NR/NR AAF Holdings LLC, 12.0%, 7/1/19 (144A) (12.0% cash,
0.0% PIK) (PIK) $ 133,412
150,000 B+/B2 Nationstar Mortgage LLC, 6.5%, 7/1/21 150,375
300,000 B/B1 Oxford Finance LLC, 7.25%, 1/15/18 (144A) 315,000
-----------
$ 598,787
-----------
Consumer Finance - 0.1%
110,000 B/B3 TMX Finance LLC, 8.5%, 9/15/18 (144A) $ 116,600
-----------
Asset Management & Custody Banks - 0.3%
200,000 BB+/Ba1 Neuberger Berman Group LLC, 5.875%, 3/15/22 (144A) $ 213,500
-----------
Total Diversified Financials $ 1,117,125
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Insurance - 1.3%
Insurance Brokers - 0.2%
150,000 CCC+/Caa2 USI, Inc. New York, 7.75%, 1/15/21 (144A) $ 154,125
-----------
Life & Health Insurance - 0.2%
200,000 BB-/B1 Fidelity & Guaranty Life Holdings, Inc., 6.375%, 4/1/21 (144A) $ 214,500
-----------
Reinsurance - 0.9%
250,000 7.40 BB-/NR Embarcadero Reinsurance, Ltd., Floating Rate Note, 2/13/15
(Cat Bond) (144A) $ 253,375
250,000 12.78 NR/NR Residential Reinsurance 2012, Ltd., Floating Rate Note, 12/6/16
(Cat Bond) (144A) 271,100
250,000 4.03 BB/NR Sanders Re, Ltd., Floating Rate Note, 5/5/17 (Cat Bond) (144A) 247,650
-----------
$ 772,125
-----------
Total Insurance $ 1,140,750
-----------
Real Estate - 2.2%
Diversified REIT - 0.7%
375,000 B/Ba3 CNL Lifestyle Properties, Inc., 7.25%, 4/15/19 $ 394,219
210,000 BB/Ba1 MPT Operating Partnership LP, 5.5%, 5/1/24 215,775
-----------
$ 609,994
-----------
Mortgage REIT - 0.5%
50,000 B+/B3 iStar Financial, Inc., 4.875%, 7/1/18 $ 50,125
365,000 NR/NR NorthStar Realty Finance Corp., 3.0%, 9/30/14 364,301
-----------
$ 414,426
-----------
Office REIT - 0.3%
300,000 BB/Ba1 DuPont Fabros Technology LP, 5.875%, 9/15/21 $ 313,500
-----------
Specialized REIT - 0.1%
100,000 BB/Ba3 Aviv Healthcare Properties LP, 7.75%, 2/15/19 $ 106,500
-----------
Real Estate Development - 0.3%
300,000 B/Ba3 The Howard Hughes Corp., 6.875%, 10/1/21 (144A) $ 321,000
-----------
Real Estate Services - 0.3%
235,000 BB-/B2 Kennedy-Wilson, Inc., 5.875%, 4/1/24 $ 238,525
-----------
Total Real Estate $ 2,003,945
-----------
Software & Services - 2.2%
Internet Software & Services - 0.9%
130,000 BB/Ba3 Equinix, Inc., 5.375%, 4/1/23 $ 132,925
75,000 BB+/Ba1 IAC, 4.875%, 11/30/18 78,188
365,000 BB/Ba3 j2 Global, Inc., 8.0%, 8/1/20 395,112
230,000 BB+/Baa3 VeriSign, Inc., 4.625%, 5/1/23 227,217
-----------
$ 833,442
-----------
Data Processing & Outsourced Services - 0.6%
100,000 BB-/Ba2 Audatex North America, Inc., 6.0%, 6/15/21 (144A) $ 106,750
89,000 B-/Caa1 First Data Corp., 12.625%, 1/15/21 109,581
50,000 B+/B1 First Data Corp., 7.375%, 6/15/19 (144A) 53,688
100,000 BB-/B2 NeuStar, Inc., 4.5%, 1/15/23 86,500
200,000 BB/Ba3 WEX, Inc., 4.75%, 2/1/23 (144A) 193,500
-----------
$ 550,019
-----------
The accompanying notes are an integral part of these financial statements.
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S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Application Software - 0.2%
135,000 BB/B2 ACI Worldwide, Inc., 6.375%, 8/15/20 (144A) $ 142,088
-----------
Systems Software - 0.3%
343,928 NR/NR Pegasus Solutions, Inc., 13.0%, 9/15/14 (144A) (d) $ 319,853
-----------
Home Entertainment Software - 0.2%
150,000 BB+/Ba2 Activision Blizzard, Inc., 5.625%, 9/15/21 (144A) $ 161,625
-----------
Total Software & Services $ 2,007,027
-----------
Technology Hardware & Equipment - 3.0%
Communications Equipment - 0.8%
410,000 BB+/Ba3 Brocade Communications Systems, Inc., 4.625%, 1/15/23 $ 397,700
80,000 B+/B2 CommScope, Inc., 5.0%, 6/15/21 (144A) 81,600
80,000 B+/B2 CommScope, Inc., 5.5%, 6/15/24 (144A) 81,300
150,000 B-/B2 ViaSat, Inc., 6.875%, 6/15/20 161,625
-----------
$ 722,225
-----------
Computer Hardware - 0.2%
210,000 BB/Ba3 NCR Corp., 5.0%, 7/15/22 $ 212,625
-----------
Computer Storage & Peripherals - 1.1%
500,000 BBB-/Ba1 Seagate HDD Cayman, 4.75%, 1/1/25 (144A) $ 496,250
475,000 BBB-/Ba1 Seagate HDD Cayman, 4.75%, 6/1/23 (144A) 478,562
-----------
$ 974,812
-----------
Electronic Equipment Manufacturers - 0.5%
445,000 B+/B1 Viasystems, Inc., 7.875%, 5/1/19 (144A) $ 470,588
-----------
Electronic Components - 0.2%
55,000 B+/Ba2 Belden, Inc., 5.25%, 7/15/24 (144A) $ 55,412
130,000 B+/Ba2 Belden, Inc., 5.5%, 9/1/22 (144A) 134,550
-----------
$ 189,962
-----------
Electronic Manufacturing Services - 0.2%
50,000 BB+/Ba1 Flextronics International, Ltd., 4.625%, 2/15/20 $ 51,375
80,000 BB+/Ba1 Flextronics International, Ltd., 5.0%, 2/15/23 82,800
-----------
$ 134,175
-----------
Total Technology Hardware & Equipment $ 2,704,387
-----------
Semiconductors & Semiconductor Equipment - 0.6%
Semiconductor Equipment - 0.4%
325,000 BB-/B3 Entegris, Inc., 6.0%, 4/1/22 (144A) $ 334,750
-----------
Semiconductors - 0.2%
210,000 B/B2 Advanced Micro Devices, Inc., 7.5%, 8/15/22 $ 226,538
-----------
Total Semiconductors & Semiconductor Equipment $ 561,288
-----------
Telecommunication Services - 4.5%
Integrated Telecommunication Services - 3.7%
375,000 BB/Ba2 CenturyLink, Inc., 6.45%, 6/15/21 $ 406,875
75,000 BB/Ba2 CenturyLink, Inc., 6.75%, 12/1/23 81,938
389,000 B/B3 Cincinnati Bell, Inc., 8.375%, 10/15/20 426,441
731,000 BB-/Ba2 Frontier Communications Corp., 8.75%, 4/15/22 847,960
200,000 BB-/Ba2 Frontier Communications Corp., 9.25%, 7/1/21 239,500
105,000 BB-/B1 tw telecom holdings inc, 5.375%, 10/1/22 114,844
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Integrated Telecommunication Services - (continued)
230,000 B/B1 Windstream Corp., 6.375%, 8/1/23 $ 233,162
405,000 B/B1 Windstream Corp., 7.5%, 6/1/22 440,944
500,000 B/B1 Windstream Corp., 7.75%, 10/15/20 541,875
-----------
$ 3,333,539
-----------
Wireless Telecommunication Services - 0.8%
195,000 BB-/B1 Sprint Corp., 7.125%, 6/15/24 (144A) $ 206,700
80,000 BB/Ba3 T-Mobile USA, Inc., 6.5%, 1/15/24 85,500
360,000 BB/Ba3 T-Mobile USA, Inc., 6.542%, 4/28/20 388,800
-----------
$ 681,000
-----------
Total Telecommunication Services $ 4,014,539
-----------
Utilities - 1.8%
Gas Utilities - 0.2%
200,000 B-/B2 Star Gas Partners LP, 8.875%, 12/1/17 $ 211,960
-----------
Independent Power Producers & Energy Traders - 1.6%
330,000 BB-/Ba3 AES Corp. Virginia, 4.875%, 5/15/23 $ 326,700
400,000 BB-/B1 NRG Energy, Inc., 6.25%, 5/1/24 (144A) 418,000
450,000 BB-/B1 NRG Energy, Inc., 6.625%, 3/15/23 487,125
125,000 NR/NR SunPower Corp., 0.875%, 6/1/21 (144A) 146,328
-----------
$ 1,378,153
-----------
Total Utilities $ 1,590,113
-----------
TOTAL CORPORATE BONDS
(Cost $53,920,132) $56,364,904
-----------
SENIOR FLOATING RATE LOAN INTERESTS - 4.5%**
Energy - 1.2%
Oil & Gas Drilling - 0.2%
169,390 7.50 B/B3 Jonah Energy LLC, Term Loan (Second Lien), 5/8/21 $ 171,719
-----------
Oil & Gas Exploration & Production - 1.0%
450,000 0.00 NR/NR American Energy Partners, Inc., Term Loan, 6/17/15 $ 450,000
60,000 8.38 B-/B2 Fieldwood Energy LLC, Closing Date Loan (Second Lien), 9/30/20 62,046
200,000 5.00 B/B1 Samson Investment Co., Tranche 1 Term Loan (Second Lien), 9/25/18 200,411
225,000 0.00 B-/NR Templar Energy LLC, Term Loan, 11/25/20 223,875
-----------
$ 936,332
-----------
Total Energy $ 1,108,051
-----------
Capital Goods - 0.1%
Industrial Conglomerates - 0.1%
80,000 8.25 B-/Caa1 Filtration Group Corp., Initial Term Loan
(Second Lien), 11/15/21 $ 81,600
-----------
Total Capital Goods $ 81,600
-----------
Commercial Services & Supplies - 0.5%
Diversified Commercial & Prof Svc - 0.3%
251,461 3.75 NR/Ba2 Seven Seas Cruises S de RL LLC, Term B2 Loan, 12/21/18 $ 251,619
-----------
Security & Alarm Services - 0.2%
185,744 4.25 B/Ba3 Monitronics International, Inc., Term B Loan, 3/23/18 $ 186,382
-----------
Total Commercial Services & Supplies $ 438,001
-----------
The accompanying notes are an integral part of these financial statements.
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S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Automobiles & Components - 1.0%
Auto Parts & Equipment - 0.6%
169,006 5.00 B+/B2 HHI Holdings LLC, Additional Term Loan, 10/5/18 $ 169,992
58,379 4.25 NR/B1 Metaldyne LLC, Tranche B Term Loan, 12/18/18 58,671
301,960 3.23 BB-/B1 Tower Automotive Holdings USA LLC, Refinancing Term Loan, 4/23/20 301,897
-----------
$ 530,560
-----------
Automobile Manufacturers - 0.4%
378,300 3.50 BB+/Ba1 Chrysler Group LLC, Term Loan B, 5/24/17 $ 380,259
-----------
Total Automobiles & Components $ 910,819
-----------
Consumer Services - 0.1%
Restaurants - 0.1%
92,549 4.00 BB-/Ba3 Landry's, Inc., B Term Loan, 4/24/18 $ 92,896
-----------
Total Consumer Services $ 92,896
-----------
Media - 0.1%
Broadcasting - 0.1%
39,475 4.00 B+/NR Univision Communications, Inc., Replacement First-Lien Term
Loan, 3/1/20 $ 39,493
-----------
Total Media $ 39,493
-----------
Food & Staples Retailing - 0.3%
Food Distributors - 0.3%
3,117 5.75 B/B2 AdvancePierre Foods, Inc., Term Loan (First Lien), 7/10/17 $ 3,125
280,000 8.25 CCC+/Caa1 Del Monte Foods Consumer Products,Term Loan (Second
Lien), 5/26/21 275,683
-----------
$ 278,808
-----------
Total Food & Staples Retailing $ 278,808
-----------
Health Care Equipment & Services - 0.7%
Health Care Services - 0.5%
69,222 6.75 B+/B1 Ardent Medical Services, Inc., 1st Lien Term Loan, 5/2/18 $ 69,676
30,629 6.50 NR/B1 BioScrip, Inc., Delayed Draw Term Loan, 7/31/20 30,821
33,414 6.50 B/B1 BioScrip, Inc., Initial Term B Loan, 7/31/20 33,622
291,455 6.50 B+/B2 Gentiva Health Services, Inc., Initial Term B Loan, 10/10/19 292,002
-----------
$ 426,121
-----------
Health Care Facilities - 0.2%
170,000 1.75 B-/B3 AmSurg Corp., Term Loan, 5/29/15 $ 170,850
-----------
Total Health Care Equipment & Services $ 596,971
-----------
Diversified Financials - 0.2%
Other Diversified Financial Services - 0.2%
123,674 5.25 BB/Ba3 WorldPay, Facility B2A Term Loan, 8/6/17 $ 125,066
-----------
Total Diversified Financials $ 125,066
-----------
Software & Services - 0.1%
Application Software - 0.1%
59,078 8.50 B-/B1 Expert Global Solutions, Inc., Term B Advance
(First Lien), 4/3/18 $ 58,831
47,774 4.25 B+/B1 Vertafore, Inc., Term Loan (2013), 10/3/19 47,919
-----------
$ 106,750
-----------
Total Software & Services $ 106,750
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
S&P/
Floating Moody's
Principal Rate (b) Ratings
Amount ($) (unaudited) (unaudited) Value
Semiconductors & Semiconductor Equipment - 0.2%
Semiconductor Equipment - 0.2%
200,553 4.50 NR/B1 Aeroflex, Inc., Tranche B-1 Term Loan, 11/9/19 $ 201,556
-----------
Total Semiconductors & Semiconductor Equipment $ 201,556
-----------
TOTAL SENIOR FLOATING RATE LOAN INTERESTS
(Cost $3,946,064) $ 3,980,011
-----------
Shares
RIGHTS / WARRANTS - 0.0%+
Energy - 0.0%+
Oil & Gas Equipment & Services - 0.0%+
75 Green Field Energy Services, Inc., 11/15/21 (144A) $ 75
-----------
Total Energy $ 75
-----------
Automobiles & Components - 0.0%+
Auto Parts & Equipment - 0.0%+
70 Lear Corp., 11/9/14 $ 12,405
-----------
Total Automobiles & Components $ 12,405
-----------
TOTAL RIGHTS / WARRANTS
(Cost $6,780) $ 12,480
-----------
TOTAL INVESTMENT IN SECURITIES - 96.0%
(Cost $78,857,293) (a) $85,851,934
-----------
OTHER ASSETS & LIABILITIES - 4.0% $ 3,613,429
-----------
TOTAL NET ASSETS - 100.0% $89,465,363
===========
* Non-income producing security.
+ Amount rounds to less than 0.1%.
NR Not rated by either S&P or Moody'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, 2014, the value of these securities
amounted to $26,535,730 or 29.7% of total net assets.
(PIK) Represents a pay-in-kind security.
REIT Real Estate Investment Trust.
(Cat Bond) Catastrophe bond is a high-yield debt instrument that is usually
insurance linked and meant to raise money in case of a catastrophe.
(Perpetual) Security with no stated maturity date.
(Step) Bond issued with an initial coupon rate which converts to a higher
rate at a later date.
** Senior floating rate loan interests in which the Portfolio invests
generally pay interest at rates that are periodically redetermined
by reference to a base lending rate plus a premium. These base
lending rates are generally (i) the lending rate offered by one or
more major European banks, such as LIBOR (London InterBank Offered
Rate), (ii) the prime rate offered by one or more major United
States banks, (iii) the rate of a certificate of deposit or (iv)
other base lending rates used by commercial lenders. The rate shown
is the coupon rate at period end.
(a) At June 30, 2014, the net unrealized appreciation on investments
based on cost for federal income tax purposes of $78,909,374 was as
follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $ 8,164,583
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (1,222,023)
-----------
Net unrealized appreciation $ 6,942,560
===========
(b) Debt obligation with a variable interest rate. Rate shown is rate at
end of period.
(c) Security issued with a zero coupon. Income is recognized through
accretion of discount.
(d) Security is in default and is non-income producing.
The accompanying notes are an integral part of these financial statements.
24
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $21,079,407 and $13,181,151,
respectively. Various inputs are used in determining the value of the
Portfolio's investments. These inputs are summarized in the three broad levels
listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Enlarge/Download Table]
Level 1 Level 2 Level 3 Total
Convertible Corporate Bonds $ -- $13,924,890 $ -- $13,924,890
Preferred Stocks
Consumer Services
Hotels, Resorts & Cruise Lines -- 41,000 -- 41,000
All Other Preferred Stocks 1,396,750 -- -- 1,396,750
Convertible Preferred Stocks -- -- -- --
Energy
Oil & Gas Exploration & Production 107,649 687,222 -- 794,871
Consumer Durables & Apparel
Home Furnishings -- 396,250 -- 396,250
Food, Beverage & Tobacco
Packaged Foods & Meats -- 275,231 -- 275,231
Diversified Financials
Asset Management & Custody Banks -- 126,125 -- 126,125
All Other Convertible Preferred Stocks 900,436 -- -- 900,436
Common Stocks
Consumer Services
Hotels, Resorts & Cruise Lines -- 1,428 -- 1,428
All Other Common Stocks 6,865,886 -- -- 6,865,886
Asset Backed Securities -- 110,598 -- 110,598
Collateralized Mortgage Obligations -- 661,074 -- 661,074
Corporate Bonds -- 56,364,904 -- 56,364,904
Senior Floating Rate Loan Interests -- 3,980,011 -- 3,980,011
Warrants
Energy
Oil & Gas Equipment & Services -- 75 -- 75
Automobiles & Components
Auto Parts & Equipment 12,405 -- -- 12,405
------------- ----------- ----------- -----------
Total $ 9,283,126 $76,568,808 $ -- $85,851,934
============= =========== =========== ===========
The following is a reconciliation of assets valued using significant observable
inputs (Level 3):
[Download Table]
Preferred
Stocks
Balance as of 12/31/13 $ 134,341
Realized gain (loss)(1) 12,729
Change in unrealized appreciation (depreciation)(2) --
Purchases
Sales (147,070)
Transfers in and out of Level 3* -----------
Balance as of 6/30/14 $ --
-----------
(1) Realized gain (loss) on these securities is included in the net realized
gain (loss) from investments in the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized appreciation (depreciation) on investments in the
Statement of Operations.
* Transfers are calculated on the beginning of period values. During the six
months ended June 30, 2014, there were no transfers between Levels 1, 2 and
3.
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
[Enlarge/Download Table]
Net change in unrealized appreciation (depreciation) of investments still
held as of 6/30/14 $ --
-----------
The accompanying notes are an integral part of these financial statements.
25
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended Year Ended
6/30/14 Year Ended Year Ended 12/31/11 Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 (Consolidated) 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 10.49 $ 10.47 $ 9.92 $ 10.64 $ 9.53 $ 6.46
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.23 $ 0.50 $ 0.56 $ 0.59 $ 0.59 $ 0.61
Net realized and unrealized gain (loss) on investments 0.35 0.70 0.96 (0.75) 1.07 3.10
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.58 $ 1.20 $ 1.52 $ (0.16) $ 1.66 $ 3.71
Distributions to shareowners:
Net investment income $ (0.26) $ (0.56) $ (0.57) $ (0.56) $ (0.55) $ (0.64)
Net realized gain (0.39) (0.62) (0.40) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.65) $ (1.18) $ (0.97) $ (0.56) $ (0.55) $ (0.64)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.07) $ 0.02 $ 0.55 $ (0.72) $ 1.11 $ 3.07
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.42 $ 10.49 $ 10.47 $ 9.92 $ 10.64 $ 9.53
======= ======= ======= ======= ======= =======
Total return* 5.59% 12.07% 16.08% (1.68)% 18.04% 60.49%
Ratio of total expenses to average net assets 0.84%** 0.85% 0.86% 0.82% 0.81% 0.80%
Ratio of net investment income to average net assets 4.41%** 4.78% 5.39% 5.47% 5.98% 7.58%
Portfolio turnover rate 33%** 39% 44% 43% 33% 41%
Net assets, end of period (in thousands) $64,694 $62,232 $59,937 $58,084 $71,180 $73,517
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
26
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended Year Ended
6/30/14 Year Ended Year Ended 12/31/11 Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 (Consolidated) 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 10.44 $ 10.42 $ 9.88 $ 10.61 $ 9.51 $ 6.45
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.21 $ 0.47 $ 0.54 $ 0.55 $ 0.54 $ 0.61
Net realized and unrealized gain (loss) on investments 0.35 0.70 0.94 (0.75) 1.08 3.07
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.56 $ 1.17 $ 1.48 $ (0.20) $ 1.62 $ 3.68
Distributions to shareowners:
Net investment income $ (0.24) $ (0.53) $ (0.54) $ (0.53) $ (0.52) $ (0.62)
Net realized gain (0.39) (0.62) (0.40) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ (0.63) $ (1.15) $ (0.94) $ (0.53) $ (0.52) $ (0.62)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.07) $ 0.02 $ 0.54 $ (0.73) $ 1.10 $ 3.06
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.37 $ 10.44 $ 10.42 $ 9.88 $ 10.61 $ 9.51
======= ======= ======= ======= ======= =======
Total return* 5.47% 11.82% 15.73% (2.04)% 17.67% 60.03%
Ratio of total expenses to average net assets 1.09%** 1.11% 1.12% 1.07% 1.04% 1.05%
Ratio of net investment income to average net assets 4.16%** 4.54% 5.10% 5.18% 5.67% 7.24%
Portfolio turnover rate 33%** 39% 44% 43% 33% 41%
Net assets, end of period (in thousands) $24,771 $18,240 $13,124 $14,696 $15,582 $65,631
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
27
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
ASSETS:
Investment in securities (cost $78,857,293) $85,851,934
Cash 4,171,561
Receivables --
Investment securities sold 10,525
Portfolio shares sold 89,682
Interest 935,155
Dividends 34,720
-----------
Total assets $91,093,577
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 1,359,001
Portfolio shares repurchased 252,981
Trustee fees 179
Due to affiliates 8,219
Accrued expenses 7,834
-----------
Total liabilities $ 1,628,214
-----------
NET ASSETS:
Paid-in capital $81,128,193
Undistributed net investment income 224,643
Accumulated net realized gain on investments 1,117,886
Net unrealized appreciation on investments 6,994,641
-----------
Total net assets $89,465,363
===========
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $64,694,100/6,207,332 shares) $ 10.42
===========
Class II (based on $24,771,263/2,388,963 shares) $ 10.37
===========
The accompanying notes are an integral part of these financial statements.
28
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Download Table]
INVESTMENT INCOME:
Interest $2,099,317
Dividends 145,192
----------
Total investment income $2,244,509
----------
EXPENSES:
Management fees $ 277,887
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 25,532
Administrative reimbursements 21,974
Custodian fees 5,901
Professional fees 23,838
Printing expense 9,493
Fees and expenses of nonaffiliated Trustees 3,473
Miscellaneous 14,059
----------
Total expenses $ 383,657
----------
Net investment income $1,860,852
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND BRIDGE LOAN COMMITMENTS:
Net realized gain (loss) on:
Investments $1,121,124
Bridge loan commitments (68) $1,121,056
---------- ----------
Change in net unrealized appreciation on investments $1,672,850
----------
Net gain on investments $2,793,906
----------
Net increase in net assets resulting from operations $4,654,758
==========
The accompanying notes are an integral part of these financial statements.
29
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 1,860,852 $ 3,586,686
Net realized gain on investments and bridge loan commitments 1,121,056 3,392,167
Change in net unrealized appreciation on investments 1,672,850 1,520,903
------------ ------------
Net increase in net assets resulting from operations $ 4,654,758 $ 8,499,756
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.26 and $0.56 per share, respectively) $ (1,573,595) $ (3,265,849)
Class II ($0.24 and $0.53 per share, respectively) (466,628) (674,771)
Net realized gain:
Class I ($0.39 and $0.62 per share, respectively) (2,375,615) (3,610,144)
Class II ($0.39 and $0.62 per share, respectively) (807,698) (666,059)
------------ ------------
Total distributions to shareowners $ (5,223,536) $ (8,216,823)
------------ ------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 20,244,525 $ 22,540,459
Reinvestment of distributions 5,223,536 8,216,823
Cost of shares repurchased (15,905,329) (23,629,512)
------------ ------------
Net increase in net assets resulting from Portfolio share transactions $ 9,562,732 $ 7,127,770
------------ ------------
Net increase in net assets $ 8,993,954 $ 7,410,703
NET ASSETS:
Beginning of period $ 80,471,409 $ 73,060,706
------------ ------------
End of period $ 89,465,363 $ 80,471,409
============ ============
Undistributed net investment income $ 224,643 $ 404,014
============ ============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 906,099 $ 9,630,080 963,117 $ 10,227,319
Reinvestment of distributions 377,288 3,949,210 666,824 6,875,993
Less shares repurchased (1,010,078) (10,732,280) (1,421,447) (14,945,951)
----------- ------------ ----------- ------------
Net increase 273,309 $ 2,847,010 208,494 $ 2,157,361
=========== ============ =========== ============
CLASS II
Shares sold 1,009,399 $ 10,614,445 1,182,279 $ 12,313,140
Reinvestment of distributions 122,216 1,274,326 130,435 1,340,830
Less shares repurchased (490,354) (5,173,049) (825,009) (8,683,561)
----------- ------------ ----------- ------------
Net increase 641,261 $ 6,715,722 487,705 $ 4,970,409
=========== ============ =========== ============
The accompanying notes are an integral part of these financial statements.
30
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer High Yield VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is to maximize total return through a combination of income and
capital appreciation.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per-share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per-share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE.
Senior floating rate loan interests (senior loans) are valued in
accordance with guidelines established by the Board of Trustees at the
mean between the last available bid and asked prices from one or more
brokers or dealers as obtained from Loan Pricing Corporation, an
independent pricing service. If price information is not available from
Loan Pricing Corporation, or if the price information is deemed to be
unreliable, price information will be obtained from an alternative loan
interest pricing service. If no reliable price quotes are available from
either the primary or alternative price service, broker quotes will be
solicited. Fixed income securities with remaining maturities of more than
sixty days are valued at prices supplied by independent pricing services,
which consider such factors as market prices, market events, quotations
from one or more brokers, Treasury spreads, yields, maturities and
ratings. Valuations may be supplemented by dealers and other sources, as
required. Credit default swaps are valued by an independent pricing
service based upon valuation models incorporating default probabilities,
estimated recovery rates, actual reported transactions, and other
available market data. Equity securities that have traded on an exchange
are valued at the last sale price on the principal exchange where they are
traded. Equity securities that have not traded on the date of valuation,
or securities for which sale prices are not available, generally are
valued using the mean between the last bid and asked prices. Short-term
fixed income securities with remaining maturities of sixty days or less
generally are valued at amortized cost. Shares of money market mutual
funds are valued at such funds' net asset value.
Securities or senior loans for which independent pricing services are
unable to supply prices or for which market prices and/or quotations are
not readily available or are considered to be unreliable are valued by a
fair valuation team comprised of certain personnel of Pioneer Investment
Management, Inc. (PIM), the Portfolio's investment adviser, pursuant to
procedures adopted by the Portfolio's Board of Trustees. PIM's fair
valuation team uses fair value methods approved by the Valuation Committee
of the Board of Trustees. PIM's fair valuation team is responsible for
monitoring developments that may impact fair valued securities
31
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
and for discussing and assessing fair values on an ongoing basis, and at
least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities valued using prices supplied by
independent pricing services or broker-dealers).
Principal amounts of mortgage-backed securities are adjusted for monthly
paydowns. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly
paydowns. All discounts/premiums on debt securities are accreted/amortized
for financial reporting purposes over the life of the respective
securities, and such accretion/amortization is included in interest
income.
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. Dividend and interest income are reported net of
unrecoverable foreign taxes withheld at the applicable country rates.
Gains and losses on 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.
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, if any,
represent, among other things, 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 the 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 may 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. All contracts are marked to market daily at
the applicable exchange rates, and any resulting unrealized appreciation
or depreciation are recorded in the Portfolio's financial statements. The
Portfolio records realized gains and losses at the time a contract is
offset by entry into a closing transaction or extinguished by delivery of
the currency. Risks may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of the contract
and from unanticipated movements in the value of foreign currencies
relative to the U.S. dollar. The Portfolio had no outstanding forward
foreign currency contracts during the six months ended June 30, 2014.
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject
to examination by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting
from differences in the recognition or classification of income or
distributions for financial statement and tax purposes. Capital accounts
within
32
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
the financial statements are adjusted for permanent book/tax differences
to reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the Portfolio's taxable year. The tax character of
distributions paid during the years ended December 31, 2013 and the
components of distributable earnings (accumulated losses) on a federal
income tax basis at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------
2013
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $4,538,817
Long-term capital gain 3,678,006
----------
Total distributions $8,216,823
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 728,550
Undistributed long-term
capital gain 2,907,688
Net unrealized appreciation 5,269,710
----------
Total $8,905,948
==========
The difference between book-basis and tax-basis net unrealized
appreciation is attributable to the tax deferral of losses on wash sales,
adjustments relating to catastrophe bonds and sidecars, interest on
default bonds and interest accruals on preferred stock.
E. Portfolio Shares and Allocations
The Portfolio records sales and repurchases of its shares as of trade
date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredit S.p.A. (UniCredit), $85,277 in underwriting
commissions on the sale of Trust shares for the six months ended June 30,
2014. Distribution fees for Class II shares are calculated based on the
average daily net asset value attributable to Class II shares of the
Portfolio (see Note 4). Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated among the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-ofpocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its respective percentage of the adjusted net assets at
the beginning of the day.
Distributions paid by the Portfolio with respect to each class of shares
are calculated in the same manner and at the same time, except that net
investment income dividends to Class I and Class II shares can reflect
different transfer agent and distribution expense rates. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
F. Risks
The Portfolio invests in below investment grade (high yield) debt
securities and in preferred and common 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. In addition, the Portfolio may have concentrations in certain
asset types, which may subject the Portfolio to additional risks. The
Portfolio's prospectus contains unaudited information regarding the
Portfolio's principal risks. Please refer to that document when
considering the Portfolio's principal risks.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of
the Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.65% of the
Portfolio's average daily net assets up to $1 billion and 0.60% on assets over
$1 billion. For the six months ended June 30, 2014, the effective management fee
(excluding waivers and/or assumption of expenses) was equivalent to 0.65% of the
Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including
33
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
accounting, regulatory reporting and insurance premiums, are paid by the
Portfolio as administrative reimbursements. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $7,292 in management
fees, administrative costs and certain other reimbursements payable to PIM at
June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $250 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12B-1 of the
Investment Company Act of 1940 with respect to its Class II shares. Pursuant to
the Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average
daily net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $677 in distribution fees payable to PFD at June 30, 2014.
5. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
34
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
35
This page for your notes.
36
This page for your notes.
