[COVER]
PIONEER VISION(SM)
VARIABLE ANNUITY [PIONEER LOGO]
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
Semiannual Report
June 30, 1996
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TABLE OF CONTENTS
Page
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Letter from the Chairman 1
Portfolio Management Discussion
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
Schedule of Investments and Financial Statements
International Growth Portfolio 9
Capital Growth Portfolio 19
Real Estate Growth Portfolio 26
Equity-Income Portfolio 31
Balanced Portfolio 38
Swiss Franc Bond Portfolio 45
America Income Portfolio 51
Money Market Portfolio 55
Notes to Financial Statements 58
Results of Contract Owner Meeeting 61
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Dear Contract Owner,
Welcome to Pioneer Vision's semiannual report covering the six months from
December 31, 1995, through June 30, 1996. Pioneer Vision offers investors a
selection of eight investment Portfolios designed to suit a variety of needs
and goals, with the added tax and insurance benefits of an annuity. The wide
array of investment options continues to have broad appeal, and the
Portfolios had a total of over $90 million in net assets by June 30.
A Period of Shifting Financial Markets
The semiannual period began with the same enthusiasm that characterized
financial markets in 1995. Last year, interest rates fell and stock and bond
prices rose sharply in the United States and, to a lesser extent, overseas.
Early in 1996, however, investors became concerned about the possibility of a
sharp pick-up in U.S. economic growth. As a result, interest rates rose and
stock and bond prices fell, even though the feared rise in inflation has yet
to materialize.
In the United States, last year's big stock winners became noticeably more
volatile, especially technology issues. Overall, investors preferred large,
familiar companies. Reflecting this, the Dow Jones Industrial Average
generated a total return of 11.75% over the six months ended June 30. The
broader Standard & Poor's 500 Index returned 10.08%, while small company
stocks, represented by the Russell 2000 Index, returned 10.36%. (It says a
lot about investor expectations that many individuals and institutions
consider these returns disappointing.) Overseas, results were less
impressive, with non-U.S. markets returning 3.72% to U.S.-dollar based
investors, according to the Morgan Stanley Capital International (MSCI)
Europe, Australia, Far East (EAFE) Index.
Bond investors probably felt the change in mood the most as the Federal
Reserve (the Fed) reversed its course after cutting short-term interest rates
in January. Up to that point, the Fed had been acting to stimulate U.S.
economic growth. But when February's employment report showed the biggest job
gain in 12 years, the Fed became concerned the economy could be overheating
and that inflation might rise. As a result, there were no more Fed rate-cuts,
and interest rates rose across the board. By June 30, the benchmark 30-year
Treasury bond yield was 6.89%, versus 5.95% on December 31.
Investors in Money Market Portfolio benefited from rising interest rates,
since the Portfolio's income and yield generally reflect trends in short-term
interest rates. The Portfolio generated a total of $0.0218 per share in
dividends over the six months, and provided a 2.20% total return for the
period based on net asset value, reflecting its conservative nature and goal
of maintaining a stable price of $1 per share. Based on accumulation unit
value (AUV), the Portfolio generated a return of 1.50%, -4.89% if the maximum
7% contingent deferred sales charge was applied at the end of the period.
Looking Ahead
As we move further into 1996, we believe Pioneer Vision will continue to
provide contract owners with the investing, tax and insurance benefits it was
designed to offer. The following pages provide detailed information about the
investment strategy and results for each of 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.
Respectfully,
/s/John Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
1
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International Growth Portfolio
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International Growth Portfolio completed the first half of its second fiscal
year on June 30, 1996. We are pleased to note that investor interest has
remained strong; at the end of the period net assets in the Portfolio totaled
over $12 million. We also are happy to report that despite lackluster results
from some established markets, emerging markets generally were strong.
