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PIONEER VISION [logo]
Variable Annuity
Pioneer Variable Contracts Trust
International Growth Portfolio
Capital Growth Portfolio
Real Estate Growth Portfolio
Equity-Income Portfolio
Balanced Portfolio
Swiss Franc Bond Portfolio
America Income Portfolio
Money Market Portfolio
[artwork]
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TABLE OF CONTENTS
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LETTER FROM THE CHAIRMAN...................................................................... 1
PORTFOLIO MANAGEMENT DISCUSSIONS
International Growth Portfolio.............................................................. 2
Capital Growth Portfolio.................................................................... 3
Real Estate Growth Portfolio................................................................ 4
Equity-Income Portfolio..................................................................... 5
Balanced Portfolio.......................................................................... 6
Swiss Franc Bond Portfolio.................................................................. 7
America Income Portfolio.................................................................... 8
GROWTH OF A $10,000 INVESTMENT................................................................ 9
SCHEDULES OF INVESTMENTS AND FINANCIAL STATEMENTS
International Growth Portfolio.............................................................. 12
Capital Growth Portfolio.................................................................... 22
Real Estate Growth Portfolio................................................................ 28
Equity-Income Portfolio..................................................................... 33
Balanced Portfolio.......................................................................... 39
Swiss Franc Bond Portfolio.................................................................. 44
America Income Portfolio.................................................................... 48
NOTES TO FINANCIAL STATEMENTS................................................................. 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS...................................................... 58
RESULTS OF CONTRACT HOLDER MEETINGS........................................................... 59
DISTRIBUTIONS MADE DURING THE YEAR............................................................ 60
TRUSTEES' FEES, PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF TRUSTEES AND OFFICERS........... 60
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DEAR CONTRACT OWNER,
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Welcome to the first annual report for Pioneer Vision Variable Annuity, covering
the abbreviated fiscal year ended December 31, 1995. Pioneer Vision was
introduced in 1995 to offer investors a selection of Portfolios designed to suit
a variety of needs and goals, with the added tax and insurance benefits of an
annuity. The first seven of Pioneer Vision's Portfolios were introduced on March
1 and an eighth joined the group on November 1. The wide array of investment
options helped attract a total of $29 million in assets to the Portfolios by the
close of the fiscal year on December 31.
A YEAR OF STRONG INVESTMENT PERFORMANCE
We are pleased to report that 1995 proved to be a successful environment
for investments of almost every type, including our Portfolios. Around the
globe, interest rates fell and inflation remained low. These factors spurred
sharp advances in financial markets, both for stocks and bonds. In the U.S.,
technology companies and large, familiar names proved the most popular.
Reflecting this, the Dow Jones Industrial Average broke numerous record-highs,
generating a total return of 30.81% from March 1 through December 31. The
broader Standard & Poor's 500 Index returned 29.51%, while small company stocks,
represented by the Russell 2000 Index, returned 24.90%. (It says a lot about
1995's pace that some investors considered the double-digit returns on smaller
stocks "disappointing.") Overseas, results were lower but still impressive, with
non-U.S. markets returning 16.28% to U.S.-dollar based investors, according to
the MSCI Europe, Australia, Far East Index.
Bond investors also profited as the Federal Reserve (the Fed) reversed its
course after a series of hikes in short-term interest rates ended in February.
The Fed began to reduce rates in July, sparking further rallies in bond prices
and pushing interest rates lower across the board. By December 31, the benchmark
30-year Treasury bond yield was 5.95%, versus 7.44% on March 1. Reflecting this
trend, Money Market Portfolio was yielding 4.96% at year-end.
LOOKING AHEAD
We are encouraged by the strong response Pioneer Vision has received during its
first fiscal year. As we move into 1996, we believe this product will continue
to deliver the investing, tax and insurance benefits it was designed to offer.
The following pages provide detailed information about the individual Portfolios
offered in Pioneer Vision. We encourage you to read on. Please contact your
financial professional if you have any questions about your investment. Thank
you for selecting Pioneer Vision Variable Annuity.
Respectfully,
/s/ John F. Cogan Jr.
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John F. Cogan, Jr.
Chairman and President,
Pioneer Variable Contracts Trust
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INTERNATIONAL GROWTH PORTFOLIO
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This report covers International Growth Portfolio's abbreviated first fiscal
year, which began on March 1, 1995, and ended on December 31, 1995. We wish to
welcome the investors who joined the Portfolio in that time. By the close of the
year, the Portfolio had reached nearly $3 million in assets.
On December 31, the Portfolio's net asset value (NAV) was $10.93 per share,
up from $10.00 on March 1. Over the course of the year, investors received a
total of $0.1102 in distributions, $0.0152 in income dividends and $0.095 in
capital gains distributions. Total return was 10.42% based on NAV and assuming
the reinvestment of distributions. The Portfolio's accumulation unit value (AUV)
rose to $1.094 by December 31, up from its initial $1.00. (The AUV reflects the
value of the underlying investments and the deduction of annuity-related
expenses.) Based on the percent change in AUV, total return was 9.17%, 2.29%
assuming deduction of the maximum contingent deferred sales charge of 7% at the
end of the period.
INVESTING FOR GROWTH OVERSEAS
International Growth Portfolio seeks long-term capital growth. The Portfolio
primarily invests in equity securities and related depositary receipts of
companies outside the United States. The Portfolio is a good complement to
U.S.-based investment vehicles and provides an opportunity for investors to
diversify their holdings.
Over the course of the Portfolio's short life, we worked to build a diversified
group of holdings. At the end of the year, 93% of the Portfolio's assets had
been invested, with the remaining 7% held in short-term cash equivalents. Our
approach relies on identifying good growth opportunities and low stock prices
around the world. This often means that we are investing as others are turning
away from a specific market or company. Our bias is toward emerging markets, or
larger markets we believe are on the verge of resurgence. We believe these areas
offer Portfolio investors the best potential for significant long-term gains,
although the trade-off may come in the form of significant volatility
day-to-day. Investors in any market outside the United States must accept the
fact that there are additional risks -- such as currency fluctuations, relative
illiquidity and varying accounting practices -- that accompany the potential
rewards.
By the close of the fiscal year, the Portfolio was invested in 159 companies
associated with 11 secotrs located in 31 nations. The accompanying chart
shows the regions represented on December 31.
GEOGRAPHICAL DISTRIBUTION
(Percentage of equity investments as of December 31, 1995)
[PIE CHART]
Latin America 3%
Asia/Pacific Basin
(excluding Japan) 29%
Japan 28%
Europe 40%
LOOKING AHEAD
We are encouraged by the movement in stock markets around the world as we move
into 1996. Low inflation and interest rates continue to make it possible, we
believe, for emerging markets to grow significantly. We continue to see a
multitude of attractive opportunities, and look forward to investing on your
behalf in some of the world's most dynamic markets.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, begin on page 12. If you have any questions about your
investment in International Growth Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses; otherwise,
returns would have been lower. Past performance does not guarantee future
results. Return and principal fluctuate so that your investment, when redeemed,
may be worth more or less than the original cost.
2
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CAPITAL GROWTH PORTFOLIO
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This report covers Capital Growth Portfolio's abbreviated first fiscal year,
which began on March 1, 1995, and ended on December 31, 1995. We wish to welcome
the investors who joined the Portfolio in that time. By the close of the year,
the Portfolio had reached $9.4 million in assets.
On December 31, the Portfolio's net asset value (NAV) was $11.57 per share, up
from $10.00 on March 1. Over the course of the year, investors received a total
of $0.1445 in distributions: $0.022 in income dividends and $0.1225 in capital
gains distributions. Total return was 17.13% based on NAV and assuming the
reinvestment of distributions. The Portfolio's accumulation unit value (AUV)
rose to $1.1581 by December 31, up from its initial $1.00. (The AUV reflects the
value of the underlying investments and the deduction of annuity-related
expenses.) Based on the percent change in AUV, total return was 15.80%, 8.80%
assuming deduction of the maximum contingent deferred sales charge of 7% at the
end of the period.
OUR AGGRESSIVE VALUE STYLE OF INVESTING
Capital Growth Portfolio seeks capital appreciation, mostly through common
stocks. The Portfolio utilizes an "aggressive value" style of investing, which
means we use our own fundamental research to identify companies whose stock we
believe is underpriced given their potential growth. We look at companies as if
we were buying them whole -- we explore their balance sheets, cash flows,
product lines and management strength. Companies in this Portfolio will probably
tend to be small- to medium-sized and often in turnaround or takeover
situations. While this strategy may prove to be more volatile than others
available in Pioneer Vision, we believe it has the potential to generate
significant capital growth over time.
By the close of the fiscal year, we had assembled a diversified group of
holdings. The accompanying chart shows the variety of industries represented on
December 31.
SECTOR DISTRIBUTION
(Percentage of equity investments as of December 31, 1995)
[PIE CHART]
Basic Industries 2%
Consumer Non-Durables 33%
Capital Goods 16%
Services 16%
Financial 12%
Technology 12%
Consumer Durables 5%
Energy 4%
LOOKING AHEAD
As we move into the Portfolio's first full fiscal year, we look forward to the
opportunities available to investors willing and able to do thorough research.
We are excited about the prospects for this Portfolio and, even if it
experiences some sharp swings in price day-to-day, believe it offers investors a
real opportunity for strong, long-term returns.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, begin on page 22. If you have any questions about your
investment in Capital Growth Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses; otherwise,
returns would have been lower. Past performance does not guarantee future
results. Return and principal fluctuate so that your investment, when redeemed,
may be worth more or less than the original cost.
3
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REAL ESTATE GROWTH PORTFOLIO
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This is the first annual report on Real Estate Growth Portfolio, covering the
period from the Portfolio's introduction on March 1, 1995, through its fiscal
year-end on December 31, 1995. We want to welcome investors who joined the
Portfolio during the period. We also would like to thank those who voted on the
proposal to approve a management contract with the Portfolio's primary manager,
Pioneering Management Corporation (PMC). The proxy became necessary when the
parent company of Winthrop Advisors Limited Partnership, with whom the Portfolio
had a subadvisory contract, was acquired by Apollo Real Estate Advisors, L.P.,
resulting in the automatic termination of the contract. (The special meeting
took place on October 10, 1995; detailed voting results appear on page 59).
Another special meeting has been scheduled for March 5, 1996, for contract
owners to vote on adding Boston Financial Securities (BFS) as subadviser of the
Portfolio. BFS is an affiliate of Boston Financial, one of the country's leading
real estate investment firms. BFS has extensive experience in real estate and
related investments, and provides financial, consulting and management services
to real estate investors and developers. If approved as subadviser, BFS would
identify and analyze potential real estate investments, monitor real estate
market conditions across the country, continually review the Portfolio and
provide advisory reports to Pioneer, based on its research.
BUILDING YOUR PORTFOLIO
Real Estate Growth Portfolio pursues long-term capital growth, with
income as a secondary objective. In selecting Portfolio investments, we focus on
individual securities, analyzing company fundamentals such as balance sheets and
income statements, management teams and favorable earnings potential. Over the
period, we saw strong performance from office and industrial REITs. We have been
especially pleased with Duke Realty Investments, an office-related enterprise
based in Indiana. We also like select hotel and apartment REITs; the Portfolio's
strong performers here included Equity Inns and Wellsford Residential
Properties.
As of December 31, contract owners accumulated total distributions of $0.4452,
including $0.1827 in non-taxable return of capital. The Portfolio's net asset
value, or NAV (the value of the Portfolio's holdings plus income dividends, less
operating expenses), stood at $11.23, versus its beginning NAV of $10.00 on
March 1, 1995. Total return was 16.96% based on net asset value and assuming
reinvestment of all dividends.
The Portfolio's accumulation unit value, or AUV, rose to $1.1563, versus its
opening value of $1.00. (The AUV reflects the value of the underlying
investments and the deduction of annuity-related expenses.) Based on the percent
change in AUV, total return was 15.61%, 8.61% assuming deduction of the maximum
contingent deferred sales charge of 7% at the end of the period.
LOOKING AHEAD
As we move into 1996 and your Portfolio's first full fiscal year, Pioneer
management will continue to build your Portfolio's holdings. We are optimistic
about our ability to uncover REITs that offer solid earnings and value, and we
look forward to building a lasting and rewarding relationship with you.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, appear on page 28. If you have any questions about your
investment in Real Estate Growth Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses, otherwise
returns would have been lower. Past performance does not guarantee future
results. Return and principal value fluctuate so that your investment, when
redeemed, may be worth more or less than original cost.
4
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EQUITY-INCOME PORTFOLIO
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This report covers Equity-Income Portfolio's abbreviated first fiscal year,
which began on March 1, 1995, and ended on December 31, 1995. We wish to welcome
the investors who joined the Portfolio in that time. By the close of the year,
the Portfolio had reached nearly $7 million in assets.
On December 31, the Portfolio's net asset value (NAV) was $12.17 per share, up
from $10.00 on March 1. Over the course of the year, investors received a total
of $0.1807 in distributions, all income dividends. Total return was 23.62% based
on NAV and assuming the reinvestment of distributions. The Portfolio's
accumulation unit value (AUV) rose to $1.2222 by December 31, up from its
initial $1.00. (The AUV reflects the value of the underlying investments and the
deduction of annuity-related expenses.) Based on the percent change in AUV,
total return was 22.22%, 15.22% assuming deduction of the maximum contingent
deferred sales charge of 7% at the end of the period.
GOAL IS GROWTH AND INCOME
Equity-Income Portfolio is designed to seek current income and long-term capital
growth by investing in income-producing equity securities of U.S.-based
corporations. The Portfolio's goal is to provide a current dividend yield above
that of the Standard & Poor's 500 Index. This approach is more conservative than
other Portfolios in Pioneer Vision, in that a larger proportion of the
Portfolio's total return comes from the compounding effect of its income
dividends.
Our investment strategy for the Portfolio is to keep it fully invested, rather
than attempting to "time" the stock market. The Portfolio's emphasis on
dividends translates into a concentration on generally large, mature companies
that tend to pay out a significant part of their income in dividends rather than
reinvesting heavily in themselves as newer, high-growth businesses typically
need to do. As a result, the industry weightings in the Portfolio will vary from
Portfolios focused solely on growth. However, we still aim for capital
appreciation. To that end, we must believe the companies we select have the
ability to experience rising earnings and increasing dividends. This approach
should provide investors with the opportunity to benefit from market
appreciation and growth in the U.S. economy over time.