37
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19622-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Mid Cap Value VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 10
Notes to Financial Statements 15
Trustees, Officers and Service Providers 19
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Common Stocks 94.4%
International Common Stocks 5.6%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Financials 26.9%
Industrials 14.2%
Health Care 12.5%
Consumer Discretionary 11.3%
Energy 10.1%
Information Technology 9.1%
Utilities 7.6%
Materials 4.8%
Consumer Staples 3.5%
Five Largest Holdings
(As a percentage of equity holdings)*
[Download Table]
--------------------------------------------------------------------------------
1. The Goodyear Tire &
Rubber Co. 2.14%
--------------------------------------------------------------------------------
2. NCR Corp. 2.10
--------------------------------------------------------------------------------
3. Precision Drilling Corp. 1.79
--------------------------------------------------------------------------------
4. The NASDAQ OMX
Group, Inc. 1.69
--------------------------------------------------------------------------------
5. Skyworks Solutions, Inc. 1.67
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $ 22.05 $ 22.96
Class II $ 21.89 $ 22.79
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $ 0.2151 $ 0.5770 $ 2.6895
Class II $ 0.1591 $ 0.5770 $ 2.6895
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Mid Cap Value VCT Portfolio at net asset value during
the periods shown, compared to that of the Russell Midcap Value Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Enlarge/Download Table]
Pioneer Mid Cap Value Pioneer Mid Cap Value
VCT Portfolio, Class I VCT Portfolio, Class II Russell Midcap Value Index
6/30/2004 $10,000 $10,000 $10,000
6/30/2005 $11,701 $11,671 $12,180
6/30/2006 $12,246 $12,185 $13,916
6/30/2007 $15,406 $15,288 $16,990
6/30/2008 $13,340 $13,197 $14,087
6/30/2009 $ 9,946 $ 9,812 $ 9,788
6/30/2010 $11,514 $11,338 $12,618
6/30/2011 $15,010 $14,744 $16,943
6/30/2012 $14,047 $13,757 $16,880
6/30/2013 $16,928 $16,543 $21,547
6/30/2014 $22,047 $21,496 $27,528
The Russell Midcap Value Index is an unmanaged index that measures the
performance of U.S. mid-cap value stocks. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not reflect
any fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
Russell Midcap
Class I Class II Value Index
--------------------------------------------------------------------------------
10 Years 8.23% 7.95% 10.66%
5 Years 17.26% 16.98% 22.97%
1 Year 30.24% 29.94% 27.76%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,113.50 $1,112.40
Expenses Paid During Period* $ 3.72 $ 5.03
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.71%
and 0.96% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,021.27 $1,020.03
Expenses Paid During Period* $ 3.56 $ 4.81
* Expenses are equal to the Portfolio's annualized net expense ratio of 0.71%
and 0.96% for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
3
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
Investments in mid-sized companies may offer the potential for higher returns,
but are also subject to greater short-term price fluctuations than larger, more
established companies.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws.
When interest rates rise, the prices of fixed-income securities in the Portfolio
will generally fall. Conversely, when interest rates fall, the prices of
fixed-income securities in the Portfolio will generally rise.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, Edward T. "Ned" Shadek, Jr. discusses his investment
approach as well as the factors that affected the performance of Pioneer Mid Cap
Value VCT Portfolio during the six-month period ended June 30, 2014. Mr. Shadek,
a senior vice president and portfolio manager at Pioneer, is responsible for the
day-to-day management of the Portfolio*.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: The Portfolio's Class I shares returned 11.35% at net asset value during the
six-month period ended June 30, 2014, and Class II shares returned 11.24%,
while the Portfolio's benchmark, the Russell Midcap Value Index (the Russell
Index), returned 11.14%. During the same period, the average return of the
214 variable portfolios in Lipper's Multi-Cap Core Underlying Funds category
was 5.71%.
Q: How would you describe the market environment for equities during the
six-month period ended June 30, 2014?
A: After a strong finish to 2013, the first few months of 2014 presented a much
more challenging period for equity investors. Concerns about economic
growth in the emerging markets and mixed economic data releases in the U.S.
helped to drive a sharp market sell-off in January 2014, particularly of
higher-quality and more value-oriented stocks. Equities did, however, regain
traction over the final few months of the period despite renewed
international tensions related to the crises in the Ukraine and Iraq as
well as general concerns about the future path of U.S. monetary
policy--particularly after the Federal Reserve Board (Fed) began tapering
its stimulative quantitative easing program earlier in the year. The
domestic equity market, as measured by the Standard & Poor's 500 Index,
finished the six-month period with a very solid return of 7.12%.
Q: What were the main reasons for the Portfolio's slight outperformance of its
benchmark, the Russell Index, during the six-month period ended June 30,
2014?
A: Successful stock selection in several sectors - most notably energy,
consumer discretionary, information technology, and health care - drove the
Portfolio's modest benchmark-relative outperformance during the period.
Individual Portfolio names that made strong positive contributions to
relative returns during the period included Skyworks Solutions, Weatherford
International, Precision Drilling and Cimarex Energy. Skyworks Solutions, a
wireless semiconductor company, outperformed over the period after
preannouncing positive results in early June due to broad-based demand
growth across its mobile products. In energy, where the Portfolio's
holdings performed particularly well, Weatherford International, an oil
service company, turned in very good results due to continued progress on
its restructuring program and a rebound in the oil service industry in
North America. Also in energy, the Portfolio's position in Precision
Drilling, an oil and gas drilling company, benefited from increased U.S.
drilling activity and the company's visibility to future Canadian LNG
(liquid natural gas) related drilling projects. A position in Cimarex
Energy, an exploration and production firm, also fared well during the
six-month period due to the continued successful development of its acreage
in both the Permian and Cana Woodford shale regions.
In consumer discretionary, the top-performing position in the Portfolio
during the six-month period was Goodyear Tire & Rubber. Goodyear was a
low-valuation
4
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
purchase that has worked out well for the Portfolio. The company has
benefited from good internal moves as well as positive external factors.
Internally, Goodyear has done a good job of cost cutting and has managed to
close the gap in its underfunded pension accounts. Externally, the
improving environment in the automobile sector has been good for Goodyear's
tire business.
In health care, the Portfolio's performance benefited strongly from two
holdings in particular: Salix Pharmaceuticals and Actavis. Salix continues
to see good results from Xifaxan, the company's treatment for intestinal
disorders, which is also used to lower the risk of worsened brain function,
or hepatic encephalopathy, in adults with liver failure. There also
appears to be a very good chance that Xifaxan soon will be approved for the
treatment of irritable bowel syndrome, a development that should provide a
boost to Salix's bottom line. Actavis, a generic/specialty pharmaceutical
company, continues to post great synergies with acquisitions such as Warner
Chilcott and the more recently announced acquisition of Forest Labs. Not
only has Actavis added to its portfolio of branded and generic drugs, but
the company is now domiciled in Ireland and should stand to benefit from
the low tax rates in that country.
The top-performing information technology holding in the Portfolio during
the period was analog chip-maker Skyworks Solutions. Skyworks was another
relatively cheap stock with good fundamentals that we purchased as a play
on the Smartphone craze, especially in China. We think China's build-out of
4G wireless data service should give Skyworks an opportunity to ramp up its
already large sales volumes in that country.
Q: Which investment decisions or individual holdings detracted from the
Portfolio's benchmark-relative performance during the six-month period ended
June 30, 2014?
A: The biggest negative factor in the Portfolio's performance relative to the
Russell Index during the period was stock selection in the financials
sector. A Portfolio underweight to the utilities sector, which led the
Russell Index with a return of 18.75% during the period, also detracted
from benchmark-relative results.
Within financials, the Portfolio's biggest performance detractor was a
position in Walter Investment Management, a mortgage servicer. Walter was
the Portfolio's worst performer in the financials sector during the period,
even though we had been selling down the Portfolio's shares of the company
for some time. We finally decided to exit the name completely before the
end of the period because the stock simply was too volatile and the
acquisition of mortgage-servicing rights had become more and more
cumbersome as time went on.
Other stocks in the Portfolio that detracted from relative performance
during the six-month period included KBR, an engineering and construction
company, and Ross Stores. KBR's performance suffered due to the fact that
several pending, large LNG (liquid natural gas) projects were pushed out,
which flattened the firm's backlog. The company also was hit hard after
announcing extraordinary charges related to a mispriced project. Retailer
Ross Stores was not immune to weakness in the retail sector during the
period caused by hypercompetitive activity in a lackluster demand
environment.
5
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
Q: What is your outlook as we head into the second half of 2014?
A: We feel that the outlook for future equity returns still looks reasonably
good, though we feel that returns will likely be more muted in 2014 than
they were last year. The U.S. and European economies look to be improving,
albeit at a very slow pace. Unemployment in the U.S. continues to abate,
and capital spending is up. Corporate fundamentals in the U.S. also look
good, and merger-and-acquisition activity has been ramping up, which is
another factor that should benefit the equity markets. In addition, equity
valuations, while more expensive than a year ago, still look decent.
Overall, we believe we can still find good value in the current market
environment.
Regardless of what the market does, we will stick to our investment
strategy, process, and discipline when selecting stocks for the Portfolio.
Our approach to stock picking emphasizes bottom-up, fundamental analysis. We
believe our approach is durable and repeatable and can deliver reasonable
investment results across the business cycle, and in a variety of market
conditions.
* Note to Shareholders: Timothy Horan, a manager of the Portfolio during most
of the six-month period, resigned from Pioneer Investments effective June
17, 2014, and Edward T. "Ned" Shadek, Jr. was subsequently named as the
sole portfolio manager of Pioneer Mid Cap Value VCT Portfolio.
Please refer to the Schedule of Investments on pages 7 to 9 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
6
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
COMMON STOCKS - 100.1%
Energy - 10.2%
Oil & Gas Drilling - 1.8%
525,948 Precision Drilling Corp. $ 7,447,424
-----------------
Oil & Gas Equipment
& Services - 2.5%
93,964 Helix Energy Solutions Group, Inc.* $ 2,472,193
157,824 Superior Energy Services, Inc.* 5,703,759
91,102 Weatherford International Plc 2,095,346
-----------------
$ 10,271,298
-----------------
Oil & Gas Exploration
& Production - 5.9%
36,172 Cimarex Energy Co. $ 5,189,235
332,484 Kodiak Oil & Gas Corp.* 4,837,642
84,969 Rosetta Resources, Inc.* 4,660,550
55,002 SM Energy Co. 4,625,668
64,940 Whiting Petroleum Corp.* 5,211,435
-----------------
$ 24,524,530
-----------------
Total Energy $ 42,243,252
-----------------
Materials - 4.9%
Diversified Chemicals - 1.0%
45,763 Eastman Chemical Co. $ 3,997,398
-----------------
Specialty Chemicals - 1.2%
46,762 Cytec Industries, Inc. $ 4,929,650
-----------------
Metal & Glass Containers - 1.6%
129,714 Crown Holdings, Inc.* $ 6,454,569
-----------------
Paper Products - 1.1%
94,685 International Paper Co. $ 4,778,752
-----------------
Total Materials $ 20,160,369
-----------------
Capital Goods - 9.7%
Construction &
Engineering - 0.9%
161,100 KBR, Inc. $ 3,842,235
-----------------
Electrical Components
& Equipment - 2.4%
50,060 Eaton Corp. Plc $ 3,863,631
124,876 Generac Holdings, Inc. 6,086,456
-----------------
$ 9,950,087
-----------------
Construction & Farm
Machinery & Heavy Trucks - 3.7%
71,912 Joy Global, Inc. $ 4,428,341
83,802 PACCAR, Inc. 5,265,280
139,263 Terex Corp.* 5,723,709
-----------------
$ 15,417,330
-----------------
Industrial Machinery - 2.7%
82,335 Crane Co. $ 6,122,431
131,483 TriMas Corp.* 5,013,447
-----------------
$ 11,135,878
-----------------
Total Capital Goods $ 40,345,530
-----------------
Commercial Services
& Supplies - 0.7%
Security & Alarm Services - 0.7%
91,779 Corrections Corp., of America $ 3,014,940
-----------------
Total Commercial
Services & Supplies $ 3,014,940
-----------------
Transportation - 3.8%
Air Freight & Logistics - 0.9%
98,753 Atlas Air Worldwide Holdings, Inc.* $ 3,639,048
-----------------
Trucking - 2.9%
105,517 Con-way, Inc. $ 5,319,112
78,122 Ryder System, Inc. 6,881,767
-----------------
$ 12,200,879
-----------------
Total Transportation $ 15,839,927
-----------------
Automobiles & Components - 3.4%
Auto Parts & Equipment - 1.3%
82,123 Tenneco, Inc.* $ 5,395,481
-----------------
Tires & Rubber - 2.1%
320,371 The Goodyear Tire & Rubber Co. $ 8,899,907
-----------------
Total Automobiles
& Components $ 14,295,388
-----------------
Consumer Durables &
Apparel - 4.7%
Homebuilding - 1.4%
237,228 DR Horton, Inc. $ 5,831,064
-----------------
Household Appliances - 1.1%
33,912 Whirlpool Corp. $ 4,721,229
-----------------
Housewares & Specialties - 1.4%
93,919 Jarden Corp.* $ 5,574,093
-----------------
Apparel, Accessories &
Luxury Goods - 0.8%
27,723 PVH Corp. $ 3,232,502
-----------------
Total Consumer
Durables & Apparel $ 19,358,888
-----------------
Media - 0.8%
Broadcasting - 0.8%
62,022 Nexstar Broadcasting Group, Inc. $ 3,200,955
-----------------
Total Media $ 3,200,955
-----------------
Retailing - 2.5%
Department Stores - 1.3%
92,501 Macy's, Inc. $ 5,366,908
-----------------
Apparel Retail - 1.2%
75,698 Ross Stores, Inc. $ 5,005,909
-----------------
Total Retailing $ 10,372,817
-----------------
Food, Beverage & Tobacco - 3.1%
Soft Drinks - 1.0%
83,293 Coca-Cola Enterprises, Inc. $ 3,979,740
-----------------
The accompanying notes are an integral part of these financial statements.
7
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Agricultural Products - 1.1%
62,706 Ingredion, Inc. $ 4,705,458
-----------------
Packaged Foods & Meats - 1.0%
240,757 Dean Foods Co.* $ 4,234,916
-----------------
Total Food, Beverage & Tobacco $ 12,920,114
-----------------
Health Care Equipment
& Services - 9.1%
Health Care Equipment - 1.5%
58,087 Zimmer Holdings, Inc. $ 6,032,916
-----------------
Health Care Supplies - 0.8%
91,295 Alere, Inc.* $ 3,416,259
-----------------
Health Care Distributors - 1.2%
69,004 Cardinal Health, Inc. $ 4,730,914
-----------------
Health Care Services - 1.6%
101,591 Omnicare, Inc. $ 6,762,913
-----------------
Health Care Facilities - 1.3%
117,485 Community Health Systems, Inc. $ 5,330,294
-----------------
Managed Health Care - 2.7%
70,464 Aetna, Inc. $ 5,713,221
44,286 Humana, Inc. 5,656,208
-----------------
$ 11,369,429
-----------------
Total Health Care
Equipment & Services $ 37,642,725
-----------------
Pharmaceuticals,
Biotechnology & Life
Sciences - 3.5%
Pharmaceuticals - 3.5%
12,987 Actavis plc* $ 2,896,750
39,268 Jazz Pharmaceuticals Plc* 5,772,789
47,584 Salix Pharmaceuticals, Ltd.* 5,869,486
-----------------
$ 14,539,025
-----------------
Total Pharmaceuticals,
Biotechnology & Life Sciences $ 14,539,025
-----------------
Banks - 7.8%
Diversified Banks - 1.0%
83,734 Comerica, Inc. $ 4,200,097
-----------------
Regional Banks - 6.8%
118,200 Cathay General Bancorp $ 3,021,192
72,732 CIT Group, Inc.* 3,328,216
32,354 First Republic Bank 1,779,146
344,509 Huntington Bancshares, Inc./OH 3,286,616
438,969 KeyCorp 6,290,426
612,080 Regions Financial Corp. 6,500,290
129,177 Zions Bancorporation 3,806,846
-----------------
$ 28,012,732
-----------------
Total Banks $ 32,212,829
-----------------
Diversified Financials - 5.5%
Other Diversified Financial
Services - 1.4%
161,649 Voya Financial, Inc. $ 5,874,325
-----------------
Specialized Finance - 1.7%
181,512 The NASDAQ OMX Group, Inc. $ 7,009,993
-----------------
Consumer Finance - 0.9%
196,281 Navient Corp. $ 3,476,137
41,384 SLM Corp. 343,901
-----------------
$ 3,820,038
-----------------
Asset Management &
Custody Banks - 1.1%
35,958 Ameriprise Financial, Inc. $ 4,314,960
-----------------
Investment Banking &
Brokerage - 0.4%
33,209 Lazard, Ltd. $ 1,712,256
-----------------
Total Diversified Financials $ 22,731,572
-----------------
Insurance - 6.0%
Life & Health Insurance - 1.9%
102,712 Lincoln National Corp. $ 5,283,505
75,902 Unum Group 2,638,354
-----------------
$ 7,921,859
-----------------
Multi-line Insurance - 1.6%
189,826 The Hartford Financial Services
Group, Inc. $ 6,797,669
-----------------
Property & Casualty
Insurance - 1.4%
97,592 The Allstate Corp. $ 5,730,602
-----------------
Reinsurance - 1.1%
55,168 Reinsurance Group of America, Inc. $ 4,352,755
-----------------
Total Insurance $ 24,802,885
-----------------
Real Estate - 7.7%
Diversified REIT - 1.3%
304,514 Duke Realty Corp. $ 5,529,974
-----------------
Residential REIT - 1.1%
69,313 Home Properties, Inc. $ 4,433,259
-----------------
Retail REIT - 2.2%
225,131 General Growth Properties, Inc. $ 5,304,086
178,372 Kimco Realty Corp. 4,098,989
-----------------
$ 9,403,075
-----------------
Specialized REIT - 2.1%
41,220 Chesapeake Lodging Trust $ 1,246,081
111,747 Pebblebrook Hotel Trust 4,130,169
92,909 The Geo Group, Inc. 3,319,639
-----------------
$ 8,695,889
-----------------
Real Estate Services - 1.0%
32,271 Jones Lang LaSalle, Inc. $ 4,078,732
-----------------
Total Real Estate $ 32,140,929
-----------------
The accompanying notes are an integral part of these financial statements.
8
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
Shares Value
Software & Services - 3.2%
IT Consulting & Other
Services - 1.1%
103,476 Amdocs, Ltd. $ 4,794,043
-----------------
Data Processing &
Outsourced Services - 2.1%
84,859 Fidelity National Information
Services, Inc. $ 4,645,182
106,465 VeriFone Systems, Inc.* 3,912,589
-----------------
$ 8,557,771
-----------------
Total Software & Services $ 13,351,814
-----------------
Technology Hardware &
Equipment - 2.8%
Computer Hardware - 2.1%
248,504 NCR Corp.* $ 8,720,005
-----------------
Office Electronics - 0.7%
251,950 Xerox Corp. $ 3,134,258
-----------------
Total Technology
Hardware & Equipment $ 11,854,263
-----------------
Semiconductors &
Semiconductor Equipment - 3.1%
Semiconductors - 3.1%
407,489 Marvell Technology Group, Ltd. $ 5,839,317
147,662 Skyworks Solutions, Inc.* 6,934,208
-----------------
$ 12,773,525
-----------------
Total Semiconductors &
Semiconductor Equipment $ 12,773,525
-----------------
Utilities - 7.6%
Electric Utilities - 6.4%
116,442 Northeast Utilities $ 5,504,213
77,922 Pinnacle West Capital Corp. 4,507,008
170,859 PNM Resources, Inc. 5,011,294
164,770 PPL Corp. 5,854,278
148,577 Westar Energy, Inc. 5,674,156
-----------------
$ 26,550,949
-----------------
Multi-Utilities - 1.2%
126,571 Ameren Corp. $ 5,174,222
-----------------
Total Utilities $ 31,725,171
-----------------
TOTAL COMMON STOCKS
(Cost $325,066,378) $ 415,526,918
-----------------
TOTAL INVESTMENT IN
SECURITIES - 100.1%
(Cost $325,066,378) (a) $ 415,526,918
-----------------
OTHER ASSETS &
LIABILITIES - (0.1)% $ (552,538)
-----------------
TOTAL NET ASSETS - 100.0% $ 414,974,380
=================
* Non-income producing security.
REIT Real Estate Investment Trust.
(a) At June 30, 2014, the net unrealized appreciation on investments based on
cost for federal income tax purposes of $325,540,312 was as follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $ 91,963,156
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (1,976,550)
------------
Net unrealized appreciation $ 89,986,606
============
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $107,115,431 and $129,396,241,
respectively.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3. See Notes to Financial Statements -- Note 1A.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $ 415,526,918 $ -- $ -- $ 415,526,918
------------- ------- ------- -------------
Total $ 415,526,918 $ -- $ -- $ 415,526,918
============= ======= ======= =============
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
9
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 22.96 $ 17.42 $ 15.85 $ 16.93 $ 14.48 $ 11.72
------- ------- ------- ------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.11 $ 0.24 $ 0.24 $ 0.23 $ 0.18 $ 0.20
Net realized and unrealized gain (loss) on investments 2.47 5.49 1.50 (1.17) 2.43 2.76
------- ------- ------- ------- -------- --------
Net increase (decrease) from investment operations $ 2.58 $ 5.73 $ 1.74 $ (0.94) $ 2.61 $ 2.96
Distributions to shareowners:
Net investment income $ (0.22) $ (0.19) $ (0.17) $ (0.14) $ (0.16) $ (0.20)
Net realized gain (3.27) -- -- -- -- --
------- ------- ------- ------- -------- --------
Total distributions $ (3.49) $ (0.19) $ (0.17) $ (0.14) $ (0.16) $ (0.20)
------- ------- ------- ------- -------- --------
Net increase (decrease) in net asset value $ (0.91) $ 5.54 $ 1.57 $ (1.08) $ 2.45 $ 2.76
------- ------- ------- ------- -------- --------
Net asset value, end of period $ 22.05 $ 22.96 $ 17.42 $ 15.85 $ 16.93 $ 14.48
======= ======= ======= ======= ======== ========
Total return* 11.35% 33.10% 11.11%(a) (5.64)% 18.22% 25.58%
Ratio of net expenses to average net assets 0.71%** 0.71% 0.72% 0.72% 0.74% 0.75%
Ratio of net investment income to average net assets 0.82%** 1.04% 1.17% 1.23% 1.02% 1.39%
Portfolio turnover rate 54%** 99% 103% 88% 99% 88%
Net assets, end of period (in thousands) $93,776 $90,706 $81,886 $92,100 $116,729 $113,962
* 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.
(a) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2012, the total return would
have been 11.08%.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sale
charges.
The accompanying notes are an integral part of these financial statements.
10
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 22.79 $ 17.30 $ 15.75 $ 16.83 $ 14.41 $ 11.66
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.07 $ 0.18 $ 0.14 $ 0.14 $ 0.09 $ 0.10
Net realized and unrealized gain (loss) on investments 2.46 5.46 1.55 (1.11) 2.46 2.81
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 2.53 $ 5.64 $ 1.69 $ (0.97) $ 2.55 $ 2.91
Distributions to shareowners:
Net investment income $ (0.16) $ (0.15) $ (0.14) $ (0.11) $ (0.13) $ (0.16)
Net realized gain (3.27) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions $ (3.43) $ (0.15) $ (0.14) $ (0.11) $ (0.13) $ (0.16)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.90) $ 5.49 $ 1.55 $ (1.08) $ 2.42 $ 2.75
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 21.89 $ 22.79 $ 17.30 $ 15.75 $ 16.83 $ 14.41
========= ======== ======== ======== ======== ========
Total return* 11.24% 32.75% 10.83%(a) (5.84)% 17.89% 25.26%
Ratio of net expenses to average net assets+ 0.96%** 0.96% 0.97% 0.97% 0.99% 1.00%
Ratio of net investment income to average net assets+ 0.57%** 0.79% 0.94% 1.03% 0.79% 1.14%
Portfolio turnover rate 54%** 99% 103% 88% 99% 88%
Net assets, end of period (in thousands) $321,199 $306,189 $259,448 $207,057 $179,212 $125,589
* 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.
(a) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2012, the total return would
have been 10.78%.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sale
charges.
The accompanying notes are an integral part of these financial statements.
11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
ASSETS:
Investment in securities (cost $325,066,378) $415,526,918
Receivables --
Investment securities sold 3,269,693
Portfolio shares sold 92,285
Dividends 507,502
Prepaid expenses 2,974
------------
Total assets $419,399,372
------------
LIABILITIES:
Payables --
Investment securities purchased $ 3,369,830
Portfolio shares repurchased 277,355
Trustee fees 187
Due to custodian 709,294
Due to affiliates 44,360
Accrued expenses 23,966
------------
Total liabilities $ 4,424,992
------------
NET ASSETS:
Paid-in capital $299,963,524
Undistributed net investment income 1,416,172
Accumulated net realized gain on investments 23,134,144
Net unrealized appreciation on investments 90,460,540
------------
Total net assets $414,974,380
============
NET ASSET VALUE PER SHARE:
(No par value unlimited number of shares authorized)
Class I (based on $93,775,597/4,252,410 shares) $ 22.05
============
Class II (based on $321,198,783/14,675,452 shares) $ 21.89
============
The accompanying notes are an integral part of these financial statements.
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Download Table]
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $9,517) $ 3,034,758
Interest 136
-----------
Total investment income $ 3,034,894
-----------
EXPENSES:
Management fees $ 1,287,811
Transfer agent fees and expenses
Class I 750
Class II 750
Distribution fees
Class II 383,579
Administrative reimbursements 68,065
Custodian fees 7,368
Professional fees 23,136
Printing expense 5,745
Fees and expenses of nonaffiliated trustees 7,088
Miscellaneous 4,435
-----------
Net expenses $ 1,788,727
-----------
Net investment income $ 1,246,167
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $23,780,610
-----------
Change in net unrealized appreciation on Investments: $17,790,250
-----------
Net gain on investments $41,570,860
-----------
Net increase in net assets resulting from operations $42,817,027
===========
The accompanying notes are an integral part of these financial statements.
13
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 1,246,167 $ 3,170,719
Net realized gain on investments and class actions 23,780,610 63,085,212
Change in net unrealized appreciation on investments 17,790,250 39,589,487
------------- -------------
Net increase in net assets resulting from operations $ 42,817,027 $ 105,845,418
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.22 and $0.19 per share, respectively) $ (791,747) $ (833,951)
Class II ($0.16 and $0.15 per share, respectively) (2,022,558) (2,135,907)
Net realized gains
Class I ($3.27 and $0.00 per share, respectively) (12,023,438) --
Class II ($3.27 and $0.00 per share, respectively) (41,525,363) --
------------- -------------
Total distributions to shareowners $ (56,363,106) $ (2,969,858)
------------- -------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 8,188,026 $ 11,762,482
Reinvestment of distributions 56,363,106 2,969,858
Cost of shares repurchased (32,925,667) (62,046,988)
------------- -------------
Net increase (decrease) in net assets resulting from
Portfolio share transactions $ 31,625,465 $ (47,314,648)
------------- -------------
Net increase in net assets $ 18,079,386 $ 55,560,912
NET ASSETS:
Beginning of period $ 396,894,994 $ 341,334,082
------------- -------------
End of period $ 414,974,380 $ 396,894,994
============= =============
Undistributed net investment income $ 1,416,172 $ 2,984,310
============= =============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 116,238 $ 2,764,020 267,113 $ 5,185,801
Reinvestment of distributions 587,045 12,815,185 43,121 833,951
Less shares repurchased (401,112) (9,417,208) (1,060,764) (21,389,909)
---------- ------------ ---------- -------------
Net increase (decrease) 302,171 $ 6,161,997 (750,530) $ (15,370,157)
========== ============ ========== =============
CLASS II
Shares sold 229,236 $ 5,424,006 330,462 $ 6,576,681
Reinvestment of distributions 2,010,523 43,547,921 111,129 2,135,907
Less shares repurchased (998,515) (23,508,459) (2,007,012) (40,657,079)
---------- ------------ ---------- -------------
Net increase (decrease) 1,241,244 $ 25,463,468 (1,565,421) $ (31,944,491)
========== ============ ========== =============
The accompanying notes are an integral part of these financial statements.
14
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Mid Cap Value VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is capital appreciation by investing in a diversified portfolio of
securities consisting primarily of common stocks.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per-share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per-share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
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 available, generally are valued at
the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such Funds' asset value.
Trading in foreign securities is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities
used in computing the net asset value of the Portfolio's shares are
determined as of such times.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted
by the Portfolio's Board of Trustees. PIM's fair valuation team uses fair
value methods approved by the Valuation Committee of the Board of Trustees.
PIM's fair valuation team is responsible for monitoring developments that
may impact fair valued securities and for discussing and assessing fair
values on an ongoing basis, and at least quarterly, with the Valuation
Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
15
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers).
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
is recorded on the accrual basis. Dividend and interest income are
reported net of unrecoverable foreign taxes withheld at the applicable
country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
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, if any,
represent, among other things, 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 the market prices of those securities, but are
included with the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation is
recorded in the Portfolio's financial statements. The Portfolio records
realized gains and losses at the time a contract 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.
During the six months ended June 30, 2014, the Portfolio had no outstanding
forward foreign currency contracts.
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject to
examination by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the current taxable year. The tax character of distributions
paid during the year ended December 31, 2013 and the components of
distributable earnings (accumulated losses) on a federal income tax basis
at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 2,969,858
----------------
Total distributions $ 2,969,858
================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 12,271,693
Undistributed long-term gain 44,088,886
Unrealized appreciation 72,196,356
----------------
Total $ 128,556,935
================
The difference between book basis and tax basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales and the tax treatment
of Real Estate Investment Trust (REIT) holdings.
16
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the average daily net
asset value attributable to Class II shares of the Portfolio (see Note 4).
Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its 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 and at the same time, except that net
investment income dividends to Class I and Class II shares can reflect
different transfer agent and distribution expense rates. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
F. Risks
Investments in mid-sized companies may offer the potential for higher
returns, but are also subject to greater short-term price fluctuations than
investments in larger, more established companies. At times, the
Portfolio's investments may represent industries or industry sectors that
are interrelated or have common risks, making the Portfolio more
susceptible to any economic, political, or regulatory developments or to
other risks affecting those industries and sectors. The Portfolio's
prospectus contains unaudited information regarding the Portfolio's
principal risks. Please refer to that document when considering the
Portfolio's principal risks.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of the
Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.65% of the
Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$33,665 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $1,924 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $8,771 in distribution fees payable to PFD at June 30, 2014.
5. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
17
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
18
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
19
This page for your notes.
20
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19609-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Real Estate VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 9
Notes to Financial Statements 14
Trustees, Officers and Service Providers 18
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
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Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Apartment 15.4%
Regional Mall 14.8%
Office 12.1%
Health Care 10.3%
Diversified 9.3%
Shopping Center 8.8%
Storage 7.9%
Industrial 7.1%
Hotel 6.4%
Cash and equivalents 3.7%
Triple Net Lease 2.8%
Manufactured Home 1.4%
Five Largest Holdings
(As a percentage of equity holdings)*
[Download Table]
--------------------------------------------------------------------------------
1. Simon Property Group, Inc. 9.37%
--------------------------------------------------------------------------------
2. Equity Residential Property Trust, Inc. 6.49
--------------------------------------------------------------------------------
3. Prologis, Inc. 5.21
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4. Boston Properties, Inc. 5.05
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5. Public Storage, Inc. 5.02
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $19.63 $18.77
Class II $19.66 $18.79
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.2700 $- $2.1366
Class II $0.2400 $- $2.1366
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Real Estate Shares VCT Portfolio at net asset value
during the periods shown, compared to that of the Morgan Stanley Capital
International (MSCI) U.S. REIT Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Real Pioneer Real Estate
Estate Shares VCT Shares VCT Portfolio,
Portfolio, Class I Class II MSCI U.S. REIT Index
6/30/2004 $10,000 $10,000 $10,000
6/30/2005 $13,506 $13,469 $13,293
6/30/2006 $16,710 $16,626 $15,905
6/30/2007 $18,427 $18,290 $17,821
6/30/2008 $15,732 $15,573 $15,300
6/30/2009 $ 9,022 $ 8,926 $ 8,608
6/30/2010 $14,090 $13,917 $13,363
6/30/2011 $18,721 $18,456 $17,918
6/30/2012 $21,164 $20,815 $20,282
6/30/2013 $22,905 $22,481 $22,113
6/30/2014 $25,913 $25,363 $25,072
The MSCI U.S. REIT Index is an unmanaged, widely used index comprising a broad
representation of the most actively traded real estate trusts, and is designed
to be a measure of real estate equity performance. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. It is not possible to invest
directly in an index.