On June 30, the Portfolio's net asset value (NAV) stood at $11.68, versus
$10.93 on December 31, 1995. For the six months, investors received $0.034 in
capital gains distributions. Total return was 7.17% based on NAV and assuming
the reinvestment of distributions. The Portfolio's accumulation unit value
(AUV) rose to $1.1642, versus $1.0940 six months ago. (The AUV reflects the
value of the underlying investments and the deduction of annuity-related
expenses.) Based on the change in AUV, total return was 6.42%, -0.28%
assuming deduction of the maximum 7% contingent deferred sales charge at the
period's end.
Our Approach to International Growth Opportunities
International Growth Portfolio pursues well-valued companies in established
and emerging markets outside the United States. We focus on attributes such
as company operations, cash flows and management. We also evaluate economic
and governmental conditions that could affect companies' growth prospects.
Our opportunistic approach keeps the Portfolio well- diversified, offering a
mix of established and emerging markets.
During the six-month period, we found many promising companies in developing
markets such as Korea and Taiwan. In addition to generally low interest rates
and inflation, each country offers intriguing opportunities for investors.
The Portfolio's largest position is in Korea Mobile Telecommunications, a
cellular phone company whose stock has increased in price strongly in 1996
and, in our view, still remains well-valued. In Taiwan, we like Siliconware
Precision Industries, an integrated- circuit packaging company. Elsewhere in
Southeast Asia, your management favors Thailand and Indonesia, where markets
started to improve in early 1996, thanks to renewed investor interest.
At June 30, your Portfolio held 190 companies in 11 sectors throughout 32
countries. This chart shows the Portfolio's geographical distribution at the
period's end.
Geographical Distribution
(Percentage of equity investments as of June 30, 1996)
Other 1%
Latin America 7%
Japan 10%
Europe 37%
Asia/Pacific Basin
(excluding Japan) 45%
Looking Ahead
Emerging markets currently are benefiting from attractive valuations and
economic and government initiatives designed to enhance competitiveness.
These markets should continue to offer opportunities, since inflation and
interest rates generally remain under control and, in our view, many stocks
are still trading at extremely low price levels. Even developed markets,
while not as strong as a group, nonetheless offer select values with strong
potential, which we expect will continue.
International Growth Portfolio lets you diversify into emerging and
established countries that are difficult, if not impossible, for individuals
to participate in on their own. Your management also monitors investing
risks, including currency fluctuations and economic and political
instabilities. While short-term setbacks and volatility remain an inevitable
part of overseas investing, we expect the Portfolio's broad assortment of
companies and countries will offer investors solid results over the long
term.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, appear on page 9. If you have any questions about your
investment in International Growth Portfolio, please contact your investment
representative.
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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 its original cost.
2
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Capital Growth Portfolio
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Capital Growth Portfolio completed the first half of its second fiscal year on
June 30, 1996. We are pleased to report that your Portfolio continued to perform
well, despite a modest decline in June, and achieved a strong six-month return.
Investor interest also remained strong, and net assets in the Portfolio reached
$28 million by the period's end.
On June 30, the Portfolio's net asset value (NAV) stood at $13.29, versus
$11.57 on December 31, 1995. For the six months, investors received $0.073 in
capital gains distributions. Total return was 15.49% based on NAV and
assuming the reinvestment of distributions. The Portfolio's accumulation unit
value (AUV) rose to $1.3282, versus $1.1581 six months ago. (The AUV reflects
the value of the underlying investments and the deduction of annuity-related
expenses.) Based on the change in AUV, total return was 14.69%, 7.69%
assuming deduction of the maximum 7% contingent deferred sales charge at the
period's end.
Our Value Approach to Finding Opportunity
Your management employs a strict "aggressive value" strategy for Capital
Growth Portfolio. We research companies on an individual basis and invest
when we believe a stock is undervalued compared to the company's assets and
growth prospects. We examine basics such as cash flow, quality of management,
balance sheet and earnings growth, as well as any major change or
restructuring a company may be undergoing.