By the close of the fiscal year, we had assembled a diversified group of
holdings. The accompanying chart shows the variety of industries represented on
December 31.
SECTOR DISTRIBUTION
(Percentage of equity investments as of December 31, 1995)
[PIE CHART]
Financial 18%
Utilities 18%
Basic Industries 13%
Consumer Non-Durables 12%
Serives 11%
Technology 10%
Consumer Durables 8%
Energy 6%
Capital Goods 2%
Transportation 2%
LOOKING AHEAD
As we move into the Portfolio's first full fiscal year, we plan to follow the
same principles that guided us in 1995: We will look for U.S. companies whose
stock offers the opportunity for both growth and income. If the fast-rising
stock market we saw in 1995 slows its pace, or even reverses course, stocks like
those in the Portfolio should enjoy some continued popularity, thanks to their
attractive dividend payments.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, begin on page 33. If you have any questions about your
investment in Equity-Income Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses; otherwise,
returns would have been lower. Past performance does not guarantee future
results. Return and principal fluctuate so that your investment, when redeemed,
may be worth more or less than the original cost.
5
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BALANCED PORTFOLIO
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This report covers Balanced Portfolio's abbreviated first fiscal year, which
began on March 1, 1995, and ended on December 31, 1995. We wish to welcome the
investors who joined the Portfolio in that time. By the close of the year, the
Portfolio had reached nearly $3 million in assets.
On December 31, the Portfolio's net asset value (NAV) was $11.87 per share, up
from $10.00 on March 1. Over the course of the year, investors received a total
of $0.2022 in distributions, all income dividends. Total return was 20.84% based
on NAV and assuming the reinvestment of distributions. The Portfolio's
accumulation unit value (AUV) rose to $1.1648 by December 31, up from its
initial $1.00. (The AUV reflects the value of the underlying investments and the
deduction of annuity-related expenses.) Based on the percent change in AUV,
total return was 19.46%, 12.46% assuming deduction of the maximum contingent
deferred sales charge of 7% at the end of the period.
AN ACTIVELY MANAGED, DIVERSIFIED PORTFOLIO
Balanced Portfolio is designed to seek capital growth and current income. What
makes this Portfolio different from others offered in Pioneer Vision is that it
seeks to achieve its goal by actively managing investments in a diversified
portfolio that contains both equity securities and bonds. At the close of the
fiscal year, the majority of the Portfolio was invested in equities, reflecting
our general optimism about stocks during the course of the year. As 1996
progresses, we expect to significantly increase the Portfolio bond holdings.
When selecting stocks, so far we have emphasized mainly dividend-paying stocks
that might prove less volatile than more aggressive, growth-type issues should
the market's upward climb slow, or even reverse. The accompanying chart shows
the variety of industries represented on December 31.
SECTOR DISTRIBUTION
(Percentage of equity investments as of December 31, 1995)
[PIE CHART]
Utilities 21%
Financial 20%
Basic Industries 13%
Technology 10%
Consumer Durables 8%
Consumer Non-Durables 6%
Transportation 8%
Services 7%
Energy 4%
Capital Goods 3%
LOOKING AHEAD
We expect that bonds will play an enlarged role in the months ahead, and we
would caution investors against thinking that stocks will always be as
predominate as they were in 1995. Our overall strategy, however, is still to
take advantage of opportunities we think will deliver Portfolio investors the
best returns, whether from stocks or bonds.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, begin on page 39. If you have any questions about your
investment in Balanced Portfolio, please contact your investment representative.
Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses; otherwise,
returns would have been lower. Past performance does not guarantee future
results. Return and principal fluctuate so that your investment, when redeemed,
may be worth more or less than the original cost.
6
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SWISS FRANC BOND PORTFOLIO
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This is the first report on Swiss Franc Bond Portfolio, covering the period from
the Portfolio's introduction on November 1, 1995, through its fiscal year-end on
December 31, 1995. The Portfolio is designed to approximate the performance of
the Swiss franc relative to the U.S. dollar, while earning a reasonable level of
income. To that end, your Portfolio invests in high-quality, short- to
intermediate-term bonds denominated in Swiss francs. While investors in the
Portfolio recognize the historically strong performance of the Swiss franc, they
also should remain aware of considerations relating to bonds denominated in a
foreign currency, including currency fluctuations, social and economic
instability, differing securities and accounting standards, limited public
information, possible changes in taxation, and periods of illiquidity.
At the close of the fiscal year, your Portfolio had been operating for a short
period of time. Our efforts focused on building the Portfolio; at December 31,
holdings included debt obligations from Austria, Denmark and Germany. Of course,
given the short period of operations, the Portfolio's temporary cash position at
fiscal year-end was relatively high -- 27%. We plan to reduce cash holdings by
allocating assets prudently, taking into account your Portfolio's income
objective.
As of December 31, the Portfolio's net asset value, or NAV (the value of the
Portfolio's holdings plus income dividends, less operating expenses), stood at
$15.06, versus its beginning NAV of $15.00 on November 1, 1995. Total return was
0.4% based on net asset value and assuming reinvestment of all dividends.
The Portfolio's accumulation unit value, or AUV, rose to $1.0015, versus its
opening value of $1.00. (The AUV reflects the value of the underlying
investments and the deduction of annuity-related expenses.) Based on the percent
change in AUV, total return was 0.15%, -6.16% assuming deduction of the maximum
contingent deferred sales charge of 7% at the end of the period.
LOOKING AHEAD
As we move into 1996 and your Portfolio's first full fiscal year, Pioneer
management will continue to build your Portfolio's holdings. We are optimistic
about overall investing conditions for Swiss-franc denominated bonds and our
ability to deliver solid long-term results.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, appear on page 44. If you have any questions about your
investment in Swiss Franc Bond Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee and certain other expenses, otherwise
returns would have been lower. Past performance does not guarantee future
results. Return and principal value fluctuate so that your investment, when
redeemed, may be worth more or less than original cost.
7
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AMERICA INCOME PORTFOLIO
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This first report on America Income Portfolio covers the period from the
Portfolio's introduction on March 1, 1995, through its fiscal year-end on
December 31, 1995. We want to welcome investors who joined the Portfolio during
the period, a time in which favorable investing conditions of low inflation,
slow economic growth and favorable interest rates enabled the bond market -- and
your Portfolio -- to perform strongly.
We also want to take a moment to thank contract owners who voted on a proposal
to broaden the Portfolio's range of investments in U.S. government securities.
Contract holders approved a proposal at the special meeting held on October 10,
1995, enabling the Portfolio to invest in U.S. government securities issued or
guaranteed as to principal and interest by the U.S. government, its agencies,
authorities or instrumentalities, and in when-issued commitments and repurchase
agreements with respect to these securities. (Detailed voting results appear on
page 59.) The Portfolio's objective continues to be to provide investors with as
high a level of current income as is consistent with the preservation of
capital.
YOUR MANAGEMENT'S CONSERVATIVE FOCUS
By December 31, the Portfolio's assets reached $3.5 million. Your management
focused its efforts on carefully allocating these assets to build your
Portfolio's holdings. At the end of the fiscal year, the Portfolio was invested
in U.S. Treasury securities, as well as obligations of the Government National
Mortgage Association, Federal National Mortgage Association, Federal Home Loan
Mortgage Corp., Student Loan Marketing Association, and Tennessee Valley
Authority.
As of December 31, contract owners accumulated a total of $0.3757 in income
dividends. The Portfolio's 30-day yield was 5.42% as of December 31, 1995.(1)
The Portfolio's net asset value, or NAV (the value of the Portfolio's holdings
plus income dividends, less operating expenses), stood at $10.18, versus its
beginning NAV of $10.00 on March 1, 1995. Total return was 5.68% based on net
asset value and assuming reinvestment of all dividends.
The Portfolio's accumulation unit value, or AUV, rose to $1.0431, versus its
opening value of $1.00. (The AUV reflects the value of the underlying
investments and the deduction of annuity-related expenses.) Based on the percent
change in AUV, total return was 4.68%, -1.92% assuming deduction of the maximum
contingent deferred sales charge of 7% at the end of the period.
LOOKING AHEAD
As we move into 1996 and your Portfolio's first full fiscal year, Pioneer
management will continue to build your Portfolio's conservative holdings. We
also will monitor progress on events that may affect the bond market, namely the
national budget. We are optimistic about overall investing conditions and our
ability to deliver solid long-term results to contract owners. We look forward
to building a lasting and rewarding relationship with you.
The Portfolio's audited Schedule of Investments and financial statements as of
December 31, 1995, begin on page 48. If you have any questions about your
investment in America Income Portfolio, please contact your investment
representative. Thank you for investing with Pioneer.
- ---------------
(1) Yield is based on a standard formula prescribed by the Securities and
Exchange Commission. The Portfolio's investment adviser, Pioneering Management
Corporation, is currently reducing its management fee and certain other
expenses, otherwise returns and yields would have been lower. Past performance
does not guarantee future results. Return and principal value fluctuate so that
your investment, when redeemed, may be worth more or less than original cost.
8
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PERFORMANCE OF A $10,000 INVESTMENT
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The following chart shows the value of an investment made in INTERNATIONAL
GROWTH PORTFOLIO, compared to the growth of the MSCI EAFE Index.
INTERNATIONAL GROWTH PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 10.42%
[INSERT LINE GRAPH]
International MSCI EAFE
Growth Portfolio Index
---------------- -----------
3/1/95 10000 10000
3/31/95 9990 10627
4/28/95 9990 11029
5/31/95 10010 10900
6/30/95 10350 10712
7/31/95 11080 11382
8/31/95 10750 10951
9/30/95 11040 11167
10/31/95 10960 10870
11/30/95 10950 11175
12/31/95 11042 11628
The Morgan Stanley Capital International (MSCI) Europe Australia Far East (EAFE)
Index is an unmanaged, capitalization-weighted index of international stock
markets. The Index includes: Australia, Austria, Belgium, Denmark, Finland,
France, Germany, Hong Kong, Italy, Japan, the Netherlands, New Zealand, Norway,
Singapore/Malaysia, Spain, Sweden, Switzerland, and the United Kingdom. Index
return is calculated monthly and assumes reinvestment of dividends. Portfolio
return does not reflect any annuity-related fees or expenses. You cannot invest
directly in the Index.
The following chart shows the value of an investment made in CAPITAL GROWTH
PORTFOLIO, compared to the growth of the Standard & Poor's 500 Index.
CAPITAL GROWTH PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 17.13%
[INSERT LINE GRAPH]
Capital Growth S&P 500 Index
Portfolio
-------------- -------------
3/1/95 10000 10000
3/31/95 9910 10338
4/28/95 10070 10627
5/31/95 10160 11013
6/30/95 10650 11321
7/31/95 11460 11681
8/31/95 11800 11677
9/30/95 11980 12218
10/31/95 11600 12157
11/30/95 11840 12656
12/31/95 11713 12951
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the Over-the-Counter market. Index return assumes reinvestment of dividends.
Portfolio return does not reflect any annuity-related fees or expenses. You
cannot invest directly in the Index.
Past performance does not guarantee future results. Return and principal
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
9
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PERFORMANCE OF A $10,000 INVESTMENT
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The following chart shows the value of an investment made in REAL ESTATE GROWTH
PORTFOLIO, compared to the growth of the Standard & Poor's 500 Index and the
Wilshire Real Estate Index.
REAL ESTATE GROWTH PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 16.96%
[INSERT LINE GRAPH]
Real Estate Wilshire Real
Growth Portfolio S&P 500 Index Estate Index
----------------- ------------- --------------
3/1/95 10000 10000 10000
3/31/95 10000 10338 10058
4/28/95 9830 10627 9986
5/31/95 10350 11013 10316
6/30/95 10721 11321 10496
7/31/95 11056 11681 10665
8/31/95 11218 11677 10795
9/30/95 11482 12218 10993
10/31/95 11090 12157 10653
11/30/95 11111 12656 10763
12/31/95 11696 12951 11388
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the Over-the-Counter market. The Wilshire Real Estate Index is a
market-capitalization weighted measure of the performance of more than 85 real
estate securities. The Index is 79% REITs (equity and hybrid) and 21% real
estate operating companies. Index returns assume reinvestment of dividends.
Portfolio return does not reflect any annuity-related fees or expenses. You
cannot invest directly in the Indexes.
The following chart shows the value of an investment made in EQUITY-INCOME
PORTFOLIO, compared to the growth of the Standard & Poor's 500 Index.
EQUITY-INCOME PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 23.62%
[INSERT LINE GRAPH]
Equity-Income
Portfolio S&P 500 Index
------------- -------------
3/1/95 10000 10000
3/31/95 10280 10338
4/28/95 10270 10627
5/31/95 10620 11013
6/30/95 10990 11321
7/31/95 11372 11681
8/31/95 11543 11677
9/30/95 11785 12218
10/31/95 11532 12157
11/30/95 12138 12656
12/31/95 12362 12951
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the Over-the-Counter market. Index return assumes reinvestment of dividends.
Portfolio return does not reflect any annuity-related fees or expenses. You
cannot invest directly in the Index.
Past performance does not guarantee future results. Return and principal
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
10
<PAGE>
PERFORMANCE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
The following chart shows the value of an investment made in BALANCED PORTFOLIO,
compared to the growth of the Lehman Brothers Corporate Bond Index and the
Standard & Poor's 500 Index.
BALANCED PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 20.84%
[INSERT LINE GRAPH]
Lehman Brothers
Corporate Bond
Balanced Portfolio S&P 500 Index Index
------------------ ------------- --------------
3/1/95 10000 10000 10000
3/31/95 10200 10338 10082
4/28/95 10180 10627 10252
5/31/95 10570 11013 10735
6/30/95 10810 11321 10832
7/31/95 11152 11681 10784
8/31/95 11333 11677 10958
9/30/95 11655 12218 11087
10/31/95 11332 12157 11232
11/30/95 12010 12656 11447
12/31/95 12084 12951 11635
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange and the Over-the-Counter market. The Lehman Brothers Corporate Bond
Index is an unmanaged measure of investment-grade domestic and yankee bonds.