[Download Table]
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
--------------------------------------------------------------------------------
MSCI U.S.
Class I Class II REIT Index
--------------------------------------------------------------------------------
10 Years 9.99% 9.75% 9.63%
5 Years 23.49% 23.23% 23.84%
1 Year 13.13% 12.82% 13.38%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,175.90 $1,174.50
Expenses Paid During Period* $ 5.45 $ 6.74
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% and
1.25%, for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,019.79 $1,018.60
Expenses Paid During Period* $ 5.06 $ 6.26
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% and
1.25%, for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. The Portfolio invests
in a limited number of securities and, as a result, the Portfolio's performance
may be more volatile than the performance of other portfolios holding more
securities. When interest rates rise, the prices of fixed-income securities in
the Portfolio will generally fall. Conversely, when interest rates fall, the
prices of fixed-income securities in the Portfolio will generally rise. At
times, the Portfolio's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, Matthew Troxell of AEW Capital Management, L.P.,
sub-adviser for Pioneer Real Estate Shares VCT Portfolio, discusses the market
environment for real estate-related investments and the Portfolio's performance
during the six-month period ended June 30, 2014.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Real Estate Shares VCT Portfolio's Class I shares returned 17.59%
at net asset value during the six-month period ended June 30, 2014, and
Class II shares returned 17.45%, while the Portfolio's benchmark, the
Morgan Stanley Capital International (MSCI) Real Estate Investment Trust
(REIT) Index (the MSCI Index)(1), returned 17.68%. During the same period,
the average return of the 44 variable portfolios in Lipper's Real Estate
Underlying Funds category was 16.79%.
Q: How would you describe the environment for REIT investors during the
six-month period ended June 30, 2014?
A: The U.S. REIT market posted strong performance during the first half of
2014 as property stocks were buoyed by the continued low-interest-rate
environment, low levels of new supply and solid demand for REITs based on
their defensive characteristics. The Portfolio's benchmark, the MSCI Index,
returned a robust 17.68% during the six-month period, far outpacing the
six-month returns of both domestic and global equity stock market indices.
Q: What were the main reasons for the Portfolio's slight underperformance of
the MSCI Index during the six-month period ended June 30, 2014?
Specifically, which investment strategies or individual holdings had the
biggest effects on the Portfolio's relative returns?
A: On a relative basis, the Portfolio underperformed the benchmark, a result
largely attributable to negative stock selection results in the
diversified, industrial and hotel sectors as well as the Portfolio's modest
cash position, which was a detractor in light of the REIT sector's strong
absolute performance.
The individual positions that detracted the most from the Portfolio's
benchmark-relative performance during the six-month period included
overweights in the underperforming REITs Forest City Enterprises and Hilton
Worldwide, and an underweight to the outperforming apartment REIT Essex
-----------------
(1) The MSCI information may only be used for your internal use, may not be
reproduced or redisseminated in any form and may not be used as a basis for
or a component of any financial instruments or products or indices. None of
the MSCI information is intended to constitute investment advice or a
recommendation to make (or refrain from making) any kind of investment
decision and may not be relied on as such. Historical data and analysis
should not be taken as an indication or guarantee of any future performance
analysis, forecast or prediction. The MSCI information is provided on an
"as is" basis and the user of this information assumes the entire risk of
any use made of this information. MSCI, each of its affiliates and each
other person involved in or related to compiling, computing or creating any
MSCI information (collectively, the "MSCI Parties") expressly disclaims all
warranties (including, without limitation, any warranties of originality,
accuracy, completeness, timeliness, non-infringement, merchantability and
fitness for a particular purpose) with respect to this information. Without
limiting any of the foregoing, in no event shall any MSCI Party have any
liability for any direct, indirect, special, incidental, punitive,
consequential (including, without limitation, lost profits) or any other
damages.
4
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Property Trust. Shares of Forest City came under selling pressure during
the period when investors had a negative reaction to management's
development and capital expenditure plans. Hilton has strong fundamentals
in our view, but lagged many of its peers in the lodging sector during the
first half of 2014 in anticipation of a private equity group's trimming its
stake in the hotelier. The Portfolio's underweight exposure in Essex
Property Trust hurt relative performance as the REIT rallied in response to
strong market conditions on the west coast.
Q: Which of your investment strategies augmented the Portfolio's performance
during the six-month period ended June 30, 2014, and which strategies
detracted from performance?
A: The Portfolio's strong absolute performance during the period was driven by
both stock selection results and sector allocation strategies. With regard
to stock selection, the Portfolio's holdings in the triple-net-lease,
regional mall, and office sectors made the largest contributions to
returns.
The holdings that contributed the most to the Portfolio's performance
during the six-month period included a significant underweight position in
the underperforming triple-net-lease REIT American Realty Capital
Properties, which posted a negative return for the first half of 2014. (A
triple-net-lease is a lease agreement that designates the lessee, or
tenant, as being solely responsible for all of the costs relating to the
asset being leased, in addition to the rental fee applied under the lease.
Under a triple-net-lease, the tenant typically pays the net real estate
taxes owed on the leased asset as well as the net building insurance
premiums and net common area maintenance costs. Because the tenant is
covering these "triple" costs - which would otherwise be the responsibility
of the property owner - the rent charged under a triple-net-lease agreement
is generally lower than the rent charged in a standard lease agreement.)
Overweight Portfolio positions in the outperforming office REIT Kilroy
Realty and the apartment REIT Equity Residential also contributed to
returns. Kilroy Realty's portfolio of assets - like those of Essex Property
Trust (mentioned previously) - continued to benefit during the period from
strength in the west coast markets, particularly in San Francisco and
Seattle. Equity Residential reported solid quarterly earnings results
during the period, which were driven by strong apartment demand.
In addition, despite strong performance from the Portfolio's individual
holdings in the triple-net-lease sector, the sector as a whole
underperformed during the period, and so being underweight there
contributed to the Portfolio's returns.
Q: Did you implement any major changes to the Portfolio's strategy during the
six-month period ended June 30, 2014?
A: We didn't make any significant changes to the Portfolio during the period.
The Portfolio continues to be well diversified* by property type and
geographic region, and our investment process remains focused on security
selection within each property sector. Throughout the period, the Portfolio
had a bias toward companies with stronger balance sheets and higher-
quality assets as well as toward companies with development pipelines that
we believe are undervalued by the market. Based on improving property
* Diversification does not assure a profit nor protect against loss in a
declining market.
5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
market fundamentals and relative valuations within the REIT sector, however, our
preference for attractive value led us to increase the Portfolio's overweight in
the office sector and move to a bigger underweight in the triple-net-lease
sector.
Q: How would you rate the attractiveness of REIT valuations at this point in
the economic recovery?
A: REITs certainly benefited from the surprising drop in market interest rates
during the first half of 2014. By period end, REIT valuations were at near
long-term historical averages, making them appear relatively expensive
compared with other equities, but attractive relative to bonds.
The Federal Reserve System (the Fed) is on pace to end its stimulative
bond-buying program later this year. If U.S. economic data continues to
improve, investors will eventually begin to focus on the timing the Fed's
first increase in the benchmark Federal funds rate. When interest rates
eventually do rise over the next several years, we expect REIT performance
gains to be driven more by earnings growth than by additional expansion of
the multiple investors are willing to pay for cash flows.
Please refer to the Schedule of Investments on pages 7-8 for a full listing of
Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
6
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
COMMON STOCKS - 96.5%
Consumer Services - 0.9%
Hotels, Resorts & Cruise Lines - 0.9%
17,300 Hilton Worldwide Holdings, Inc. $ 403,090
-----------
Total Consumer Services $ 403,090
-----------
Real Estate - 95.6%
Diversified REIT - 7.3%
15,500 American Assets Trust, Inc. $ 535,525
9,600 American Realty Capital Properties, Inc. 120,288
9,300 Armada Hoffler Properties, Inc. 90,024
28,600 Empire State Realty Trust, Inc.* 471,900
1,807 First Potomac Realty Trust 23,708
21,300 Liberty Property Trust 807,909
27,100 Retail Opportunity Investments Corp. 426,283
7,900 Vornado Realty Trust 843,167
-----------
$ 3,318,804
-----------
Industrial REIT - 5.3%
55,800 Prologis, Inc. $ 2,292,822
7,800 Rexford Industrial Realty, Inc.* 111,072
-----------
$ 2,403,894
-----------
Office REIT - 14.9%
11,000 Alexandria Real Estate Equities, Inc. $ 854,040
34,900 BioMed Realty Trust, Inc. 761,867
18,800 Boston Properties, Inc. 2,221,784
17,800 Douglas Emmett, Inc. 502,316
26,200 DuPont Fabros Technology, Inc. 706,352
17,700 Gramercy Property Trust, Inc.* 107,085
21,700 Kilroy Realty Corp. 1,351,476
14,400 Piedmont Office Realty Trust, Inc. 272,736
-----------
$ 6,777,656
-----------
Residential REIT - 16.8%
14,600 American Campus Communities, Inc. $ 558,304
14,100 American Homes 4 Rent* 250,416
14,300 AvalonBay Communities, Inc. 2,033,317
12,400 Camden Property Trust 882,260
15,000 Equity Lifestyle Properties, Inc. 662,400
45,300 Equity Residential Property Trust, Inc. 2,853,900
2,414 Essex Property Trust, Inc. 446,373
-----------
$ 7,686,970
-----------
Retail REIT - 23.8%
17,700 Acadia Realty Trust $ 497,193
45,300 DDR Corp. 798,639
10,000 Federal Realty Investment Trust 1,209,200
13,500 National Retail Properties, Inc. 502,065
20,400 Ramco-Gershenson Properties Trust 339,048
13,500 Regency Centers Corp. $ 751,680
24,800 Simon Property Group, Inc. 4,123,744
15,500 Taubman Centers, Inc. 1,175,055
20,300 The Macerich Co. 1,355,025
6,500 Washington Prime Group, Inc. 121,810
-----------
$10,873,459
-----------
Specialized REIT - 25.2%
2,800 Aviv Real Estate Investment Trust, Inc. 78,876
20,700 CubeSmart 379,224
11,800 EPR Properties 659,266
19,100 Extra Space Storage, Inc. 1,017,075
40,900 HCP, Inc. 1,692,442
23,400 Health Care Real Estate Investment
Trust, Inc. 1,466,478
83,200 Host Hotels & Resorts, Inc. 1,831,232
12,900 Public Storage, Inc. 2,210,415
23,700 RLJ Lodging Trust 684,693
23,100 Ventas, Inc. 1,480,710
-----------
$11,500,411
-----------
Diversified Real Estate Activities - 0.8%
8,400 Alexander & Baldwin, Inc.* $ 348,180
-----------
Real Estate Operating Companies - 1.5%
34,700 Forest City Enterprises, Inc.* $ 689,488
-----------
Total Real Estate $43,598,862
-----------
TOTAL COMMON STOCKS
(Cost $19,680,094) $44,001,952
-----------
TOTAL INVESTMENT IN
SECURITIES - 96.5%
(Cost $19,680,094) (a) $44,001,952
-----------
OTHER ASSETS &
LIABILITIES - 3.5% $ 1,612,028
-----------
TOTAL NET ASSETS - 100.0% $45,613,980
===========
* Non-income producing security.
REIT Non-income producing security.
(a) At June 30, 2014, the net unrealized appreciation on investments based on
cost for federal income tax purposes of $20,416,555 was as follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $23,598,994
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (13,597)
-----------
Net unrealized appreciation $23,585,397
===========
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $1,531,302 and $5,523,659,
respectively.
The accompanying notes are an integral part of these financial statements.
7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3.
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $44,001,952 $ -- $ -- $44,001,952
----------- -------- -------- -----------
Total $44,001,952 $ -- $ -- $44,001,952
=========== ======== ======== ===========
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
8
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--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 18.77 $ 19.93 $ 17.53 $ 16.34 $ 13.04 $ 10.41
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.27 $ 0.28 $ 0.25 $ 0.44 $ 0.24 $ 0.35
Net realized and unrealized gain (loss) on investments 3.00 0.06 2.61 1.18 3.46 2.76
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 3.27 $ 0.34 $ 2.86 $ 1.62 $ 3.70 $ 3.11
Distributions to shareowners:
Net investment income $ (0.27) $ (0.29) $ (0.25) $ (0.43) $ (0.40) $ (0.35)
Net realized gain (2.14) (1.21) (0.21) -- -- --
Tax return of capital -- -- -- -- -- (0.13)
------- ------- ------- ------- ------- -------
Total distributions $ (2.41) $ (1.50) $ (0.46) $ (0.43) $ (0.40) $ (0.48)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.86 $ (1.16) $ 2.40 $ 1.19 $ 3.30 $ 2.63
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.63 $ 18.77 $ 19.93 $ 17.53 $ 16.34 $ 13.04
======= ======= ======= ======= ======= =======
Total return* 17.59% 1.75% 16.41% 10.02% 28.70% 31.64%
Ratio of net expenses to average net assets 1.01%** 1.03% 1.02% 1.03% 1.03% 1.10%
Ratio of net investment income to average net assets 2.64%** 1.38% 2.41% 2.48% 1.68% 3.48%
Portfolio turnover rate 7%** 13% 5% 10% 11% 30%
Net assets, end of period (in thousands) $10,408 $ 9,383 $10,514 $10,428 $11,035 $10,151
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 18.79 $ 19.93 $ 17.54 $ 16.35 $ 13.03 $ 10.38
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.25 $ 0.22 $ 0.21 $ 0.40 $ 0.19 $ 0.33
Net realized and unrealized gain (loss) on investments 3.00 0.07 2.60 1.18 3.49 2.78
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 3.25 $ 0.29 $ 2.81 $ 1.58 $ 3.68 $ 3.11
Distributions to shareowners:
Net investment income $ (0.24) $ (0.22) $ (0.21) $ (0.39) $ (0.36) $ (0.33)
Net realized gain (2.14) (1.21) (0.21) -- -- --
Tax return of capital -- -- -- -- -- (0.13)
------- ------- ------- ------- ------- -------
Total distributions $ (2.38) $ (1.43) $ (0.42) $ (0.39) $ (0.36) $ (0.46)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.87 $ (1.14) $ 2.39 $ 1.19 $ 3.32 $ 2.65
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.66 $ 18.79 $ 19.93 $ 17.54 $ 16.35 $ 13.03
======= ======= ======= ======= ======= =======
Total return* 17.45% 1.54% 16.09% 9.76% 28.53% 31.56%
Ratio of net expenses to average net assets+ 1.25%** 1.27% 1.26% 1.28% 1.27% 1.33%
Ratio of net investment income to average net assets+ 2.39%** 1.12% 2.16% 2.24% 1.45% 3.21%
Portfolio turnover rate 7%** 13% 5% 10% 11% 30%
Net assets, end of period (in thousands) $35,206 $32,663 $35,500 $35,435 $38,057 $39,638
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and sales
charges.
The accompanying notes are an integral part of these financial statements.
10
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
ASSETS:
Investment in securities (cost $19,680,094) $44,001,952
Cash 1,656,032
Receivables --
Investment securities sold 195,431
Portfolio shares sold 2,632
Dividends 156,827
-----------
Total assets $46,012,874
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 313,500
Portfolio shares repurchased 54,412
Trustee fees 107
Due to affiliates 9,398
Accrued expenses 21,477
-----------
Total liabilities $ 398,894
-----------
NET ASSETS:
Paid-in capital $19,425,278
Undistributed net investment income 14,737
Accumulated net realized gain on investments 1,852,107
Net unrealized appreciation on investments 24,321,858
-----------
Total net assets $45,613,980
===========
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $10,407,636/530,320 shares) $ 19.63
===========
Class II (based on $35,206,344/1,791,160 shares) $ 19.66
===========
The accompanying notes are an integral part of these financial statements.
11
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STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Download Table]
INVESTMENT INCOME:
Dividends $795,428
Interest 121
--------
Total investment income $ 795,549
----------
EXPENSES:
Management fees $174,483
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 42,250
Administrative reimbursements 14,491
Custodian fees 2,741
Professional fees 19,185
Printing expense 3,523
Fees and expenses of nonaffiliated trustees 3,369
Miscellaneous 270
--------
Total expenses $ 261,812
----------
Net investment income $ 533,737
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $2,588,577
----------
Change in net unrealized appreciation on investments $3,913,224
----------
Net gain on investments $6,501,801
----------
Net increase in net assets resulting from operations $7,035,538
==========
The accompanying notes are an integral part of these financial statements.
12
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 533,737 $ 543,118
Net realized gain on investments 2,588,577 4,942,030
Change in net unrealized appreciation (depreciation) on investments 3,913,224 (4,530,069)
------------ -------------
Net increase in net assets resulting from operations $ 7,035,538 $ 955,079
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.27 and $0.29 per share, respectively) $ (128,352) $ (149,273)
Class II ($0.24 and $0.22 per share, respectively) (390,648) (393,845)
Net realized gains:
Class I ($2.14 and $1.21 per share, respectively) (1,013,509) (611,238)
Class II ($2.14 and $1.21 per share, respectively) (3,434,575) (2,051,292)
------------ -------------
Total distributions to shareowners $ (4,967,084) $ (3,205,648)
------------ -------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,216,309 $ 3,849,610
Reinvestment of distributions 4,967,084 3,205,648
------------ -------------
Cost of shares repurchased (6,683,633) (8,772,880)
------------ -------------
Net increase (decrease) in net assets resulting from resulting
from Portfolio share transactions $ 1,499,760 $ (1,717,622)
------------ -------------
Net increase (decrease) in net assets $ 3,568,214 $ (3,968,191)
NET ASSETS:
Beginning of period $ 42,045,766 $ 46,013,957
------------ -------------
End of period $ 45,613,980 $ 42,045,766
============ =============
Undistributed net investment income $ 14,737 $ --
============ =============
[Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 18,830 $ 392,331 34,031 $ 712,454
Reinvestment of distributions 58,664 1,141,861 40,072 760,511
Less shares repurchased (47,003) (952,279) (101,896) (2,067,227)
--------- ----------- --------- ------------
Net increase (decrease) 30,491 $ 581,913 (27,793) $ (594,262)
========= =========== ========= ============
CLASS II
Shares sold 135,216 $ 2,823,978 155,549 $ 3,137,156
Reinvestment of distributions 196,148 3,825,223 128,884 2,445,137
Less shares repurchased (278,322) (5,731,354) (327,170) (6,705,653)
--------- ----------- --------- ------------
Net increase (decrease) 53,042 $ 917,847 (42,737) $ (1,123,360)
========= =========== ========= ============
The accompanying notes are an integral part of these financial statements.
13
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Real Estate Shares VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is to pursue long-term capital growth, with current income as a
secondary objective.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per-share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per-share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses, gains and losses on investments during the
reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
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 available, generally are valued at
the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such funds' net asset value.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted
by the Portfolio's Board of Trustees. PIM's fair valuation team uses fair
value methods approved by the Valuation Committee of the Board of Trustees.
PIM's fair valuation team is responsible for monitoring developments that
may impact fair valued securities and for discussing and assessing fair
values on an ongoing basis, and at least quarterly, with the Valuation
Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers).
14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
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. Dividend and interest income are reported net of
unrecoverable foreign taxes withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
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, if any,
represent, among other things, 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 the market prices of those securities but are
included with the net realized and unrealized gain or loss on investments.
C. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of June 30, 2014, the Portfolio did not accrue any interest
or penalties with respect to uncertain tax positions, which, if applicable,
would be recorded as an income tax expense in the Statement of Operations.
Tax returns filed within the prior three years remain subject to
examination by Federal and State tax authorities.
A portion of the dividend income recorded by the Portfolio is from
distributions by publicly traded REITs, and such distributions for tax
purposes may also consist of capital gains and return of capital. The
actual return of capital and capital gains portions of such distributions
will be determined by formal notifications from the REITs subsequent to the
calendar year-end.
Distributions received from the REITs that are determined to be a return of
capital are recorded by the Portfolio as a reduction of the cost basis of
the securities held and those determined to be capital gain are reflected
as such on the Statement of Operations.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the Portfolio's taxable year. The tax character of
distributions paid during the years ended December 31, 2013 and the
components of distributable earnings (accumulated losses) on a federal
income tax basis at December 31, 2013, were as follows:
[Download Table]
---------------------------------------------------------------------------
2013
---------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 608,906
Long-term capital gain 2,596,742
-----------
Total distributions $ 3,205,648
===========
Distributable Earnings
(Accumulated Losses):
Undistributed Long-term gain $ 4,448,075
Unrealized appreciation 19,672,173
-----------
Total $24,120,248
===========
The difference between book-basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
D. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Distribution
fees for Class II shares are calculated based on the
15
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
average daily net asset value attributable to Class II shares of the
Portfolio (see Note 4). Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its 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 and at the same time, except that net
investment income dividends to Class I and Class II shares can reflect
different transfer agent and distribution expense rates. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
E. Risks
Because the Portfolio invests a substantial portion of its assets in real
estate investment trusts (REITs), the Portfolio may be subject to certain
risks associated with direct investments in REITs. REITs may be affected by
changes in the value of their underlying properties and by defaults by
borrowers or tenants. REITs depend generally on their ability to generate
cash flow to make distributions to shareowners, and certain REITs have
self-liquidation provisions by which mortgages held may be paid in full and
return of capital distributions may be made at any time. In addition, the
performance of a REIT may be affected by its failure to qualify for
tax-free pass-through of income under the Internal Revenue Code or its
failure to maintain exemption from registration under the Investment
Company Act of 1940. The Portfolio's prospectus contains unaudited
information regarding the Portfolio's principal risks. Please refer to that
document when considering the Portfolio's principal risks.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of the
Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.80% of the
Portfolio's average daily net assets up to $500 million and 0.75% on assets over
$500 million.
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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$4,508 in management fees, administrative costs and certain other reimbursements
payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $3,924 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $966 in distribution fees payable to PFD at June 30, 2014.
5. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
16
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective
August 8, 2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
18
This page for your notes.
19
This page for your notes.
20
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19614-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Select Mid Cap Growth VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Select Mid Cap Growth VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 8
Financial Statements 17
Notes to Financial Statements 21
Trustees, Officers and Service Providers 29
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Common Stocks 90.5%
International Common Stocks 8.2%
Depositary Receipts for International Stocks 0.9%
U.S Corporate Bonds 0.4%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
Consumer Discretionary 22.3%
Information Technology 16.7%
Health Care 15.6%
Industrials 15.3%
Energy 7.9%
Financials 7.2%
Consumer Staples 7.0%
Materials 6.2%
Telecommunication Services 1.0%
Utilities 0.8%
Five Largest Holdings
(As a percentage of equity holdings)
[Download Table]
--------------------------------------------------------------------------------
1. American Airlines Group, Inc. 1.94%
--------------------------------------------------------------------------------
2. Keurig Green Mountain, Inc. 1.80
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3. Lear Corp. 1.68
--------------------------------------------------------------------------------
4. Actavis plc* 1.51
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5. Cabot Oil & Gas Corp. 1.41
--------------------------------------------------------------------------------
* The Portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or
sell any security listed.
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $ 28.14 $32.78
[Download Table]
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $ - $ 2.4089 $4.5011
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Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
shares of Pioneer Select Mid Cap Growth VCT Portfolio at net asset value during
the periods shown, compared to that of the Russell Mid Cap 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 MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Select Mid
Cap Growth VCT Portfolio, Russell Midcap
Class I Growth Index**
6/30/2004 $ 10,000 $ 10,000
6/30/2005 $ 11,147 $ 11,086
6/30/2006 $ 11,883 $ 12,532
6/30/2007 $ 13,574 $ 15,005
6/30/2008 $ 10,974 $ 14,041
6/30/2009 $ 9,363 $ 9,782
6/30/2010 $ 11,004 $ 11,865
6/30/2011 $ 15,060 $ 16,997
6/30/2012 $ 14,356 $ 16,489
6/30/2013 $ 16,714 $ 20,262
6/30/2014 $ 21,766 $ 25,538
The Russell Midcap Growth Index is an unmanaged index that measures the
performance of U.S. mid-cap growth stocks. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns do not reflect
any fees, expenses or sales charges. It is not possible to invest directly in an
index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
Russell Midcap
Class I Growth Index
--------------------------------------------------------------------------------
10 Years 8.09% 9.83%
5 Years 18.38% 21.16%
1 Year 30.22% 26.04%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Select Mid Cap Growth VCT
Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00
Ending Account Value on 6/30/14 $1,071.80
Expenses Paid During Period* $ 4.32
* Expenses are equal to the Portfolio's annualized expense ratio of 0.84%
for Class I shares multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Select Mid Cap Growth VCT
Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00
Ending Account Value on 6/30/14 $1,020.63
Expenses Paid During Period* $ 4.21
* Expenses are equal to the Portfolio's annualized expense ratio of 0.84%
for Class I shares multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
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Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
Investments in mid-sized companies may offer the potential for higher returns,
but are also subject to greater short-term price fluctuations than larger, more
established companies. When interest rates rise, the prices of fixed-income
securities in the Portfolio will generally fall. Conversely, when interest rates
fall, the prices of fixed-income securities in the Portfolio will generally
rise. The Portfolio invests in REIT securities, the value of which can fall for
a variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. Investing in foreign
and/or emerging markets securities involves risks relating to interest rates,
currency exchange rates, economic, and political conditions. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
In the following interview, Ken Winston reviews the investment background and
details some of the decisions that drove the performance of Pioneer Select Mid
Cap Growth VCT Portfolio during the six-month period ended June 30, 2014. Mr.
Winston, a vice president and portfolio manager at Pioneer, is the
longest-standing member of the Portfolio's management team, which also includes
Shaji John, a vice president and portfolio manager at Pioneer, and Jon
Stephenson, a vice president and portfolio manager at Pioneer. Mr. Winston, Mr.
John and Mr. Stephenson are responsible for the day-to-day management of the
Portfolio.
Q: How would you describe the investment environment for equities during the
six-month period ended June 30, 2014?
A: Stocks in general moved higher during the six-month period, overcoming
notable pullbacks in February and April of 2014. April's market drop
reflected a shift in investor preferences from growth to value, as growth
stocks that had recorded significant gains over the previous several
quarters fell while market participants sought out value-oriented stocks
that appeared to be more stable. The change in focus -- known as a rotation
-- hurt the Portfolio's performance during the early part of the six-month
period because we usually concentrate on investing in stocks of companies
that we view as having long-term, sustainable growth potential and that
tend to have higher valuations.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Select Mid Cap Growth VCT Portfolio's Class I shares returned 7.18%
at net asset value during the six-month period ended June 30, 2014, while
the Portfolio's benchmark, the Russell Midcap Growth Index (the Russell
Index), returned 6.51%. During the same period, the average return of the
110 variable portfolios in Lipper's Mid Cap Growth Underlying Funds
category was 3.52%.
Q: Which of your investment strategies or individual holdings made positive
contributions to the Portfolio's performance during the six-month period
ended June 30, 2014, and which detracted from performance?
A: Asset Allocation decisions added the Portfolio's benchmark-relative
performance during the period. A combination of the Portfolio's overweight
stance (compared with the Russell Index) in the outperforming energy
sector, and underweight exposure to the laggard consumer discretionary
sector helped to boost benchmark-relative results at the sector level.
Conversely, underweight positions in stronger-performing sectors such as
consumer staples reduced the Portfolio's benchmark-relative performance
advantage.
Stock selection results, overall, also were favorable during the period,
and were especially strong in health care and information technology.
Selection results were also positive in energy, materials and consumer
staples, while the Portfolio's holdings in the industrials and consumer
discretionary sectors held back relative returns.
With regard to individual positions, the top-performing stock in the
Portfolio during the period was Keurig Green Mountain, formerly known as
Green Mountain Coffee Roasters and a long-time Portfolio holding. The
company, which is the leading maker of single-serve coffee brewing
machines, saw its shares buoyed by strong financial performance and, in
particular, the announcement of an alliance with Coca Cola. The two
companies are collaborating to develop a single-serve beverage system for
cold drinks. Coca-Cola also made a direct equity investment in Keurig Green
Mountain and now effectively owns 10 percent of the company.
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Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
The Portfolio's shares of Goodrich Petroleum, an independent oil and gas
exploration company, also rose during the period amid the ongoing shale
revolution, as investors came to value the potential of the company's
energy-rich acreage in the Tuscaloosa Marine Shale area and elsewhere. We
continue to believe that Goodrich's holdings offer significant upside
potential. In industrials, the Portfolio's position in American Airlines
Group performed extremely well during the period after AMR, American's
predecessor company, combined with US Airways. Investors began to
appreciate the enhanced earnings potential and cost efficiencies of the
combined company.
In health care, two positions produced outstanding performance during the
period, boosting the Portfolio's returns. One was Neurocrine Biosciences, a
biopharmaceutical company focused on developing drug candidates for
neurological and endocrine disorders. The company's leading product
candidate is Elagolix, an oral drug that has shown positive Phase II trial
data for the treatment of endometriosis and uterine fibroids. In addition,
the company's share price increased sharply in January following positive
Phase II results for a new drug that targets movement disorders such as
Parkinson's disease. The other strong performer in health care was a
position in Salix Pharmaceuticals, another long-term Portfolio holding.
Salix is developing a suite of drugs for treating gastrointestinal
disorders. The company's core product, Xifaxan, has proven effective in
treating E-coli-based traveler's diarrhea. Xifaxan also aids in the
treatment of hepatic encephalopathy, a condition that causes deteriorating
brain function due to toxins in the blood that are normally removed by the
liver. Salix also completed an acquisition during the period that has the
potential to boost the company's future earnings.
In the information technology sector, the Portfolio's position in Skyworks
Solutions made a solid contribution to relative returns. Skyworks has
expanded its share of the market for mobile device semiconductors. The
company has increased the functionality of such semiconductors by
effectively bundling and combining various functions -- like switching and
power amplification -- onto an integrated module. Skyworks also offers the
best range of solutions for both 3G and 4G LTE as well as the various
network protocols in China, North America and Europe.
On the negative side, benchmark-relative results in energy took a slight
hit due to the Portfolio's not owning Cheniere Energy, which was a strong
performer during the period. Nevertheless, the Portfolio outperformed the
Russell Index in the sector.
Individual holdings that detracted from performance during the six-month
period included Towers Watson and Wageworks in the industrials sector,
Cabot Oil & Gas in the energy sector, and LKQ in the consumer discretionary
sector.
Towers Watson had very strong share performance during the 2013 calendar
year, as investors began to appreciate the added long-term revenue
opportunity presented by the company's health care exchange services
business (Towers Watson's customer base creates health care exchanges for
active and retiree plans). In the first half of 2014, however, the
company's shares declined in value as the early contract signings for the
exchange services business did not meet some investors' expectations. We
still believe in the long-term opportunity for Towers Watson's health care
exchange business, and continue to regard the shares as a core Portfolio
holding.
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Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
Wageworks is a benefits transaction processing company that has increased
its share of the market for processing flexible spending accounts such as
health care and commuter discount programs. The company's financial
performance was favorable over the period, but its share price fell as
investors moved away from high-valuation growth stocks. In our opinion,
Wageworks' shares merit their current high valuation because of the
companies' strong growth potential. In fact, we added to Wageworks' shares
on weakness during the six-month period.
Cabot Oil & Gas, the leading producer of natural gas out of the Marcellus
shale in Pennsylvania, is a long-time Portfolio holding and its largest
position in the energy sector. Cabot's shares declined in value during the
six-month period after it disclosed that pricing realization for its gas as
compared with quoted market rates on a national basis (referred to as
"differentials") was worse than expected, primarily because of a continued
lack of adequate pipeline infrastructure to expand the market potential for
the gas that Cabot produces. We trimmed the Portfolio's position in Cabot's
shares during the period, but the company remains a core Portfolio holding,
as we believe the lower realization "differentials" issue is a shorter-term
problem that will be resolved by pipeline expansion over the medium to long
term.