The companies we acquired and added to the Portfolio over the past six months
represent a wide assortment of industries. We saw good value in select
companies in the retail sector, an area that lagged most other industries in
1995. Many retailers began to demonstrate renewed signs of life in 1996,
which benefited your Portfolio for much of the period. While results slipped
in June because of declines in the overall market, we still expect strong
results from Kmart, Grossman's, Melville and Woolworth.
This chart shows the Portfolio's diverse array of industries at the period's
end.
Sector Distribution
(Percentage of equity holdings as of June 30, 1996)
Basic Industries 2%
Energy 5%
Consumer Durables 6%
Financial 10%
Services 12%
Capital Goods 16%
Technology 20%
Consumer Non-Durables 29%
Looking Ahead
Financial markets of late have become increasingly volatile; we think this
trend is likely to continue over the near term, especially given the
uncertain strength of the economy. But rather than get bogged down in market
forecasting, your management focuses on what we think is the most effective
way to invest for the long term -- identifying the potential of individual
companies. By doing so, we expect to give contract owners a diversified,
well-managed portfolio that provides solid long-term results.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, appear on page 19. If you have any questions about your
investment in Capital Growth Portfolio, please contact your investment
representative.
- -----------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee, 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 its original cost.
3
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Real Estate Growth Portfolio
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Real Estate Growth Portfolio completed the first half of its second fiscal
year on June 30, 1996. Domestic equity markets continued to be strong, thanks
primarily to high-flying technology stocks. These issues became increasingly
volatile as the period progressed, however, and investors grew concerned with
the market's ability to sustain their lofty prices. This mood may have helped
set the stage for investors to begin looking elsewhere for better values,
including real estate investment trusts (REITs).
Shifting focus to the Portfolio itself, in March contract owners approved the
proposal to add Boston Financial Securities as the Portfolio's subadviser. We
appreciate your support and are confident Boston Financial will be an
important link in the chain of the Portfolio's success. For detailed voting
results, please turn to page 61.
Your Portfolio's Performance and Strategy
For the six months, investors received $0.31 in income dividends. On June 30,
the Portfolio's net asset value (NAV) stood at $11.51, versus $11.23 on
December 31, 1995. Total return was 5.30% based on NAV and assuming the
reinvestment of distributions. The Portfolio's accumulation unit value (AUV)
rose to $1.2091, versus $1.1563 six months ago. (The AUV reflects the value
of the underlying investments and the deduction of annuity-related expenses.)
Based on the change in AUV, total return was 4.57%, -2.02% assuming deduction
of the maximum 7% contingent deferred sales charge at the period's end.
Real Estate Growth Portfolio invests for long-term capital growth and current
income. To select REITs, your management focuses on company basics such as
balance sheets and income statements, quality management and favorable
earnings potential. We also review the growth and income potential of
different property types such as apartment complexes, warehouses and outlet
malls, as well as demographics such as population trends and job growth. To
that end, we look to Boston Financial. Boston Financial brings the Portfolio
in-depth expertise in a number of aspects of real estate, including property
acquisition and asset and property management.
Over the course of the past six months, we saw signs of strong performance
from full-service hotels. We added Felcor Suite Hotels, a well-managed
company with owner interests in 31 Embassy Suites and Doubletree Hotels
located primarily in the South and Southwest. Another area we continued to
favor was the increasingly popular office sector. With employment currently
strong, so too is demand for office space, creating the potential for rents
to increase. We also added Liberty Property Trust, a company involved with
office and industrial properties along the Eastern seaboard.
Moving Forward
Debates will undoubtedly persist about how high financial markets will go. We
believe no one can predict stock market movements into the future; however,
we think it is likely the overall market will remain volatile near-term,
especially given the uncertain outlook for interest rates, the strength of
the economy and corporate earnings. Your management, however, does not get
bogged down in market forecasting. Instead, we remain focused on what we
think is the most effective way to invest for the long-term -- working with
Boston Financial to identify individual REITs we think offer exceptional
prospects.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, appear on page 26. If you have any questions about your
investment in Real Estate Growth Portfolio, please contact your investment
representative.