Bonds in the Index must be publicly issued, fixed-rate and non-convertible.
Index returns assume reinvestment of dividends. Portfolio return does not
reflect any annuity-related fees or expenses. You cannot invest directly in the
Indexes.
The following chart shows the value of an investment made in AMERICA INCOME
PORTFOLIO, compared to the growth of the Lehman Brothers Government Index.
AMERIC INCOME PORTFOLIO
Total Return
(as of December 31, 1995)
Life (3/1/95) 5.68%
[INSERT LINE GRAPH]
Lehman Brothers
America Income Government
Portfolio Bond Index
-------------- ---------------
3/1/95 10000 10000
3/31/95 9994 10063
4/28/95 10008 10195
5/31/95 10042 10606
6/30/95 10103 10687
7/31/95 10044 10648
8/31/95 10113 10772
9/30/95 10201 10876
10/31/95 10310 11041
11/30/95 10448 11213
12/31/95 10568 11373
The Lehman Brothers Government Bond Index is an unmanaged measure of the U.S.
Treasury debt, all publicly issued debt of U.S. government agencies and
quasi-federal corporations and corporate debt guaranteed by the U.S. government.
Index return assumes reinvestment of dividends. Portfolio return does not
reflect any annuity-related fees or expenses. You cannot invest directly in the
Index.
Past performance does not guarantee future results. Return and principal
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
11
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT IN SECURITIES - 92.6%
CONVERTIBLE CORPORATE BOND - 0.3%
$ 6,000 United Microelectronics Corp., Ltd., 1.25%, 6/8/04 $ 7,552
$ 7,552
TOTAL CONVERTIBLE CORPORATE BOND (Cost $10,145)
<CAPTION>
SHARES
<S> <C> <C>
PREFERRED STOCKS - 2.2%
80 Hornbach Holding AG (Non-voting) $ 6,988
350 SAP AG (Non-voting) 53,263
$ 60,251
TOTAL PREFERRED STOCKS (Cost $58,479)
COMMON STOCKS - 90.1%
BASIC INDUSTRIES - 4.6%
CHEMICALS - 0.9%
30 Hoechst AG $ 8,175
5,700 Indo Gulf Fertilizers and Chemicals Corp., Ltd. (G.D.R.) 8,550
600 Reliance Industries, Ltd. (G.D.R.) 8,400
$ 25,125
IRON & STEEL - 2.1%
550 China Steel Corp. (G.D.S.)* $ 9,449
2,000 Hylsamex S.A.* 7,126
1,300 Usinor Sacilor* 17,029
3,000 Yodogawa Steel Works 23,604
$ 57,208
PAPER PRODUCTS - 1.1%
740 Kymmene Oy $ 19,563
230 Mo och Domsjo AB (Series B) 9,783
$ 29,346
MANUFACTURING - 0.5%
50 Sommer-Allibert $ 13,253
$ 124,932
TOTAL BASIC INDUSTRIES
CAPITAL GOODS - 15.3%
AEROSPACE MFG. - 0.6%
2,000 Mitsubishi Heavy Industries Ltd. $ 15,989
CONSTRUCTION, BUILDING MATERIALS & ENGINEERING - 4.3%
4,000 C & P Homes* $ 2,936
3,000 Cemex S.A. 10,747
75 FLS Industries A/S 5,822
100 GTM Entrepose 7,020
1,000 JGC Corp. 10,588
1,000 Kaneshita Construction Co. 13,502
745 Kvaerner AS 26,438
400 Legris Industries S.A.* 13,030
740 Powerscreen International Plc 4,432
4,000 PT Mulia Industrindo 11,294
300 Siam City Cement Public Co., Ltd. 4,691
100 Technip 6,887
5 Wolseley Plc** 35
$ 117,422
MACHINERY - 4.4%
4,000 Hitachi, Ltd. $ 40,409
1,000 Makita Corp. 16,028
10 Mannesmann AG 3,190
1,000 Mitsubishi Corp. 12,336
225 Nordtank Energy Group* 15,637
950 Raymond, Ltd. (G.D.R.) 16,150
330 Stork N.V. 8,198
50 VA Technologie AG 6,359
$ 118,307
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
PRODUCER GOODS - 6.0%
2,000 Canon, Inc. $ 36,330
2,000 Glory, Ltd. 73,825
40,000 M.C. Packaging, Ltd. 14,236
200 Samas-Groep N.V. 7,290
500 Sankyo Co., Ltd. 23,313
1,500 Vitro SA 7,125
$ 162,119
$ 413,837
TOTAL CAPITAL GOODS
CONSUMER DURABLES - 2.5%
MOTOR VEHICLES - 2.5%
800 Catena AB (Series A) $ 6,252
1,700 CIADEA S.A.* 8,791
1,000 Honda Motor Co., Ltd. 20,690
1,000 Suzuki Motor Co., Ltd. 11,171
1,000 Toyota Motor Corp. 21,273
$ 68,177
TOTAL CONSUMER DURABLES
CONSUMER NON-DURABLES - 10.5%
AGRICULTURE & FOOD MANUFACTURING - 0.4%
1,000 Cerebos Pacifico, Ltd. $ 6,941
1,500 Pioneer International, Ltd. 3,881
$ 10,822
HOME PRODUCTS - 0.8%
500 Amway Japan, Ltd. $ 21,176
PERSONAL CARE - 0.4%
1,000 Shiseido Co., Ltd. $ 11,948
RETAIL FOOD - 0.7%
6,000 Cifra S.A. de C.V. (Series B)* $ 6,297
4,000 PT Matahari Putra Prima 7,048
1,200 McBride Plc* 3,584
100 Panamerican Beverages, Inc. 3,200
$ 20,129
RETAIL NON-FOOD - 0.5%
100 Autobacs Seven Co. $ 8,334
200 Pryca Centros Comerciales SA 4,199
$ 12,533
RETAIL - GENERAL - 1.4%
7,820 David Jones, Ltd.* $ 11,952
100 FamilyMart 4,527
5,500 Siam Makro Public Co., Ltd 20,193
$ 36,672
TEXTILES/CLOTHES - 6.3%
150 Adidas AG* $ 7,934
355 Chargeurs S.A. 70,734
50 Hennes & Mauritz AB (Series B) 2,780
8,000 Shoei 69,939
500 Xebio Co., Ltd. 17,728
$ 169,115
$ 282,395
TOTAL CONSUMER NON-DURABLES
ENERGY - 1.2%
OIL & GAS - 1.2%
100 Compagnie Francaise de Petroleum Total $ 6,754
140 Elf Aquitaine 10,323
470 Repsol S.A. 15,411
$ 32,488
TOTAL ENERGY
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
FINANCIAL - 14.1%
COMMERCIAL BANK - 8.6%
2,000 Aomori Bank, Ltd. $ 11,676
1,600 Bangkok Bank Public Co., Ltd. 19,432
1,000 Bank Gdanski (G.D.R.)* 9,725
1,900 Bank of Ayudhya Public Co., Ltd. 10,633
1,000 BPI-SGPS S.A. 12,160
200 Corporacion Bancaria de Espana S.A. 8,249
500 Credit Foncier de France 7,234
2,000 Dah Sing Financial Holdings, Ltd. 4,659
1,000 DCB Holdings Bhd. 2,918
600 Development Bank of Singapore, Ltd. 7,480
2,600 Krung Thai Bank Public Co., Ltd. 10,629
2,000 National Finance & Securities Co., Ltd. 10,716
17,375 PT Bank Dagang Nasional Indonesia 14,261
12,700 PT Bank International Indonesia 42,111
3,000 Public Bank Bhd. 5,749
1,000 Shizuoka Bank 12,628
500 Siam Commercial Bank Public Co., Ltd. 6,589
700 Skandinaviska Enskilda Banken 5,786
1,000 Sumitomo Bank 14,182
1,000 Thai Farmers Bank Public Co., Ltd. 10,081
2,500 Unitas Bank, Ltd. 6,322
$ 233,220
FINANCE - MISCELLANEOUS - 0.9%
150 Compagnie Financiere de Paribas $ 8,231
80 Credit Local de France 6,409
4,000 MBF Capital Bhd. 4,053
4,500 Peregrine Investment Holdings Ltd. 5,824
$ 24,517
INSURANCE - GENERAL - 4.3%
100 Corporacion Mapfre $ 5,601
2,000 Dai-Tokyo Fire and Marine 15,309
1,000 Dowa Fire and Marine 5,605
2,700 Fedsure Holdings, Ltd. 19,646
3,125 Malaysia Assurance Alliance Bhd. 14,169
6,000 National Mutual Asia, Ltd. 5,435
2,200 Pacific & Orient Bhd.* 6,939
1,180 Skandia Forsakrings AB 31,834
350 Societe Centrale des Assurances Generales de France 11,730
$ 116,268
REAL ESTATE - 0.3%
2,000 New World Infrastructure, Ltd.* $ 3,831
7,000 PT Duta Anggada Realty 3,371
$ 7,202
$ 381,207
TOTAL FINANCIAL
SERVICES - 6.3%
COMMERCIAL - 0.3%
60 Sophus Berendsen, A/S (Class B) $ 6,769
BROADCASTING & MEDIA - 1.0%
701 News Corp., Ltd. $ 3,747
2,300 Publishing & Broadcasting Ltd. 8,042
1,000 Tokyo Broadcasting System 16,513
$ 28,302
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 5.0%
450 Astra AB (Series A) $ 17,923
12 Ciba-Geigy AG 10,597
2 Roche Holdings AG 15,878
120 Rhone - Poulenc (Series A) 2,572
3,700 Scandinavian Mobility International* 88,832
$ 135,802
$ 170,873
TOTAL SERVICES
TECHNOLOGY - 15.5%
ELECTRONICS - 10.0%
1,000 Alphatec Electronics Public Co., Ltd. $ 14,289
500 Amper S.A.* 5,918
5,000 LG Electronics Inc. (G.D.R.) 59,000
100 Nintendo Corp. Ltd. 7,625
350 Otra, N.V. 6,226
310 Philips Electronics N.V. 11,223
1,000 Rohm Co.* 56,631
536 Samsung Electronics Co., Ltd. (G.D.S.) 30,360
4 Samsung Electronics Co., Ltd. (G.D.R.)* 392
2,800 Siliconware Precision Industries Co. (G.D.R.)* 46,200
500 Sony Corp. 30,064
250 Yageo Corp. (G.D.R.)* 2,250
$ 270,178
TELEPHONE NETWORKS - 5.5%
300 Advanced Information Service Plc $ 5,311
900 Nokia Corp. (A Shares) 35,378
900 Nokia Corp. (A.D.R.) 34,987
3,365 Telefonaktielbologet LM Ericsson (Series B) 65,746
120 Telefonos de Mexico S.A. (A.D.R.) 3,825
800 Thailand Telephone & Telecom* 4,350
$ 149,597
$ 419,775
TOTAL TECHNOLOGY
TRANSPORTATION - 0.5%
SHIPS & SHIPPING - 0.5%
770 Finnlines Oy $ 12,568
$ 12,568
TOTAL TRANSPORTATION
UTILITIES - 13.7%
ELECTRIC UTILITY - 5.3%
6,000 BE Semiconductor Industry* $ 78,000
1,600 CESC, Ltd. (G.D.R.)* 4,592
2,000 Iberdrola I S.A. 18,312
2,000 Nichicon Corp. 29,530
500 Shandong Huaneng Power (A.D.R.) 3,375
6,000 QPL International Holdings Ltd. 6,755
500 Union Electrica Fenosa S.A. 3,011
$ 143,575
TELECOMMUNICATIONS - 8.4%
110 Alcatel Alsthom S.A. $ 9,491
55,000 Champion Technology Holdings Ltd. 5,765
6 DDI Corp. 46,626
200 ECI Telecommunications Ltd. 4,562
1,890 Korea Mobile Telecommunications Corp. (G.D.S.)* 83,632
1,000 Portugal Telecom S.A. (A.D.R.)* 19,000
50 PT Indonesian Satellite Corp. (A.D.R.) 1,825
4,000 Stet Societa Finanziaria Telefonica SpA 11,346
100 Telecom Argentina Stet France S.A. (A.D.R.) 4,763
7,680 Telecom Italia SpA 11,984
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
250 Tele Danmark A/S (A.D.R.) $ 6,906
5,600 Vodafone Group Plc 20,019
$ 225,919
$ 369,494
TOTAL UTILITIES
MISCELLANEOUS - 5.9%
CONGLOMERATES & HOLDING COMPANIES - 5.9%
2,000 ALFA, S.A. $ 25,550
5,000 Benpres Holdings (G.D.R.)* 25,000
250 G.I.B. Holdings, Ltd. 10,986
1,900 First Capital Corp., Ltd. 5,276
500 Kinnevik AB (Series B Free) 15,593
300 Lagardere Groupe 5,518
1,000 Land & General Holdings 2,169
77,000 PT Bimantara Citra* 64,040
2,000 Technology Resources Industries Bhd.* 5,914
$ 160,046
TOTAL MISCELLANEOUS
$2,435,792
TOTAL COMMON STOCKS (Cost $2,397,569)
$2,503,595
TOTAL INVESTMENT IN SECURITIES (Cost $2,466,193)(a)(b)
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 7.4%
$ 200,000 Repurchase agreement with Chase Manhattan Bank, dated 12/29/95, bearing 5.65%, to 200,094
be repurchased at $200,000 plus accrued interest on 1/2/96, collateralized by a
$199,000 U.S. Treasury Note, 7.25%, 11/15/96. $
$ 200,094
TOTAL TEMPORARY CASH INVESTMENT (Cost $200,000)
$2,703,689
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY
CASH INVESTMENT - 100.0% (Cost $2,666,193)
* Non-income producing security.
** Restricted from resale until a later date to be determined by the company. At December 31,
1995, the value of this security amounted to $35 or 0% of total net assets.