LKQ, another long-term Portfolio holding, underperformed during the
six-month period. LKQ is the leading provider of refurbished auto and truck
parts. The company's share price fell when an independent newsletter
claimed that LKQ's accounting practices with regard to acquisitions were
overly aggressive. We believed the accusations were without merit, however,
and the stock price recovered half its decline by the end of the period.
Q: What is your investment outlook?
A: Extreme weather in much of the U.S. was likely the main reason behind the
U.S. economy's contraction in the first quarter of 2014. However, the
domestic economy does appear to be regaining some momentum and consensus
expectations for GDP growth in 2014 remain positive. Employment gains,
while still sluggish, have been improving, and we think they will continue
to do so.
Among the possible headwinds to the economy is slowing growth in the
emerging markets, particularly China, which is a major consumer of U.S.
goods and materials. Political upheaval in the Ukraine and the Middle East
has also raised investor sensitivity. We expect both situations to be a
continued source of worry.
On the whole, we take the calm environment for interest rates in the wake
of Federal Reserve's tapering of its quantitative easing (QE) program as a
positive sign, since it indicates that the winding down of QE may not
produce the kind of jump in interest rates that many analysts had feared. A
continuation of this environment would be favorable for domestic equities
and has the potential to offset the effects of a dampened global growth
outlook. We expect the economic recovery to reaccelerate in the second half
of 2014 as the housing and labor markets continue to improve and the
outlook for capital spending brightens. However, sharp changes in
interest-rate expectations remain a risk.
6
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
As noted previously, there currently appears to be a sharp rotation in
domestic markets away from longer-term growth stocks and into value stocks.
Sentiment is less favorable for portfolios that focus on non-cyclical
growth potential and those that seek companies with long runways of
growth--similar to the types of stocks held in the Portfolio. With that
said, we believe that over the next few years our anticipated economic
scenario of sustainable, moderate growth and manageable inflation will
mostly favor secular growth companies, which remain our primary focus when
investing the Portfolio's assets.
Please refer to the Schedule of Investments on pages 8 to 16 for a full
listing of Portfolio securities.
Past performance is no guarantee of future results, and there is no
guarantee that the market forecast discussed will be realized.
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 opinion as of the date of this report. These
statements should not be relied upon for any other purposes.
7
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
COMMON STOCKS - 99.1%
Energy - 7.5%
Oil & Gas Equipment & Services - 0.6%
18,125 Basic Energy Services, Inc.* $ 529,612
13,491 RPC, Inc. 316,904
--------------
$ 846,516
--------------
Oil & Gas Exploration & Production - 6.4%
56,450 Cabot Oil & Gas Corp. $ 1,927,203
7,815 Cimarex Energy Co. 1,121,140
1,987 Concho Resources, Inc.* 287,122
60,187 Goodrich Petroleum Corp.* 1,661,161
17,427 Gulfport Energy Corp.* 1,094,416
52,416 Memorial Resource Development Corp.* 1,276,854
45,671 Penn Virginia Corp.* 774,123
20,451 Rice Energy, Inc. 622,733
--------------
$ 8,764,752
--------------
Oil & Gas Storage & Transportation - 0.5%
9,308 SemGroup Corp. $ 733,936
--------------
Total Energy $ 10,345,204
--------------
Materials - 6.2%
Commodity Chemicals - 0.8%
12,308 Westlake Chemical Corp. $ 1,030,918
--------------
Specialty Chemicals - 1.4%
28,796 Flotek Industries, Inc.* $ 926,079
10,807 WR Grace & Co.* 1,021,586
--------------
$ 1,947,665
--------------
Construction Materials - 1.5%
11,416 Eagle Materials, Inc. $ 1,076,300
7,017 Martin Marietta Materials, Inc. 926,595
--------------
$ 2,002,895
--------------
Metal & Glass Containers - 0.3%
7,898 Crown Holdings, Inc.* $ 393,004
--------------
Paper Packaging - 0.1%
1,700 Rock-Tenn Co. $ 179,503
--------------
Diversified Metals & Mining - 0.4%
13,021 Horsehead Holding Corp.* $ 237,763
64,246 Lundin Mining Corp.* 353,675
--------------
$ 591,438
--------------
Steel - 1.2%
24,492 APERAM* $ 826,866
82,741 Outokumpu OYJ 832,351
--------------
$ 1,659,217
--------------
Paper Products - 0.5%
21,672 KapStone Paper and Packaging Corp. $ 717,993
--------------
Total Materials $ 8,522,633
--------------
The accompanying notes are an integral part of these financial statements.
8
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
Shares Value
Capital Goods - 5.4%
Aerospace & Defense - 1.1%
11,620 B/E Aerospace, Inc.* $ 1,074,734
5,080 Huntington Ingalls Industries, Inc. 480,517
--------------
$ 1,555,251
--------------
Construction & Engineering - 0.4%
15,648 Quanta Services, Inc.* $ 541,108
--------------
Electrical Components & Equipment - 1.5%
20,498 Brady Corp. $ 612,275
5,817 Rockwell Automation, Inc. 728,056
5,191 Roper Industries, Inc. 757,938
--------------
$ 2,098,269
--------------
Construction & Farm Machinery & Heavy Trucks - 1.0%
9,600 Terex Corp.* $ 394,560
27,560 The Manitowoc Co., Inc. 905,622
--------------
$ 1,300,182
--------------
Industrial Machinery - 1.4%
11,044 Chart Industries, Inc.* $ 913,781
8,340 Ingersoll-Rand Plc 521,333
11,313 ITT Corp. 544,155
--------------
$ 1,979,269
--------------
Total Capital Goods $ 7,474,079
--------------
Commercial Services & Supplies - 3.0%
Diversified Support Services - 1.5%
14,451 Mobile Mini, Inc.* $ 692,058
12,129 United Rentals, Inc.* 1,270,270
--------------
$ 1,962,328
--------------
Human Resource & Employment Services - 1.5%
13,447 Towers Watson & Co. $ 1,401,581
14,173 WageWorks, Inc.* 683,280
--------------
$ 2,084,861
--------------
Total Commercial Services & Supplies $ 4,047,189
--------------
Transportation - 6.9%
Airlines - 4.1%
86,430 Air Canada* $ 770,842
61,792 American Airlines Group, Inc. 2,654,579
44,703 Delta Air Lines, Inc. 1,730,900
44,407 JetBlue Airways Corp.* 481,816
--------------
$ 5,638,137
--------------
Marine - 2.0%
85,695 Diana Shipping, Inc.* $ 933,219
9,136 Kirby Corp.* 1,070,191
38,253 Safe Bulkers, Inc. 373,349
31,787 Star Bulk Carriers Corp. 412,277
--------------
$ 2,789,036
--------------
Railroads - 0.4%
5,272 Kansas City Southern $ 566,793
--------------
The accompanying notes are an integral part of these financial statements.
9
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Trucking - 0.4%
7,429 Old Dominion Freight Line, Inc.* $ 473,079
--------------
Total Transportation $ 9,467,045
--------------
Automobiles & Components - 3.1%
Auto Parts & Equipment - 2.1%
8,793 Delphi Automotive Plc $ 604,431
25,763 Lear Corp. 2,301,151
--------------
$ 2,905,582
--------------
Automobile Manufacturers - 0.2%
1,361 Tesla Motors, Inc.* $ 326,722
--------------
Motorcycle Manufacturers - 0.8%
14,842 Harley-Davidson, Inc. $ 1,036,714
--------------
Total Automobiles & Components $ 4,269,018
--------------
Consumer Durables & Apparel - 5.2%
Home Furnishings - 0.6%
5,709 Mohawk Industries, Inc.* $ 789,783
--------------
Homebuilding - 0.7%
12,411 Lennar Corp. $ 521,014
11,775 Toll Brothers, Inc.* 434,498
--------------
$ 955,512
--------------
Household Appliances - 0.5%
5,409 Whirlpool Corp. $ 753,041
--------------
Leisure Products - 0.2%
19,025 Performance Sports Group, Ltd. $ 326,279
--------------
Apparel, Accessories & Luxury Goods - 2.9%
12,016 G-III Apparel Group, Ltd.* $ 981,227
17,300 Hanesbrands, Inc. 1,703,012
7,112 Michael Kors Holdings, Ltd.* 630,479
5,485 PVH Corp. 639,551
--------------
$ 3,954,269
--------------
Textiles - 0.3%
10,169 Kate Spade & Co. $ 387,846
--------------
Total Consumer Durables & Apparel $ 7,166,730
--------------
Consumer Services - 3.1%
Casinos & Gaming - 0.7%
7,638 Las Vegas Sands Corp. $ 582,168
11,017 Melco Crown Entertainment, Ltd. (A.D.R.)* 393,417
--------------
$ 975,585
--------------
Hotels, Resorts & Cruise Lines - 0.8%
32,569 Norwegian Cruise Line Holdings, Ltd.* $ 1,032,437
--------------
Restaurants - 0.8%
1,094 Chipotle Mexican Grill, Inc.* $ 648,206
10,357 Dunkin' Brands Group, Inc.* 474,454
--------------
$ 1,122,660
--------------
Specialized Consumer Services - 0.8%
32,882 H&R Block, Inc. $ 1,102,205
--------------
Total Consumer Services $ 4,232,887
--------------
The accompanying notes are an integral part of these financial statements.
10
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Download Table]
Shares Value
Media - 1.3%
Broadcasting - 0.5%
9,761 Discovery Communications, Inc.* $ 725,047
--------------
Cable & Satellite - 0.8%
11,215 Liberty Global Plc (Class A)* $ 495,927
14,047 Liberty Global Plc (Class C)* 594,329
--------------
$ 1,090,256
--------------
Total Media $ 1,815,303
--------------
Retailing - 9.5%
Distributors - 0.6%
30,369 LKQ Corp.* $ 810,549
--------------
Internet Retail - 2.3%
26,597 HomeAway, Inc.* $ 926,108
2,438 Netflix, Inc.* 1,074,183
1,021 The Priceline Group, Inc.* 1,228,263
--------------
$ 3,228,554
--------------
General Merchandise Stores - 1.3%
5,194 Dollar General Corp.* $ 297,928
27,248 Dollar Tree, Inc.* 1,483,926
--------------
$ 1,781,854
--------------
Apparel Retail - 2.1%
35,636 DSW, Inc. $ 995,670
16,526 Ross Stores, Inc. 1,092,864
14,576 The TJX Companies, Inc. 774,714
--------------
$ 2,863,248
--------------
Home Improvement Retail - 0.6%
17,621 Lowe's Companies, Inc. $ 845,632
--------------
Specialty Stores - 0.7%
15,957 Tractor Supply Co.* $ 963,803
--------------
Automotive Retail - 1.9%
12,581 Advance Auto Parts, Inc. $ 1,697,429
857 AutoZone, Inc.* 459,558
8,572 CarMax, Inc.* 445,830
--------------
$ 2,602,817
--------------
Total Retailing $ 13,096,457
--------------
Food & Staples Retailing - 0.9%
Food Retail - 0.9%
25,597 The Kroger Co. $ 1,265,260
--------------
Total Food & Staples Retailing $ 1,265,260
--------------
Food, Beverage & Tobacco - 5.0%
Brewers - 0.5%
10,238 Molson Coors Brewing Co. (Class B) $ 759,250
--------------
Distillers & Vintners - 0.8%
13,109 Constellation Brands, Inc.* $ 1,155,296
--------------
Soft Drinks - 0.9%
16,582 Monster Beverage Corp.* $ 1,177,819
--------------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Packaged Foods & Meats - 1.8%
19,792 Keurig Green Mountain, Inc. $ 2,466,281
--------------
Tobacco - 1.0%
22,389 Lorillard, Inc. $ 1,365,057
--------------
Total Food, Beverage & Tobacco $ 6,923,703
--------------
Household & Personal Products - 1.1%
Personal Products - 1.1%
20,626 Coty, Inc. $ 353,323
4,341 Nu Skin Enterprises, Inc. 321,060
11,065 The Estee Lauder Companies, Inc. 821,687
--------------
$ 1,496,070
--------------
Total Household & Personal Products $ 1,496,070
--------------
Health Care Equipment & Services - 6.3%
Health Care Equipment - 1.8%
19,878 Edwards Lifesciences Corp.* $ 1,706,328
18,904 Insulet Corp.* 749,922
--------------
$ 2,456,250
--------------
Health Care Supplies - 1.4%
19,218 Align Technology, Inc.* $ 1,076,977
59,822 Endologix, Inc.* 909,893
--------------
$ 1,986,870
--------------
Health Care Services - 2.1%
38,567 Catamaran Corp.* $ 1,703,119
17,740 Omnicare, Inc. 1,180,952
--------------
$ 2,884,071
--------------
Health Care Facilities - 0.5%
19,708 Brookdale Senior Living, Inc.* $ 657,065
--------------
Managed Health Care - 0.5%
9,016 WellCare Health Plans, Inc.* $ 673,135
--------------
Total Health Care Equipment & Services $ 8,657,391
--------------
Pharmaceuticals, Biotechnology & Life Sciences - 9.3%
Biotechnology - 3.0%
17,915 Alkermes Plc* $ 901,662
12,407 Cubist Pharmaceuticals, Inc.* 866,257
52,693 Neurocrine Biosciences, Inc.* 781,964
23,654 NPS Pharmaceuticals, Inc.* 781,765
9,000 Vertex Pharmaceuticals, Inc.* 852,120
--------------
$ 4,183,768
--------------
Pharmaceuticals - 5.2%
9,249 Actavis plc* $ 2,062,989
26,037 Akorn, Inc.* 865,730
10,820 Jazz Pharmaceuticals Plc* 1,590,648
13,562 Salix Pharmaceuticals, Ltd.* 1,672,873
3,757 Shire Plc (A.D.R.) 884,736
--------------
$ 7,076,976
--------------
Life Sciences Tools & Services - 1.1%
35,249 Bruker Corp.* $ 855,493
12,487 Charles River Laboratories International, Inc.* 668,304
--------------
$ 1,523,797
--------------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 12,784,541
--------------
The accompanying notes are an integral part of these financial statements.
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[Download Table]
Shares Value
Banks - 1.5%
Regional Banks - 1.5%
32,060 BankUnited, Inc.* $ 1,073,369
7,982 Signature Bank* 1,007,169
--------------
$ 2,080,538
--------------
Total Banks $ 2,080,538
--------------
Diversified Financials - 4.1%
Specialized Finance - 1.3%
47,394 The NASDAQ OMX Group, Inc. $ 1,830,356
--------------
Consumer Finance - 0.9%
20,456 Discover Financial Services, Inc. $ 1,267,863
--------------
Asset Management & Custody Banks - 1.4%
5,662 Affiliated Managers Group, Inc.* $ 1,162,975
20,334 The Blackstone Group LP 679,969
--------------
$ 1,842,944
--------------
Investment Banking & Brokerage - 0.5%
20,787 Morgan Stanley Co. $ 672,044
--------------
Total Diversified Financials $ 5,613,207
--------------
Insurance - 0.6%
Insurance Brokers - 0.6%
9,245 Aon Plc* $ 832,882
--------------
Total Insurance $ 832,882
--------------
Real Estate - 1.0%
Specialized REIT - 1.0%
41,423 Weyerhaeuser Co. $ 1,370,687
--------------
Total Real Estate $ 1,370,687
--------------
Software & Services - 9.4%
Internet Software & Services - 3.8%
27,032 Akamai Technologies, Inc.* $ 1,650,574
5,920 CoStar Group, Inc.* 936,366
14,051 eBay, Inc.* 703,393
1,110 Google, Inc. (Class A)* 648,984
1,107 Google, Inc. (Class C) 636,835
3,466 LinkedIn Corp.* 594,315
--------------
$ 5,170,467
--------------
IT Consulting & Other Services - 0.4%
7,965 Gartner, Inc.* $ 561,692
--------------
Data Processing & Outsourced Services - 2.2%
1,935 Alliance Data Systems Corp.* $ 544,219
9,057 MasterCard, Inc. 665,418
25,379 Vantiv, Inc.* 853,242
9,328 WEX, Inc.* 979,160
--------------
$ 3,042,039
--------------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Download Table]
Shares Value
Application Software - 2.4%
8,354 ANSYS, Inc.* $ 633,400
6,577 Autodesk, Inc.* 370,811
54,102 Cadence Design Systems, Inc.* 946,244
15,374 Qlik Technologies, Inc.* 347,760
8,029 salesforce.com inc* 466,324
11,062 SS&C Technologies Holdings, Inc.* 489,162
--------------
$ 3,253,701
--------------
Systems Software - 0.6%
8,668 VMware, Inc.* $ 839,149
--------------
Total Software & Services $ 12,867,048
--------------
Technology Hardware & Equipment - 2.7%
Communications Equipment - 1.8%
15,607 F5 Networks, Inc.* $ 1,739,244
15,184 Ubiquiti Networks, Inc. 686,165
--------------
$ 2,425,409
--------------
Computer Storage & Peripherals - 0.9%
5,673 SanDisk Corp. $ 592,431
7,757 Western Digital Corp. 715,971
--------------
$ 1,308,402
--------------
Total Technology Hardware & Equipment $ 3,733,811
--------------
Semiconductors & Semiconductor Equipment - 4.6%
Semiconductors - 4.6%
112,174 Atmel Corp.* $ 1,051,070
17,940 Avago Technologies, Ltd. 1,292,936
23,321 Integrated Device Technology, Inc.* 360,543
8,405 NXP Semiconductor NV* 556,243
27,758 Skyworks Solutions, Inc.* 1,303,516
9,928 Synaptics, Inc.* 899,874
16,651 Xilinx, Inc. 787,759
--------------
$ 6,251,941
--------------
Total Semiconductors & Semiconductor Equipment $ 6,251,941
--------------
Telecommunication Services - 1.0%
Wireless Telecommunication Services - 1.0%
14,011 SBA Communications Corp.* $ 1,433,325
--------------
Total Telecommunication Services $ 1,433,325
--------------
Utilities - 0.4%
Electric Utilities - 0.2%
2,033 NextEra Energy, Inc.* $ 208,342
2,041 NextEra Energy Partners LP 68,394
--------------
$ 276,736
--------------
Gas Utilities - 0.2%
2,846 National Fuel Gas Co. $ 222,842
--------------
Total Utilities $ 499,578
--------------
TOTAL COMMON STOCKS
(Cost $104,390,429) $ 136,246,527
--------------
The accompanying notes are an integral part of these financial statements.
14
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[Enlarge/Download Table]
S&P/Moody's
Principal Ratings
Amount ($) (unaudited) Value
CORPORATE BONDS - 0.3%
Energy - 0.3%
Integrated Oil & Gas - 0.3%
424,000 NR/NR American Energy - Utica LLC, 3.5%, 3/1/21 (144A) (PIK) $ 455,800
--------------
Total Energy $ 455,800
--------------
TOTAL CORPORATE BONDS
(Cost $435,284) $ 455,800
--------------
TOTAL INVESTMENT IN SECURITIES - 99.4%
(Cost $104,825,713) (a) $ 136,702,327
--------------
OTHER ASSETS & LIABILITIES - 0.6% $ 808,400
--------------
TOTAL NET ASSETS - 100.0% $ 137,510,727
--------------
Shares
WRITTEN OPTIONS - (0.0%)+
Capital Goods - (0.0%)+
Aerospace & Defense - (0.0%)+
(11) B/E Aerospace, Inc. $ (715)
--------------
Total Capital Goods $ (715)
--------------
Transportation - (0.0%)+
Airlines - (0.0%)+
(31) American Airlines, Inc. $ (4,263)
--------------
Total Transportation $ (4,263)
--------------
TOTAL WRITTEN OPTIONS
(Premium paid $6,274) $ (4,978)
--------------
+ Amount rounds to less than (0.1)%.
* Non-income producing security.
NR Not rated by either S&P or Moody'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, 2014, the value of these securities amounted to $455,800 or
0.3% of total net assets.
(A.D.R.) American Depositary Receipts.
REIT Real Estate Investment Trust.
(a) At June 30, 2014, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $105,211,310 was as
follows:
[Enlarge/Download Table]
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 32,184,396
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (693,379)
--------------
Net unrealized appreciation $ 31,491,017
==============
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 aggregated $63,928,658 and $72,589,167,
respectively.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
as Level 3.
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Enlarge/Download Table]
Level 1 Level 2 Level 3 Total
Common Stocks $ 136,702,327 $ -- $ -- $ 136,702,327
-------------- ---------- --------- --------------
Total $ 136,702,327 $ -- $ -- $ 136,702,327
============== ========== ========= ==============
Other Financial Instruments
Net unrealized appreciation on written options $ 1,296 $ -- $ -- $ 1,296
Net unrealized appreciation on forward foreign currency contracts -- 422 -- 422
-------------- ---------- --------- --------------
Total Other Financial Instruments $ 1,296 $ 422 $ -- $ 1,718
============== ========== ========= ==============
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
The accompanying notes are an integral part of these financial statements.
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FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 32.78 $ 24.07 $ 22.49 $ 23.01 $ 19.14 $ 13.24
--------- -------- --------- --------- --------- ----------
Increase (decrease) from investment operations:
Net investment loss $ (0.04) $ (0.11) $ (0.09) $ (0.13) $ (0.09) $ (0.03)
Net realized and unrealized gain (loss)
on investments 2.31 10.05 1.67 (0.39) 3.96 5.93
--------- -------- --------- --------- --------- ----------
Net increase (decrease) from investment
operations $ 2.27 $ 9.94 $ 1.58 $ (0.52) $ 3.87 $ 5.90
Distributions to shareowners:
Net realized gain $ (6.91) $ (1.23) $ -- $ -- $ -- $ --
--------- -------- --------- --------- --------- ----------
Net increase (decrease) in net asset value $ (4.64) $ 8.71 $ 1.58 $ (0.52) $ 3.87 $ 5.90
--------- -------- --------- --------- --------- ----------
Net asset value, end of period $ 28.14 $ 32.78 $ 24.07 $ 22.49 $ 23.01 $ 19.14
========= ======== ========= ========= ========= ==========
Total return* 7.18% 42.46% 7.02%(b) (2.26)%(a) 20.22% 44.56%
Ratio of total expenses to average net assets 0.84%** 0.84% 0.85% 0.84% 0.85% 0.85%
Ratio of net investment loss to average net
assets (0.26)%** (0.36)% (0.34)% (0.54)% (0.44)% (0.15)%
Portfolio turnover rate 96%** 162% 135% 111% 119% 134%
Net assets, end of period (in thousands) $ 137,511 $135,657 $ 110,170 $ 121,377 $ 141,034 $ 134,090
Ratios with no waiver of fees and assumption
of expenses by the Adviser and no
reduction for fees paid indirectly:
Total expenses 0.84%** 0.84% 0.87% 0.84% 0.87% 0.88%
Net investment loss (0.26)%** (0.36)% (0.36)% (0.54)% (0.46)% (0.18)%
* 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.
(a) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2011, the total return would
have been (2.31)%.
(b) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2012, the total return would
have been 6.96%.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, separate account charges, and
sales charges.
The accompanying notes are an integral part of these financial statements.
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STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
ASSETS:
Investment in securities (cost $104,825,713) $136,702,327
Cash 1,466,189
Receivables --
Investment securities sold 1,261,805
Portfolio shares sold 168,768
Dividends and interest 27,818
Due from Pioneer Investment Management, Inc. 20,906
Unrealized appreciation on forward foreign currency contracts 422
------------
Total assets $139,648,235
------------
LIABILITIES:
Payables --
Investment securities purchased $ 1,433,317
Portfolio shares repurchased 60,751
Written options (premium paid $6,274) 4,978
Due to custodian 610,420
Due to affiliates 11,058
Accrued expenses 16,984
------------
Total liabilities $ 2,137,508
------------
NET ASSETS:
Paid-in capital $ 98,152,892
Distributions in excess of net investment income (143,188)
Accumulated net realized gain on investments and foreign currency transactions 7,624,094
Net unrealized appreciation on investments 31,876,614
Net unrealized appreciation on written options 1,296
Net unrealized depreciation on forward foreign currency transactions and other
assets and liabilities dominated in foreign currencies (981)
------------
Total net assets $137,510,727
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $137,510,727/4,887,204 shares) $ 28.14
============
The accompanying notes are an integral part of these financial statements.
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STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $524) $ 385,880
Interest 613
----------
Total investment income $ 386,493
----------
EXPENSES:
Management fees $ 491,822
Transfer agent fees 624
Administrative reimbursement 24,602
Custodian fees 15,321
Professional fees 17,833
Printing expense 2,715
Fees and expenses of nonaffiliated Trustees 3,328
Miscellaneous 738
----------
Total expenses $ 556,983
----------
Net investment loss $ (170,490)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY
TRANSACTIONS AND WRITTEN OPTIONS:
Net realized gain on:
Investments $8,029,439
Written options 351
Other assets and liabilities denominated in foreign currencies 7,663 $8,037,453
---------- ----------
Change in net unrealized appreciation (depreciation) on:
Investments $1,423,334
Written options 1,296
Other assets and liabilities denominated in foreign currencies (863) $1,423,767
---------- ----------
Net gain on investments $9,461,220
----------
Net increase in net assets resulting from operations $9,290,730
==========
The accompanying notes are an integral part of these financial statements.
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STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment loss $ (170,490) $ (440,180)
Net realized gain on investments, foreign currency transactions and written options 8,037,453 28,544,816
Change in net unrealized appreciation on investments, foreign currency transactions
and written options 1,423,767 15,330,252
------------- -------------
Net increase in net assets resulting from operations $ 9,290,730 $ 43,434,888
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net realized gain:
Class I ($6.91 and $1.23 per share, respectively) $ (27,088,770) $ (5,196,895)
------------- -------------
Total distributions to shareowners $ (27,088,770) $ (5,196,895)
------------- -------------
FROM PORTFOLIO SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,717,909 $ 7,415,386
Reinvestment of distributions 27,088,770 5,196,895
Cost of shares repurchased (11,155,407) (25,362,450)
------------- -------------
Net increase (decrease) in net assets resulting from
Portfolio share transactions $ 19,651,272 $ (12,750,169)
------------- -------------
Net increase in net assets $ 1,853,232 $ 25,487,824
NET ASSETS:
Beginning of period $ 135,657,495 $ 110,169,671
------------- -------------
End of period $ 137,510,727 $ 135,657,495
------------- -------------
Undistributed distributions (in excess of) net investment income $ (143,188) $ 27,302
============= =============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 116,489 $ 3,717,909 258,021 $ 7,415,386
Reinvestment of distributions 974,416 27,088,770 194,932 5,196,895
Less shares repurchased (341,965) (11,155,407) (891,151) (25,362,450)
-------- ------------ -------- -------------
Net increase (decrease) 748,940 $ 19,651,272 (438,198) $ (12,750,169)
======== ============ ======== =============
The accompanying notes are an integral part of these financial statements.
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NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Select Mid Cap Growth VCT Portfolio (the Portfolio), formerly Pioneer
Growth Opportunities VCT Portfolio, is one of 10 portfolios comprising Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust. The Portfolio
is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The investment objective of the
Portfolio is to seek growth of capital.
The Portfolio offers one class of shares designated as Class I shares. There is
no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities that have traded on an exchange
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 available, generally are valued at
the mean between the last bid and asked prices. Short-term fixed income
securities with remaining maturities of sixty days or less generally are
valued at amortized cost. Shares of money market mutual funds are valued at
such funds' net asset value.
Trading in foreign securities is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities
used in computing the net asset value of the Portfolio's shares are
determined as of such times.
Securities for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily
available or are considered to be unreliable are valued by a fair valuation
team comprised of certain personnel of Pioneer Investment Management, Inc.
(PIM), the Portfolio's investment adviser, pursuant to procedures adopted
by the Portfolio's Board of Trustees. PIM's fair valuation team uses fair
value methods approved by the Valuation Committee of the Board of Trustees.
PIM's fair valuation team is responsible for monitoring developments that
may impact fair valued securities and for discussing and assessing fair
values on an ongoing basis, and at least quarterly, with the Valuation
Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, there were no securities that were valued using fair
value methods (other than securities that were valued using prices supplied
by independent pricing services or broker-dealers).
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. Dividend and interest income are reported net of
unrecoverable foreign taxes withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
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.
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NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, 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 the market prices of those securities but are
included with the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation
are recorded in the Portfolio's financial statements. The Portfolio records
realized gains and losses at the time a contract 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 4).
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject
to examination by Federal and State tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the Portfolio's taxable year. The tax character of
distributions paid during the year ended December 31, 2013 and the
components of distributable earnings (accumulated losses) on a federal
income tax basis at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Long-term capital gain $ 5,196,895
-----------
Total distributions $ 5,196,895
-----------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 9,443,057
Undistributed long-term capital gain 17,645,253
Unrealized appreciation 30,067,565
-----------
Total $57,155,875
===========
The difference between book-basis and tax-basis net unrealized appreciation
is attributable to the tax deferral of losses on wash sales and tax basis
adjustment relating to partnerships.
E. Portfolio Shares
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary
of UniCredit S.p.A. (UniCredit), $85,277 in underwriting commissions on the
sale of Trust shares for the six months ended June 30, 2014. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
F. Risks
Investments in mid-sized companies may offer the potential for higher
returns, but are also subject to greater short-term price fluctuations than
investments in larger, more established companies. Investing in foreign
and/or emerging markets securities involves risks relating to interest
rates, currency exchange rates and economic and political conditions. The
Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is more susceptible to
adverse developments affecting those countries. The Portfolio's prospectus
contains unaudited information regarding the Portfolio's principal risks.
Please refer to that document when considering the Portfolio's principal
risks.
22
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
G. Option Writing
The Portfolio may write put and covered call options to seek to increase
total return. When an option is written, the Portfolio receives a premium
and becomes obligated to purchase or sell the underlying security at a
fixed price, upon the exercise of the option.
When the Portfolio writes an option, an amount equal to the premium
received by the Portfolio is recorded as a liability and is subsequently
adjusted to the current value of the option written. Premiums received from
writing options that expire unexercised are treated by the Portfolio on the
expiration date as realized gains from investments. The difference between
the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a realized
gain, or, if the premium is less than the amount paid for the closing
purchase transaction, as a realized loss. If a call option is exercised,
the premium is added to the proceeds from the sale of the underlying
security in determining whether the Portfolio has realized a gain or loss.
The Portfolio as writer of an option bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
The average value of contracts open during the six months ended June 30,
2014 was $1,695. Written call option contracts outstanding at period end
are listed at the end of the Portfolio's schedule of investments.
The Portfolio held two written call option contracts that were open at June
30, 2014. If the call options were exercised at June 30, 2014, the maximum
amount the Portfolio would have been required to pay was $6,274.
Transactions in written options for the year ended June 30, 2014 are
summarized as follows:
[Download Table]
Number of Premiums
Contracts Paid
Options outstanding at beginning of period -- $ --
Options opened (76) (13,142)
Options exercised -- --
Options closed -- --
Options expired 34 6,868
--------- --------
Options outstanding at end of period (42) $ (6,274)
========= ========
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.74% of the
Portfolio's average daily net assets.
PIM has contractually agreed to limit ordinary operating expenses of the
Portfolio to the extent required to reduce Portfolio expenses to 0.85% of the
average daily net assets attributable to Class I shares. This expense limitation
is in effect through May 1, 2015. There can be no assurance that PIM will extend
the expense limitation agreement beyond the date referred to above.
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 as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$11,058 in management fees, administrative costs and certain other
reimbursements payable to PIM at June 30, 2014.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredit, provides substantially all transfer agent and
shareowner services to the Portfolio at negotiated rates. There is no transfer
agent fees payable to PIMSS at June 30, 2014.
4. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized appreciation or depreciation are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a contract 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
23
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
to meet the terms of the contract and from unanticipated movements in the value
of foreign currencies relative to the U.S. dollar. The average value of
contracts open during the six months ended June 30, 2014 was $27,134. As of June
30, 2014, open contracts were as follows.
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------
Unrealized
Contracts Settlement Appreciation/
Currency to Deliver In Exchange for Date Value Depreciation
---------------------------------------------------------------------------------------------------
EUR (Euro) 43,089 58,693 7/1/14 59,014 $321
EUR (Euro) 23,429 31,983 7/2/14 32,088 105
EUR (Euro) 22,461 30,767 7/3/14 30,763 (4)
---------------------------------------------------------------------------------------------------
$422
---------------------------------------------------------------------------------------------------
5. Offsetting Assets and Liabilities
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities of the Fund as of June 30, 2014.
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Assets:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the ---------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Assets Liabilities Liabilities Instruments Received Net Amount
-----------------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $ 426 $ (4) $ 422 $ -- $ -- $ 422
Written Options $ 2,552 $ (1,256) $ 1,296 $ -- $ -- $ 1,296
-----------------------------------------------------------------------------------------------------------------
Total $ 2,978 $ (1,260) $ 1,718 $ -- $ -- $ 1,718
-----------------------------------------------------------------------------------------------------------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Liabilities:
Net Gross Amounts
Amounts of Not Offset in the
Gross Liabilities Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the --------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Liabilities Liabilities Liabilities Instruments Pledged Net Amount
-----------------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $ 4 $ (4) $ -- $ -- $ -- $ --
Written Options $ 1,256 $ (1,256) $ -- $ -- $ -- $ --
-----------------------------------------------------------------------------------------------------------------
Total $ 1,260 $ (1,260) $ -- $ -- $ -- $ --
-----------------------------------------------------------------------------------------------------------------
24
Pioneer Select Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
6. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of June 30, 2014 were as follows:
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments ------------------------------------ ----------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Value Location Value
---------------------------------------------------------------------------------------------------------
Forward foreign Net unrealized appreciation Net unrealized depreciation
currency contracts on forward foreign on forward foreign
currency contracts $ 422 currency contracts $ -
Written options Net unrealized appreciation Net unrealized depreciation
on written options 1,296 on written options $ -
---------------------------------------------------------------------------------------------------------
Total $ 1,718 $ -
---------------------------------------------------------------------------------------------------------
The effect of derivative instruments on the Statement of Operations for the six
months ended June 30, 2014 was as follows:
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------
Change in
Unrealized
Realized Gain Appreciation or
Derivatives Not Accounted for or (Loss) on (Depreciation)
as Hedging Instruments Under Location of Gain or (Loss) Derivatives on Derivatives
Accounting Standards on Derivatives Recognized Recognized Recognized in
Codification (ASC) 815 in Income in Income Income
---------------------------------------------------------------------------------------------------------
Forward foreign Net realized gain (loss) on forward
currency contracts foreign currency contracts and other
assets and liabilities denominated in
foreign currencies $7,663
Forward foreign Change in unrealized appreciation
currency contracts (depreciation) on forward foreign
currency contracts and other assets
and liabilities denominated in
foreign currencies $ (863)
Written options Net realized gain on written options $ 351
Written options Change in unrealized (depreciation)
on written options $1,296
---------------------------------------------------------------------------------------------------------
7. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP, which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Portfolio's financial statements
for the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
25
This page for your notes.
26
This page for your notes.
27
This page for your notes.
28
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective August 8,
2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
29
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19616-08-0814
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Strategic Income VCT Portfolio -- Class I and II Shares
SEMIANNUAL REPORT
June 30, 2014
Please refer to your contract prospectus to determine the applicable share class
offered under your contract.
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
--------------------------------------------------------------------------------
[Download Table]
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 30
Notes to Financial Statements 35
Trustees, Officers and Service Providers 43
This report is authorized for distribution only when preceded or accompanied by
a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of investments for
the Portfolio with the Securities and Exchange Commission for the first and the
third quarters for each fiscal year on Form N-Q. Shareowners may view the filed
Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form
may also be viewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operations of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/14
--------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
U.S. Government Securities 25.9%
U.S. Corporate Bonds 25.3%
International Corporate Bonds 10.6%
Senior Secured Loans 9.0%
Collateralized Mortgage Obligations 8.0%
Foreign Government Bonds 6.3%
Municipal Bonds 3.9%
Convertible Corporate Bonds 3.3%
Asset Backed Securities 3.1%
U.S. Preferred Stocks 2.4%
Convertible Preferred Stocks 0.9%
U.S. Common Stocks 0.6%
International Common Stocks 0.6%
International Preferred Stocks 0.1%
Warrants 0.0%*
* Amount rounds to less than 0.1%.
Maturity Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
[Download Table]
AAA 29.8%
AA 2.8%
A 9.2%
BBB 20.4%
BB 15.6%
B 11.9%
CCC 2.0%
Cash Equivalent 5.4%
Not Rated 2.9%
Due to rounding, figures may not total 100%. Credit rating breakdown reflects
the average of available ratings across Moody's, Standard & Poor's (S&P) and
Fitch. Bond ratings are ordered highest to lowest in portfolio. Based on S&P's
measures, AAA (highest possible rating) through BBB are considered investment
grade. BB or lower ratings are considered non-investment grade. Cash equivalents
and some bonds may not be rated.
Five Largest Holdings
(As a percentage of long-term holdings)
[Download Table]
--------------------------------------------------------------------------------
1. Fannie Mae, 30YR Pool
5.0%, TBA 4.25%
--------------------------------------------------------------------------------
2. Fannie Mae Pool, 5.0%,
5/25/40 2.84
--------------------------------------------------------------------------------
3. Fannie Mae, 30YR Pool,
4.5%, TBA 2.76
--------------------------------------------------------------------------------
4. U.S. Treasury Notes,
2.0%, 2/15/22 2.51
--------------------------------------------------------------------------------
5. U.S. Treasury Bonds,
4.5%, 8/15/39 1.56
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/14
--------------------------------------------------------------------------------
Prices and Distributions
[Download Table]
Net Asset Value per Share 6/30/14 12/31/13
Class I $ 10.57 $10.37
Class II $ 10.54 $10.35
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/14 - 6/30/14) Income Capital Gains Capital Gains
Class I $0.2010 $0.0135 $0.1019
Class II $0.1878 $0.0135 $0.1019
--------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I
and II shares of Pioneer Strategic Income VCT Portfolio at net asset value
during the periods shown, compared to that of the Barclays U.S. Universal Index.
Portfolio returns are based on net asset value and do not reflect any applicable
insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
[Download Table]
Pioneer Strategic Pioneer Strategic
Income VCT Portfolio, Income VCT Portfolio, Barclays U.S.
Class I Class II Universal Index
6/30/2004 $ 10,000 $ 10,000 $ 10,000
6/30/2005 $ 11,173 $ 11,144 $ 10,743
6/30/2006 $ 11,422 $ 11,365 $ 10,715
6/30/2007 $ 12,249 $ 12,158 $ 11,423
6/30/2008 $ 12,996 $ 12,869 $ 12,134
6/30/2009 $ 12,931 $ 12,789 $ 12,732
6/30/2010 $ 15,349 $ 15,150 $ 14,082
6/30/2011 $ 16,942 $ 16,653 $ 14,755
6/30/2012 $ 17,542 $ 17,202 $ 15,841
6/30/2013 $ 18,483 $ 18,080 $ 15,879
6/30/2014 $ 19,768 $ 19,273 $ 16,705
The Barclays U.S. Universal Index is an unmanaged 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. It is not possible
to invest directly in an index.
--------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2014)
[Download Table]
--------------------------------------------------------------------------------
Barclays U.S.
Class I Class II Universal Index
--------------------------------------------------------------------------------
10 Years 7.05% 6.78% 5.27%
5 Years 8.86% 8.55% 5.58%
1 Year 6.95% 6.60% 5.20%
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
2
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES
--------------------------------------------------------------------------------
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Portfolio and to compare these costs with the
ongoing costs of investing in other variable annuities. The example is based on
an investment of $1,000 at the beginning of the Portfolio's latest six-month
period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value (divided by) $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio
Based on actual returns from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,050,20 $1,048.00
Expenses Paid During Period* $ 6.20 $ 7.41
* Expenses are equal to the Portfolio's annualized net expense ratio of 1.22%
and 1.46%, for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Portfolio's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolio's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period.
You may use this information to compare the ongoing costs of investing in the
Portfolio and other variable annuities. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different variable annuities. In
addition, if these transaction costs were included, your costs would have been
higher.
Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2014, through June 30, 2014.
[Download Table]
Share Class I II
--------------------------------------------------------------------------------
Beginning Account Value on 1/1/14 $1,000.00 $1,000.00
Ending Account Value on 6/30/14 $1,018.74 $1,017.55
Expenses Paid During Period* $ 6.11 $ 7.30
* Expenses are equal to the Portfolio's annualized net expense ratio of 1.22%
and 1.46%, for Class I and Class II shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
3
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/14
--------------------------------------------------------------------------------
A Word About Risk:
Investments in high yield or lower-rated securities are subject to
greater-than-average price volatility, illiquidity and possibility of default.
When interest rates rise, the prices of fixed-income securities in the Portfolio
will generally fall. Conversely, when interest rates fall the prices of
fixed-income securities in the Portfolio will generally rise. Investments in the
Portfolio are subject to possible loss due to the financial failure of the
issuers of the underlying securities and their inability to meet their debt
obligations. Prepayment risk is the chance that an issuer may exercise its right
to prepay its security, if falling interest rates prompt the issuer to do so.
Forced to reinvest the unanticipated proceeds at lower interest rates, the
Portfolio would experience a decline in income and lose the opportunity for
additional price appreciation. The securities issued by U.S. Government
sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued
by the U.S. Government. The Portfolio may invest in mortgage-backed securities,
which during times of fluctuating interest rates may increase or decrease more
than other fixed-income securities. Mortgage-backed securities are also subject
to pre-payments. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
Call 800-688-9915 or visit us.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers performance would be lower. Waivers may not
be in effect for all portfolios. Certain fee waivers are contractual through a
specified period. Other wise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
Fixed-income investments, both high-quality government bonds and lower-rated,
more credit-sensitive securities, generated positive results in a relatively
calm environment during the six-month period ended June 30, 2014. In the
following interview, Kenneth J. Taubes, Andrew Feltus and Charles Melchreit
discuss the factors that affected the performance of Pioneer Strategic Income
VCT Portfolio during the six-month period. Mr. Taubes, Chief Investment Officer,
U.S., Executive Vice President, and a portfolio manager at Pioneer, is
responsible for daily management of the Portfolio, supported by Mr. Feltus,
Director of High Yield and Bank Loans, a senior vice president and a portfolio
manager at Pioneer, and Mr. Melchreit, Director of Investment-Grade Management,
a senior vice president and a portfolio manager at Pioneer.
Q: How did the Portfolio perform during the six-month period ended June 30,
2014?
A: Pioneer Strategic Income VCT Portfolio's Class I shares returned 5.02% at
net asset value during the six-month period ended June 30, 2014, and Class
II shares returned 4.80%, while the Portfolio's benchmark, the Barclays
U.S. Universal Index (the Barclays Index), returned 4.19%. During the same
period, the average return of the 64 variable portfolios in Lipper's
General Bond Underlying Funds category was 4.28%.
Q: How would you describe the investment environment for bond investors during
the six-month period ended June 30, 2014?
A: Against a backdrop of modest volatility in the capital markets,
lower-rated, more credit-sensitive bonds outperformed Treasuries and
government securities, but virtually all fixed-income investments produced
positive results over the six-month period. Investors remained confident
that economies in the United States and Europe would continue to improve,
helped by accommodative monetary policies. Although U.S. gross domestic
product (GDP) growth for the first quarter was disappointing (-2.9%),
investors focused on more encouraging economic indicators, including job
growth, industrial production, and the recovering housing market. In
addition, government fiscal policies - including spending cuts and tax
hikes - that restrained growth during 2013 seemed likely to be less of a
drag on the economy in 2014. Throughout the six-month period, markets
demonstrated their resiliency in the face of a succession of problems
overseas, ranging from slowing economic growth in China, turmoil in the
Middle East, and heightened tensions between Russia and the Ukraine.
In the U.S., while the Federal Reserve (the Fed) began tapering its
stimulative quantitative easing (QE) bond-purchasing program, it kept
short-term interest rates at exceptionally low levels. The Fed appeared
comfortable with maintaining its accommodative stance on interest rates
given the lack of any notable inflationary pressures during the period. In
Europe, economies continued to improve, led by solid growth in Germany and
gains in the peripheral European Union (E.U.) economies, where problems had
been the most severe. The European Central Bank (ECB) maintained
accommodative policies designed to keep European banks liquid and able to
lend. In Asia, the new government in China appeared determined not to allow
economic growth to slow by too much, while Japan continued to push forward
with monetary and fiscal stimulus programs designed to encourage economic
expansion and curb the nation's deflation problem. Emerging economies that
are highly dependent on growth in China did feel pressure, but even the
performance of emerging markets debt recovered during the period as many
governments moved aggressively to control inflation.
4
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
In that environment, riskier, credit-sensitive securities outperformed the
overall fixed-income market, with high-yield and investment-grade corporate
bonds producing solid returns. Bank loans, asset-backed debt and
convertible securities also performed well. Meanwhile, longer-term Treasury
yields declined, leading to price appreciation for most longer-maturity
Treasury and government securities, although Treasuries lagged the credit
sectors in performance.
Q: What were your principal investment strategies for the Portfolio during the
six-month period ended June 30, 2014, and how did they affect performance?
A: We maintained a consistent emphasis on the credit sectors in the Portfolio
during the six-month period, which helped drive the Portfolio's
outperformance of the benchmark Barclays Index. We maintained an overweight
Portfolio position in credit-sensitive debt, especially early in the
period, with healthy exposures to high-yield corporate bonds,
investment-grade corporates, asset-backed securities and bank loans. The
Portfolio's out-of-benchmark investments in convertible securities had a
notably positive effect on benchmark-relative results. The Portfolio's
underweight in Treasuries and government mortgages, which underperformed
credit-sensitive securities, also aided performance. Even the Portfolio's
exposure to emerging markets helped performance, as the sovereign debt of
several countries in the developing markets bounced back after performing
poorly during much of 2013. Late in the period, we reduced the Portfolio's
overweighting of credit somewhat, paring back positions in areas where we
thought valuations had gotten higher, and adding to the Portfolio's
positions in government agency mortgages.
The one investment approach that detracted from the Portfolio's results
during the six-month period was having a short-duration position relative
to the Barclays Index {duration is a measure of the sensitivity of the
price (the value of principal) of a fixed-income investment to a change in
interest rates, expressed as a number of years}. The Portfolio's lack of
exposure to intermediate-term securities did not help relative returns as
market interest rates declined and fixed-coupon securities gained in value.
However, the negative effect of duration positioning on performance was
partially mitigated by the Portfolio's solid exposures to 30-year and
10-year bonds, which rallied strongly as their yields declined more than
those of shorter-maturity issues.
Currency positioning was not a significant factor, either positive or
negative, in the Portfolio's performance during the period. Exposures to
the currencies of Nigeria, Brazil, Turkey and India lent some support to
the Portfolio's performance, while Norway's currency detracted slightly
from relative results. During the period, we reduced Portfolio positions in
non-dollar currencies, especially the euro and the Japanese yen.
As of June 30, 2014, the majority of the Portfolio's assets were invested
in the credit-sensitive sectors, with more than 25% of assets allocated to
U.S. investment-grade corporates and U.S. high-yield bonds, and nearly 9%
in floating-rate bank loans. More than 15% of assets were allocated to
emerging markets and international investment-grade debt; but the largest
Portfolio position as of period end was government agency mortgages, at
more than 17% of assets. On June 30, 2014, the Portfolio's effective
duration was 3.58 years.
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/14 (continued)
--------------------------------------------------------------------------------
Q: Which individual investments affected the Portfolio's performance during
the six-month period ended June 30, 2014?
A: Among the Portfolio's individual investments, convertibles issued by Golar
LNG, a Norwegian shipper of liquefied natural gas, performed exceptionally
well during the period. There were no positions in the Portfolio that
significantly detracted from relative performance, although a position in
the convertibles issued by General Cable, a manufacturer of fibre optic and
cable products, proved disappointing.
Q: Did you invest the Portfolio in any derivative securities during the
six-month period in its strategy? If so, did the derivatives have an impact
on performance?
A: We did invest in Treasury futures to manage the Portfolio's interest-rate
sensitivity. Because the futures were part of our strategy to maintain a
lower-than-benchmark duration in the Portfolio, they tended to hold back
results when interest rates declined. We also used credit default swaps and
forward foreign currency contracts to manage other risks, but those
investments did not have a notable impact on relative performance.
Q: What is your investment outlook and how have you positioned the Portfolio
in accordance with that outlook?
A: We are generally positive about the investment outlook. We anticipate that
the Fed will continue to gradually lessen its accommodative monetary
policy as the economy grows, and we think credit-sensitive securities have
the potential to continue to perform well. At the same time, we do not
anticipate robust performance from any particular fixed-income asset class,
as the gradual increase of short-term Treasury yields to normal levels and
the resulting increase in market interest rates should have a somewhat
negative effect on all bond asset classes. Yield spreads - which are the
differences in yield levels between lower-quality, credit-sensitive
securities and Treasuries with similar maturities - already are tight, and
so we do not anticipate any major spread tightening to the extent that
would generate significant outperformance in the credit sectors.
Given the tighter spreads, we thought it made sense to reduce the
Portfolio's exposure to the credit-sensitive sectors somewhat during the
period, while remaining overweight in general. As we have done this, we
have reduced exposure to convertible securities and asset-backed debt,
while increasing the Portfolio's allocation to government agency mortgages,
although we maintained an underweight to agency mortgages relative to the
benchmark as of period end.
As we have modestly reduced the Portfolio's exposure to the
credit-sensitive sectors, we have improved the Portfolio's overall credit
quality.
Please refer to the Schedule of Investments on pages 7 to 29 for a full listing
of Portfolio securities.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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 opinion as of the date of this report. These statements should not
be relied upon for any other purposes.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
CONVERTIBLE CORPORATE BONDS - 3.3%
Energy - 0.5%
Oil & Gas Exploration & Production - 0.2%
85,000 NR/NR Cobalt International Energy, Inc., 2.625%, 12/1/19 $ 78,412
-----------
Oil & Gas Storage & Transportation - 0.3%
100,000 NR/NR Golar LNG, Ltd., 3.75%, 3/7/17 $ 134,790
-----------
Total Energy $ 213,202
-----------
Materials - 0.3%
Diversified Metals & Mining - 0.3%
25,000 NR/NR Mirabella Nickel, Ltd., 9.5%, 5/20/19 (144A) (d) $ 25,000
100,000 BB/NR Vedanta Resources Jersey, Ltd., 5.5%, 7/13/16 102,750
-----------
$ 127,750
-----------
Total Materials $ 127,750
-----------
Capital Goods - 0.2%
Electrical Components & Equipment - 0.2%
74,000 B/B3 General Cable Corp., 4.5%, 11/15/29 (Step) $ 73,260
-----------
Total Capital Goods $ 73,260
-----------
Consumer Durables & Apparel - 0.2%
Homebuilding - 0.2%
60,000 B/B2 KB Home, 1.375%, 2/1/19 $ 60,300
20,000 BB-/B1 The Ryland Group, Inc., 0.25%, 6/1/19 18,275
-----------
$ 78,575
-----------
Total Consumer Durables & Apparel $ 78,575
-----------
Health Care Equipment & Services - 0.5%
Health Care Equipment - 0.3%
103,000 NR/NR NuVasive, Inc., 2.75%, 7/1/17 $ 117,806
-----------
Managed Health Care - 0.2%
50,000 NR/NR Molina Healthcare, Inc., 1.125%, 1/15/20 $ 62,500
-----------
Total Health Care Equipment & Services $ 180,306
-----------
Pharmaceuticals, Biotechnology & Life Sciences - 0.2%
Biotechnology - 0.2%
50,000 NR/NR Cubist Pharmaceuticals, Inc., 1.125%, 9/1/18 (144A) $ 56,250
-----------
Total Pharmaceuticals, Biotechnology &
Life Sciences $ 56,250
-----------
Software & Services - 0.6%
Internet Software & Services - 0.2%
75,000 NR/NR WebMD Health Corp., 1.5%, 12/1/20 (144A) $ 83,484
-----------
Application Software - 0.4%
80,000 NR/NR Mentor Graphics Corp., 4.0%, 4/1/31 $ 97,950
55,000 BB-/NR Nuance Communications, Inc., 2.75%, 11/1/31 54,931
-----------
$ 152,881
-----------
Total Software & Services $ 236,365
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Technology Hardware & Equipment - 0.2%
Electronic Components - 0.2%
95,000 BB+/NR Vishay Intertechnology, Inc., 2.25%, 5/15/41 (144A) $ 91,853
-----------
Total Technology Hardware & Equipment $ 91,853
-----------
Semiconductors & Semiconductor Equipment - 0.6%
Semiconductor Equipment - 0.2%
50,000 BBB/Baa1 Lam Research Corp., 1.25%, 5/15/18 $ 68,312
-----------
Semiconductors - 0.4%
150,000 A-/NR Intel Corp., 2.95%, 12/15/35 $ 186,469
-----------
Total Semiconductors & Semiconductor Equipment $ 254,781
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $1,155,029) $ 1,312,342
-----------
Shares
PREFERRED STOCKS - 2.6%
Energy - 0.2%
Oil & Gas Storage & Transportation - 0.2%
2,300 7.62 B+/Ba2 NuStar Logistics LP, Floating Rate Note, 1/15/43 $ 61,916
-----------
Total Energy $ 61,916
-----------
Banks - 0.7%
Diversified Banks - 0.3%
5,325 6.00 A-/Baa1 US Bancorp, Floating Rate Note (Perpetual) $ 145,958
-----------
Regional Banks - 0.4%
1,000 6.25 A-/NR CoBank ACB, Floating Rate Note (Perpetual) (144A) $ 104,094
1,700 6.62 BBB-/Ba1 Fifth Third Bancorp, Floating Rate Note (Perpetual) 45,526
-----------
$ 149,620
-----------
Total Banks $ 295,578
-----------
Diversified Financials - 1.0%
Other Diversified Financial Services - 0.8%
5,800 7.88 BB+/Ba2 Citigroup Capital XIII, Floating Rate Note, 10/30/40 $ 160,660
4,000 7.12 BB+/B1 Citigroup, Inc., Floating Rate Note (Perpetual) 110,596
1,950 8.12 B/B3 GMAC Capital Trust I, Floating Rate Note, 2/15/40 53,235
-----------
$ 324,491
-----------
Consumer Finance - 0.1%
30 B/B3 Ally Financial, Inc., 7.0% (Perpetual) (144A) $ 30,226
-----------
Investment Banking & Brokerage - 0.1%
1,600 7.12 BB+/Ba3 Morgan Stanley, Floating Rate Note (Perpetual) $ 44,592
-----------
Total Diversified Financials $ 399,309
-----------
Insurance - 0.4%
Property & Casualty Insurance - 0.2%
3,325 5.10 BBB/Baa1 The Allstate Corp., Floating Rate Note, 1/15/53 $ 83,557
-----------
The accompanying notes are an integral part of these financial statements.
8
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
Floating S&P/Moody's
Shares Rate (b) Ratings Value
Reinsurance - 0.2%
16,836 0.00 NR/NR Altair Re, Floating Rate Note, 4/30/16 (Cat Bond) $ 21,124
50,000 0.00 NR/NR Altair Re, Floating Rate Note, 6/30/16 (Cat Bond) 51,765
-----------
$ 72,889
-----------
Total Insurance $ 156,446
-----------
Telecommunication Services - 0.3%
Integrated Telecommunication Services - 0.3%
4,000 BBB-/Baa3 Qwest Corp., 7.375%, 6/1/51 $ 105,720
-----------
Total Telecommunication Services $ 105,720
-----------
TOTAL PREFERRED STOCKS
(Cost $955,187) $ 1,018,969
-----------
CONVERTIBLE PREFERRED STOCKS - 0.9%
Banks - 0.5%
Diversified Banks - 0.5%
170 BBB+/Baa3 Wells Fargo & Co., 7.5% (Perpetual) $ 206,380
-----------
Total Banks $ 206,380
-----------
Diversified Financials - 0.4%
Other Diversified Financial Services - 0.2%
83 BB+/Ba3 Bank of America Corp., 7.25% (Perpetual) $ 96,861
-----------
Asset Management & Custody Banks - 0.2%
1,000 BB+/NR AMG Capital Trust II, 5.15%, 10/15/37 $ 63,062
-----------
Total Diversified Financials $ 159,923
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $328,240) $ 366,303
-----------
COMMON STOCKS - 0.6%
Materials - 0.0%+
Diversified Metals & Mining - 0.0%+
174,829 Mirabela Nickel, Ltd.* $ 6,591
-----------
Total Materials $ 6,591
-----------
Real Estate - 0.6%
Real Estate Development - 0.6%
53,917 Newhall Land Development LLC* $ 242,626
-----------
Total Real Estate $ 242,626
-----------
TOTAL COMMON STOCKS
(Cost $48,886) $ 249,217
-----------
Principal
Amount ($)
ASSET BACKED SECURITIES - 3.1%
Food & Staples Retailing - 0.1%
Food Retail - 0.1%
49,063 BBB-/NR CKE Restaurant Holdings, Inc., 4.474%, 3/20/43 (144A) $ 50,393
-----------
Total Food & Staples Retailing $ 50,393
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Banks - 2.0%
Thrifts & Mortgage Finance - 2.0%
24,634 0.30 BB/Baa1 Accredited Mortgage Loan Trust, Floating Rate Note, 9/25/36 $ 23,880
82,712 A/NR Beacon Container Finance LLC, 3.72%, 9/20/27 (144A) 84,448
7,011 0.89 AA/Baa3 Carrington Mortgage Loan Trust Series 2005-NC1, Floating Rate
Note, 2/25/35 7,003
39,559 BB/Ba3 Citicorp Residential Mortgage Trust Series 2006-1, 5.836%,
7/25/36 (Step) 40,700
49,539 B-/B1 Citicorp Residential Mortgage Trust Series 2006-3, 5.703%,
11/25/36 (Step) 52,032
89,204 4.00 AA/NR Citigtoup Mortgage Loan Trust 2014-A, Floating Rate Note,
1/1/35 (144A) 92,866
1,117 6.24 BBB/Baa3 Conseco Financial Corp., Floating Rate Note, 12/1/28 1,147
13,717 4.46 BB+/Ba1 Countrywide Asset-Backed Certificates, Floating Rate Note, 10/25/35 13,744
43,971 5.07 BB+/Ba2 Countrywide Asset-Backed Certificates, Floating Rate Note, 2/25/36 44,805
10,874 0.40 B/Ba3 Countrywide Asset-Backed Certificates, Floating Rate Note, 4/25/36 10,624
24,469 0.33 B-/B2 Countrywide Asset-Backed Certificates, Floating Rate Note, 6/25/36 23,438
13,228 0.24 CCC/B1 Credit-Based Asset Servicing and Securitization LLC, Floating Rate
Note, 4/25/37 10,749
64,201 AAA/Aaa Equifirst Mortgage Loan Trust 2003-1, 4.01%, 12/25/32 (Step) 64,729
249 1.23 AAA/NR First Franklin Mortgage Loan Trust 2004-FF10, Floating Rate
Note, 9/25/34 249
4,185 0.83 AA+/NR First Franklin Mortgage Loan Trust 2005-FF5, Floating Rate
Note, 3/25/35 4,168
14,161 0.66 NR/Baa1 First Franklin Mortgage Loan Trust 2005-FFH3, Floating Rate
Note, 9/25/35 13,910
13,015 AAA/NR First Investors Auto Owner Trust 2012-2, 1.47%, 5/15/18 (144A) 13,072
25,000 BBB/NR First Investors Auto Owner Trust 2013-1, 2.53%, 1/15/20 (144A) 25,046
41,620 0.40 B+/B3 GSAA Home Equity Trust 2005-11, Floating Rate Note, 10/25/35 41,428
6,352 0.81 AA/A1 Home Equity Asset Trust 2005-3, Floating Rate Note, 8/25/35 6,342
11,848 0.32 BB+/A2 Home Equity Asset Trust 2006-4, Floating Rate Note, 8/25/36 11,582
43,597 1.35 A+/Aa2 HSBC Home Equity Loan Trust USA 2007-3, Floating Rate
Note, 11/20/36 43,634
11,917 0.85 AA+/A2 Irwin Whole Loan Home Equity Trust 2005-C, Floating Rate
Note, 3/25/25 11,885
28,305 0.40 A+/Aa1 Lehman Brothers Small Balance Commercial, Floating Rate
Note, 2/25/30 (144A) 25,132
75,000 5.50 BBB/Baa1 Mastr Specialized Loan Trust, Floating Rate Note, 11/25/34 (144A) 73,892
17,667 0.28 CCC/Baa3 Structured Asset Securities Corp Mortgage Loan Trust 2007-BC2,
Floating Rate Note, 3/25/37 17,563
37,139 0.53 AA+/NR Wells Fargo Home Equity Asset-Backed Securities 2005-3 Trust,
Floating Rate Note, 12/25/35 36,597
-----------
$ 794,665
-----------
Total Banks $ 794,665
-----------
Diversified Financials - 1.0%
Other Diversified Financial Services - 0.3%
99,989 NR/NR AXIS Equipment Finance Receivables II LLC, 4.94%, 7/20/18 (144A) $ 101,624
34,218 A+/NR Sierra Timeshare 2012-2 Receivables Funding LLC, 2.38%,
3/20/29 (144A) 34,753
-----------
$ 136,377
-----------
The accompanying notes are an integral part of these financial statements.