- -----------
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 its original cost.
4
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Equity-Income Portfolio
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This report covers the six months ended June 30, 1996, the first half of
Equity-Income Portfolio's second fiscal year. The Portfolio continued to grow
in popularity, and by June 30 had reached $25 million in net assets. We wish
to welcome the investors who joined the Portfolio over the recent period.
On June 30, the Portfolio's net asset value (NAV) was $12.55 per share,
versus $12.17 on December 31, 1995. Over the course of the half-year,
investors received $0.13 in income dividends. Total return for the six months
was 4.19%, based on NAV and assuming the reinvestment of distributions. The
Portfolio's accumulation unit value (AUV) rose to $1.2646 by June 30, up from
$1.2222 on December 31. (The AUV reflects the value of the underlying
investments and the deduction of annuity-related expenses.) Based on the
change in AUV, total return was 3.46%, -3.05% assuming deduction of the
maximum 7% contingent deferred sales charge at the period's end.
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 seeks to provide a current dividend
yield above that of the Standard & Poor's 500 Index.
Our investment strategy for the Portfolio is to keep it fully invested,
rather than attempting to "time" the stock market, particularly when the
market is volatile. 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 present on
June 30.
Sector Distribution
(Percentage of equity investments as of June 30, 1996)
Transportation 1%
Capital Goods 3%
Technology 5%
Consumer Durables 6%
Basic Industries 8%
Consumer Non-Durables 8%
Energy 10%
Services 10%
Financial 23%
Utilities 26%
Looking Ahead
As we move into the second half of the Portfolio's fiscal year, we plan to
follow the same principles we have exercised to date: We will look for U.S.
companies whose stocks offer the opportunity for both growth and income. As
the fast-rising stock market we have seen over the past year and a half 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 unaudited Schedule of Investments and financial statements as
of June 30, 1996, begin on page 31. If you have any questions about your
investment in Equity-Income Portfolio, please contact your investment
representative.
- ----------
The Portfolio's investment adviser, Pioneering Management Corporation, is
currently reducing its management fee, 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 its original cost.
5
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Balanced Portfolio
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This report covers the first half of Balanced Portfolio's second fiscal year.
We wish to welcome those of you who joined the Portfolio during the six
months ended June 30, 1996. At the close of the semiannual period, the
Portfolio totaled over $7 million in assets.
On June 30, the Portfolio's net asset value (NAV) was $12.34 per share,
versus $11.87 on December 31, 1995. Over the six months, investors received
$0.12 in income dividends. Total return for the six months was 4.98% based on
NAV and assuming the reinvestment of distributions. The Portfolio's
accumulation unit value (AUV) was $1.2143 by June 30, versus $1.1648 on
December 31. (The AUV reflects the value of the underlying investments and
the deduction of annuity-related expenses.) Based on the change in AUV, total
return was 4.25%, -2.32% assuming deduction of the maximum 7% contingent
deferred sales charge 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 six months, 63% of the Portfolio's long-term holdings were
equities and 37% bonds, reflecting our general emphasis on stocks during the
course of the period.
When selecting equities, so far we have emphasized mainly dividend-paying
stocks we believe will be less volatile than more aggressive, growth-type
issues in a volatile stock market. The accompanying chart shows the variety
of industries present on June 30.
Sector Distribution
(Percentage of equity investments as of June 30, 1996)
Energy 6%
Capital Goods 6%
Consumer Durables 6%
Services 8%
Consumer Non-Durables 8%
Basic Industries 10%
Technology 17%
Utilities 18%
Financial 21%
The Portfolio's bond investments have an average quality rating of AA, and an
average effective maturity of 6.5 years. By design, our bias is toward
high-quality bonds. In this particular period, we took an especially
conservative approach to bonds, given the changing interest rate environment.