(a) At December 31,1995, the net unrealized gain on investments based on cost for federal income
tax purposes of $2,470,719 was as follows:
Aggregate gross unrealized gain for the investments in which there is an excess
of value over tax cost $ 114,871
Aggregate gross unrealized loss for the investments in which there is an excess
of tax cost over value (81,995)
-----------
Net unrealized gain $ 32,876
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
(b) Investments by country of issue, as a percentage of total value of investment in securities, is
as follows:
Japan 27.9%
France 7.8%
South Korea 6.9%
Sweden 6.2%
Indonesia 5.7%
Denmark 5.0%
Thailand 4.7%
Finland 4.4%
Netherlands 4.4%
Germany 3.2%
Mexico 2.6%
Taiwan 2.6%
Spain 2.4%
Hong Kong 1.9%
Malaysia 1.7%
India 1.5%
Portugal 1.2%
Australia 1.1%
Norway 1.1%
Philippines 1.1%
Switzerland 1.1%
United Kingdom 1.1%
Others (individually less than 1%) 4.4%
-------
100.0%
=======
Purchases and sales of securities (excluding temporary cash investments) for the period ended
December 31, 1995 aggregated $3,363,951 and $953,777, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment of
$200,094) (cost $2,666,193; see Schedule of Investments and Note 1) $2,703,689
Cash 277,263
Foreign currencies, at value (Note 1) 26,636
Receivables--
Investment securities sold 48,794
Trust shares sold 6,597
Dividends and interest (net of foreign taxes withheld) (Note 1) 1,287
Due from Pioneering Management Corporation (Note 2) 52,092
Other 983
----------
Total Assets $3,117,341
----------
LIABILITIES:
Payables--
Investment securities purchased $ 92,513
Forward foreign currency settlement contracts -- net (Notes 1 and 5) 396
Due to affiliates (Note 3) 1,998
Accrued expenses 55,699
----------
Total liabilities $ 150,606
----------
NET ASSETS:
Paid-in capital (Note 1) $2,899,408
Accumulated net realized gain on investments and
foreign currency transactions (Notes 1 and 5) 29,855
Net unrealized gain on investments (Note 1) 37,402
Net unrealized gain on forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (Notes 1 and 5) 70
----------
Total net assets (equivalent to $10.93 per share on
271,494 trust shares outstanding) $2,966,735
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Dividends (net of foreign taxes withheld of $541) $ 5,434
Interest 10,186
--------
Total investment income $ 15,620
--------
EXPENSES:
Management fees (Note 2) $ 8,341
Transfer agent fees (Note 3) 1,514
Registration fees 2,065
Professional fees 23,630
Accounting (Note 2) 52,235
Custodian fees 38,538
Printing 1,400
Fees and expenses of nonaffiliated trustees 551
Miscellaneous 17,580
--------
Total expenses $ 145,854
Less fees paid indirectly (Note 4) (2,999)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (128,062)
--------
Net expenses $ 14,793
--------
Net investment income $ 827
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments (Note 1) $ 56,019
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies (Notes 1 and 5) (5)
--------
$ 56,014
--------
Net unrealized gain from:
Investments (Note 1) $ 37,402
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies (Notes 1 and 5) 70
--------
$ 37,472
--------
Net gain on investments and foreign currency transactions $ 93,486
--------
Net increase in net assets resulting from operations $ 94,313
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 827
Net realized gain on investments and foreign currency transactions 56,014
Net unrealized gain on investments and foreign currency
transactions 37,472
----------
Net increase in net assets resulting from operations $ 94,313
----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.00 per share) $ (827)
In excess of net investment income ($0.02 per share) (2,895)
From net realized gain ($0.09 per share) (23,264)
----------
Net decrease in net assets resulting from distributions to
shareholders $ (26,986)
----------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-------
<S> <C> <C>
Net proceeds from sale of shares 253,350 $2,725,200
Net asset value of shares issued to shareholders in
reinvestment of dividends 2,510 26,986
Cost of shares repurchased (9,366) (102,778)
------- ----------
Net increase in net assets resulting from trust share
transactions 246,494 $2,649,408
=======
----------
Net increase in net assets $2,716,735
NET ASSETS:
Beginning of period (initial capitalization - 25,000 shares) 250,000
----------
End of period $2,966,735
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 10.00
---------
-
Increase from investment operations:
Net investment income $ --
Net realized and unrealized gain on investments and
foreign currency transactions 1.04
---------
-
Total increase from investment operations $ 1.04
Distributions to shareholders from:
Net investment income (0.02)
Net realized gain (0.09)
---------
-
Net increase in net asset value $ 0.93
---------
-
Net asset value, end of period $ 10.93
==========
Total return* 10.42%
Ratio of net operating expenses to average net assets 2.10%**+
Ratio of net investment loss to average net assets (0.25%)**+
Portfolio turnover rate 138.64%**
Net assets, end of period (in thousands) $ 2,967
Ratios assuming no waiver of fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses 17.22%**
Net investment loss (15.37%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net operating expenses 1.75%**
Net investment income 0.10%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 90.3%
BASIC INDUSTRIES - 1.9%
IRON & STEEL - 1.9%
30,000 Armco, Inc.* $ 176,250
----------
TOTAL BASIC INDUSTRIES $ 176,250
----------
CAPITAL GOODS - 14.4%
CONSTRUCTION & ENGINEERING - 9.3%
4,000 Devcon International Corp.* $ 32,000
25,000 Insteel Industries, Inc. 171,875
16,000 Justin Industries 176,000
27,000 Kasler Holding Co.* 175,500
6,000 Lone Star Industries, Inc. 150,000
19,000 Perini Corp.* 156,750
----------
$ 862,125
----------
POLLUTION & WASTE - 1.4%
31,000 Catalytica, Inc.* $ 135,625
----------
PRODUCER GOODS - 3.7%
21,400 Griffon Corp.* $ 192,600
7,000 Rival Manufacturing Co. 154,875
----------
$ 347,475
----------
TOTAL CAPITAL GOODS $1,345,225
----------
CONSUMER DURABLES - 4.7%
CONSUMER LUXURIES - 2.6%
6,000 Ladd Furniture, Inc. $ 78,750
31,000 Meridian Sports, Inc.* 158,875
----------
$ 237,625
----------
MOTOR VEHICLES - 2.1%
22,700 TBC Corp.* $ 195,788
----------
TOTAL CONSUMER DURABLES $ 433,413
----------
CONSUMER NON-DURABLES - 30.1%
RETAIL NON-FOOD - 26.8%
18,200 Best Products Corp., Inc.* $ 86,450
38,000 Drug Emporium, Inc.* 156,750
9,000 Fingerhut Co., Inc. 124,875
15,000 Forschner Group, Inc.* 185,625
8,200 Fuqua Enterprises Inc.* 152,725
43,000 Genesco Inc.* 150,500
575,500 Grossman's Inc.* 647,438
21,500 Kmart Corp. 155,875
47,400 Levitz Furniture, Inc.* 159,975
19,000 The Stride Rite Corp. 142,500
55,000 Sunbelt Nursery Group, Inc.* 127,188
18,200 Syms Corp.* 136,500
5,700 TJX Companies, Inc. 107,587
24,000 Wet Seal, Inc. (Class A)* 162,000
----------
$2,495,988
----------
TEXTILES/CLOTHES - 3.3%
1,800 Galey & Lord, Inc.* $ 19,350
36,000 Hartmax Corp.* 157,500
32,100 Tultex Corp.* 132,412
----------
$ 309,262
----------
TOTAL CONSUMER NON-DURABLES $2,805,250
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
ENERGY - 3.2%
OIL SERVICES - 3.2%
5,500 Crystal Oil Co.* $ 165,687
42,000 Zapata Corp.* 131,250
----------
TOTAL ENERGY $ 296,937
----------
FINANCIAL - 11.2%
FINANCIAL SERVICES - 1.3%
2,000 Arden Group Inc. Class A* $ 119,000
----------
INSURANCE - 6.1%
24,000 American Annuity Group, Inc. $ 285,000
4,163 Financial Security Assurance Holdings Ltd. 103,555
11,000 Western National Corp. 177,375
----------
$ 565,930
----------
REAL ESTATE - 3.8%
15,800 Amresco, Inc. $ 201,450
33,000 Patten Corp.* 156,750
----------
$ 358,200
----------
TOTAL FINANCIAL $1,043,130
----------
SERVICES - 14.0%
HEALTH SERVICES & PERSONAL CARE - 6.9%
20,000 Aequitron Medical, Inc.* $ 152,500
10,000 Allied Healthcare Products Inc. 160,000
10,000 Myriad Genetics, Inc.* 326,250
----------
$ 638,750
----------
PHARMACEUTICALS - 5.9%
65,000 American White Cross Inc.* $ 154,375
14,400 Autoimmune Inc.* 162,000
21,300 Ligand Pharmaceutical Inc.* 228,975
----------
$ 545,350
----------
PUBLISHING - 1.2%
3,000 Value Line, Inc. $ 115,500
----------
TOTAL SERVICES $1,299,600
----------
TECHNOLOGY - 10.8%
COMPUTER SERVICES & SOFTWARE - 6.6%
3,000 Equinox Systems Inc.* $ 22,875
14,500 MICOM Communications Corp.* 110,562
30,000 NetFRAME Systems, Inc.* 159,375
15,000 TGV Software, Inc.* 142,500
24,400 Walker Interactive Systems, Inc.* 181,475
----------
$ 616,787
----------
TECHNOLOGY - 4.2%
15,000 Ballard Power Systems, Inc.* $ 165,821
13,000 Banyan Systems Inc.* 133,250
28,600 Dataflex Corp.* 96,525
----------
395,596
----------
TOTAL TECHNOLOGY $1,012,383
----------
TOTAL COMMON STOCKS (Cost $8,450,475)(a) $8,412,188
PRINCIPAL
AMOUNT ----------
TEMPORARY CASH INVESTMENT - 9.7%
$ 900,000 Repurchase agreement with Chase Manhattan Corp., dated 12/29/95, bearing 5.65% to be
repurchased at $900,000 plus accrued interest on 1/2/96, collateralized by $896,000
U.S. Treasury Notes, 7.25%, 11/15/96 $ 900,424
----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $900,000) $ 900,424
----------
TOTAL INVESTMENT IN SECURITIES - 100.0% (Cost $9,350,475) $9,312,612
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
* Non-income producing security.
(a) At December 31, 1995, the net unrealized loss on investments based on cost for federal income tax
purposes of $8,450,475 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess
of value over tax cost $ 587,229
Aggregate gross unrealized loss for all investments in which there is an excess
of tax cost over value (625,516)
----------
Net unrealized loss $ (38,287)
==========
Purchases and sales of securities (excluding temporary cash investments) for the period ended
December 31, 1995 aggregated $9,185,764 and $977,583, respectively.