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Consumer Finance - 0.4%
9,000 BBB+/NR American Credit Acceptance Receivables Trust 2012-2,
4.05%, 2/15/18 (144A) $ 9,150
12,344 A+/NR American Credit Acceptance Receivables Trust, 1.64%,
11/15/16 (144A) 12,369
25,000 A+/NR AmeriCredit Automobile Receivables Trust 2013-1, 1.57%, 1/8/19 25,099
20,000 A+/Baa1 Capital Auto Receivables Asset Trust/ Ally, 2.19%, 9/20/21 20,062
50,000 AA/Aaa Santander Drive Auto Receivables Trust 2012-1, 3.78%, 11/15/17 51,328
25,000 A/Aaa Santander Drive Auto Receivables Trust 2012-5, 2.7%, 8/15/18 25,699
-----------
$ 143,707
-----------
Asset Management & Custody Banks - 0.3%
98,958 A/NR Triton Container Finance LLC, 4.21%, 5/14/27 (144A) $ 98,958
-----------
Total Diversified Financials $ 379,042
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $1,190,348) $ 1,224,100
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 7.9%
Banks - 5.7%
Thrifts & Mortgage Finance - 5.7%
3,299 2.53 BBB+/Ba3 Adjustable Rate Mortgage Trust 2004-5, Floating Rate Note, 4/25/35 $ 3,209
47,591 BB-/NR Alternative Loan Trust 2003-16T1, 5.25%, 9/25/33 50,200
8,298 0.60 BBB+/Baa1 Alternative Loan Trust 2004-18CB, Floating Rate Note, 9/25/34 8,329
1,437 0.55 BBB+/Ba1 Alternative Loan Trust 2004-2CB, Floating Rate Note, 3/25/34 1,433
11,606 AA+/Baa1 Alternative Loan Trust Resecuritization 2003-23T2R REMICS,
4.25%, 9/25/33 11,393
21,692 2.32 AA+/Ba1 American Home Mortgage Investment Trust 2005-1, Floating
Rate Note, 6/25/45 21,921
25,122 A+/Baa2 Banc of America Alternative Loan Trust 2003-2, 5.75%, 4/25/33 26,049
18,569 NR/B1 Banc of America Alternative Loan Trust 2004-10, 5.5%, 11/25/19 18,765
11,960 NR/B2 Banc of America Alternative Loan Trust 2004-10, 6.0%, 11/25/34 11,964
11,123 NR/Ba2 Banc of America Alternative Loan Trust 2004-2, 6.0%, 3/25/34 11,506
22,857 NR/B2 Banc of America Alternative Loan Trust 2004-3, 6.0%, 4/25/34 23,076
19,266 NR/B2 Banc of America Alternative Loan Trust 2004-4, 5.25%, 5/25/34 19,526
31,982 2.69 BBB/NR Banc of America Mortgage 2003-F Trust, Floating Rate Note, 7/25/33 32,383
18,322 2.74 NR/Baa3 Banc of America Mortgage 2003-H Trust, Floating Rate Note, 9/25/33 18,348
13,493 5.12 BBB+/NR Banc of America Mortgage 2005-H Trust, Floating Rate Note, 9/25/35 13,549
2,318 B-/NR Banc of America Mortgage Trust 2004-7, 4.5%, 8/25/19 2,352
1,220 AA+/Baa1 Banc of America Mortgage Trust 2005-9, 4.75%, 10/25/20 1,228
183,526 NR/Caa2 Bayview Commercial Asset Trust, 3.53033%, 9/25/37
(Step) (144A) (f) 11,892
8,990 1.15 A/Baa1 Bayview Commercial Asset Trust, Floating Rate Note, 1/25/35 (144A) 8,081
29,748 2.33 AA+/Baa2 Bear Stearns ARM Trust 2003-5, Floating Rate Note, 8/25/33 29,871
16,581 4.82 CCC/B2 Bear Stearns ARM Trust 2004-12, Floating Rate Note, 2/25/35 16,713
12,475 7.66 AAA/Aaa Bear Stearns Commercial Mortgage Securities Trust 2002-TOP6,
Floating Rate Note, 10/15/36 (144A) 12,517
11,766 BB+/Ba1 Charlie Mac Trust 2004-2, 5.0%, 10/25/34 11,764
295 3.01 B-/B1 CHL Mortgage Pass-Through Trust 2003-42, Floating Rate
Note, 9/25/33 287
39,446 NR/Baa1 Citigroup Mortgage Loan Trust, Inc., 6.75%, 8/25/34 42,405
100,000 4.65 AA-/A3 City Center Trust 2011-CCHP, Floating Rate Note, 7/15/28 (144A) 100,005
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
25,000 NR/Aaa COMM 2012-CCRE2 Mortgage Trust REMICS, 3.791%, 8/15/45 $ 25,864
25,000 NR/Aaa COMM 2012-CCRE2 Mortgage Trust, 3.147%, 8/15/45 25,266
25,000 NR/Aa2 COMM 2012-CCRE2 Mortgage Trust, 4.393%, 8/15/45 26,650
21,000 AAA/Aaa COMM 2012-CCRE4 Mortgage Trust, 2.436%, 10/15/45 20,907
12,271 AAA/Aaa COMM 2012-CCRE4 Mortgage Trust, 3.251%, 10/15/45 12,206
50,000 AAA/Aaa COMM 2013-LC6 Mortgage Trust, 2.941%, 1/10/46 49,376
76,113 NR/Baa1 Credit Suisse Commercial Mortgage Trust Series 2007-C1,
5.361%, 2/15/40 81,681
6,059 D/NR Credit Suisse First Boston Mortgage Securities Corp., 5.0%, 8/25/20 6,054
11,558 2.57 BBB+/Ba2 Credit Suisse First Boston Mortgage Securities Corp., Floating
Rate Note, 11/25/33 11,554
12,779 2.45 BBB+/B1 Credit Suisse First Boston Mortgage Securities Corp., Floating
Rate Note, 6/25/34 12,848
63,943 5.10 AAA/NR Credit Suisse First Boston Mortgage Securities Corp., Floating Rate
Note, 8/15/38 65,810
25,174 0.32 AAA/A1 Credit Suisse Mortgage Capital Certificates REMICS, Floating Rate
Note, 10/15/21 (144A) 25,125
25,000 1.15 NR/NR CSMC Series 2010-14R REMICS, Floating Rate Note,
11/26/37 (144A) 23,383
37,794 3.59 NR/NR CSMC Trust 2010-16, Floating Rate Note, 6/25/50 (144A) 37,743
12,779 2.57 B-/NR First Horizon Mortgage Pass-Through Trust 2005-AR2, Floating Rate
Note, 6/25/35 12,035
47,993 0.42 BB/Ba2 Global Mortgage Securitization, Ltd., Floating Rate Note, 4/25/32 46,083
24,895 5.30 AAA/Aa3 GMAC Commercial Mortgage Securities, Inc. Series 2004-C2 Trust,
Floating Rate Note, 8/10/38 24,935
35,000 A-/Ba1 GS Mortgage Securities Corp II Series 2005-GG4 REMICS,
4.782%, 7/10/39 35,903
25,000 AA-/NR GS Mortgage Securities Corp. II, 3.682%, 2/10/46 (144A) 25,098
50,000 AAA/NR GS Mortgage Securities Trust 2013-GCJ12, 3.135%, 6/10/46 49,970
20,182 0.79 BB/Ba3 Impac CMB Trust Series 2004-4, Floating Rate Note, 9/25/34 19,234
55,754 0.89 BBB+/A3 Impac CMB Trust Series 2004-7, Floating Rate Note, 11/25/34 53,659
26,608 0.35 BB+/Baa2 Impac Secured Assets Trust 2006-5, Floating Rate Note, 12/25/36 24,738
26,180 3.50 AAA/Aaa JP Morgan Chase Commercial Mortgage Securities Trust 2013-A5,
Floating Rate Note, 7/25/20 27,435
15,183 5.06 BBB+/NR JP Morgan Mortgage Trust 2005-A3, Floating Rate Note, 6/25/35 15,207
19,619 3.50 AAA/NR JP Morgan Mortgage Trust 2013-2, Floating Rate Note,
5/25/43 (144A) 19,728
20,585 3.72 AAA/NR JP Morgan Mortgage Trust 2013-2, Floating Rate Note,
5/25/43 (144A) 19,901
98,940 3.50 AAA/NR JP Morgan Mortgage Trust 2014-1 REMICS, Floating Rate Note,
1/25/44 (144A) 98,096
43,190 AAA/Aaa LB-UBS Commercial Mortgage Trust 2005-C3, 4.739%, 7/15/30 44,166
7,530 1.10 A+/Aa1 Lehman Brothers Small Balance Commercial Mortgage
Trust 2007-3 Class 1A4, Floating Rate Note, 10/25/37 (144A) 7,478
12,200 BB+/NR MASTR Alternative Loan Trust 2004-10, 5.5%, 10/25/19 12,500
35,547 B-/NR MASTR Alternative Loan Trust 2004-6, 6.0%, 7/25/34 36,168
19,563 6.62 A-/NR MASTR Seasoned Securitization Trust 2005-1, Floating Rate
Note, 9/25/32 20,451
The accompanying notes are an integral part of these financial statements.
12
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Thrifts & Mortgage Finance - (continued)
97,031 3.25 AAA/NR NRP Mortgage Trust 2013-1, Floating Rate Note, 7/25/43 (144A) $ 93,968
12,509 NR/A2 PHH Mortgage Capital LLC, 6.6%, 12/25/27 (Step) (144A) 12,692
4,424 A+/Aa3 RALI Series 2003-QS1 Trust, 5.0%, 1/25/33 4,464
20,194 0.72 B+/Ba1 RALI Series 2003-QS11 Trust, Floating Rate Note, 6/25/33 19,166
68,251 0.60 BB/NR RALI Series 2003-QS22 Trust, Floating Rate Note, 12/26/33 63,403
91,367 NR/Ba3 RALI Series 2004-QS3 Trust, 5.0%, 3/25/19 94,480
10,177 0.65 BB+/NR RALI Series 2004-QS4 Trust, Floating Rate Note, 3/25/34 9,933
9,987 0.75 BB+/Ba3 RALI Series 2004-QS5 Trust, Floating Rate Note, 4/25/34 9,821
22,955 1.55 B-/Ba3 RESI Finance LP, Floating Rate Note, 9/10/35 (144A) 19,944
23,063 NR/B3 RFMSI Series 2005-S5 Trust, 5.25%, 7/25/35 23,813
95,669 3.00 AAA/NR Sequoia Mortgage Trust 2013-7, Floating Rate Note, 6/25/43 91,390
101,762 2.50 NR/Aaa Sequoia Mortgage Trust, Floating Rate Note, 12/25/42 95,144
15,407 2.52 BBB-/B3 Structured Adjustable Rate Mortgage Loan Trust, Floating Rate
Note, 1/25/35 15,317
18,264 2.51 AA+/Baa3 Structured Adjustable Rate Mortgage Loan Trust, Floating Rate
Note, 2/25/34 18,508
26,685 0.90 A+/Ba1 Structured Asset Mortgage Investments Trust 2003-AR2, Floating
Rate Note, 12/19/33 25,565
24,104 2.69 A+/Baa3 Structured Asset Securities Corp. Mortgage Certificates
Series 2003-31A, Floating Rate Note, 10/25/33 24,126
14,917 2.49 AA+/Baa3 Structured Asset Securities Corp. Mortgage Pass-Through
Certificates Series 2003-22A, Floating Rate Note, 6/25/33 15,089
19,052 2.17 NR/Baa2 Thornburg Mortgage Securities Trust 2003-3, Floating Rate
Note, 6/25/43 19,068
17,757 1.77 AAA/Baa3 Thornburg Mortgage Securities Trust Class II4A, Floating Rate
Note, 3/25/44 17,647
7,924 0.58 BBB+/Ba1 WaMu Mortgage Pass-Through Certificates Series 2004-AR12
Trust, Floating Rate Note, 10/25/44 7,664
9,915 2.41 BBB/NR WaMu Mortgage Pass-Through Certificates Series 2005-AR3
Trust, Floating Rate Note, 3/25/35 9,949
27,120 2.40 BBB+/NR WaMu Mortgage Pass-Through Certificates, Floating Rate
Note, 1/25/35 27,240
10,000 4.69 NR/A3 Wells Fargo Commercial Mortgage Trust 2012-LC5, Floating
Rate Note, 10/15/45 10,591
33,411 2.61 A+/NR Wells Fargo Mortgage Backed Securities 2005-AR10 Trust,
Floating Rate Note, 6/25/35 33,404
-----------
$ 2,288,404
-----------
Total Banks $ 2,288,404
-----------
Diversified Financials - 0.9%
Other Diversified Financial Services - 0.9%
100,000 1.65 AA-/Aa3 Hilton USA Trust 2013-HLF, Floating Rate Note, 11/5/30 (144A) $ 100,252
24,657 2.55 NR/NR Jefferies Resecuritization Trust 2009-R2, Floating Rate Note,
5/26/37 (144A) 24,594
94,172 2.50 NR/NR JP Morgan Mortgage Trust 2013-1, Floating Rate Note,
3/25/43 (144A) 93,184
100,000 BBB-/NR Morgan Stanley Capital I Trust 2007-HQ13, 5.569%, 12/15/44 108,899
32,300 0.25 AA+/Aaa Morgan Stanley Capital I, Inc., Floating Rate Note, 10/15/20 (144A) 32,263
-----------
$ 359,192
-----------
Total Diversified Financials $ 359,192
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Government - 1.3%
6,545 AA+/Aaa Federal Home Loan Mortgage Corp. REMICS, 5.0%, 6/15/34 $ 6,608
100,000 AA+/Baa2 Federal Home Loan Mortgage Corp., 4.304%, 9/25/44 (144A) 104,642
22,168 AA+/Aaa Federal National Mortgage Association REMICS, 4.5%, 6/25/29 24,035
3,404 AA+/Aaa Federal National Mortgage Association REMICS, 5.0%, 9/25/39 3,565
30,000 AA+/A3 FREMF Mortgage Trust 2011-K12, 4.495%, 1/25/46 (144A) 32,066
25,000 AA+/A3 FREMF Mortgage Trust 2011-K703, 5.051%, 7/25/44 (144A) 27,258
25,000 3.61 NR/A2 FREMF Mortgage Trust Class B, Floating Rate Note, 11/25/46 (144A) 25,904
22,000 3.95 AA+/Aaa FREMF Mortgage Trust Class B, Floating Rate Note, 6/25/47 (144A) 23,062
50,000 4.44 A-/Aaa FREMF Mortgage Trust Class B, Floating Rate Note, 7/25/48 (144A) 53,267
50,000 4.44 BBB/Aaa FREMF Mortgage Trust Class C, Floating Rate Note, 7/25/48 (144A) 52,682
44,768 AA+/Aaa Government National Mortgage Association, 3.0%, 4/20/41 46,527
100,000 AA+/Aaa Government National Mortgage Association, 4.5%, 9/20/39 107,445
-----------
$ 507,061
-----------
Total Government $ 507,061
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $3,107,460) $ 3,154,657
-----------
CORPORATE BONDS - 34.4%
Energy - 7.2%
Oil & Gas Drilling - 1.1%
140,000 BB/Ba3 Atwood Oceanics, Inc., 6.5%, 2/1/20 $ 149,275
50,000 B-/B3 Offshore Group Investment, Ltd., 7.5%, 11/1/19 52,875
100,000 BBB+/Baa1 Pride International, Inc., 6.875%, 8/15/20 121,514
100,000 BBB-/Baa3 Rowan Companies, Inc., 4.75%, 1/15/24 105,803
-----------
$ 429,467
-----------
Oil & Gas Equipment & Services - 0.3%
100,000 B/B1 Expro Finance Luxembourg SCA, 8.5%, 12/15/16 (144A) $ 104,500
-----------
Integrated Oil & Gas - 0.5%
100,000 B/B3 Energy XXI Gulf Coast, Inc., 7.5%, 12/15/21 $ 107,000
75,000 BBB-/Baa1 Petrobras Global Finance BV, 3.0%, 1/15/19 73,624
-----------
$ 180,624
-----------
Oil & Gas Exploration & Production - 3.4%
175,000 B+/NR Line, Ltd., Floating Rate Note, 11/1/19 $ 183,312
60,000 B-/B3 BreitBurn Energy Partners LP, 7.875%, 4/15/22 64,950
75,000 B-/B3 Carrizo Oil & Gas, Inc., 8.625%, 10/15/18 79,031
95,000 BB/B1 Denbury Resources, Inc., 4.625%, 7/15/23 92,170
50,000 B/B2 EP Energy LLC, 9.375%, 5/1/20 57,250
200,000 BBB-/Baa1 Gazprom OAO Via Gaz Capital SA, 4.95%, 7/19/22 (144A) 198,960
75,000 B-/B3 Gulfport Energy Corp., 7.75%, 11/1/20 81,188
50,000 B-/Caa1 Lightstream Resources, Ltd., 8.625%, 2/1/20 (144A) 52,500
75,000 BBB-/Ba1 Newfield Exploration Co., 5.625%, 7/1/24 82,312
95,000 B-/Caa1 Northern Oil and Gas, Inc., 8.0%, 6/1/20 101,412
30,000 B+/B1 Rosetta Resources, Inc., 5.625%, 5/1/21 30,862
100,000 BBB-/Baa1 Rosneft Finance SA, 7.25%, 2/2/20 (144A) 114,000
35,000 CCC+/B3 Samson Investment Co., 10.5%, 2/15/20 (144A) 36,881
25,000 B-/B2 SandRidge Energy, Inc., 8.125%, 10/15/22 27,531
65,000 B-/B3 Stone Energy Corp., 7.5%, 11/15/22 71,662
The accompanying notes are an integral part of these financial statements.
14
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Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Oil & Gas Exploration & Production - (continued)
25,000 B/B3 Swift Energy Co., 7.875%, 3/1/22 26,125
50,000 B/B3 Vanguard Natural Resources LLC, 7.875%, 4/1/20 54,125
25,000 B-/B3 W&T Offshore, Inc., 8.5%, 6/15/19 27,000
-----------
$ 1,381,271
-----------
Oil & Gas Refining & Marketing - 0.1%
45,000 BB+/Ba2 Tesoro Corp., 5.375%, 10/1/22 $ 47,025
-----------
Oil & Gas Storage & Transportation - 1.7%
35,000 BBB-/Baa3 Buckeye Partners LP, 6.05%, 1/15/18 $ 39,548
50,000 BB/B1 Crestwood Midstream Partners LP, 6.0%, 12/15/20 52,500
73,000 BBB-/Baa2 DCP Midstream LLC, 9.75%, 3/15/19 (144A) 94,124
75,000 5.85 BB/Baa3 DCP Midstream LLC, Floating Rate Note, 5/21/43 (144A) 71,250
40,000 3.24 BB/Ba1 Energy Transfer Partners LP, Floating Rate Note, 11/1/66 36,760
56,000 8.38 BBB-/Baa2 Enterprise Products Operating LLC, Floating Rate Note, 8/1/66 63,034
80,000 BB/Ba3 Gibson Energy, Inc., 6.75%, 7/15/21 (144A) 86,600
83,000 BBB/Baa2 Plains All American Pipeline LP, 6.125%, 1/15/17 93,014
99,000 A/A3 Questar Pipeline Co., 5.83%, 2/1/18 111,895
35,000 BBB-/Baa2 Spectra Energy Capital LLC, 6.75%, 7/15/18 40,170
-----------
$ 688,895
-----------
Coal & Consumable Fuels - 0.1%
50,000 BB-/B1 Berau Coal Energy Tbk PT, 7.25%, 3/13/17 (144A) $ 48,500
-----------
Total Energy $ 2,880,282
-----------
Materials - 2.0%
Commodity Chemicals - 0.3%
100,000 BB/Ba3 Axiall Corp., 4.875%, 5/15/23 $ 99,500
-----------
Specialty Chemicals - 0.1%
50,000 B/B1 Rentech Nitrogen Partners LP, 6.5%, 4/15/21 (144A) $ 50,500
-----------
Metal & Glass Containers - 0.1%
50,000 B-/B3 AEP Industries, Inc., 8.25%, 4/15/19 $ 52,750
-----------
Diversified Metals & Mining - 0.3%
50,000 BB+/Baa3 AngloGold Ashanti Holdings Plc, 5.375%, 4/15/20 $ 50,778
50,000 BBB/Baa3 Freeport-McMoRan, Inc., 3.875%, 3/15/23 49,848
20,000 BB+/Baa3 Volcan Cia Minera SAA, 5.375%, 2/2/22 (144A) 20,000
-----------
$ 120,626
-----------
Gold - 0.1%
25,000 BB-/B1 IAMGOLD Corp., 6.75%, 10/1/20 (144A) $ 23,125
-----------
Precious Metals & Minerals - 0.5%
200,000 BBB/Baa2 Fresnillo Plc, 5.5%, 11/13/23 (144A) $ 209,000
-----------
Steel - 0.5%
75,000 CCC+/B3 Essar Steel Algoma, Inc., 9.375%, 3/15/15 (144A) $ 74,812
25,000 BBB/Baa2 Glencore Funding LLC, 4.125%, 5/30/23 (144A) 25,109
100,000 NR/Caa2 Metinvest BV, 8.75%, 2/14/18 (144A) 87,000
-----------
$ 186,921
-----------
Paper Products - 0.1%
55,000 BB-/Ba3 Resolute Forest Products, Inc., 5.875%, 5/15/23 $ 54,175
-----------
Total Materials $ 796,597
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Capital Goods - 2.1%
Building Products - 0.4%
25,000 BBB-/Ba3 Masco Corp., 5.95%, 3/15/22 $ 27,625
85,000 BBB-/Ba3 Masco Corp., 7.125%, 3/15/20 100,021
50,000 5.75 BBB+/Baa2 Stanley Black & Decker, Inc., Floating Rate Note, 12/15/53 54,000
-----------
$ 181,646
-----------
Construction & Engineering - 0.3%
100,000 BB-/Ba3 Dycom Investments, Inc., 7.125%, 1/15/21 $ 107,500
-----------
Construction & Farm Machinery & Heavy Trucks - 0.4%
75,000 A/A3 Cummins, Inc., 5.65%, 3/1/98 $ 84,925
22,000 A/A3 Cummins, Inc., 6.75%, 2/15/27 27,484
35,000 CCC-/B3 Navistar International Corp., 8.25%, 11/1/21 36,531
-----------
$ 148,940
-----------
Industrial Machinery - 0.2%
50,000 CCC+/Caa2 Boart Longyear Management Pty, Ltd., 7.0%, 4/1/21 (144A) $ 37,500
49,000 B/Caa1 Mueller Water Products, Inc., 7.375%, 6/1/17 49,796
-----------
$ 87,296
-----------
Trading Companies & Distributors - 0.8%
125,000 BB+/Ba3 Aircastle, Ltd., 6.25%, 12/1/19 $ 136,875
100,000 BB+/NR Aviation Capital Group Corp., 6.75%, 4/6/21 (144A) 112,492
75,000 B+/B1 WESCO Distribution, Inc., 5.375%, 12/15/21 (144A) 76,688
-----------
$ 326,055
-----------
Total Capital Goods $ 851,437
-----------
Commercial Services & Supplies - 0.3%
Commercial Printing - 0.2%
65,000 B/B3 Cenveo Corp., 6.0%, 8/1/19 (144A) $ 65,000
-----------
Research & Consulting Services - 0.1%
50,000 BB-/Ba2 FTI Consulting, Inc., 6.0%, 11/15/22 $ 51,438
-----------
Total Commercial Services & Supplies $ 116,438
-----------
Transportation - 0.5%
Airlines - 0.5%
97,164 A-/Baa2 Continental Airlines 2012-2 Class A Pass Through Trust,
4.0%, 10/29/24 $ 99,107
25,379 A/Baa1 Delta Air Lines 2010-2 Class A Pass Through Trust,
4.95%, 5/23/19 27,663
75,000 B-/NR Gol Finance SA, 9.25%, 7/20/20 (144A) 77,812
-----------
$ 204,582
-----------
Total Transportation $ 204,582
-----------
Automobiles & Components - 0.3%
Auto Parts & Equipment - 0.3%
70,000 BB+/B2 Dana Holding Corp., 6.0%, 9/15/23 $ 74,200
45,000 B+/B2 Stackpole International Intermediate, 7.75%, 10/15/21 (144A) 47,025
-----------
$ 121,225
-----------
Total Automobiles & Components $ 121,225
-----------
Consumer Durables & Apparel - 0.7%
Home Furnishings - 0.0%+
25,000 BBB/Baa3 Mohawk Industries, Inc., 3.85%, 2/1/23 $ 24,906
-----------
The accompanying notes are an integral part of these financial statements.
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Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Homebuilding - 0.7%
100,000 BB-/B2 Brookfield Residential Properties, Inc., 6.5%, 12/15/20 (144A) $ 105,750
105,000 NR/NR Desarrolladora Homex SAB de CV, 12/11/19 (144A) (c) (e) 15,750
40,000 BB/Ba1 DR Horton, Inc., 5.75%, 8/15/23 43,000
100,000 BB-/Ba3 Lennar Corp., 4.5%, 6/15/19 102,375
-----------
$ 266,875
-----------
Total Consumer Durables & Apparel $ 291,781
-----------
Consumer Services - 0.9%
Casinos & Gaming - 0.6%
EURO 108,000 8.25 BB+/Ba2 GTECH S.p.A., Floating Rate Note, 3/31/66 (144A) $ 159,277
15,869 NR/NR Mashantucket Western Pequot Tribe, 6.5%, 7/1/36 (PIK) 2,222
30,000 BBB-/NR Wynn Las Vegas LLC, 4.25%, 5/30/23 (144A) 29,025
65,000 BBB-/NR Wynn Las Vegas LLC, 5.375%, 3/15/22 67,681
-----------
$ 258,205
-----------
Education Services - 0.3%
25,000 NR/Aa2 Bowdoin College, 4.693%, 7/1/12 $ 23,478
50,000 AAA/Aaa President and Fellows of Harvard College, 2.3%, 10/1/23 46,970
25,000 AA-/Aa2 Tufts University, 5.017%, 4/15/12 25,386
25,000 AAA/Aaa William Marsh Rice University, 4.626%, 5/15/63 24,602
-----------
$ 120,436
-----------
Total Consumer Services $ 378,641
-----------
Media - 0.4%
Broadcasting - 0.4%
95,000 BB-/B1 CCO Holdings LLC, 6.625%, 1/31/22 $ 102,125
40,000 B+/B2 Univision Communications, Inc., 5.125%, 5/15/23 (144A) 42,350
-----------
$ 144,475
-----------
Total Media $ 144,475
-----------
Retailing - 0.4%
Internet Retail - 0.4%
125,000 BBB-/Ba1 Expedia, Inc., 5.95%, 8/15/20 $ 141,432
-----------
Total Retailing $ 141,432
-----------
Food & Staples Retailing - 0.3%
Drug Retail - 0.3%
36,589 BBB+/Baa1 CVS Pass-Through Trust, 5.773%, 1/10/33 (144A) $ 40,957
79,157 BBB+/Baa1 CVS Pass-Through Trust, 6.036%, 12/10/28 91,122
-----------
$ 132,079
-----------
Total Food & Staples Retailing $ 132,079
-----------
Food, Beverage & Tobacco - 1.9%
Soft Drinks - 0.3%
120,000 BB/Ba2 Central American Bottling Corp., 6.75%, 2/9/22 (144A) $ 128,100
-----------
Agricultural Products - 0.4%
150,000 BBB/Baa2 Viterra, Inc., 5.95%, 8/1/20 (144A) $ 171,204
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Packaged Foods & Meats - 1.0%
50,000 B/B2 Agrokor dd, 8.875%, 2/1/20 (144A) $ 56,125
100,000 BB/Ba3 JBS Finance II, Ltd., 8.25%, 1/29/18 (144A) 106,000
150,000 B/B2 Marfrig Overseas, Ltd., 9.5%, 5/4/20 (144A) 161,250
50,000 B/B2 Post Holdings, Inc., 7.375%, 2/15/22 54,062
-----------
$ 377,437
-----------
Tobacco - 0.2%
55,000 B-/Caa1 Alliance One International, Inc., 9.875%, 7/15/21 $ 56,100
25,000 BBB-/Baa2 Lorillard Tobacco Co., 3.75%, 5/20/23 24,690
-----------
$ 80,790
-----------
Total Food, Beverage & Tobacco $ 757,531
-----------
Health Care Equipment & Services - 0.2%
Health Care Facilities - 0.2%
25,000 B-/B3 Kindred Healthcare, Inc., 6.375%, 4/15/22 (144A) $ 25,125
50,000 A-/A3 NYU Hospitals Center, 4.428%, 7/1/42 46,934
-----------
$ 72,059
-----------
Total Health Care Equipment & Services $ 72,059
-----------
Pharmaceuticals, Biotechnology & Life
Sciences - 0.1%
Pharmaceuticals - 0.1%
25,000 B+/B1 Endo Finance LLC, 5.75%, 1/15/22 (144A) $ 25,500
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 25,500
-----------
Banks - 2.9%
Diversified Banks - 2.2%
100,000 7.38 BBB-/NR Banco Continental SA via Continental Trustees Cayman, Ltd.,
Floating Rate Note, 10/7/40 (144A) $ 109,599
65,000 6.88 BBB/Baa3 Banco de Credito del Peru Panama, Floating Rate Note,
9/16/26 (144A) 72,638
75,000 BBB+/NR BBVA Banco Continental SA, 5.0%, 8/26/22 (144A) 79,500
150,000 NR/A2 BBVA Bancomer SA Texas, 4.375%, 4/10/24 (144A) 152,812
IDR 120,000,000 NR/Aaa Inter-American Development Bank, 7.25%, 7/17/17 10,082
100,000 BBB/Baa2 Intesa Sanpaolo S.p.A., 6.5%, 2/24/21 (144A) 118,275
200,000 A/Baa1 Nordea Bank AB, 4.25%, 9/21/22 (144A) 207,206
60,000 4.50 NR/Baa3 Scotiabank Peru SA, Floating Rate Note, 12/13/27 (144A) 57,450
55,000 5.90 BBB+/Baa3 Wells Fargo & Co., Floating Rate Note, 12/29/49 58,341
-----------
$ 865,903
-----------
Regional Banks - 0.6%
50,000 BBB/Baa1 SunTrust Banks, Inc., 3.5%, 1/20/17 $ 52,939
81,000 4.45 BBB/Baa3 The PNC Financial Services Group, Inc., Floating Rate
Note (Perpetual) 81,000
100,000 6.75 BBB/Baa3 The PNC Financial Services Group, Inc., Floating Rate
Note (Perpetual) 111,500
-----------
$ 245,439
-----------
Thrifts & Mortgage Finance - 0.1%
50,000 BBB-/Baa2 Astoria Financial Corp., 5.0%, 6/19/17 $ 54,319
-----------
Total Banks $ 1,165,661
-----------
The accompanying notes are an integral part of these financial statements.