Looking Ahead
Our overall strategy is to take advantage of opportunities we think will
deliver Portfolio investors the best returns. We will continue to strike a
balance between stocks and bonds as we pursue the Portfolio's objective of
growth and income.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, begin on page 38. If you have any questions about your
investment in Balanced Portfolio, please contact your investment
representative.
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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 its original cost.
6
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Swiss Franc Bond Portfolio
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This report covers the first half of Swiss Franc Bond Portfolio's second
fiscal year. We wish to welcome those of you who joined the Portfolio during
the six months ended June 30, 1996. At the close of the semiannual period,
the Portfolio had reached over $4 million in net assets.
On June 30, the Portfolio's net asset value (NAV) was $13.90 per share,
versus $15.06 on December 31, 1995. Over the six months, investors received
$0.0023 in income dividends. Total return for the six months was -7.69% based
on NAV and assuming the reinvestment of distributions. The Portfolio's
accumulation unit value (AUV) was $0.9180 by June 30, versus $1.0015 on
December 31. (The AUV reflects the value of the underlying investments and
the deduction of annuity-related expenses.) Based on the change in AUV, total
return was -8.34%, -14.11% assuming the maximum 7% contingent deferred sales
charge was applied on June 30.
A Specialty Portfolio
Swiss Franc Bond Portfolio is designed to provide income by investing in debt
obligations denominated in Swiss francs. This means that the Portfolio's
performance will reflect both the value of the underlying investments and the
strength of the Swiss franc in relation to the U.S. dollar. Over the past six
months, interest rates generally rose, which hurt the price of bonds. Toward
the end of the period, however, the franc strengthened versus the dollar,
lifting returns for U.S.-based investors. As of June 30, the franc:dollar
exchange rate was fr1.25345:$1, compared to fr1.24533:$1 on December 31.
As part of our investment strategy, we seek the best values we can find in
franc-denominated bonds. That means the Portfolio will usually contain issues
from a variety of sources. At the close of the period, there were 15
securities in the Portfolio representing 11 countries. The Portfolio's bond
investments had an average quality rating of AA+, and an average effective
maturity of 2.4 years, reflecting our conservative approach.
Looking Ahead
Our overall strategy is to take advantage of opportunities we think will
deliver Portfolio investors a strong income stream and attractive returns. By
design, the Portfolio will offer an opportunity for investors seeking to take
advantage of the relationship between the Swiss franc and the U.S. dollar.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, begin on page 45. If you have any questions about your
investment in Swiss Franc Bond Portfolio, please contact your investment
representative.
- ---------------
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 its original cost.
7
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America Income Portfolio
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This report details the progress of America Income Portfolio during the six
months ended June 30, 1996. Although 1995 was considered one of the best
years on record for the bond market -- thanks to low inflation, slow economic
growth and falling interest rates -- unexpected economic growth and rising
interest rates have made 1996 challenging for bond investors.
How Pioneer Managed Your Investment
The eroding climate for bond investing overall prompted some changes to the
Portfolio. We sold long-term Treasurys and increased the Portfolio's position
in short-term liquid or "cash" securities. In our view, a fairly conservative
blend of maturities and overall portfolio maturity is appropriate in a
volatile market. Mortgage-backed securities tend to perform well when
interest rates are moving higher, so your management increased the position
in Government National Mortgage Association (GNMA) issues. We carefully
bought and sold GNMA issues in an effort to manage the effect of their
lengthening maturities as interest rates rose. The Portfolio benefited from
its mortgage-backed securities, particularly in the latter half of the
period. As always, your management maintains a high-quality, conservative
focus and avoids speculative derivative investments.
Over the six months through June 30, 1996, contract owners accumulated a
total of $0.2545 in income dividends. The Portfolio's net asset value, or NAV
(the value of the Portfolio's holdings plus income dividends, less operating
expenses), stood at $9.70 on June 30. Total return was -2.22% for the
six-month period, based on net asset value and assuming reinvestment of all
dividends.