</TABLE>
BALANCE SHEET - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment
of $900,424) (cost $9,350,475; see Schedule of Investments and Note 1) $9,312,612
Cash 28,637
Receivables--
Trust shares sold 22,948
Dividends 2,840
Due from Pioneering Management Corporation (Note 2) 14,821
Other 1,299
----------
Total assets $9,383,157
----------
LIABILITIES:
Due to affiliates (Note 3) $ 1,506
Accrued expenses 24,717
----------
Total liabilities $ 26,223
----------
NET ASSETS:
Paid-in capital (Note 1) $9,248,441
Accumulated net realized gain on investments (Note 1) 146,780
Net unrealized loss on investments (Note 1) (38,287)
----------
Total net assets (equivalent to $11.57 per share on
808,983 trust shares outstanding) $9,356,934
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
CAPITAL GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 45,318
Dividends 10,952
--------
Total investment income $ 56,270
--------
EXPENSES:
Management fees (Note 2) $ 17,739
Transfer agent fees (Note 3) 1,506
Registration fees 3,940
Professional fees 25,019
Accounting (Note 2) 44,996
Custodian fees 11,886
Printing 704
Fees and expenses of nonaffiliated trustees 522
Miscellaneous 2,573
--------
Total expenses $108,885
Less fees paid indirectly (Note 4) (1,866)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (65,951)
--------
Net expenses $ 41,068
--------
Net investment income $ 15,202
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (Note 1) $242,294
Net unrealized loss on investments (Note 1) (38,287)
--------
Net gain on investments $204,007
--------
Net increase in net assets resulting from operations $219,209
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
CAPITAL GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 15,202
Net realized gain on investments 242,294
Net unrealized loss on investments (38,287)
----------
Net increase in net assets resulting from operations $ 219,209
----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.02 per share) $ (15,202)
In excess of net investment income ($0.00 per share) (1,654)
From net realized gain ($0.12 per share) (93,860)
----------
Decrease in net assets resulting from distributions
to shareholders $ (110,716)
----------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-------
<S> <C> <C>
Net proceeds from sale of shares 812,531 $9,287,478
Net asset value of shares issued to shareholders in
reinvestment of dividends 9,447 110,716
Cost of shares repurchased (22,995) (249,753)
------- ----------
Net increase in net assets resulting from trust share
transactions 798,983 $9,148,441
=======
----------
Net increase in net assets $9,256,934
NET ASSETS:
Beginning of period (initial capitalization - 10,000 shares) 100,000
----------
End of period $9,356,934
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
CAPITAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $10.00
-------
---
Increase from investment operations:
Net investment income $ 0.02
Net realized and unrealized gain on investments 1.69
-------
---
Net increase from investment operations $ 1.71
Distributions to shareholders from:
Net investment income (0.02)
Net realized gain (0.12)
-------
---
Net increase in net asset value $ 1.57
-------
---
Net asset value, end of period $11.57
==========
Total return* 17.13%
Ratio of net operating expenses to average net assets 1.56%**+
Ratio of net investment income to average net assets 0.48%**+
Portfolio turnover rate 46.09%**
Net assets, end of period (in thousands) $9,357
Ratios assuming no waiver of fees and assumption of expenses
and no reduction for fees paid indirectly:
Net operating expenses 3.95%**
Net investment loss (1.91%)**
Ratios assuming waiver of fees and assumption of expenses
and reduction for fees paid indirectly:
Net operating expenses 1.49%**
Net investment income 0.55%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
REAL ESTATE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT IN SECURITIES - 100%
CAPITAL GOODS - 1.8%
CONSTRUCTION & ENGINEERING
500 Ply Gems Industries, Inc. $ 8,125
--------
TOTAL CAPITAL GOODS (Cost $7,655) $ 8,125
--------
REAL ESTATE INVESTMENT TRUSTS - 95.4%
400 Bradley Real Estate Trust $ 5,400
900 CenterPoint Properties Corp. 20,812
700 Developers Diversified Realty Corp. 21,000
700 Duke Realty Investments, Inc. 21,963
1,700 Equity Inns, Inc. 19,550
700 Equity Residential Property 21,438
700 Factory Stores of America, Inc. 9,188
900 Gables Residential Trust 20,587
1,000 General Growth Properties 20,750
800 HGI Realty, Inc. 18,300
1,000 JP Realty, Inc. 21,875
800 Merry Land & Investment Co., Inc. 18,900
900 National Golf Properties, Inc. 20,587
900 Oasis Residential, Inc. 20,475
600 Post Properties, Inc. 19,125
700 Spieker Properties, Inc. 17,587
800 Sun Communities, Inc. 21,100
800 Tanger Factory Outlet Centers, Inc. 20,000
800 Trinet Corporate Realty Trust, Inc. 21,800
1,000 Walden Residential Properties 20,875
800 Weeks Corporation 20,100
200 Weingarten Realty Investors 7,600
900 Wellsford Residential Properties Trust 20,700
--------
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $403,310) $429,712
--------
REAL ESTATE SERVICES - 2.8%
1,000 Amresco, Inc. $ 12,750
--------
TOTAL REAL ESTATE SERVICES (Cost $7,000) $ 12,750
--------
TOTAL INVESTMENT IN SECURITIES (Cost $417,965)(a) $450,587
========
(a) At December 31, 1995, the net unrealized gain on investments based on cost for
federal income tax purposes of $417,965 was as follows:
$ 35,944
Aggregate gross unrealized gain for all investments in which there is an excess of
value over tax cost
(3,322)
Aggregate gross unrealized loss for all investments in which there is an excess of tax
cost over value
--------
$ 32,622
Net unrealized gain
=========
Purchases and sales of securities (excluding temporary cash investments) for the period
ended December 31, 1995 aggregated $424,105 and $2,350, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
REAL ESTATE GROWTH PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (cost $417,965; see Schedule of
Investments and Note 1) $450,587
Cash 98,525
Receivables--
Trust shares sold 2,653
Dividends 3,792
Due from Pioneering Management Corporation (Note 2) 25,986
Other 962
----------
Total assets $582,505
----------
LIABILITIES:
Payables--
Investment securities purchased $ 42,590
Due to affiliates (Note 3) 1,514
Accrued expenses 25,905
----------
Total liabilities $ 70,009
----------
NET ASSETS:
Paid-in capital (Note 1) $479,874
Net unrealized gain on investments (Note 1) 32,622
----------
Total net assets (equivalent to $11.23 per share on
45,631 trust shares outstanding) $512,496
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
REAL ESTATE GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Dividends $ 9,051
--------
EXPENSES:
Management fees (Note 2) $ 1,879
Transfer agent fees (Note 3) 1,514
Registration fees 2,066
Professional fees 25,043
Accounting (Note 2) 42,160
Custodian fees 10,281
Printing 556
Fees and expenses of nonaffiliated trustees 552
Miscellaneous 2,908
--------
Total expenses $ 86,959
Less fees paid indirectly (Note 4) (1,014)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (82,981)
--------
Net expenses $ 2,964
--------
Net investment income $ 6,087
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments (Note 1) $ 950
Net unrealized gain on investments (Note 1) 32,622
--------
Net gain on investments $ 33,572
--------
Net increase in net assets resulting from operations $ 39,659
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
REAL ESTATE GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 6,087
Net realized gain on investments 950
Net unrealized gain on investments 32,622
--------
Net increase in net assets resulting from operations $ 39,659
--------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.23 per share) $ (5,705)
Tax return of capital ($0.18 per share) (4,425)
Net realized gain ($0.03 per share) (1,332)
--------
Decrease in net assets resulting from distributions
to shareholders $(11,462)
--------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
------
<S> <C> <C>
Net proceeds from sale of shares 37,073 $400,041
Net asset value of shares issued to shareholders in
reinvestment of dividends 1,048 11,462
Cost of shares repurchased (2,490) (27,204)
------ --------
Net increase in net assets resulting from trust share
transactions 35,631 $384,299
======
--------
Net increase in net assets $412,496
NET ASSETS:
Beginning of period (initial capitalization - 10,000 shares) 100,000
--------
End of period $512,496
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
REAL ESTATE GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 10.00
---------
-
Increase from investment operations:
Net investment income $ 0.12
Net realized and unrealized gain on investments 1.55
---------
-
Total increase from investment operations $ 1.67
Distributions to shareholders from:
Net investment income (0.23)
Tax return of capital (0.18)
Net realized gain (0.03)
---------
-
Net increase in net asset value $ 1.23
---------
-
Net asset value, end of period $ 11.23
==========
Total return* 16.96%
Ratio of net operating expenses to average net assets 2.10%**+
Ratio of net investment income to average net assets 2.68%**+
Portfolio turnover rate 1.43%**
Net assets, end of period (in thousands) $ 512
Ratios assuming no waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net operating expenses 45.96%**
Net investment loss (41.18%)**
Ratios assuming waiver of fees and assumption of expenses
by PMC and reduction for fees paid indirectly:
Net operating expenses 1.57%**
Net investment income 3.21%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
EQUITY-INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT IN SECURITIES - 91.3%
CONVERTIBLE PREFERRED STOCKS - 2.8%
1,100 Delta Air Lines, Inc., $3.50 (Series C) $ 65,313
100 Reynolds Metals, 7.00% 5,062
2,000 Rouse Co., 6.50% (Series A) 103,250
570 Sprint, 8.25%, 2000 21,660
--------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $193,091) $ 195,285
--------
COMMON STOCKS - 88.5%
BASIC INDUSTRIES - 11.6%
CHEMICALS - 4.0%
3,441 ARCO Chemical Co. $ 167,319
1,000 Borden Chemicals and Plastics, L.P. 12,750
100 E.I. du Pont de Nemours and Co. 6,987
4,000 A. Schulman, Inc. 90,000
--------
$ 277,056
--------
METALS & MINING - 5.9%
2,500 Allegheny Ludlum Corp. $ 46,250
3,400 Aluminum Company of America 179,775
2,900 Phelps Dodge Corp. 180,525
--------
$ 406,550
--------
PAPER PRODUCTS - 1.7%
900 Louisiana Pacific Corp. $ 21,825
2,100 Union Camp Corp. 100,013
--------
$ 121,838
--------
TOTAL BASIC INDUSTRIES $ 805,444
--------
CAPITAL GOODS - 1.9%
PRODUCER GOODS - 1.9%
300 Manitowoc Company, Inc. $ 9,188
7,500 Westinghouse Electric Corp. 123,750
--------
TOTAL CAPITAL GOODS $ 132,938
--------
CONSUMER DURABLES - 7.8%
MOTOR VEHICLES - 7.8%
2,000 Chrysler Corp. $ 110,750
3,800 Ford Motor Co. 110,200
6,000 General Motors Corp. 317,250
--------
TOTAL CONSUMER DURABLES $ 538,200
--------
CONSUMER NON-DURABLES - 11.4%
AGRICULTURE & FOOD - 9.2%
4,100 CPC International, Inc. $ 281,362
8,000 H.J. Heinz Co. 265,000
2,750 Quaker Oats Co. 94,875
--------
$ 641,237
--------
RETAIL NON-FOOD - 2.2%
950 J.C. Penney Co., Inc. $ 45,244
2,050 May Department Stores Co. 86,612
450 Mercantile Stores Co., Inc. 20,813
--------
$ 152,669
--------
TOTAL CONSUMER NON-DURABLES $ 793,906
--------
ENERGY - 5.2%
OIL & GAS EXTRACTION - 5.2%
1,680 Amoco Corp. $ 120,750
3,300 Chevron Corporation 173,250
1,000 Schlumberger, Ltd. 69,250
--------
TOTAL ENERGY $ 363,250
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
EQUITY-INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
FINANCIAL - 15.2%
COMMERCIAL BANKS - 12.5%
7,000 H.F. Ahmanson & Co. $ 185,500
2,700 The Bank of New York Company, Inc. 131,625
1,000 Corestates Financial Corp. 37,875
2,000 First Chicago NBD Corp. 79,000
1,650 FirsTier Financial, Inc. 72,600
2,400 First Security Corp. 92,400
200 First Tennessee National Corp. 12,100
5,420 Huntington Bancshares, Inc. 130,080
367 Old Kent Financial Corp. 15,093
3,500 PNC Bank Corp. 112,875
--------
$ 869,148
--------
INSURANCE - 2.7%
500 Chubb Corp. $ 48,375
4,000 Safeco Corp. 138,000
--------
$ 186,375
--------
TOTAL FINANCIAL $1,055,523
--------
SERVICES - 9.7%
BROADCASTING & MEDIA - 0.4%
1,300 U.S. West Media Group* $ 24,700
--------
HEALTH & PERSONAL CARE - 4.7%
1,000 Becton Dickinson & Co. $ 75,000
5,400 U.S. Healthcare, Inc. 251,100
--------
$ 326,100
--------
PUBLISHING - 1.8%
1,500 Dun & Bradstreet Corp. $ 97,125
300 McGraw Hill Companies, Inc. 26,138
--------
$ 123,263
--------
PHARMACEUTICALS - 2.8%
1,200 Bristol-Myers Squibb Co. $ 103,050
1,700 Schering-Plough 93,075
--------
$ 196,125
--------
TOTAL SERVICES $ 670,188
--------
TECHNOLOGY - 8.9%
BUSINESS MACHINES - 2.9%
2,000 Apple Computers, Inc. $ 63,750
1,500 IBM Corp. 137,625
--------
$ 201,375
--------
ELECTRONICS - 5.8%
3,000 Diebold, Inc. $ 166,124
3,100 General Motors Corp. (Class H) 152,288
1,180 Thomas & Betts Corp. 87,025
--------
$ 405,437
--------
PHOTO/INSTRUMENTATION - 0.2%
200 Eastman Kodak Co. $ 13,400
--------
TOTAL TECHNOLOGY $ 620,212
--------
TRANSPORTATION - 0.8%
RAILROAD & BUS - 0.8%
300 Conrail, Inc. $ 21,000
500 Union Pacific Corp. 33,000
--------
TOTAL TRANSPORTATION $ 54,000
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
EQUITY-INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
UTILITIES - 16.0%
ELECTRIC UTILITIES - 4.3%
4,000 Allegheny Power System, Inc. $ 114,500
5,600 Western Resources, Inc. 186,900
--------
$ 301,400
--------
GAS UTILITIES - 1.8%
4,300 Brooklyn Union Gas Co. $ 125,775
--------
TELECOMMUNICATIONS - 9.0%
1,600 Ameritech Corp. $ 94,400
2,000 Bell Atlantic Corp. 133,750
3,200 BellSouth Corp. 139,200
800 Frontier Corp. 24,000
2,300 Lincoln Telecommunications Co. 48,587
300 NYNEX Corp. 16,200
3,700 Pacific Telesis Group 124,412
1,300 U.S. West Communications Group 46,475
--------
$ 627,024
--------
UTILITY/OTHER - 0.9%
1,400 Aquarion Co. $ 35,700
800 E'Town Corp. 24,100
--------
$ 59,800
--------
TOTAL UTILITIES $1,113,999
--------
TOTAL COMMON STOCKS (Cost $5,796,185) $6,147,660
--------
TOTAL INVESTMENT IN SECURITIES (Cost $5,989,276)(a) $6,342,945
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 8.7%
$ 600,000 Repurchase Agreement with Citibank Corp., dated 12/29/95, bearing 5.85%, to be
repurchased at $600,000 plus accrued interest on 1/2/96, collateralized by $594,000
U.S. Treasury Notes, 5.625%, 1/31/98 $ 600,293
----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $600,000) $ 600,293
----------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY
CASH INVESTMENT - 100.0% (Cost $6,589,276) $6,943,238
==========
* Non-income producing security.