18
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Diversified Financials - 4.5%
Other Diversified Financial Services - 2.0%
90,000 BBB+/Baa2 Alterra Finance LLC, 6.25%, 9/30/20 $ 103,716
135,000 A-/NR Carlyle Holdings II Finance LLC, 5.625%, 3/30/43 (144A) 149,332
67,000 5.95 BB+/Ba3 Citigroup, Inc., Floating Rate Note (Perpetual) 67,670
25,000 BBB+/Baa1 Hyundai Capital Services, Inc., 4.375%, 7/27/16 (144A) 26,578
NZD 100,000 A/A3 JPMorgan Chase & Co., 4.25%, 11/2/18 83,967
225,000 5.15 BBB/Ba1 JPMorgan Chase & Co., Floating Rate Note (Perpetual) 215,719
100,000 A/NR KKR Group Finance Co. II LLC, 5.5%, 2/1/43 (144A) 106,246
50,000 5.65 BB/Ba1 Voya Financial, Inc., Floating Rate Note, 5/15/53 50,875
-----------
$ 804,103
-----------
Specialized Finance - 0.3%
71,000 BBB-/NR Cantor Fitzgerald LP, 7.875%, 10/15/19 (144A) $ 78,775
20,000 BBB+/NR Corp Financiera de Desarrollo SA, 4.75%, 2/8/22 (144A) 20,850
-----------
$ 99,625
-----------
Consumer Finance - 0.5%
INR 5,700,000 NR/Aaa International Finance Corp., 8.25%, 6/10/21 $ 99,890
106,000 4.00 BB/Ba3 Navient Corp., Floating Rate Note, 7/25/14 106,001
-----------
$ 205,891
-----------
Asset Management & Custody Banks - 0.5%
125,000 A+/NR Blackstone Holdings Finance Co. LLC, 6.25%, 8/15/42 (144A) $ 151,044
35,000 BBB/Baa1 Legg Mason, Inc., 5.625%, 1/15/44 38,044
25,000 4.50 BBB/Baa2 The Bank of New York Mellon Corp., Floating Rate Note (Perpetual) 23,250
-----------
$ 212,338
-----------
Investment Banking & Brokerage - 1.2%
150,000 BBB+/Baa3 Bank of America Corp., 6.11%, 1/29/37 $ 173,046
75,000 BBB/A3 Macquarie Group, Ltd., 6.0%, 1/14/20 (144A) 84,963
85,000 BBB+/Baa3 Morgan Stanley, 4.1%, 5/22/23 86,225
60,000 A-/Baa2 Morgan Stanley, 5.5%, 1/26/20 68,674
75,000 BBB/Baa2 Raymond James Financial, Inc., 4.25%, 4/15/16 79,215
-----------
$ 492,123
-----------
Total Diversified Financials $ 1,814,080
-----------
Insurance - 3.2%
Insurance Brokers - 0.2%
85,000 BBB/Baa3 Ironshore Holdings US, Inc., 8.5%, 5/15/20 (144A) $ 101,027
-----------
Life & Health Insurance - 1.4%
55,000 BBB+/NR Delphi Financial Group, Inc., 7.875%, 1/31/20 $ 66,754
50,000 BBB/Baa2 MetLife, Inc., 10.75%, 8/1/69 79,438
110,000 A-/Baa2 Protective Life Corp., 7.375%, 10/15/19 136,104
50,000 5.62 BBB+/Baa2 Prudential Financial, Inc., Floating Rate Note, 6/15/43 53,484
50,000 8.88 BBB+/Baa2 Prudential Financial, Inc., Floating Rate Note, 6/15/68 61,315
50,000 5.88 BBB+/Baa2 Prudential Financial, Inc., Floating Rate Note, 9/15/42 54,312
100,000 BBB/Baa2 Unum Group, 5.75%, 8/15/42 116,462
-----------
$ 567,869
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Multi-line Insurance - 0.3%
85,000 BBB/A3 AXA SA, 8.6%, 12/15/30 $ 114,219
-----------
Property & Casualty Insurance - 0.6%
75,000 BBB-/Baa3 Fidelity National Financial, Inc., 5.5%, 9/1/22 $ 81,857
50,000 BBB-/Baa2 OneBeacon US Holdings, Inc., 4.6%, 11/9/22 51,622
25,000 BBB-/Baa3 The Hanover Insurance Group, Inc., 7.5%, 3/1/20 29,869
59,000 BBB-/Baa3 The Hanover Insurance Group, Inc., 7.625%, 10/15/25 72,191
-----------
$ 235,539
-----------
Reinsurance - 0.7%
60,000 BBB/NR Montpelier Re Holdings, Ltd., 4.7%, 10/15/22 $ 62,009
61,000 BBB/NR Platinum Underwriters Finance, Inc., 7.5%, 6/1/17 70,026
105,000 7.51 BB+/Ba2 Sirius International Group, Ltd., Floating Rate Note (Perpetual) (144A) 110,250
30,000 5.88 NR/NR Wilton Re Finance LLC, Floating Rate Note, 3/30/33 (144A) 31,275
-----------
$ 273,560
-----------
Total Insurance $ 1,292,214
-----------
Real Estate - 1.3%
Diversified REIT - 0.2%
35,000 BBB-/Baa2 DCT Industrial Operating Partnership LP, 4.5%, 10/15/23 $ 36,058
20,000 BBB/Baa2 Digital Realty Trust LP, 5.875%, 2/1/20 22,228
40,000 BBB-/Baa2 WP Carey, Inc., 4.6%, 4/1/24 41,571
-----------
$ 99,857
-----------
Office REIT - 0.7%
20,000 BBB-/Baa2 Alexandria Real Estate Equities, Inc., 4.6%, 4/1/22 $ 21,147
20,000 BBB/Baa3 BioMed Realty LP, 4.25%, 7/15/22 20,621
35,000 BBB-/Baa3 Corporate Office Properties LP, 3.6%, 5/15/23 33,467
95,000 BB/Ba1 DuPont Fabros Technology LP, 5.875%, 9/15/21 99,275
50,000 BBB/Baa2 Highwoods Realty LP, 3.625%, 1/15/23 49,381
60,000 BBB/Baa2 Piedmont Operating Partnership LP, 3.4%, 6/1/23 57,036
-----------
$ 280,927
-----------
Specialized REIT - 0.4%
15,000 BBB-/Baa3 CubeSmart LP, 4.8%, 7/15/22 $ 16,143
25,000 BBB/Baa2 Health Care Real Estate Investment Trust, Inc., 4.5%, 1/15/24 26,342
40,000 BBB-/Baa2 Hospitality Properties Trust, 5.0%, 8/15/22 42,317
65,000 BBB-/Baa3 Senior Housing Properties Trust, 6.75%, 4/15/20 75,094
-----------
$ 159,896
-----------
Total Real Estate $ 540,680
-----------
Software & Services - 0.2%
Data Processing & Outsourced Services - 0.1%
50,000 BB-/Ba2 Audatex North America, Inc., 6.0%, 6/15/21 (144A) $ 53,375
-----------
Home Entertainment Software - 0.1%
25,000 BB+/Ba2 Activision Blizzard, Inc., 5.625%, 9/15/21 (144A) $ 26,938
-----------
Total Software & Services $ 80,313
-----------
Technology Hardware & Equipment - 0.8%
Communications Equipment - 0.1%
50,000 BB+/Ba3 Brocade Communications Systems, Inc., 4.625%, 1/15/23 $ 48,500
-----------
The accompanying notes are an integral part of these financial statements.
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Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Computer Storage & Peripherals - 0.3%
100,000 BBB-/Ba1 Seagate HDD Cayman, 4.75%, 6/1/23 (144A) $ 100,750
-----------
Electronic Equipment Manufacturers - 0.1%
50,000 B+/B1 Viasystems, Inc., 7.875%, 5/1/19 (144A) $ 52,875
-----------
Electronic Manufacturing Services - 0.3%
100,000 BB+/Ba1 Flextronics International, Ltd., 5.0%, 2/15/23 $ 103,500
-----------
Total Technology Hardware & Equipment $ 305,625
-----------
Telecommunication Services - 2.7%
Integrated Telecommunication Services - 1.9%
50,000 BB/Ba2 CenturyLink, Inc., 6.45%, 6/15/21 $ 54,250
50,000 BB/Ba2 CenturyLink, Inc., 7.6%, 9/15/39 50,188
81,000 B/B3 Cincinnati Bell, Inc., 8.375%, 10/15/20 88,796
125,000 BB-/Ba2 Frontier Communications Corp., 8.5%, 4/15/20 147,500
60,000 NR/Ba3 GTP Acquisition Partners I LLC, 7.628%, 6/15/16 (144A) 63,619
40,000 NR/A2 GTP Towers Issuer LLC, 4.436%, 2/15/15 (144A) 40,650
75,000 BBB/Baa2 Telefonica Emisiones SAU, 6.221%, 7/3/17 84,873
25,000 NR/NR Unison Ground Lease Funding LLC, 2.981%, 3/15/20 (144A) 25,207
90,000 BBB+/Baa1 Verizon Communications, Inc., 6.55%, 9/15/43 113,260
80,000 B/B1 Windstream Corp., 6.375%, 8/1/23 81,100
25,000 B/B1 Windstream Corp., 7.75%, 10/15/20 27,094
-----------
$ 776,537
-----------
Wireless Telecommunication Services - 0.8%
40,000 BB/Ba3 T-Mobile USA, Inc., 6.125%, 1/15/22 $ 42,450
200,000 BB/Ba3 VimpelCom Holdings BV, 7.5043%, 3/1/22 (144A) 215,750
50,000 NR/NR WCP Wireless Site Funding, 6.829%, 11/15/15 (144A) 52,099
-----------
$ 310,299
-----------
Total Telecommunication Services $ 1,086,836
-----------
Utilities - 1.5%
Electric Utilities - 1.0%
100,000 NR/Baa2 Dubai Electricity & Water Authority, 8.5%, 4/22/15 (144A) $ 106,000
125,000 A+/Aa3 Electricite de France SA, 6.0%, 1/22/14 (144A) 141,158
50,000 6.25 BBB-/Baa1 Southern California Edison Co., Floating Rate Note (Perpetual) 54,250
83,000 BBB+/A3 West Penn Power Co., 5.95%, 12/15/17 (144A) 93,810
-----------
$ 395,218
-----------
Multi-Utilities - 0.2%
92,543 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 $ 92,080
-----------
Independent Power Producers & Energy Traders - 0.3%
82,920 BBB-/NR Alta Wind Holdings LLC, 7.0%, 6/30/35 (144A) $ 91,974
2,726 NR/NR Juniper Generation LLC, 6.79%, 12/31/14 (144A) 2,680
-----------
$ 94,654
-----------
Total Utilities $ 581,952
-----------
TOTAL CORPORATE BONDS
(Cost $12,841,691) $13,781,420
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 25.4%
500,000 AAA/Aaa Fannie Mae, 30YR Pool, 4.0%, TBA $ 530,625
1,000,000 AAA/Aaa Fannie Mae, 30YR Pool, 4.5%, TBA 1,082,969
1,500,000 AAA/Aaa Fannie Mae, 30YR Pool 5.0%, TBA 1,665,706
1,000,000 AAA/Aaa Fannie Mae Pool, 5.0%, 5/25/40 1,111,202
934,917 AAA/Aaa Fannie Mae, 3.5%, 12/1/42-5/1/44 963,942
114,394 AAA/Aaa Fannie Mae, 4.0%, 11/1/41-11/1/43 121,609
92,538 NR/NR Fannie Mae, 4.0%, 12/1/41-11/1/43 98,390
297,506 AA+/Aaa Fannie Mae, 4.5%, 3/1/35-12/1/43 322,882
308,214 NR/NR Fannie Mae, 6.0%, 3/1/32-6/1/40 342,519
729 AAA/Aaa Fannie Mae, 6.5%, 7/1/31-2/1/32 823
176 AAA/Aaa Fannie Mae, 7.0%, 9/1/29 198
106,395 AA+/Aaa Federal Home Loan Mortgage Corp., 3.5%, 11/1/28-10/1/40 111,266
297,198 NR/NR Federal Home Loan Mortgage Corp., 4.0%, 1/1/44-5/1/44 315,275
90,180 AA+/Aaa Federal Home Loan Mortgage Corp., 5.0%, 5/1/34-11/1/39 100,106
481 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 510
89,603 NR/NR Federal National Mortgage Association, 4.0%, 12/1/19 95,222
198,698 NR/NR Government National Mortgage Association I, 4.0%,
7/21/14-8/15/43 212,693
434,625 NR/NR Government National Mortgage Association I, 4.5%,
9/15/33-7/15/41 474,627
8,051 AA+/Aaa Government National Mortgage Association I, 5.0%, 4/15/35 8,992
74,445 AA+/Aaa Government National Mortgage Association I, 5.5%,
1/15/34-11/15/35 83,925
49,335 AAA/Aaa Government National Mortgage Association I, 6.0%,
5/15/17-10/15/33 55,785
6,672 AAA/Aaa Government National Mortgage Association I, 6.5%,
3/15/29-11/15/32 7,675
179 AA+/Aaa Government National Mortgage Association I, 7.0%, 3/15/31 202
35,873 AAA/Aaa Government National Mortgage Association II, 4.5%, 9/20/41 39,244
7,669 AA+/Aaa Government National Mortgage Association II, 5.5%, 3/20/34 8,630
13,023 AAA/Aaa Government National Mortgage Association II, 6.0%, 11/20/33 15,061
150,000 AA+/Aaa U.S. Treasury Bonds, 4.375%, 2/15/38 179,086
500,000 AA+/Aaa U.S. Treasury Bonds, 4.5%, 5/15/38 607,969
500,000 AA+/Aaa U.S. Treasury Bonds, 4.5%, 8/15/39 609,453
25,000 AA+/Aaa U.S. Treasury Bonds, 6.25%, 8/15/23 32,977
1,000,000 AA+/Aaa U.S. Treasury Notes, 2.0%, 2/15/22 984,453
-----------
$10,184,016
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $9,955,825) $10,184,016
-----------
FOREIGN GOVERNMENT BONDS - 6.9%
GHS 100,000 NR/B2 Ghana Government Bond, 19.24%, 5/30/16 $ 27,586
GHS 50,000 NR/NR Ghana Government Bond, 26.0%, 6/5/17 15,364
IDR 171,000,000 NR/Baa3 Indonesia Treasury Bond, 6.125%, 5/15/28 11,395
IDR 155,000,000 NR/Baa3 Indonesia Treasury Bond, 7.0%, 5/15/22 12,159
IDR 150,000,000 NR/Baa3 Indonesia Treasury Bond, 7.0%, 5/15/27 11,135
IDR 893,000,000 NR/Baa3 Indonesia Treasury Bond, 8.25%, 6/15/32 70,807
IDR 550,000,000 NR/Aaa Inter-American Development Bank, 4.5%, 2/4/16 44,654
The accompanying notes are an integral part of these financial statements.
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
FOREIGN GOVERNMENT BONDS - (continued)
BRL 250,000 AAA/Aaa International Finance Corp., 5.0%, 12/21/15 $ 105,616
INR 5,670,000 NR/Aaa International Finance Corp., 7.75%, 12/3/16 95,328
EURO 80,000 A-/Baa1 Ireland Government Bond, 5.0%, 10/18/20 133,660
200,000 B+/NR Kenya Government International Bond, 5.875%, 6/24/19 (144A) 204,100
200,000 NR/NR Kenya Government International Bond, 6.875%, 6/24/24 (144A) 208,000
MXN 550,000 A/A3 Mexican Bonos, 6.5%, 6/9/22 44,999
MXN 520,000 A/A3 Mexican Bonos, 7.5%, 6/3/27 45,406
MXN 2,565,695 A/A3 Mexican Udibonos, 2.0%, 6/9/22 196,774
MXN 1,539,417 A/A3 Mexican Udibonos, 3.5%, 12/14/17 129,820
NGN 14,000,000 B+/Ba3 Nigeria Government Bond, 16.0%, 6/29/19 100,407
NOK 750,000 AAA/Aaa Norway Government Bond, 2.0%, 5/24/23 118,804
NOK 1,200,000 AAA/Aaa Norway Government Bond, 4.25%, 5/19/17 210,932
NOK 1,250,000 AAA/Aaa Norway Government Bond, 4.5%, 5/22/19 229,916
NOK 1,700,000 AAA/Aaa Norway Government Bond, 5.0%, 5/15/15 285,895
PLN 125,000 A/A2 Poland Government Bond, 5.5%, 4/25/15 42,183
50,000 A-/A2 Poland Government International Bond, 4.0%, 1/22/24 51,875
100,000 CCC-/Caa2 Provincia de Buenos Aires Argentina, 10.875%, 1/26/21 (144A) 95,500
AUD 50,000 AA+/Aa1 Queensland Treasury Corp., 5.75%, 7/22/24 53,948
RON 440,000 BBB-/NR Romania Government Bond, 5.85%, 4/26/23 152,160
RON 150,000 BB+/Baa3 Romania Government Bond, 5.95%, 6/11/21 52,542
TRY 50,000 NR/NR Turkey Government Bond, 10.5%, 1/15/20 25,641
-----------
$ 2,776,606
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $2,873,805) $ 2,776,606
-----------
MUNICIPAL BONDS - 3.9%
Municipal Development - 1.0%
60,000 5.90 BBB/NR Brazos Harbor Industrial Development Corp., Floating Rate
Note, 5/1/38 $ 64,677
65,000 BBB/Baa3 Louisiana Local Government Environmental Facilities &
Community Development Authority, 6.75%, 11/1/32 72,439
100,000 AA/A2 New Jersey Economic Development Authority, 0.0%, 2/15/18 (e) 92,049
70,000 BBB/Baa1 Parish of St. John the Baptist Louisiana, 5.125%, 6/1/37 73,327
60,000 BB-/B1 Port of Corpus Christi Authority of Nueces County, 6.7%, 11/1/30 60,089
50,000 BBB/NR Selma Industrial Development Board, 6.25%, 11/1/33 56,663
-----------
$ 419,244
-----------
Municipal Education - 0.0%+
10,000 AA+/Aaa Amherst College, 3.794%, 11/1/42 $ 9,132
-----------
Municipal General - 1.1%
90,000 AA/A2 JobsOhio Beverage System, 3.985%, 1/1/29 $ 90,730
25,000 AA/A2 JobsOhio Beverage System, 4.532%, 1/1/35 25,872
75,000 A/A2 New Jersey Transportation Trust Fund Authority, 5.5%, 6/15/41 83,214
25,000 AAA/Aa1 New York City Transitional Finance Authority Future Tax
Secured Revenue, 5.0%, 11/1/33 28,431
40,000 AAA/Aa1 New York State Dormitory Authority, 5.0%, 12/15/30 45,680
66,000 AA-/Aa3 State of Wisconsin, 5.75%, 5/1/33 76,245
25,000 BBB/A3 Texas Municipal Gas Acquisition & Supply Corp. III, 5.0%, 12/15/30 26,686
50,000 BBB/A3 Texas Municipal Gas Acquisition & Supply Corp. III, 5.0%, 12/15/31 53,078
-----------
$ 429,936
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Higher Municipal Education - 0.9%
25,000 A+/NR Baylor University, 4.313%, 3/1/42 $ 24,254
45,000 AAA/Aaa California Educational Facilities Authority, 5.0%, 6/1/43 57,214
50,000 AAA/Aaa Houston Higher Education Finance Corp., 5.0%, 5/15/40 55,849
30,000 AAA/Aaa Massachusetts Development Finance Agency, 5.0%, 10/15/40 34,230
30,000 AAA/Aaa Massachusetts Health & Educational Facilities Authority,
6.0%, 7/1/36 35,431
25,000 AAA/Aaa Massachusetts Institute of Technology, 5.6%, 7/1/11 31,372
25,000 AAA/Aaa Permanent University Fund, 5.0%, 7/1/30 29,942
40,000 A+/A1 The George Washington University, 1.827%, 9/15/17 39,940
50,000 AA/Aa2 University of California, 3.38%, 5/15/28 47,182
-----------
$ 355,414
-----------
Municipal Medical - 0.3%
50,000 AA/Aa2 Maryland Health & Higher Educational Facilities Authority,
5.0%, 7/1/41 $ 55,380
25,000 AA-/A1 Massachusetts Development Finance Agency, 5.375%, 4/1/41 27,457
50,000 A/NR New Hampshire Health and Education Facilities Authority
Act, 6.5%, 1/1/41 56,062
-----------
$ 138,899
-----------
Municipal Pollution - 0.4%
135,000 5.95 BBB/NR Port Freeport Texas, Floating Rate Note, 5/15/33 $ 147,951
-----------
Municipal School District - 0.1%
20,000 AAA/Aaa North East Independent School District Texas, 5.25%, 2/1/31 $ 25,156
-----------
Municipal Transportation - 0.0%+
15,000 AA-/Aa3 Port Authority of New York & New Jersey, 4.458%, 10/1/62 $ 15,289
-----------
Municipal Obligation - 0.1%
20,000 AA+/Aa1 State of Washington, 3.0%, 7/1/28 $ 19,950
-----------
TOTAL MUNICIPAL BONDS
(Cost $1,444,428) $ 1,560,971
-----------
SENIOR FLOATING RATE LOAN INTERESTS - 8.8%**
Energy - 0.7%
Oil & Gas Exploration & Production - 0.6%
115,000 0.00 NR/NR American Energy Partners, Inc., Bridge Loan, 6/17/15 $ 115,000
30,000 8.38 B-/B2 Fieldwood Energy LLC, Closing Date Loan (Second Lien), 9/30/20 31,023
100,000 5.00 B/B1 Samson Investment Co., Tranche 1 Term Loan (Second Lien), 9/25/18 100,205
-----------
$ 246,228
-----------
Coal & Consumable Fuels - 0.1%
78,333 18.15 NR/NR Bumi Resources Tbk PT, Term Loan, 8/15/13 $ 47,000
-----------
Total Energy $ 293,228
-----------
Materials - 0.5%
Specialty Chemicals - 0.2%
74,063 3.23 BB-/B1 Axalta Coating Systems US Holdings, Inc., Refinanced Term B
Loan, 2/1/20 $ 74,197
-----------
Aluminum - 0.1%
39,100 5.75 B/B2 Noranda Aluminum Acquisition Corp., Term B Loan, 2/28/19 $ 37,732
-----------
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Paper Products - 0.2%
99,250 5.75 B+/Ba2 Appvion, Inc., Term Commitment, 6/28/19 $ 100,150
-----------
Total Materials $ 212,079
-----------
Capital Goods - 0.1%
Trading Companies & Distributors - 0.1%
24,964 3.75 BB/Ba3 WESCO Distribution, Inc., Tranche B-1 Loan, 12/12/19 $ 25,017
-----------
Total Capital Goods $ 25,017
-----------
Commercial Services & Supplies - 0.5%
Diversified Commercial & Prof Svc - 0.3%
104,775 3.75 NR/Ba2 Seven Seas Cruises S de RL LLC, Term B2 Loan, 12/21/18 $ 104,841
-----------
Security & Alarm Services - 0.1%
34,216 4.25 B/Ba3 Monitronics International, Inc., Term B Loan, 3/23/18 $ 34,334
-----------
Research & Consulting Services - 0.1%
49,562 5.00 BB/B1 Wyle Services Corp., 1st Lien Term Loan, 5/22/21 $ 49,655
-----------
Total Commercial Services & Supplies $ 188,830
-----------
Transportation - 0.1%
Trucking - 0.1%
19,450 3.75 BB-/Baa2 Swift Transportation Co., LLC, Tranche B Loan, 6/9/21 $ 19,517
-----------
Total Transportation $ 19,517
-----------
Automobiles & Components - 0.9%
Auto Parts & Equipment - 0.5%
39,204 5.50 NR/NR TI Group Automotive Systems LLC, Additional Term Loan, 3/27/19 $ 39,399
153,455 3.23 BB-/B1 Tower Automotive Holdings USA LLC, Refinancing Term Loan, 4/23/20 153,423
-----------
$ 192,822
-----------
Automobile Manufacturers - 0.4%
145,500 3.50 BB+/Ba1 Chrysler Group LLC, Term Loan B, 5/24/17 $ 146,254
-----------
Total Automobiles & Components $ 339,076
-----------
Consumer Durables & Apparel - 0.1%
Apparel, Accessories & Luxury Goods - 0.1%
55,031 3.25 BBB-/Ba1 PVH Corp., Tranche B Term Loan, 12/19/19 $ 55,489
-----------
Total Consumer Durables & Apparel $ 55,489
-----------
Consumer Services - 1.0%
Casinos & Gaming - 0.5%
128,050 3.50 BB/Ba2 MGM Resorts International, Term B Loan, 12/20/19 $ 127,842
63,922 3.75 BB+/Ba2 Pinnacle Entertainment, Inc., Tranche B-2 Term Loan, 8/13/20 64,109
-----------
$ 191,951
-----------
Leisure Facilities - 0.2%
66,681 3.50 BB+/Ba2 Six Flags Theme Parks, Inc., Tranche B Term Loan, 12/20/18 $ 66,920
-----------
Restaurants - 0.3%
112,988 3.75 BB/Ba3 Burger King Corp., Tranche B Term Loan (2012), 9/28/19 $ 113,544
24,058 3.25 BB-/B1 Wendy's International, Inc., Term B Loan, 5/15/19 24,128
-----------
$ 137,672
-----------
Total Consumer Services $ 396,543
-----------
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Media - 0.9%
Cable & Satellite - 0.7%
49,500 3.25 BB/Ba3 MCC Iowa LLC, Tranche H Term Loan, 1/29/21 $ 49,035
73,507 3.50 BB/Ba3 Telesat Canada, U.S. Term B Loan, 3/28/19 73,498
175,000 3.50 BB-/Ba3 Virgin Media Investment Holdings, Ltd., New Term B Loan, 2/6/20 174,552
-----------
$ 297,085
-----------
Movies & Entertainment - 0.1%
17,472 0.00 NR/NR Rovi Solutions Corp., Term B Loan, 7/2/21 $ 17,521
26,350 3.50 BB-/Ba2 Rovi Solutions Corp., Tranche B-3 Term Loan, 3/29/19 26,194
-----------
$ 43,715
-----------
Publishing - 0.1%
23,455 4.75 B+/B2 Interactive Data Corp., Term Loan, 4/24/21 $ 23,685
-----------
Total Media $ 364,485
-----------
Household & Personal Products - 0.2%
Personal Products - 0.2%
87,606 4.75 B/B1 Federal Mogul Corp., Tranche C Term Loan, 4/15/21 $ 87,752
-----------
Total Household & Personal Products $ 87,752
-----------
Health Care Equipment & Services - 1.1%
Health Care Services - 0.6%
79,200 4.00 B/B2 Surgical Care Affiliates LLC, Class C Incremental Term Loan, 6/29/18 $ 79,075
241,250 7.25 NR/NR Virtual Radiologic Corp., Term Loan A, 12/22/16 176,112
-----------
$ 255,187
-----------
Health Care Facilities - 0.4%
50,000 1.75 B-/B3 Amsurg Corp., Bridge Loan, 5/29/15 $ 50,250
31,169 3.48 BB/Ba2 CHS, 2017 Term E Loan, 1/25/17 31,281
83,075 4.25 BB/Ba2 CHS, 2021 Term D Loan, 1/27/21 83,692
-----------
$ 165,223
-----------
Managed Health Care - 0.1%
19,398 9.75 B+/B2 MMM Holdings, Inc., Term Loan, 10/9/17 $ 19,568
14,103 9.75 B+/B2 MSO of Puerto Rico, Inc., MSO Term Loan, 12/12/17 14,226
-----------
$ 33,794
-----------
Total Health Care Equipment & Services $ 454,204
-----------
Pharmaceuticals, Biotechnology & Life
Sciences - 0.7%
Pharmaceuticals - 0.7%
99,750 3.23 BB/Ba1 Grifols Worldwide Operations USA, Inc., U.S. Tranche B Term
Loam, 4/1/21 $ 99,756
97,770 4.00 B/B1 Par Pharmaceutical Companies, Inc., Term B-2 Loan, 9/28/19 97,931
91,727 3.75 BB/Ba1 Valeant Pharmaceuticals International, Inc., Series E1 Tranche B
Term Loan, 8/5/20 91,761
-----------
$ 289,448
-----------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 289,448
-----------
Banks - 0.4%
Thrifts & Mortgage Finance - 0.4%
172,813 5.00 B+/B1 Ocwen Financial Corp., Initial Term Loan, 1/15/18 $ 173,798
-----------
Total Banks $ 173,798
-----------
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
[Enlarge/Download Table]
Principal Floating S&P/Moody's
Amount ($) Rate (b) Ratings Value
Diversified Financials - 0.5%
Specialized Finance - 0.5%
197,010 4.25 B/B1 Mirror BidCo Corp., New Incremental Term Loan, 12/18/19 $ 197,338
-----------
Total Diversified Financials $ 197,338
-----------
Insurance - 0.9%
Insurance Brokers - 0.4%
147,758 4.25 NR/B1 USI Insurance Services LLC, Term B Loan, 12/30/19 $ 148,159
-----------
Life & Health Insurance - 0.2%
92,470 3.75 BB/Ba2 CNO Financial Group, Inc., Tranche B2 Term Loan, 9/4/18 $ 92,643
-----------
Property & Casualty Insurance - 0.3%
102,338 5.75 B/B2 Confie seguros Holding II Co., Term B Loan (First Lien), 11/9/18 $ 102,754
-----------
Total Insurance $ 343,556
-----------
Telecommunication Services - 0.2%
Integrated Telecommunication Services - 0.2%
97,804 3.25 BB/Ba3 West Corp., B-10 Term Loan (First Lien), 6/30/18 $ 97,403
-----------
Total Telecommunication Services $ 97,403
-----------
TOTAL SENIOR FLOATING RATE LOAN INTERESTS
(Cost $3,595,009) $ 3,537,763
-----------
Shares
RIGHT / WARRANT - 0.0%+
Automobiles & Components - 0.0%+
Auto Parts & Equipment - 0.0%+
9 Lear Corp., 11/9/14 $ 1,595
-----------
TOTAL RIGHT / WARRANT
(Cost $486) $ 1,595
-----------
TOTAL INVESTMENT IN SECURITIES - 97.8%
(Cost $37,496,394) (a) $39,167,959
-----------
OTHER ASSETS & LIABILITIES - 2.2% $ 879,600
-----------
TOTAL NET ASSETS - 100.0% $40,047,559
===========
+ Amount rounds to less than 0.1%.
(Step) Bond issued with an initial coupon rate which converts to a higher
rate at a later date.
(Perpetual) Security with no stated maturity date.
(Cat Bond) Catastrophe bond is a high-yield debt instrument that is usually
insurance linked and meant to raise money in case of a catastrophe.
REIT Real Estate Investment Trust.
* Non-income producing security.
NR Not rated by either S&P or Moody'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, 2014, the value of these securities
amounted to $8,109,530 or 20.3% of total net assets.
** Senior floating rate loan interests in which the Portfolio invests
generally pay interest at rates that are periodically redetermined
by reference to a base lending rate plus a premium. These base
lending rates are generally (i) the lending rate offered by one or
more major European banks, such as LIBOR (London InterBank Offered
Rate), (ii) the prime rate offered by one or more major United
States banks, (iii) the certificate of deposit or (iv) other base
lending rates used by commercial lenders. The rate shown is the
coupon rate at period end.
TBA To-be announced.
The accompanying notes are an integral part of these financial statements.
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SCHEDULE OF INVESTMENTS 6/30/14 (UNAUDITED) (continued)
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(a) At June 30, 2014, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $37,518,405 was as follows:
[Download Table]
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $2,130,496
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (480,942)
----------
Net unrealized appreciation $1,649,554
==========
(b) Debt obligation with a variable interest rate. Rate shown is rate at end
of period.
(c) Security is in default and is non-income producing.
(d) Security is valued using fair value methods (other than prices supplied
by independent pricing services or broker-dealers). See Notes To
Financial Statements -- Note 1A.
(e) Security issued with a zero coupon. Income is recognized through
accretion of discount.
(f) Security represents the interest only portion payments on a pool of
underlying mortgages or mortgage-backed securities.
Principal amounts are denominated in U.S. Dollars unless otherwise noted:
AUD Australian Dollar
BRL Brazilian Real
EURO Euro
GHS Ghanian Cedi
IDR Indonesian Rupiah
INR Indian Rupee
MXN Mexican Peso
NGN Nigerian Naira
NOK Norwegian Krone
NZD New Zealand Dollar
PLN New Polish Zloty
RON Romanian New Leu
TRY Turkish Lira
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 2014 were as follows:
[Download Table]
Purchases Sales
Long-Term U.S. Government Securities $9,056,859 $3,055,356
Other Long-Term Securities $4,641,164 $8,260,109
CREDIT DEFAULT SWAP AGREEMENTS - BUY PROTECTION
[Enlarge/Download Table]
Notional Expiration Premiums Net Unrealized
Principal ($) Counterparty Obligation Entity/Index Coupon Date Received (Paid) Depreciation
(300,000) JP Morgan Securities LLC MARKIT CDX North America
High Yield 5.00% 6/20/19 $(22,739) $ (3,544)
-------- --------------
$(22,739) $ (3,544)
======== ==============
CREDIT DEFAULT SWAP AGREEMENTS - SELL PROTECTION
[Enlarge/Download Table]
Notional Expiration Premiums Net Unrealized
Principal ($) (1) Counterparty Obligation Entity/Index Coupon Date Received (Paid) Appreciation
100,000 JP Morgan Securities LLC American Axle & Manufacturing Co. 5.00% 12/20/17 $(3,000) $15,143
900,000 JP Morgan Securities LLC MARKIT CDX North America
Investment Grade 1.00% 12/20/17 (871) 20,287
50,000 JP Morgan Securities LLC Goodyear Tire & Rubber 5.00% 12/20/17 (1,625) 7,884
-------- -------
$(5,496) $43,314
======== =======
(1) The notional amount is the maximum amount that a seller of credit
protection would be obligated to pay upon occurrence of a credit event.
Various inputs are used in determining the value of the Portfolio's investments.
These inputs are summarized in the three broad levels listed below.
Level 1 - quoted prices in active markets for identical securities.
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.) See Notes to Financial Statements -- Note 1A.
Level 3 - significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments) See Notes to
Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans as Level 2 and securities valued using fair value methods
(other than prices supplied by independent pricing services or broker-dealers)
are categorized as Level 3. See Notes To Financial Statements -- Note 1A.