The Portfolio's accumulation unit value, or AUV, was $1.0129, versus its
value of $1.0431 six months ago. (The AUV reflects the value of the
underlying investments and the deduction of annuity-related expenses.) Based
on the change in AUV, total return was -2.89%, -9.01% assuming deduction of
the maximum contingent deferred sales charge of 7% at the end of the period.
Looking Ahead
From our vantage point, we think inflation will not reach significant levels
in the second half of the year. Even if the economy maintains its momentum,
interest rates should be relatively stable if there is no pressure in the
form of rising inflation. At this point it is uncertain what action, if any,
the Federal Reserve will take in regard to changing short-term interest
rates. In this election year, the Fed may be hesitant to move in the absence
of extreme inflation or strong domestic growth.
As we progress into the second half of 1996, we will continue to manage the
Portfolio conservatively to ensure contract owners solid long-term results
from a steady stream of dividends with an eye toward preserving principal.
The Portfolio's unaudited Schedule of Investments and financial statements as
of June 30, 1996, begin on page 51. If you have any questions about your
investment in America Income Portfolio, please contact your investment
representative.
- ------------------
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 its original cost.
8
<PAGE>
International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
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Principal
Amount Value
-------- ------------------------------------------------------ ---------
INVESTMENT IN SECURITIES - 75.3%
CONVERTIBLE CORPORATE BONDS - 0.8%
$ 70,000 Bangkok Land, 4.5%, 10/13/03 $ 51,628
770 Castorama, 3.15%, 1/1/03 933
40,000 INA SpA, Private Exchange Note, 5.0%, 6/28/01 40,903
6,000 United Microelectronics Corp., Ltd., 1.25%, 6/8/04 7,743
--------
TOTAL CONVERTIBLE CORPORATE BONDS (Cost $101,914) $101,207
--------
Shares
--------
PREFERRED STOCKS - 3.8%
4,500,000 Banco Bradesco S.A. $ 35,852
350 Bau Holdings AG 17,832
2,300 BCP International Bank (Class A), 8.0%,
non-cumulative 114,429
200,000 Brasmotor S.A. 63,736
700,000 Companhia Energetica Sao Paulo* 24,401
1,300,000 Companhia Energetica de Minas Gerais 34,569
67,000 Cosipa (B Shares)* 48,041
30 Henkel KGAA (Non-voting) 12,982
252 Samsung Electronics Co., Ltd. (Non-voting) (G.D.R.) 6,106
140 SAP AG (Non-voting) 20,826
208,571 Telecommunicacoes de Sao Paulo S.A. 44,763
2,200,000 Unibanco 58,935
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TOTAL PREFERRED STOCKS (Cost $481,201) $482,472
--------
COMMON STOCKS - 70.7%
BASIC INDUSTRIES - 6.6%
Chemicals - 0.6%
5,700 Indo Gulf Fertilizers and Chemicals Corp., Ltd.
(G.D.R.) $ 8,838
4,600 Reliance Industries Ltd. (G.D.R.) 60,954
--------
$ 69,792
--------
Containers - 0.6%
70,000 MC Packaging Ltd. * $ 29,619
220 Schmalbach Lubeca AG* 43,253
--------
$ 72,872
--------
Iron & Steel - 3.7%
32,000 Australia National Industries Ltd. $ 25,909
400 Boehler Uddeholm AG * 31,033
27,000 China Steel Corp, Ltd. (G.D.R.)* 28,260
6,800 Pohang Iron & Steel Co. Ltd. 165,753
68,000 Sahaviriya Steel Industries Public Co.* 40,849
9,000 Steel Authority of India Ltd. 132,753
4,000 Usinor Sacilor* 57,737
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$482,294
--------
Mining - 0.9%
38,000 HJ Joel Gold Mining Co., Ltd.* $ 34,206
2,020 Impala Platinum Holdings Ltd. 29,024
2,500 Kloof Gold Mining Co., Ltd. 23,659
300 Vaal Reefs Exploration & Mining Co., Ltd. 24,479
--------
$111,368
--------
Tire & Rubber - 0.1%
13,000 PT Andayani Megah $ 6,426
--------
Miscellaneous - 0.5%
38,000 PT United Tractors $ 60,004
--------
Manufacturing - 0.2%
12,500 Merloni Elettrodomestici SpA $ 27,342
--------
TOTAL BASIC INDUSTRIES $830,098
--------
CAPITAL GOODS - 5.7%
Construction, Building Materials & Engineering - 3.0%
5,500 Apasco S.A. $ 30,458
9,630 Asia Cement Corp. 18,724
The accompanying notes are an integral part of these financial statements.