(a) At December 31, 1995, the net unrealized gain on investments based on cost for
federal income tax purposes of $5,989,276 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess $ 441,234
of value over tax cost
Aggregate gross unrealized loss for all investments in which there is an excess (87,565)
of tax cost over value
----------
Net unrealized gain $ 353,669
==========
Purchases and sales of securities (excluding temporary cash investments) for
the period ended December 31, 1995 aggregated $5,989,291 and $17, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
EQUITY-INCOME PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment of
$600,293) (cost $6,589,276; see Schedule of Investments and Note 1) $6,943,238
Receivables--
Trust shares sold 36,231
Dividends 19,939
Due from Pioneering Management Corporation (Note 2) 18,303
Other 1,320
----------
Total assets $7,019,031
----------
LIABILITIES:
Due to bank $ 79,544
Due to affiliates (Note 3) 1,524
Accrued expenses 24,274
----------
Total liabilities $ 105,342
----------
NET ASSETS:
Paid-in capital (Note 1) $6,557,450
Accumulated undistributed net investment income (Note 1) 2,568
Accumulated net realized gain on investments (Note 1) 2
Net unrealized gain on investments (Note 1) 353,669
----------
Total net assets (equivalent to $12.17 per share based on
568,005 trust shares outstanding) $6,913,689
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
EQUITY-INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Dividends $ 70,698
Interest 5,849
--------
Total investment income $ 76,547
--------
EXPENSES:
Management fees (Note 2) $ 10,878
Transfer agent fees (Note 3) 1,524
Registration fees 906
Professional fees 22,126
Accounting (Note 2) 38,904
Custodian fees 11,776
Regulatory reporting 1,190
Fees and expenses of nonaffiliated trustees 514
Printing 256
Miscellaneous 1,987
--------
Total expenses $ 90,061
Less fees paid indirectly (Note 4) (2,708)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (62,513)
--------
Net expenses $ 24,840
--------
Net investment income $ 51,707
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments (Note 1) $ 2
Net unrealized gain on investments (Note 1) 353,669
--------
Net gain on investments $353,671
--------
Net increase in net assets resulting from operations $405,378
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
EQUITY-INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 51,707
Net realized gain on investments 2
Net unrealized gain on investments 353,669
----------
Net increase in net assets resulting from operations $ 405,378
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.18 per share) $ (49,139)
----------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-------
<S> <C> <C>
Net proceeds from sale of shares 566,392 $6,550,913
Net asset value of shares issued to shareholders in reinvestment
of dividends 4,147 49,139
Cost of shares repurchased (12,534) (142,602)
------- ----------
Net increase in net assets resulting from trust share
transactions 558,005 $6,457,450
=======
----------
Net increase in net assets $6,813,689
NET ASSETS:
Beginning of period (initial capitalization -- 10,000 shares) 100,000
----------
End of period (including accumulated undistributed net investment
income of $2,568) $6,913,689
==========
</TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $10.00
-------
---
Increase from investment operations:
Net investment income $ 0.19
Net realized and unrealized gain on investments 2.16
-------
---
Total increase from investment operations $ 2.35
Distributions to shareholders from:
Net investment income (0.18)
-------
---
Net increase in net asset value $ 2.17
-------
---
Net asset value, end of period $12.17
==========
Total return* 23.62%
Ratio of net operating expenses to average net assets 1.63%**+
Ratio of net investment income to average net assets 2.89%**+
Portfolio turnover rate --%
Net assets, end of period (in thousands) $6,914
Ratios assuming no waiver of fees and assumption of expenses by PMC
and no reduction of fees paid indirectly:
Net operating expenses 5.32%**
Net investment loss (0.80%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net operating expenses 1.47%**
Net investment income 3.05%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT IN SECURITIES - 100.0%
CONVERTIBLE PREFERRED STOCKS - 5.7%
1,195 Delta Air Lines, Inc., $3.50, 1996 $ 70,953
200 Reading & Bates, $1.625, 1996 9,000
700 Rouse Co., 6.50%, 1996 36,138
780 Sprint, 8.25%, 2000 29,640
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $133,349) $ 145,731
COMMON STOCKS - 91.6%
BASIC INDUSTRIES - 12.6%
CHEMICALS - 3.5%
1,200 A. Schulman, Inc. $ 27,000
1,035 Arco Chemical Co. 50,327
1,000 Borden Chemicals & Plastics, L.P. 12,750
$ 90,077
FOREST PRODUCTS - 0.1%
100 Louisiana-Pacific Corp. $ 2,425
IRON & STEEL - 0.7%
1,000 Allegheny Ludlum Corp. $ 18,500
NON-FERROUS METALS - 4.5%
1,000 Aluminum Company of America $ 52,875
1,000 Phelps Dodge Corp. 62,250
$ 115,125
PAPER PRODUCTS - 3.8%
2,000 Union Camp Corp. $ 95,250
TOTAL BASIC INDUSTRIES $ 321,377
CAPITAL GOODS - 2.9%
PRODUCER GOODS - 2.9%
4,500 Westinghouse Electric Co. $ 74,250
TOTAL CAPITAL GOODS $ 74,250
CONSUMER DURABLES - 8.0%
MOTOR VEHICLES - 8.0%
1,950 Chrysler Corp. $ 107,981
1,350 Ford Motor Co. 39,150
1,100 General Motors Corp. 58,163
TOTAL CONSUMER DURABLES $ 205,294
CONSUMER NON-DURABLES - 5.7%
AGRICULTURE & FOOD - 2.9%
2,250 H.J. Heinz Co. $ 74,531
RETAIL FOOD - 0.7%
500 Quaker Oats Co. $ 17,250
RETAIL NON - FOOD - 2.1%
600 J.C. Penney Co., Inc. $ 28,575
600 May Department Stores Co. 25,350
$ 53,925
TOTAL CONSUMER NON-DURABLES $ 145,706
ENERGY - 3.8%
OIL SERVICES - 3.8%
1,200 Chevron Corp. $ 63,000
500 Schlumberger, Ltd. 34,625
TOTAL ENERGY $ 97,625
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
FINANCIAL - 18.2%
COMMERCIAL BANK - 7.8%
200 The Bank of New York Co., Inc. $ 9,750
700 CoreStates Financial Corp. 26,512
1,500 First Chicago NBD Corp. 59,250
500 First Security Corp. 19,250
100 First Tennessee National Corp. 6,050
200 FirsTier Financial, Inc. 8,800
1,710 Old Kent Financial Corp. 70,324
$ 199,936
INSURANCE - 6.8%
5,000 Safeco Corp. $ 172,500
SAVINGS & LOAN - 3.6%
3,500 H. F. Ahmanson & Co. $ 92,750
TOTAL FINANCIAL $ 465,186
SERVICES - 6.2%
BROADCASTING & MEDIA - 0.3%
400 U.S. West Media Group* $ 7,600
HEALTH SERVICES & PERSONAL CARE - 4.0%
1,000 Becton Dickinson & Co. $ 75,000
600 U.S. Healthcare, Inc. 27,900
$ 102,900
PHARMACEUTICALS - 0.6%
300 Schering-Plough Corp. $ 16,425
PUBLISHING - 1.3%
500 The Dun & Bradstreet Corp. $ 32,375
TOTAL SERVICES $ 159,300
TECHNOLOGY - 9.8%
BUSINESS MACHINES - 5.8%
1,000 Diebold, Inc. $ 55,375
1,000 IBM Corp. 91,750
$ 147,125
ELECTRONICS - 1.9%
1,000 General Motors (Class H) $ 49,125
COMPUTER SERVICES - 2.1%
3,000 Advent Software, Inc.* $ 53,250
TOTAL TECHNOLOGY $ 249,500
TRANSPORTATION - 4.7%
RAILROAD & BUS - 4.7%
4,500 Canadian Natural Railway Co.*+ $ 67,500
200 Conrail, Inc. 14,000
600 Union Pacific Corp. 39,600
TOTAL TRANSPORTATION $ 121,100
UTILITIES - 19.7%
ELECTRIC UTILITIES - 4.4%
2,000 Allegheny Power Systems, Inc. $ 57,250
1,650 Western Resources, Inc. 55,069
$ 112,319
GAS UTILITIES - 3.4%
3,000 The Brooklyn Union Gas Co. $ 87,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 11.9%
1,800 Ameritech Corp. $ 106,200
1,000 Bell Atlantic Corp. 66,875
200 Bellsouth Corp. 8,700
500 Frontier Corp. 15,000
800 NYNEX Corp. 43,200
1,500 Pacific Telesis Group 50,437
400 U.S. West Communication Group 14,300
$ 304,712
TOTAL UTILITIES $ 504,781
TOTAL COMMON STOCKS (Cost $2,248,767) $2,344,119
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
U.S. GOVERNMENT OBLIGATION - 2.7%
$69,000 U.S. Treasury Note, 5.125%, 12/31/98 $ 68,784
TOTAL U.S. GOVERNMENT OBLIGATION (Cost $65,932) $ 68,784
TOTAL INVESTMENT IN SECURITIES (Cost $2,448,048)(a) $2,558,634
* Non-income producing security.
+ Partly-paid security - additional subscription payment of C $10.75 per share
will be required on November 28, 1996.
(a) At December 31, 1995, the net unrealized gain on investments based on cost for
federal income tax purposes of $2,448,048 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess $ 152,873
of value over tax cost
Aggregate gross unrealized loss for all investments in which there is an excess (42,287)
of tax cost over value
-----------
Net unrealized gain $ 110,586
===========
Purchases and sales of securities (excluding temporary cash investments) for the period
ended December 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
PURCHASES SALES
---------- -----
<S> <C> <C>
Long-term government securities $2,382,116 $--
Other long-term securities 65,173 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
BALANCED PORTFOLIO
BALANCE SHEET - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (cost $2,448,048; see Schedule of
Investments and Note 1) $2,558,634
Cash 95,404
Receivables--
Dividends 8,282
Interest 1,769
Due from Pioneering Management Corporation (Note 2) 25,332
Other 1,254
----------
Total assets $2,690,675
----------
LIABILITIES:
Payables--
Trust shares repurchased $ 325
Due to affiliates (Note 3) 1,506
Accrued expenses 27,581
----------
Total liabilities $ 29,412
----------
NET ASSETS:
Paid-in capital (Note 1) $2,550,677
Net unrealized gain on investments (Note 1) 110,586
----------
Total net assets (equivalent to $11.87 per share on
224,219 trust shares outstanding) $2,661,263
==========
</TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Dividends $ 4,011
Interest 25,037
--------
Total investment income $ 29,048
--------
EXPENSES:
Management fees (Note 2) $ 3,924
Transfer agent fees (Note 3) 1,506
Registration fees 2,228
Professional fees 25,019
Accounting (Note 2) 42,013
Custodian fees 11,897
Printing 558
Fees and expenses of nonaffiliated trustees 522
Miscellaneous 2,573
--------
Total expenses $ 90,240
Less fees paid indirectly (Note 4) (1,877)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (79,479)
--------
Net expenses $ 8,884
--------
Net investment income $ 20,164
--------
UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments (Note 1) $110,586
--------
Net gain on investments $110,586
--------
Net increase in net assets resulting from operations $130,750
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 20,164
Net unrealized gain on investments 110,586
----------
Net increase in net assets resulting from operations $ 130,750
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.20 per share) $ (20,164)
Tax return of capital ($0.00 per share) (450)
----------
Decrease in net assets resulting from distributions
to shareholders $ (20,614)
----------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-------
<S> <C> <C>
Net proceeds from sale of shares 214,614 $2,454,594
Net asset value of shares issued to shareholders in reinvestment
of dividends 1,781 20,614
Cost of shares repurchased (2,176) (24,081)
------- ----------
Net increase in net assets resulting from trust share
transactions 214,219 $2,451,127
=======
----------
Net increase in net assets $2,561,263
NET ASSETS:
Beginning of period (initial capitalization -- 10,000 shares) 100,000
----------
End of period $2,661,263
==========
</TABLE>
BALANCED PORTFOLIO - FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 10.00
---------
-
Increase from investment operations:
Net investment income $ 0.20
Net realized and unrealized gain on investments 1.87
---------
-
Net increase from investment operations $ 2.07
Distributions to shareholders from:
Net investment income (0.20)
---------
-
Net increase in net asset value $ 1.87
---------
-
Net asset value, end of period $ 11.87
==========
Total return* 20.84%
Ratio of net operating expenses to average net assets 1.76%**+
Ratio of net investment income to average net assets 2.99%**+
Portfolio turnover rate --%
Net assets, end of period (in thousands) $ 2,661
Ratios assuming no waiver of fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses 14.77%**
Net investment loss (10.02)%**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net operating expenses 1.45%**
Net investment income 3.30%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
SWISS FRANC BOND PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
DEBT OBLIGATIONS - 73.5%
AUSTRIA - 24.6%
$25,000 Republic of Austria, 4.50%, 2/12/00 $22,941
DENMARK - 24.5%
25,000 Kingdom of Denmark, 4.25%, 9/30/99 $22,843
GERMANY - 24.4%
25,000 Deutsche Siedlungs LB Bank, 4.25%, 12/28/98 $22,703
TOTAL DEBT OBLIGATIONS (Cost $68,674)(a) $68,487
TEMPORARY CASH INVESTMENT - 26.5%
U.S. GOVERNMENT OBLIGATION - 26.5%
25,000 U.S. Treasury Bill, 4.80%, 3/14/96 $24,740
TOTAL TEMPORARY CASH INVESTMENT (Cost $24,757) $24,740
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $93,431)(b) $93,227
(a) Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
Austria 33.5%
Denmark 33.4%
Germany 33.1%
-------
100.0%
========
(b) At December 31, 1995, the net unrealized gain on investments based on cost for
federal income tax purposes of $93,431 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess
of value over tax cost $ --
Aggregate gross unrealized loss for all investments in which there is an excess
of tax cost over value (204)
-------
Net unrealized loss $ (204)
========
Purchases and sales of securities (excluding temporary cash investments) for the period ended
December 31, 1995 aggregated $68,674 and $0, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
SWISS FRANC BOND PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment
of $24,740) (cost $93,431; see Schedule of Investments and Note 1) $ 93,227
Cash 165,061
Receivables--
Interest (Note 1) 1,128
Due from Pioneering Management Corporation (Note 2) 5,716
Other 965
----------
Total assets $266,097
----------
LIABILITIES:
Payables--
Investment securities purchased $ 69,712
Trust shares repurchased 42
Forward foreign currency settlement contracts -- net (Notes 1 and 5) 92
Due to affiliates (Note 3) 244
Accrued expenses 6,682
----------
Total liabilities $ 76,772
----------
NET ASSETS:
Paid-in capital (Note 1) $188,994
Accumulated undistributed net investment income (Note 1) 537
Net unrealized loss on investments (Note 1) (204)
Net unrealized loss on other assets and liabilities denominated in foreign
currencies (Notes 1 and 5) (2)
----------
Total net assets (equivalent to $15.06 per share on
12,575 trust shares outstanding) $189,325
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
SWISS FRANC BOND PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 782
--------
EXPENSES:
Management fees (Note 2) $ 127
Transfer agent fees (Note 3) 244
Registration fees 305
Professional fees 3,355
Accounting (Note 2) 5,978
Custodian fees 2,764
Printing 61
Fees and expenses of nonaffiliated trustees 61
Miscellaneous 828
--------
Total expenses $ 13,723
Less fees paid indirectly (Note 4) (202)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (13,276)
--------
Net expenses $ 245
--------
Net investment income $ 537
--------
UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net unrealized loss from:
Investments (Note 1) $ (204)
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies (Notes 1 and 5) (2)
--------
Net loss on investments and other foreign currency transactions $ (206)
--------
Net increase in net assets resulting from operations $ 331
========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 537
Net unrealized loss on investments and foreign currency transactions (206)
--------
Net increase in net assets resulting from operations $ 331
--------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-----
<S> <C> <C>
Net proceeds from sale of shares 5,908 $ 88,994
----- --------
Net increase in net assets resulting from trust share
transactions 5,908 $ 88,994
=====
--------
Net increase in net assets $ 89,325
NET ASSETS:
Beginning of period (initial capitalization -- 6,667 shares) 100,000
--------
End of period (including accumulated undistributed net investment
income of $537) $189,325
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
SWISS FRANC BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
NOVEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 15.00
---------
-
Increase from investment operations:
Net investment income $ 0.04
Net unrealized gain on investments and
foreign currency transactions 0.02
---------
-
Net increase in net asset value $ 0.06
---------
-
Net asset value, end of period $ 15.06
==========
Total return* 0.40%
Ratio of net operating expenses to average net assets 2.25%**+
Ratio of net investment income to average net assets 1.70%**+
Portfolio turnover rate --%
Net assets, end of period (in thousands) $ 189
Ratios assuming no waiver of fees and assumption of expenses
and no reduction for fees paid indirectly:
Net operating expenses 69.22%**
Net investment loss (65.27%)**
Ratios assuming waiver of fees and assumption of expenses
and reduction for fees paid indirectly:
Net operating expenses 1.25%**
Net investment income 2.70%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
47
<PAGE>
AMERICA INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 90.5%
$ 110,000 Federal Home Loan Mortgage Corp., 6.55%, 2000 $ 113,918
225,000 Federal National Mortgage Association, 6.8%, 2003 238,745
100,000 Federal National Mortgage Association, 6.85%, 2004 106,656
297,168 Government National Mortgage Association, 7.5%, 2022 to 2023 305,993
100,928 Government National Mortgage Association, 8.0%, 2025 104,523
200,000 Student Loan Marketing Association, 7.5%, 2000 214,250
100,000 Tennessee Valley Authority, Global Bond, 6.375%, 2005 103,437
25,000 U.S. Treasury Notes, 6.125%, 1997 25,305
50,000 U.S. Treasury Notes, 7.875%, 1998 52,797
250,000 U.S. Treasury Notes, 6.875%, 2000 264,103
210,000 U.S. Treasury Notes, 7.125%, 2000 223,551
135,000 U.S. Treasury Notes, 7.875%, 2001 150,777
710,000 U.S. Treasury Notes, 6.375%, 2002 744,499
200,000 U.S. Treasury Notes, 6.5%, 2005 213,062
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $2,811,117)(a) $2,861,616
TEMPORARY CASH INVESTMENT - 9.5%
300,000 Repurchase agreement with Citibank, dated 12/29/95, bearing 5.85% to be
repurchased at $300,000 plus accrued interest on 1/2/96, collateralized by
$297,000 U.S. Treasury Note, 5.625%, 1/31/98 $ 300,195
TOTAL TEMPORARY CASH INVESTMENT (Cost $300,000) $ 300,195
TOTAL INVESTMENT IN SECURITIES - 100.0% (Cost $3,111,117) $3,161,811
(a) At December 31, 1995, the net unrealized gain on investments based on cost
for federal income purposes of $2,811,117 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $ 50,499
Aggregate gross unrealized loss of all investments in which there is
an excess of tax cost over value --
-----------
Net unrealized gain $ 50,499
===========
Note: The Fund's investments in mortgage-backed securities of the Government National Mortgage
Association (GNMA) are interests in separate pools of mortgages. All separate investments in
the issuer which have the same coupon rate have been aggregated for the purpose of presentation
in the schedule of investments.