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
The following is a summary of the inputs used as of June 30, 2014, in valuing
the Portfolio's investments:
[Enlarge/Download Table]
Level 1 Level 2 Level 3 Total
Convertible Corporate Bonds
Materials
Diversified Metals & Mining $ -- $ 102,750 $ 25,000 $ 127,750
All Other Convertible Corporate Bonds -- 1,184,592 -- 1,184,592
Preferred Stocks
Banks
Regional Banks 45,526 104,094 -- 149,620
Diversified Financials
Consumer Finance -- 30,226 -- 30,226
Insurance
Reinsurance -- -- 72,889 72,889
All Other Preferred Stocks 766,234 -- -- 766,234
Convertible Preferred Stocks
Diversified Financials
Asset Management & Custody Banks -- 63,062 -- 63,062
All Other Convertible Preferred Stocks 303,241 -- -- 303,241
Common Stock
Materials
Diversified Metals & Mining 6,591 -- -- 6,591
Real Estate
Real Estate Development -- 242,626 -- 242,626
Asset Backed Securities -- 1,224,100 -- 1,224,100
Collateralized Mortgage Obligations -- 3,154,657 -- 3,154,657
Corporate Bonds -- 13,781,420 -- 13,781,420
U.S. Government Agency Obligations -- 10,184,016 -- 10,184,016
Foreign Government Bonds -- 2,776,606 -- 2,776,606
Municipal Bonds -- 1,560,971 -- 1,560,971
Senior Floating Rate Loan Interests -- 3,537,763 -- 3,537,763
Rights/Warrants 1,595 -- -- 1,595
---------------- ----------- -------- -----------
Total $ 1,123,187 $37,946,883 $ 97,889 $39,167,959
================ =========== ======== ===========
Other Financial Instruments
Net unrealized Appreciation on Swap Contracts $ -- $ 39,770 $ -- $ 39,770
Net unrealized Appreciation on Futures Contracts 33,930 -- -- 33,930
Net unrealized Depreciation on Forward Foreign
Currency Contracts -- (3,916) -- (3,916)
---------------- ----------- -------- -----------
Total Other Financial Instruments $ 33,930 $ 35,854 $ -- $ 69,784
================ =========== ======== ===========
The following is a reconciliation of assets valued using significant observable
inputs (Level 3):
[Enlarge/Download Table]
Convertible
Preferred Corporate
Stocks Bonds Total
Balance as of 12/31/13 $138,746 $ -- $138,746
Realized gain (loss)(1) 5,092 -- 5,092
Change in unrealized appreciation (depreciation)(2) (2,623) -- (2,623)
Purchases 19,930 25,000 44,930
Sales (88,256) -- (88,256)
Transfers in to Level 3* -- -- --
Transfers out of Level 3* -- -- --
-------- -------- --------
Balance as of 6/30/14 $ 72,889 $ 25,000 $ 97,889
======== ======== ========
(1) Realized gain (loss) on these securities is included in the net realized
gain (loss) from investments in the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized appreciation (depreciation) on investments in the
Statement of Operations.
* Transfers are calculated on the beginning of period values.
During the six months ended June 30, 2014, there were no transfers between
Levels 1, 2 and 3.
[Download Table]
Net change in unrealized appreciation (depreciation) of investments still
held as of 6/30/14 $(2,623)
--------
The accompanying notes are an integral part of these financial statements.
29
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--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class I
Net asset value, beginning of period $ 10.37 $ 10.76 $ 10.24 $ 10.63 $ 10.07 $ 8.91
---------- -------- --------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.18 $ 0.43 $ 0.48 $ 0.63 $ 0.55 $ 0.61(a)
Net realized and unrealized gain (loss) on
investments, futures contracts and foreign
currency transactions 0.34 (0.31) 0.67 (0.43) 0.59 1.85
---------- -------- --------- -------- ------- -------
Net increase (decrease) from investment operations $ 0.52 $ 0.12 $ 1.15 $ 0.20 $ 1.14 $ 2.46
Distributions to shareholders:
Net investment income $ (0.20) $ (0.45) $ (0.53) $ (0.54) $ (0.58) $ (0.78)
Net realized gain (0.12) (0.06) (0.10) (0.05) -- (0.52)
---------- -------- --------- -------- ------- -------
Total distributions $ (0.32) $ (0.51) $ (0.63) $ (0.59) $ (0.58) $ (1.30)
---------- -------- --------- -------- ------- -------
Net increase (decrease) in net asset value $ 0.20 $ (0.39) $ 0.52 $ (0.39) $ 0.56 $ 1.16
---------- -------- --------- -------- ------- -------
Net asset value, end of period $ 10.57 $ 10.37 $ 10.76 $ 10.24 $ 10.63 $ 10.07
========== ======== ========= ======== ======= =======
Total return* 5.02% 1.17% 11.43% 1.90%(b) 11.61% 29.73%
Ratio of net expenses to average net assets 1.22%** 1.23% 1.27% 1.22% 1.23% 1.28%
Ratio of net investment income to average net assets 3.49%** 3.97% 4.24% 5.30% 5.25% 6.43%
Portfolio turnover rate 61%** 30% 25% 43% 92% 71%
Net assets, end of period (in thousands) $ 10,457 $ 10,243 $ 10,931 $ 11,312 $15,494 $15,096
(a) Net investment income per share has been calculated using the average
shares method.
(b) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2011, the total return would
have been 1.83%.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
Class II
Net asset value, beginning of period $ 10.35 $ 10.74 $ 10.22 $ 10.62 $ 10.06 $ 8.92
---------- --------- --------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.17 $ 0.37 $ 0.36 $ 0.52 $ 0.48 $ 0.61(a)
Net realized and unrealized gain (loss) on
investments, futures contracts and foreign
currency transactions 0.33 (0.27) 0.76 (0.35) 0.64 1.82
---------- --------- --------- -------- ------- -------
Net increase (decrease) from investment operations $ 0.50 $ 0.10 $ 1.12 $ 0.17 $ 1.12 $ 2.43
Distributions to shareholders:
Net investment income $ (0.19) $ (0.43) $ (0.50) $ (0.52) $ (0.56) $ (0.77)
Net realized gain (0.12) (0.06) (0.10) (0.05) -- (0.52)
---------- --------- --------- -------- ------- -------
Total distributions $ (0.31) $ (0.49) $ (0.60) $ (0.57) $ (0.56) $ (1.29)
---------- --------- --------- -------- ------- -------
Net increase (decrease) in net asset value $ 0.19 $ (0.39) $ 0.52 $ (0.40) $ 0.56 $ 1.14
---------- --------- --------- -------- ------- -------
Net asset value, end of period $ 10.54 $ 10.35 $ 10.74 $ 10.22 $ 10.62 $ 10.06
========== ========= ========= ======== ======== =======
Total return* 4.80% 0.92% 11.18% 1.56%(b) 11.37% 29.35%
Ratio of net expenses to average net assets 1.46%** 1.47% 1.53% 1.47% 1.47% 1.32%
Ratio of net investment income to average net assets 3.24%** 3.74% 3.92% 5.06% 4.96% 6.65%
Portfolio turnover rate 61%** 30% 25% 43% 92% 71%
Net assets, end of period (in thousands) $ 29,590 $ 28,261 $ 25,265 $ 16,511 $16,315 $13,438
(a) Net investment income per share has been calculated using the average
shares method.
(b) If the Portfolio had not recognized gains in settlement of class action
lawsuits during the year ended December 31, 2011, the total return would
have been 1.50%.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of
non-portfolio expenses associated with variable insurance products, such
as mortality and expense risk charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
31
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--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
[Enlarge/Download Table]
ASSETS:
Investment in securities (cost $37,496,394) $39,167,959
Cash 4,817,051
Futures Collateral 81,450
Foreign currencies, at value (cost $162,497) 156,778
Receivables --
Investment securities sold 237,538
Portfolio shares sold 34,442
Dividends 8,576
Interest 321,786
Net unrealized appreciation in futures contracts 33,930
Net unrealized appreciation on swap contracts 39,770
Other assets 7,980
-----------
Total assets $44,907,260
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 4,747,657
Portfolio shares repurchased 19,857
Trustee fees 4
Variation margin 5,367
Credit default swaps, premiums paid 28,235
Net unrealized depreciation on forward foreign currency contracts 3,916
Due to affiliates 4,322
Accrued expenses 50,343
-----------
Total liabilities $ 4,859,701
-----------
NET ASSETS:
Paid-in capital $37,897,039
Undistributed net investment income 382,109
Accumulated net realized gain on investments, foreign currency
transactions, swap contracts and futures contracts 33,216
Net unrealized appreciation on investments 1,671,565
Net unrealized depreciation on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies (10,070)
Net unrealized appreciation on futures contracts 33,930
Net unrealized appreciation on swap contracts 39,770
-----------
Total net assets $40,047,559
-----------
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class I (based on $10,457,147/989,791 shares) $ 10.57
===========
Class II (based on $29,590,412/2,806,851 shares) $ 10.54
===========
The accompanying notes are an integral part of these financial statements.
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--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
For the Six Months Ended 6/30/14
[Enlarge/Download Table]
INVESTMENT INCOME:
Interest (net of foreign taxes withheld of $261) $ 868,066
Dividends 45,315
----------
Total investment income $ 913,381
----------
EXPENSES:
Management fees $ 126,088
Transfer agent fees
Class I 750
Class II 750
Distribution fees
Class II 35,765
Administrative reimbursements 14,930
Custodian fees 26,514
Professional fees 24,666
Printing expense 14,689
Fees and expenses of nonaffiliated trustees 3,252
Pricing fees 20,771
Miscellaneous 3,425
----------
Total expenses $ 271,600
----------
Net investment income $ 641,781
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS, FOREIGN CURRENCY TRANSACTIONS
AND SWAP CONTRACTS:
Net realized gain (loss) on:
Investments $ 252,748
Swap contracts 11,824
Futures contracts (121,051)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (27,010) $ 116,511
---------- ----------
Change in net unrealized appreciation (depreciation) on:
Investments $1,139,167
Futures contracts (49,293)
Swap contracts (15,115)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 7,261 $1,082,020
---------- ----------
Net gain on investments, futures contracts, foreign currency transactions
and swap contracts $1,198,531
----------
Net increase in net assets resulting from operations $1,840,312
==========
The accompanying notes are an integral part of these financial statements.
33
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
Six Months
Ended
6/30/14 Year Ended
(unaudited) 12/31/13
FROM OPERATIONS:
Net investment income $ 641,781 $ 1,425,331
Net realized gain on investments, futures contracts, swap contracts
and foreign currency transactions 116,511 276,189
Change in net unrealized appreciation (depreciation) on investments, futures
contracts.
swap contracts and foreign currency transactions 1,082,020 (1,341,841)
------------ ------------
Net increase in net assets resulting from operations $ 1,840,312 $ 359,679
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I ($0.20 and $0.45 per share, respectively) $ (195,826) $ (437,208)
Class II ($0.19 and $0.43 per share, respectively) (514,589) (1,098,722)
Net realized gain:
Class I ($0.12 and $0.06 per share, respectively) (112,033) (57,933)
Class II ($0.12 and $0.06 per share, respectively) (319,062) (156,127)
------------ ------------
Total distributions to shareowners $ (1,141,510) $ (1,749,990)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 4,967,138 $ 15,316,196
Reinvestment of distributions 1,141,510 1,749,990
Cost of shares repurchased (5,264,631) (13,366,875)
------------ ------------
Net increase in net assets resulting from
Portfolio share transactions $ 844,017 $ 3,699,311
------------ ------------
Net increase in net assets $ 1,542,819 $ 2,309,000
NET ASSETS:
Beginning of period $ 38,504,740 $ 36,195,740
------------ ------------
End of period $ 40,047,559 $ 38,504,740
============ ============
Undistributed net investment income $ 382,109 $ 450,743
============ ============
[Enlarge/Download Table]
'14 Shares '14 Amount
(unaudited) (unaudited) '13 Shares '13 Amount
CLASS I
Shares sold 58,752 $ 623,111 132,301 $ 1,384,687
Reinvestment of distributions 29,191 307,859 46,964 495,141
Less shares repurchased (85,573) (902,905) (207,583) (2,197,343)
----------- ----------- --------- ------------
Net increase (decrease) 2,370 $ 28,065 (28,318) $ (317,515)
=========== =========== ========= ============
CLASS II
Shares sold 413,444 $ 4,344,027 1,318,296 $ 13,931,509
Reinvestment of distributions 79,213 833,651 119,400 1,254,849
Less shares repurchased (415,615) (4,361,726) (1,060,628) (11,169,532)
----------- ----------- --------- ------------
Net increase 77,042 $ 815,952 377,068 $ 4,016,826
=========== =========== ========= ============
The accompanying notes are an integral part of these financial statements.
34
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Strategic Income VCT Portfolio (the Portfolio) is one of 10 portfolios
comprising Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust. The Portfolio is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The investment objective of
the Portfolio is to produce a high level of current income.
The Portfolio offers two classes of shares designated as Class I and Class II
shares. Each class of shares represents an interest in the same schedule of
investments of the Portfolio and has identical rights (based on relative net
asset values) to assets and liquidation proceeds. Share classes can bear
different rates of class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of different
dividends from net investment income earned by each class. The Amended and
Restated Declaration of Trust of the Portfolio gives the Board the flexibility
to specify either per-share voting or dollar-weighted voting when submitting
matters for shareholder approval. Under per-share voting, each share of a class
of the Portfolio is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Each share class has
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. There is no
distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of
funding variable annuity and variable life insurance contracts, or by qualified
pension and retirement plans.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses 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 followed by the
Portfolio in the preparation of its financial statements, which are consistent
with those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Portfolio is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE.
Senior floating rate loan interests (senior loans) are valued in accordance
with guidelines established by the Board of Trustees at the mean between
the last available bid and asked prices from one or more brokers or
dealers as obtained from Loan Pricing Corporation, an independent pricing
service. If price information is not available from Loan Pricing
Corporation, or if the price information is deemed to be unreliable, price
information will be obtained from an alternative loan interest pricing
service. If no reliable price quotes are available from either the primary
or alternative pricing service, broker quotes will be solicited. Fixed
income securities with remaining maturity of more than sixty days are
valued at prices supplied by independent pricing services, which consider
such factors as market prices, market events, quotations from one or more
brokers, Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by dealers and other sources, as required. Credit default
swaps are valued by an independent pricing service based upon valuation
models incorporating default probabilities, estimated recovery rates,
actual reported transactions, and other available market data. Equity
securities that have traded on an exchange are valued at the last sale
price on the principal exchange where they are traded. Equity securities
that have not traded on the date of valuation, or securities for which
sale prices are not available, generally are valued using the mean between
the last bid and asked prices. Short-term fixed income securities with
remaining maturities of sixty days or less generally are valued at
amortized cost. Shares of money market mutual funds are valued at such
funds' net asset value.
Securities or senior loans for which independent pricing services are
unable to supply prices or for which market prices and/or quotations are
not readily available or are considered to be unreliable are valued by a
fair valuation team comprised of certain personnel of Pioneer Investment
Management, Inc. (PIM), the Portfolio's investment adviser, pursuant to
procedures adopted by the Portfolio's Board of Trustees. PIM's fair
valuation team uses fair value methods approved by the Valuation Committee
of the Board of Trustees. PIM's fair valuation team is responsible for
monitoring developments that may impact fair valued securities
35
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
and for discussing and assessing fair values on an ongoing basis, and at
least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Portfolio may use fair
value methods if it is determined that a significant event has occurred
after the close of the exchange or market on which the security trades and
prior to the determination of the Portfolio's net asset value. Examples of
a significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Portfolio's securities may differ significantly
from exchange prices and such differences could be material.
At June 30, 2014, one security was valued using fair value methods (in
addition to securities valued using prices supplied by independent pricing
services or broker-dealers) representing 0.1% of net assets.
Principal amounts of mortgage-backed securities are adjusted for monthly
paydowns. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly
paydowns. All discounts/premiums on debt securities are accreted/amortized
for financial reporting purposes over the life of the respective
securities, and such accretion/amortization is included in interest
income. Interest income is recorded on the accrual basis.
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. 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.
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, if any,
represent, among other things, 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 the market prices of those
securities but are included with the net realized and unrealized gain or
loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio may 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. All contracts are marked to market daily at
the applicable exchange rates, and any resulting unrealized appreciation
or depreciation is recorded in the Portfolio's financial statements. The
Portfolio records realized gains and losses at the time a contract 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 5).
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no provision for federal income taxes
is required. As of December 31, 2013, the Portfolio did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as an income tax expense in the Statement of
Operations. Tax returns filed within the prior three years remain subject
to examination by Federal and State tax authorities.
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, 2014, the Portfolio paid
no such taxes.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment
36
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
income or net realized gains are temporary overdistributions for financial
statement purposes resulting from differences in the recognition or
classification of income or distributions for financial statement and tax
purposes. Capital accounts within the financial statements are adjusted for
permanent book/tax differences to reflect tax character, but are not
adjusted for temporary differences.
The tax character of current year distributions payable will be determined
at the end of the current taxable year. The tax character of distributions
paid during the year ended December 31, 2013 and the components of
distributable earnings (accumulated losses) on a federal income tax basis
at December 31, 2013, were as follows:
[Download Table]
--------------------------------------------------------------------------------
2013
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $1,622,080
Long-term capital gain 127,910
----------
Total distributions $1,749,990
==========
Distributable Earnings:
Undistributed ordinary income $ 573,160
Undistributed long-term gain 380,633
Unrealized appreciation 497,925
----------
Total $1,451,718
==========
The difference between book-basis and tax-basis net unrealized
appreciation is attributable to the tax adjustments relating to
catastrophe bonds, interest accruals on preferred stock, defaulted bonds,
and the mark-to-market on foreign currency contracts, credit default swaps
and futures contracts.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade
date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredit S.p.A. (UniCredit), $85,277 in underwriting
commissions on the sale of Trust shares for the six months ended June 30,
2014. Distribution fees for Class II shares are calculated based on the
average daily net asset value attributable to Class II shares of the
Portfolio (see Note 4). Class I shares do not pay distribution fees.
All expenses and fees paid to the transfer agent, Pioneer Investment
Management Shareholder Services, Inc. (PIMSS), for its services are
allocated between the classes of shares based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and
distribution fees) and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on its respective percentage of adjusted net assets at the
beginning of the day.
The Portfolio declares as daily dividends substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends. Distributions paid by the Portfolio with respect to each class
of shares are calculated in the same manner and at the same time, except
that net investment income dividends to Class I and Class II shares can
reflect different transfer agent and distribution expense rates. Dividends
and distributions to shareowners are recorded on the ex-dividend date.
F. Risks
When interest rates rise, the prices of fixed income securities in the
Portfolio will generally fall. Conversely, when interest rates fall, the
prices of fixed income securities in the Portfolio will generally rise.
Investments in the Portfolio are subject to possible loss due to the
financial failure of underlying issuers and their inability to meet their
debt obligations. Prepayment risk is the chance that fixed-income
securities will be paid off early if interest rates fall. The Portfolio's
prospectus contains unaudited information regarding the Portfolio's
principal risks. Please refer to that document when considering the
Portfolio's principal risks.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian or a subcustodian of
the Portfolio. PIM is responsible for determining that the value of the
collateral remains at least equal to the repurchase price.
H. Futures Contracts
The Portfolio may enter into futures transactions in order to attempt to
hedge against changes in interest rates, securities prices and currency
exchange rates or to seek to increase total return. Futures contracts are
types of derivatives. All futures contracts entered into by the Portfolio
are traded on a futures exchange. Upon entering into a futures contract,
the Portfolio is required
37
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
to deposit with a broker an amount of cash or securities equal to the
minimum "initial margin" requirements of the associated futures exchange.
The amount of cash deposited with the broker as collateral at June 30,
2014 was $81,450. 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 appreciation or depreciation. 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, interest rate
and counterparty risks, which may exceed the amounts recognized by the
Portfolio. Changes in value of the contracts may not directly correlate to
the changes in value of the underlying securities. The average value of
contracts open during the six months ended June 30, 2014 was $8,463,357.
At June 30, 2014, open futures contracts were as follows:
[Enlarge/Download Table]
------------------------------------------------------------------------------------------------------
Number of Unrealized
Contracts Settlement Appreciation
Type Long/(Short) Month Value (Depreciation)
------------------------------------------------------------------------------------------------------
U.S. Ultra Bond (CBT) 2 9/14 $ 299,875 $ (1,984)
U.S. 10 Year Note (CBT) (36) 9/14 (4,506,188) 19,125
U.S. 5 Year Note (CBT) (27) 9/14 (3,225,445) 11,812
U.S. Long Bond (CBT) (7) 9/14 (960,313) 4,977
------------------------------------------------------------------------------------------------------
$ (8,392,071) $ 33,930
------------------------------------------------------------------------------------------------------
I. Credit Default Swap/Index Agreements
A credit default swap/Index is a contract between a buyer of protection
and a seller of protection against a pre-defined credit event. The
Portfolio may buy or sell credit default swap contracts to seek to
increase the Portfolio's income, or to attempt to hedge the risk of
default on portfolio securities. A credit default swap index is used to
hedge risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Portfolio would be required to pay the
notional (or other agreed-upon) value of the referenced debt obligation to
the counterparty in the event of a default by a U.S. or foreign corporate
issuer of a debt obligation, which would likely result in a loss to the
Portfolio. In return, the Portfolio would receive from the counterparty a
periodic stream of payments during the term of the contract provided that
no event of default occurred. The maximum exposure of loss to the seller
would be the notional value of the credit default swaps outstanding. If no
default occurs, the Portfolio would keep the stream of payments and would
have no payment obligation. The Portfolio may also buy credit default swap
contracts in order to hedge against the risk of default of debt
securities, in which case the Portfolio would function as the counterparty
referenced above.
When the Portfolio enters into a credit default swap contract, the
protection buyer makes an upfront or periodic payment to the protection
seller in exchange for the right to receive a contingent payment. An
upfront payment made by the Portfolio, as the protection buyer, is
recorded as an asset in the Statement of Assets and Liabilities. Periodic
payments received or paid by the Portfolio are recorded as realized gains
or losses in the Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations
supplied by independent sources and the change in value, if any, is
recorded as unrealized appreciation or depreciation in the Statement of
Assets and Liabilities. Payments received or made as a result of a credit
event or upon termination of the contract are recognized, net of the
appropriate amount of the upfront payment, as realized gains or losses in
the Statement of Operations.
Credit default swap contracts involving the sale of protection may involve
greater risks than if the Portfolio had invested in the referenced debt
instrument directly. Credit default swap contracts are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the
Portfolio is a protection buyer and no credit event occurs, it will lose
its investment. If the Portfolio is a protection seller and a credit event
occurs, the value of the referenced debt instrument received by the
Portfolio, together with the periodic payments received, may be less than
the amount the Portfolio pays to the protection buyer, resulting in a loss
to the Portfolio.
38
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
Open credit default swap contracts at June 30, 2014 are listed in the
Schedule of Investments. The average value of swap contracts open during
the six months ended June 30, 2014 was $1,301,497.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Portfolio.
Management fees are calculated daily at the annual rate of 0.65% of the
Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio as administrative reimbursements. Included
in "Due to affiliates" reflected on the Statement of Assets and Liabilities is
$3,265 in management fees, administrative costs and certain other reimbursements
payable to PIM at June 30, 2014.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Portfolio at negotiated rates.
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $249 in transfer agent fees payable to PIMSS at June 30, 2014.
4. Distribution Plan
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940 with respect to Class II shares. Pursuant to the
Plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in "Due to affiliates" reflected on the Statement of Assets
and Liabilities is $808 in distribution fees payable to PFD at June 30, 2014.
5. Forward Foreign Currency Contracts
During the six months ended June 30, 2014, the Portfolio entered into various
forward foreign currency contracts that obligate the Portfolio to deliver or
take delivery of currencies at specified future maturity dates. Alternatively,
prior to the settlement date of a forward foreign currency contract, the
Portfolio may close out such contract by entering into an offsetting contract.
The average value of forward foreign currency contracts open during the six
months ended June 30, 2014 was $1,594,336.
As of June 30, 2014, open forward foreign currency contracts were as follows:
[Enlarge/Download Table]
----------------------------------------------------------------------------------------------------------------
Net
Unrealized
Net Contracts In Exchange Settlement Appreciation/
Currency to Deliver For Date Value (Depreciation)
----------------------------------------------------------------------------------------------------------------
AUD (Australian Dollar) (47,827) $ (44,267) 7/7/14 $ (45,058) $ (791)
EURO (European Euro) (486,210) (660,859) 7/16/14 (665,952) (5,093)
EURO (European Euro) (69,913) (96,611) 7/16/14 (95,759) 852
EURO (European Euro) (127,230) (175,904) 7/16/14 (174,264) 1,640
IDR (Indonesian
Rupiah) 408,095,594 34,178 7/7/14 34,391 213
JPY (Japanese Yen) (29,704,120) (292,575) 8/19/14 (293,380) (805)
KRW (South
Korea Won) 100,795,611 98,534 7/9/14 99,578 1,044
NZD (New Zealand Dollar) (90,749) (78,180) 8/7/14 (79,156) (976)
----------------------------------------------------------------------------------------------------------------
Total $(3,916)
----------------------------------------------------------------------------------------------------------------
39
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
6. Assets and Liabilities Offsetting
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities of the Portfolio as of June 30, 2014.
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Assets:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the --------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Assets Liabilities Liabilities Instruments Received Net Amount
-----------------------------------------------------------------------------------------------------------------
Forward Foreign
Currency Contracts $ 3,749 $ (3,749) $ - $ - $ - $ -
Futures Contracts 35,914 (1,984) 33,930 - - 33,930
Swap contracts 43,314 (3,544) 39,770 - - 39,770
-----------------------------------------------------------------------------------------------------------------
$ 82,977 $ 9,277 $ 73,700 $ - $ - $ 73,700
-----------------------------------------------------------------------------------------------------------------
[Enlarge/Download Table]
-----------------------------------------------------------------------------------------------------------------
Liabilities:
Net Gross Amounts
Amounts of Not Offset in the
Gross Assets Statement of
Amounts Presented Assets and Liabilities
Gross Offset in the in the --------------------------
Amounts of Statement of Statement of Cash
Recognized Assets and Assets and Financial Collateral
Description Liabilities Liabilities Liabilities Instruments Pledged Net Amount
-----------------------------------------------------------------------------------------------------------------
Forward foreign
currency contracts $ 7,665 $(3,749) $ 3,916 $ - $ - $ 3,916
Futures contracts 1,984 (1,984) - - - -
Swap contracts 3,544 (3,544) - - - -
-----------------------------------------------------------------------------------------------------------------
$ 13,193 $(9,277) $ 3,916 $ - $ - $ 3,916
-----------------------------------------------------------------------------------------------------------------
40
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
7. Additional Disclosures about Derivative Instruments and Hedging Activities
Values of derivative instruments as of June 30, 2014 were as follows:
[Enlarge/Download Table]
---------------------------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments ---------------------------------- -------------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Value Location Value
---------------------------------------------------------------------------------------------------------------
Forward foreign Net unrealized Net unrealized
currency contracts appreciation on depreciation on
forward foreign forward foreign
currency contracts $ - contracts $3,916
Swap contracts Net unrealized Net unrealized
appreciation on depreciation on
swap contracts $ 39,770 swap contracts $ -
Futures contracts* Net unrealized Net unrealized
appreciation on depreciation on
futures contracts $ 33,930 futures contracts $ -
---------------------------------------------------------------------------------------------------------------
Total $ 73,700 $3,916
---------------------------------------------------------------------------------------------------------------
* Reflects unrealized appreciation/depreciation of futures contracts (see
Note 1H). The current day's variation margin is disclosed on the Statement
of Assets and Liabilities.
The effect of derivative instruments on the Statement of Operations for the six
months ended June 30, 2014 was as follows:
[Enlarge/Download Table]
--------------------------------------------------------------------------------------------------------------------------
Change in
Unrealized
Realized Gain Appreciation or
Derivatives Not Accounted for or (Loss) on (Depreciation)
as Hedging Instruments Under Location of Gain or (Loss) Derivatives on Derivatives
Accounting Standards on Derivatives Recognized Recognized Recognized in
Codification (ASC) 815 in Income in Income Income
--------------------------------------------------------------------------------------------------------------------------
Forward foreign Net realized gain (loss) on forward
currency contracts foreign currency contracts and other
assets and liabilities denominated
in foreign currencies $ (27,010)
Forward foreign Change in unrealized appreciation
currency contracts (depreciation) on forward foreign
currency contracts and other assets
and liabilities denominated in
foreign currencies $ 7,261
Futures contracts Net realized gain (loss) on
futures contracts $(121,051)
Futures contracts Change in net unrealized appreciation
(depreciation) on futures contracts $(49,293)
Swap Contracts Net realized gain (loss) on swap contracts $ 11,824
Swap Contracts Change in net unrealized appreciation
(depreciation) on swap contracts $(15,115)
--------------------------------------------------------------------------------------------------------------------------
41
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/14 (UNAUDITED) (continued)
--------------------------------------------------------------------------------
8. Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Portfolio, with the approval and recommendation of
the Audit Committee, appointed Deloitte & Touche LLP to serve as the Portfolio's
independent registered public accounting firm for the fiscal year ending
December 31, 2014. Deloitte & Touche LLP replaces Ernst & Young LLP which
resigned as the Portfolio's independent registered public accounting firm,
effective upon completion of the audit of the Fund's financial statements for
the fiscal year ended December 31, 2013.
During the periods that Ernst & Young LLP served as the Portfolio's independent
registered public accounting firm, including the Portfolio's two most recent
fiscal years, Ernst & Young LLP's reports on the financial statements of the
Portfolio have not contained an adverse opinion or disclaimer of opinion and
have not been qualified or modified as to uncertainty, audit scope or accounting
principles. Further, there have been no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
42
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
Daniel K. Kingsbury, President* Thomas J. Perna, Chairman
Mark D. Goodwin, Executive Vice President David R. Bock
Mark E. Bradley, Treasurer** Benjamin M. Friedman
Christopher J. Kelley, Secretary Margaret B.W. Graham
Daniel K. Kingsbury*
Marguerite A. Piret
Kenneth J. Taubes
Stephen K. West***
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
* Chief Executive Officer of the Portfolios. Resigned effective
August 8, 2014.
** Chief Financial and Accounting Officer of the Portfolios
*** Retired effective July 15, 2014.
43
This page for your notes.
44
This page for your notes.
45
[LOGO] PIONEER
Investments(R)
Proxy Voting Policies and Procedures of the Portfolio are available without
charge, upon request, by calling our toll free number (1-800-225-6292).
Information regarding how the Portfolio voted proxies relating to Portfolio
securities during the most recent 12-month period ended June 30 is publicly
available to shareowners at us.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at www.sec.gov.
19636-08-0814
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 12(a)(1), 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 (see attachment);
(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.
Not applicable.
(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.
Not applicable.
(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.
Not applicable.
(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.
Not applicable.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
[Enlarge/Download Table]
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"
------------------------------------- ------------------------------------
[Enlarge/Download Table]
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"
------------------------------------- -------------------------
[Enlarge/Download Table]
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"
------------------------------------- --------------------------
[Enlarge/Download Table]
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.
Not applicable.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountants 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.
Not applicable.
(g) Disclose the aggregate non-audit fees billed by the registrants accountant
for services rendered to the registrant, and rendered to the registrants
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.
Not applicable.
(h) Disclose whether the registrants audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrants investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) 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.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrant's audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule of Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.1212
of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrant's portfolio ("Portfolio Manager"). Also state each Portfolio
Manager's business experience during the past 5 years.
Not applicable to open-end management investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrant's equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781).
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 407(c)(2)(iv) of
Regulation S-R(17 CFR 229.407)(as required by Item 22(b)(15))
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrant's board of
directors since the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-R of Schedule 14(A)
in its definitive proxy statement, or this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive and
principal financials officers, or persons performing similar functions,
regarding the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR
270.30a-3(c))) as of a date within 90 days of the filing date of the report
that includes the disclosure required by this paragraph,
based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the Act (17 CFR 270.30(a)-3(b) and Rules 13a-15(b) or 15d-15(b)
under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on the evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that
occured during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) 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.
(2) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2(a)) , exactly as set forth below:
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/ Mark Goodwin
Mark Goodwin, Executive Vice President
Date August 28, 2014
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/ Mark Goodwin
Mark Goodwin, Executive Vice President
Date August 28, 2014
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer & Chief Accounting & Financial Officer
Date August 28, 2014
* Print the name and title of each signing officer under his or her signature.
Dates Referenced Herein and Documents Incorporated by Reference
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