9
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International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
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Shares Value
-------- ------------------------------------------------------ ---------
Construction, Building Materials & Engineering
(Continued)
26,000 Compeq Manufacturing Comp., Ltd. $ 46,864
450 Felten & Guillaume Energietechnik AG 63,119
25 Heidelberger Zement AG 17,164
40 Hochtief AG 17,847
225 Kone Corp. (Series B) 25,116
70,000 Kumagai Gumi Ltd. 62,852
4,000 Persimmon Plc 14,234
800 Portland Valderrivas S.A. 52,501
4,240 Powerscreen International Plc 30,172
5 Wolseley Plc 35
--------
$379,086
--------
Machinery - 1.8%
5,000 Esselte AB (Series B) $102,313
225 Nordtank Energy Group 13,254
950 Raymond, Ltd. (G.D.R.) 19,839
3,130 Stork N.V. 89,931
--------
$225,337
--------
Producer Goods - 0.9%
1,000 Canon, Inc. $ 20,844
250 Iwka AG 51,453
1,000 Samas-Groep N.V. 36,942
--------
$109,239
--------
TOTAL CAPITAL GOODS $713,662
--------
CONSUMER DURABLES - 1.8%
Motor Vehicles - 1.8%
1,300 Allgon AB $ 21,697
48,500 Pt Astra International 70,331
2,000 Edaran Ototmobil Nasional Bhd. 19,165
10,000 Magnetti Marelli SpA 14,269
5,000 Sasib 20,373
1,000 Toyota Motor Corp. 25,050
160 Volkswagan AG 59,599
--------
TOTAL CONSUMER DURABLES $230,484
--------
CONSUMER NON-DURABLES - 7.3%
Agriculture & Food Manufacturing - 0.7%
12,500 Pioneer International, Ltd. $ 36,355
17,000 President Enterprise Corp. * 30,334
1,700 Tiger Oats Ltd. 23,838
--------
$ 90,527
--------
Home Products - 0.4%
500 Amway Japan Ltd. $ 25,140
2,200 Makro Atacadista S.A.* 20,793
--------
$ 45,933
--------
Cosmetics - 0.7%
4,000 Shiseido Co., Ltd. $ 51,191
20,000 Takare Plc 40,395
--------
$ 91,586
--------
Retail Food - 2.1%
89,000 Dairy Farm International Holdings Ltd. $ 75,209
440 FamilyMart 19,630
4,500 KWIK Save Group Plc 31,462
7,000 PT Matahari Putra Prima 12,785
24,200 McBride Plc 48,502
600 Panamerican Beverages, Inc. 26,854
12,000 Standard Foods Taiwain Ltd.* 27,693
6,000 Want Want Holdings Ltd.* 16,143
--------
$258,278
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
-------- ------------------------------------------------------ ---------
Retail Non-Food - 0.5%
40 Kaufhof Holdings AG $ 15,139
300 Koninklijke Bijenkorf Beheer 25,369
650 PUMA AG 144A 23,423
--------
$ 63,931
--------
General Retail - 1.2%
28,820 David Jones, Ltd.* $ 39,871
65,000 Siam City Bank Public Co. Ltd. 69,771
8,800 Siam Makro Public Co. Ltd 45,064
--------
$154,706
--------
Oil and Gas Extraction - 0.2%
120 Elf Gabon $ 24,449
--------
Textiles/Clothes - 1.5%