Purchases and sales of securities (excluding temporary cash investments) for the period ended
December 31, 1995 were $3,469,545 and $659,671, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE>
AMERICA INCOME PORTFOLIO
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment of
$300,195) (cost $3,111,117; see Schedule of Investments and Note 1) $3,161,811
Cash 300,589
Receivables--
Interest 56,926
Due from Pioneering Management Corporation (Note 2) 22,717
Other 1,085
----------
Total assets $3,543,128
----------
LIABILITIES:
Payables--
Trust shares repurchased $ 2,431
Due to affiliates (Note 3) 1,520
Accrued expenses 24,885
----------
Total liabilities $ 28,836
----------
NET ASSETS:
Paid-in capital (Note 1) $3,463,991
Accumulated net realized loss (Note 1) (198)
Net unrealized gain on investments (Note 1) 50,499
----------
Total net assets (equivalent to $10.18 per share on
345,297 trust shares outstanding) $3,514,292
==========
</TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 44,744
--------
EXPENSES:
Management fees (Note 2) $ 3,861
Transfer agent fees (Note 3) 1,520
Registration fees 888
Professional fees 25,197
Accounting (Note 2) 36,040
Custodian fees 11,525
Printing 468
Fees and expenses of nonaffiliated trustees 516
Miscellaneous 3,693
--------
Total expenses $ 83,708
Less fees paid indirectly (Note 4) (926)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (75,790)
--------
Net expenses $ 6,992
--------
Net investment income $ 37,752
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (Note 1) $ (198)
Net unrealized gain on investments (Note 1) 50,499
--------
Net gain on investments $ 50,301
--------
Net change in assets resulting from operations $ 88,053
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE>
AMERICA INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 37,752
Net realized loss on investments (198)
Net unrealized gain on investments 50,499
----------
Net increase in net assets resulting from operations $ 88,053
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.38 per share) $ (37,752)
----------
FROM TRUST SHARE TRANSACTIONS:
<CAPTION>
SHARES
-------
<S> <C> <C>
Net proceeds from sale of shares 364,974 $3,661,407
Net asset value of shares issued to shareholders in reinvestment
of dividends 3,744 37,752
Cost of shares repurchased (33,421) (335,168)
------- ----------
Net increase in net assets resulting from trust share
transactions 335,297 $3,363,991
=======
----------
Net increase in net assets $3,414,292
NET ASSETS:
Beginning of period (initial capitalization -- 10,000 shares) 100,000
----------
End of period $3,514,292
==========
</TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 10.00
---------
-
Increase from investment operations:
Net investment income $ 0.38
Net realized and unrealized gain on investments 0.18
---------
-
Total increase from investment operations $ 0.56
Distributions to shareholders from:
Net investment income (0.38)
---------
-
Net increase in net asset value $ 0.18
---------
-
Net asset value, end of period $ 10.18
==========
Total return* 5.68%
Ratio of net operating expenses to average net assets 1.12%**+
Ratio of net investment income to average net assets 5.22%**+
Portfolio turnover rate 96.38%**
Net assets, end of period (in thousands) $ 3,514
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net operating expenses 11.86%**
Net investment loss (5.52%)**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net operating expenses 0.99%**
Net investment income 5.35%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 100.0%
$ 210,000 Federal Farm Credit Bank, 5.60% 1/18/96 $ 209,477
285,000 Federal Home Loan Bank, 5.60%, 1/3/96 284,956
365,000 Federal Home Loan Bank, 5.63%, 1/8/96 364,658
300,000 Federal Home Loan Bank, 5.53%, 1/12/96 299,539
300,000 Federal Home Loan Bank, 5.51%, 1/16/96 299,357
275,000 Federal Home Loan Mortgage Corp., 5.58%, 1/4/96 274,915
520,000 Federal Home Loan Mortgage Corp., 5.60%, 1/5/96 519,757
350,000 Federal Home Loan Mortgage Corp., 5.50%, 1/30/96 348,503
515,000 Federal National Mortgage Association, 5.44%, 1/9/96 514,455
295,000 Tennessee Valley Authority, 5.52%, 2/1/96 293,643
TOTAL INVESTMENT IN SECURITIES $3,409,260
</TABLE>
BALANCE SHEET
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value based on amortized cost
(see Schedule of Investments and Note 1) $3,409,260
Cash 10,908
Due from Pioneering Management Corporation (Note 2) 27,070
Other 974
----------
Total assets $3,448,212
----------
LIABILITIES:
Payables--
Trust shares repurchased $ 3,029
Due to affiliates (Note 3) 1,519
Accrued expenses 28,092
----------
Total liabilities $ 32,640
----------
NET ASSETS:
Trust shares (unlimited number of shares authorized), amount paid in on
3,415,572 shares outstanding $3,415,572
----------
Total net assets (equivalent to $1.00 per share) $3,415,572
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
51
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 58,322
--------
EXPENSES:
Management fees (Note 2) $ 4,972
Transfer agent fees (Note 3) 1,519
Registration fees 2,072
Professional fees 25,124
Accounting (Note 2) 31,732
Custodian fees 14,447
Printing 560
Fees and expenses of nonaffiliated trustees 553
Miscellaneous 2,775
--------
Total expenses $ 83,754
Less fees paid indirectly (Note 4) (701)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (75,634)
--------
Net expenses $ 7,419
--------
Net investment income $ 50,903
--------
Net increase in net assets resulting from operations $ 50,903
========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FROM OPERATIONS:
Net investment income $ 50,903
----------
Net increase in net assets resulting from operations $ 50,903
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.04 per share) $ (50,903)
----------
FROM TRUST SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Net proceeds from sale of shares $ 8,860,820
Net asset value of shares issued to shareholders in reinvestment
of dividends 50,885
Cost of shares repurchased (5,596,133)
----------
Net increase in net assets resulting from trust share
transactions $ 3,315,572
----------
Net increase in net assets $ 3,315,572
NET ASSETS:
Beginning of period (initial capitalization -- 100,000 shares) 100,000
----------
End of period $ 3,415,572
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD FROM
MARCH 1, 1995 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Net asset value, beginning of period $ 1.00
-------
---
Increase from investment operations:
Net investment income $ 0.04
Distributions to shareholders from:
Net investment income (0.04)
-------
---
Net increase in net asset value $ --
-------
---
Net asset value, end of period $ 1.00
==========
Total return* 4.35%
Ratio of net operating expenses to average net assets 0.81%**+
Ratio of net investment income to average net asset 5.00%**+
Net assets, end of period (in thousands) $3,416
Ratios assuming no waiver of fees and assumption of expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses 8.34%**
Net investment loss (2.53%)**
Ratios assuming waiver of management fees and assumption of expenses by PMC and
reduction for fees paid indirectly:
Net operating expenses 0.74%**
Net investment income 5.07%**
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all
distributions and the complete redemption of the investment at net asset value at the end of period.
** Annualized.
</TABLE>
The accompanying notes are an integral part of these financial statements.
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. Pioneer Variable Contracts Trust (the Trust) is a Delaware business
trust registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The Trust consists of eight separate
portfolios (collectively, the Portfolios): International Growth Portfolio,
Capital Growth Portfolio, Real Estate Growth Portfolio, Equity-Income Portfolio,
Balanced Portfolio, Swiss Franc Bond Portfolio, America Income Portfolio, and
Money Market Portfolio. The Trust was organized on February 6, 1995 and
commenced operations on March 1, 1995, except for the Swiss Franc Bond
Portfolio, which commenced operations on November 1, 1995. Prior to March 1,
1995, the Trust had no operations other than those relating to organizational
matters and the initial capitalization of the Trust by The Pioneer Group, Inc.
(PGI) of $140,000 on February 6, 1995. Subsequent to February 6, 1995, PGI
contributed an additional $710,000 as part of the initial capitalization. On
November 1, 1995, PGI contributed $100,000 as part of the initial capitalization
of the Swiss Franc Bond Portfolio. Shares of each Portfolio may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts.
The Trust's financial statements have been prepared in conformity with
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Trust, which are in conformity
with those generally accepted in the investment company industry:
A. Security Valuation - Security transactions are recorded on trade date.
Each day, equity securities are valued at the last sale price on the principal
exchange where they are traded. Securities that have not traded on the date of
valuation or securities for which sale prices are not generally reported are
valued at the mean between the last bid and asked prices. Trading in foreign
equity securities is substantially completed each day at various times prior to
the close of the New York Stock Exchange. The value of such securities used in
computing the net asset value of the Portfolio's shares are determined as of
such times.
Taxable fixed income securities are valued based on valuations furnished
by an independent pricing service that utilizes a matrix system. This matrix
system reflects such factors as security prices, yields, maturities and ratings
and is supplemented by dealer and exchange quotations and fair market value
information from other sources, as required. Market discount and premium are
accreted and amortized daily on a straight-line basis.
Securities for which market quotations are not available will be valued
at their fair market value as determined by, or under the direction of, the
Board of Trustees (the Trustees). Temporary cash investments are valued at cost
plus accrued interest, which approximates market value. Dividend income is
recorded on the ex-dividend date, except certain dividends from foreign
securities where the ex-dividend date may have passed are recorded as soon as
the Portfolios are informed of the ex-dividend date. Interest income is recorded
on the accrual basis. Interest income for foreign securities is recorded on the
accrual basis net of unrecoverable foreign taxes withheld at the applicable
country rates.
Gains and losses from sales on investments are calculated on the
"identified cost" method for both financial reporting and federal income tax
purposes. It is the Trust's practice to first select for sale those securities
which have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes. In addition, net realized gains on securities in
certain countries give rise to capital gains taxes. It is the Trust's policy to
provide a reserve against net unrealized gains for capital gains taxes on
certain foreign securities held by the Trust. During the year ended December 31,
1995, no capital gains taxes realized on the sale of certain foreign securities
were paid.
Because the Real Estate Growth Portfolio may invest 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 shareholders, and certain REITs have
self-liquidation provisions by which mortgages held may be paid in full and
distributions of capital returns may be made at any time. In addition, the
performance of a REIT may be affected by its failure to qualify for tax-free
pass-through of income under the Internal Revenue Code or its failure to
maintain exemption from registration under the Investment Company Act of 1940.
The International Growth Portfolio's investments in emerging markets or
countries with limited or developing markets may subject the Portfolio to
greater degree of risk than in a developed market. Risks associated with these
developing markets, attributable to political, social or economic factors, 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.
54
<PAGE>
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
B. Foreign Currency Translation - The books and records of the Portfolios
are maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
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. dollar actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in market
price of those securities but are included with the net realized and unrealized
gain or loss on investments.
C. Forward Foreign Currency Contracts - Certain Portfolios are authorized
to enter into forward foreign currency contracts (contracts) for the purchase or
sale of a specific foreign currency at a fixed price on a future date as a hedge
or cross-hedge against either specific investment transactions (settlement
hedges) or portfolio positions (portfolio hedges). All contracts are marked to
market daily at the applicable translation rates, and any resulting unrealized
gains or losses are recorded in the Portfolios' financial statements. The
Portfolios record realized gains and losses at the time a portfolio hedge is
offset by entry into a closing transaction or extinguished by delivery of the
currency. Risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar (see Note 5).
D. Federal Income Taxes - It is the policy of each Portfolio 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 the separate accounts of participating insurance companies.
Therefore, no federal income tax provisions are required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of each Portfolio's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or net
realized gain on investment transactions, or from capital, depending on the type
of book/tax differences that may exist.
A portion of the dividend income recorded by the Real Estate Growth
Portfolio is from distributions by publicly traded REITs and such distributions
for tax purposes may 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. The character of such distributions, for tax
purposes, is determined by the Portfolio based on information received from the
REITs.
Certain Portfolios have made reclassifications as described below. These
reclassifications have no impact on the net asset values of the respective
Portfolios and are designed to present the Portfolios' capital accounts on a tax
basis.
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED DISTRIBUTIONS IN
UNDISTRIBUTED UNDISTRIBUTED EXCESS OF NET
NET INVESTMENT NET REALIZED INVESTMENT TAX RETURN PAID-IN
PORTFOLIO INCOME GAIN INCOME OF CAPITAL CAPITAL
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
International Growth Portfolio $ -- $(2,895) $ 2,895 $ -- $ --
Capital Growth Portfolio -- (1,654) 1,654 -- --
Real Estate Growth Portfolio (382) 382 -- 4,425 (4,425 )
Balanced Portfolio -- -- -- 450 (450 )
</TABLE>
E. Trust Shares - The Portfolios record sales and repurchases of their
trust shares on the trade date. Net losses, if any, as a result of cancellations
are absorbed by Pioneer Funds Distributor, Inc. (PFD), the principal underwriter
for the Trust and an indirect subsidiary of PGI. Dividends and distributions to
shareholders are recorded as of the ex-dividend date.
The America Income Portfolio and Money Market Portfolio declare as daily
dividends substantially all of their respective net investment income. All
dividends are paid on a monthly basis. Short-term capital gain distributions, if
any, may be declared with the daily dividends.
F. Repurchase Agreements - Each Portfolio may enter into repurchase
agreements. At the time the Portfolio enters into a repurchase agreement, the
value of the underlying security (collateral), including accrued interest, will
be equal to
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
or exceed the value of the repurchase agreement, and in the case of repurchase
agreements exceeding one day, the value of the underlying security, including
accrued interest, is required during the term of the agreement to be equal to or
exceed the value of the repurchase agreement. The underlying securities for all
repurchase agreements are held in safekeeping in the customer-only account of
the Trust's custodian, or at the Federal Reserve Bank. If the seller defaults
and the value of the collateral declines, or if bankruptcy proceedings commence
with respect to the seller of the security, realization of the collateral by the
Portfolio may be delayed or limited.
2. Pioneering Management Corporation (PMC) is the Trust's investment
adviser, manages the Portfolios, and is a wholly owned subsidiary of PGI.
Management fees are calculated at the following annual rate:
<TABLE>
<CAPTION>
MANAGEMENT FEE AS A PERCENTAGE
OF EACH PORTFOLIO'S AVERAGE
PORTFOLIO DAILY NET ASSETS
<S> <C>
- ----------------------------------------------------------------------------------------------------
International Growth Portfolio 1.00%
Capital Growth Portfolio 0.65%
Real Estate Growth Portfolio 1.00%
Equity-Income Portfolio 0.65%
Balanced Portfolio 0.65%
Swiss Franc Bond Portfolio 0.65%
America Income Portfolio 0.55%
Money Market Portfolio 0.50%
</TABLE>
Prior to July 17, 1995, Pioneer Winthrop Advisers (PWA), a joint
venture between PGI and Winthrop Financial Associates, served as investment
adviser to the Real Estate Growth Portfolio and was responsible for the overall
management of the Portfolio's business affairs, subject to the authority of the
Trustees. All of the Real Estate Growth Portfolio's investment decisions were
made by PWA's advisory committee that relied on investment subadvisory services
provided by PMC and by Winthrop Advisors Limited Partnership pursuant to their
investment subadvisory contracts with the Portfolio. As compensation for its
advisory services and certain expenses which it incurred, PWA was entitled to a
management fee equal to 1.00% per annum of the Portfolio's average daily net
assets.
PMC has agreed to waive its management fees and to assume other
operating expenses for the Portfolios to the extent necessary to limit expenses
of each Portfolio to the following percentage of its average daily net assets:
<TABLE>
<CAPTION>
EXPENSE LIMITATION AS A
PERCENTAGE OF EACH PORTFOLIO'S
PORTFOLIO AVERAGE DAILY NET ASSETS
<S> <C>
- ---------------------------------------------------------------------------------------------------
International Growth Portfolio 1.50%
Capital Growth Portfolio 1.25%
Real Estate Growth Portfolio 1.25%
Equity-Income Portfolio 1.25%
Balanced Portfolio 1.25%
Swiss Franc Bond Portfolio 1.25%
America Income Portfolio 1.00%
Money Market Portfolio 0.75%
</TABLE>
Prior to November 1, 1995, PMC had voluntarily agreed to limit
management fees and other operating expenses to the extent that such expenses
exceeded the following percentage of certain Portfolios' average daily net
assets:
<TABLE>
<CAPTION>
EXPENSE LIMITATION AS A
PERCENTAGE OF EACH PORTFOLIO'S
PORTFOLIO AVERAGE DAILY NET ASSETS
<S> <C>
- ---------------------------------------------------------------------------------------------------
International Growth Portfolio 2.00%
Capital Growth Portfolio 1.75%
Real Estate Growth Portfolio 1.75%
Equity-Income Portfolio 1.75%
Balanced Portfolio 1.75%
</TABLE>
56
<PAGE>
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
- --------------------------------------------------------------------------------
PMC's agreement to waive its management fees and to assume certain
expenses of the Portfolios is temporary and voluntary and may be revised or
terminated at any time.
In addition, under the management agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolios.
3. PSC, a wholly owned subsidiary of PGI, provides transfer agent and
shareholder services to the Trust at negotiated rates. Included in due to
affiliates are transfer agent fees payable to PSC at December 31, 1995:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
<S> <C>
- ---------------------------------------------------------------------------------------
International Growth Portfolio $1,998
Capital Growth Portfolio 1,506
Real Estate Growth Portfolio 1,514
Equity-Income Portfolio 1,524
Balanced Portfolio 1,506
Swiss Franc Bond Portfolio 244
America Income Portfolio 1,520
Money Market Portfolio 1,519
</TABLE>
4. The Trust has entered into certain expense offset arrangements
resulting in a reduction in the Portfolios' total expenses. For the period ended
December 31, 1995, the Portfolios' expenses were reduced under such arrangements
as follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
<S> <C>
- ---------------------------------------------------------------------------------------
International Growth Portfolio $2,999
Capital Growth Portfolio 1,866
Real Estate Growth Portfolio 1,014
Equity-Income Portfolio 2,708
Balanced Portfolio 1,877
Swiss Franc Bond Portfolio 202
America Income Portfolio 926
Money Market Portfolio 701
</TABLE>
5. At December 31, 1995, certain Portfolios had entered into various
contracts that obligate the Portfolios to deliver currencies at specified future
dates. At the maturity of a contact, the Portfolios must make delivery of the
foreign currency. Alternatively, prior to the settlement date of a portfolio
hedge, the Portfolios may close out such contracts by entering into an
offsetting hedge contract. As of December 31, 1995, the Portfolios had no
outstanding portfolio hedges. The International Growth Portfolio's gross forward
foreign currency settlement contracts receivable and payable were $18,897 and
$19,293, respectively, resulting in a net payable of $396. The Swiss Franc Bond
Portfolio's gross forward foreign currency settlement contracts receivable and
payable were $70,221 and $70,313, respectively, resulting in a net payable of
$92.
57
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER VARIABLE CONTRACTS
TRUST:
We have audited the accompanying balance sheets of Pioneer Variable Contracts
Trust (comprising the International Growth Portfolio, Capital Growth Portfolio,
Real Estate Growth Portfolio, Equity-Income Portfolio, Balanced Portfolio, Swiss
Franc Bond Portfolio, America Income Portfolio, and Money Market Portfolio),
including the schedules of investments, as of December 31, 1995, and the related
statements of operations, statements of changes in net assets and financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Portfolios composing the Pioneer Variable Contracts Trust as
of December 31, 1995, the results of their operations, the changes in their net
assets and financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 2, 1996
58
<PAGE>
RESULTS OF CONTRACT OWNER MEETINGS
- ------------------------------------------------------------------------
REAL ESTATE GROWTH PORTFOLIO CONTRACT HOLDER MEETING
On October 10, 1995, Pioneer Variable Contracts Trust -- Real Estate Growth
Portfolio held a special meeting of contract owners. The Proposal was passed by
contract owner vote; the following are the detailed results of the vote for the
Proposal presented.
PROPOSAL 1 -- TO APPROVE THE TERMS OF A NEW MANAGEMENT CONTRACT WITH PIONEERING
MANAGEMENT CORPORATION AND TO APPROVE THE PAYMENT TO PIONEERING MANAGEMENT
CORPORATION OF FEES UNDER AN INTERIM MANAGEMENT CONTRACT
<TABLE>
<S> <C>
Affirmative.............................................................................. 21,362.137
Against.................................................................................. --
Abstain.................................................................................. 857.427
</TABLE>
AMERICA INCOME PORTFOLIO CONTRACT HOLDER MEETING
On October 10, 1995, Pioneer Variable Contracts Trust -- America Income
Portfolio held a special meeting of contract owners. The Proposal was passed by
contract owner vote; the following are the detailed results of the vote for the
Proposal presented.
Proposal 1 -- To approve the elimination of the Portfolio's fundamental
investment restriction limiting investment to certain types of U.S. government
securities
<TABLE>
<S> <C>
Affirmative.............................................................................. 41,709.341
Against.................................................................................. --
Abstain.................................................................................. 10,801.785
</TABLE>
59
<PAGE>
DISTRIBUTIONS MADE DURING THE PERIOD ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
During the period ended December 31, 1995, the Trust paid the following
distributions from net investment income:
<TABLE>
<CAPTION>
INTERNATIONAL CAPITAL REAL ESTATE EQUITY- AMERICA
TO SHAREHOLDERS PAYMENT GROWTH GROWTH GROWTH INCOME BALANCED INCOME
OF RECORD* DATE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------ ------------------- ------------- --------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- -- March 31, 1995 $ -- $ -- $ -- $ -- $ -- $ 0.0041
- -- April 28, 1995 -- -- -- -- -- 0.0037
- -- May 31, 1995 -- -- -- -- -- 0.0041
June 22, 1995 June 30, 1995 -- -- 0.1500 0.0700 0.0700 0.1011
- -- July 31, 1995 -- -- -- -- -- 0.0412
- -- August 31, 1995 -- -- -- -- -- 0.0384
September 21, 1995 September 29, 1995 -- -- 0.1700 0.0400 0.0600 0.0460
- -- October 31, 1995 -- -- -- -- -- 0.0462
- -- November 30, 1995 -- -- -- -- -- 0.0449
December 20, 1995 December 28, 1995 0.0152 0.0220 0.0930 0.0707 0.0722 0.0460
------- ------- ------- ------- ------- -------
Total $0.0152 $ 0.0220 $0.4130** $ 0.1807 $0.2022 $ 0.3757
------- ------- ------- ------- ------- -------
<CAPTION>
MONEY
TO SHAREHOLDERS MARKET
OF RECORD* PORTFOLIO
- ------------------ ---------
<S> <C>
- -- $ 0.0044
- -- 0.0041
- -- 0.0041
June 22, 1995 0.0042
- -- 0.0042
- -- 0.0040
September 21, 1995 0.0046
- -- 0.0073
- -- 0.0041
December 20, 1995 0.0018
-------
$ 0.0428
-------
</TABLE>
During the period ended December 31, 1995, the Trust paid the following
distributions from net realized gain:
<TABLE>
<CAPTION>
REAL
INTERNATIONAL CAPITAL ESTATE
TO SHAREHOLDERS PAYMENT GROWTH GROWTH GROWTH
OF RECORD DATE PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------ ------------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
December 20,1995 December 28,1995 $ 0.0950 $ 0.1225 $ 0.0322
------- ------- -------
</TABLE>
The Real Estate Portfolio hereby designates $382 as a capital gain dividend for
the purposes of the dividend paid deduction.
* America Income and Money Market Portfolios distribute daily to record date
shareholders.
** Includes tax return of capital distributions of $0.1827.
TRUSTEES' FEES, PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF TRUSTEES AND
OFFICERS
(UNAUDITED)
- --------------------------------------------------------------------------------
The aggregate direct remuneration paid by the Trust to nonaffiliated trustees
and officers during the period ended December 31, 1995, plus expenses incurred
in attending trustees meetings, are described below. Fees of trustees who are
affiliated with or "interested persons" of Pioneering Management Corporation,
the investment adviser, of the Trust are reimbursed to the Trust by Pioneering
Management Corporation in accordance with the management contract with the Trust
are described below. The Pioneer Group, Inc., the parent company of Pioneering
Management Corporation, is a publicly held corporation of which Mr. Cogan,
Chairman and President of the Trust, owned approximately 15% of the outstanding
shares of capital stock at December 31, 1995.
<TABLE>
<CAPTION>
FEES OF AFFILIATED
TRUSTEES REIMBURSED
PORTFOLIO DIRECT REMUNERATION PAID BY PMC
- ------------------------------- ------------------------ ------------------------
<S> <C> <C>
International Growth Portfolio $470 $105
Capital Growth Portfolio 469 105
Real Estate Portfolio 469 104
Equity-Income Portfolio 469 104
Balanced Portfolio 470 104
Swiss Franc Bond Portfolio 469 104
America Income Portfolio 469 104
Money Market Portfolio 469 104
</TABLE>
60
<PAGE>
PIONEER VISION
Variable Annuity
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., Chairman and President
David D. Triple, Executive Vice President
William H. Keough, Treasurer
Joseph P. Barri, Secretary
Stephen G. Kasnet, Vice President
Trustees
John F. Cogan, Jr.
Richard H. Egdahl, M.D.
Marguerite A. Piret
David D. Tripple
Stephen K. West
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Legal Counsel
Hale and Dorr
Independent Public Accountants
Arthur Andersen LLP
Issuer
Allmerica Financial Life Insurance and Annuity Company In New York
and Hawaii, issued by First Allmerica Financial Life Insurance Company,
Policy Form A3023- GRC.
General Distributor
Allmerica Investments, Inc.
440 Lincoln Street
Worcester, MA 01653
Pioneer Vision may not be available in all states.
This report must be preceded or accompanied by a prospectus for Pioneer
Vision variable annuity, which includes more information about charges and
expenses. Please read the prospectus carefully before you invest or send money.
0396-2968
c Pioneer Funds Distributor, Inc.