15 Hugo Boss AG $ 17,165
3,000 Marzotto & Figli SPA 18,786
8,000 Shoei 94,337
1,500 Xebio Co., Ltd. 56,356
--------
$186,644
--------
TOTAL CONSUMER NON-DURABLES $916,054
--------
ENERGY - 0.3%
Oil & Gas - 0.3%
1,400 YPF S.A. (Class C) (Sponsored A.D.R.) $ 31,503
--------
TOTAL ENERGY $ 31,503
--------
FINANCIAL - 16.6%
Commercial Banks - 6.9%
2,000 77 Bank $ 19,941
5,000 Aomori Bank Ltd. 29,802
200 Argentaria S.A. 8,737
13,000 Australia & New Zealand Banking Group Ltd. 61,513
450 Banca Popolare di Bergamo 6,861
2,500 Banca Popolare di Milano 12,407
47,136 Bangkok Metropolitan Bank 34,812
4,500 Banco Wiese, Ltd. (Sponsored A.D.R.) 32,067
25,375 PT Bank Dagang Nasional Indonesia 21,263
1,000 Bank Gdanski S.A. (G.D.R.) 12,253
5,000 Bank of Ayudhya Public Co., Ltd. 27,575
2,000 BPI-SGPS S.A. 25,379
1,000 Chugkou Bank Ltd. 18,742
2,000 Credit National 137,631
2,075 Credit Foncier de France* 13,517
25,000 Christiania Bank Og Kreditkasse 58,935
6,000 Dah Sing Financial Holdings Ltd. 18,180
4,600 Development Bank of Singapore Ltd. 57,382
53,500 First Bangkok City Bank 88,510
18,000 Foreningsbanken AB (A Shares) 59,258
11,000 Krung Thai Bank Public Co., Ltd. 51,563
3,500 National Finance & Securities Co., Ltd. 15,581
18,500 Merita Bank Ltd. (Class A)* 38,745
500 Svenska Handelsbanken (Class A) 10,461
--------
$861,115
--------
Finance - 3.0%
950 Banque Paribus $ 56,143
900 Compagnie Bancaire S.A. 101,474
8,000 Jardine Matheson Holdings Ltd. 58,803
98,000 MBF Capital Bhd. 135,148
17,500 Peregrine Investment Holdings Ltd. 25,210
--------
$376,778
--------
Insurance - 5.4%
610 Corporacion Mapfre $ 31,169
7,000 Dowa Fire and Marine Insurance Co. Ltd. 38,266
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
-------- ------------------------------------------------------ ---------
Insurance (Continued)
1,350 Groupe des Assurances Nationales * 36,218
38,000 INA SpA 56,692
27,000 PT Lippo Life Insurance * 35,529
46,000 Malaysia Assurance Alliance Bhd. 243,419
1,000 Mediolandum SpA 144A* 9,959
73,000 National Mutual Asia Ltd. 64,129
9,200 Pacific & Orient Bhd. 25,818
16,000 Reinsurance Australia Corp. 46,531
1,210 Skandia Forsakrings AB 32,069
2,200 Societe Centrale des Assurances Generales de France 59,617
--------
$ 679,416
--------
Real Estate - 1.3%
43,000 PT Duta Anggada Realty $ 29,561
274,000 Lai Sun Development Co. Ltd. 55,928
500 Nackebro Fastighets AB 605
18,000 Property Perfect Public Co. Ltd. 77,282
--------
$ 163,376
--------
TOTAL FINANCIAL $2,080,685
--------
SERVICES - 3.2%
Commercial - 1.2%
6,000 ISS International Service System A/S (Class B) $ 134,165
4,500 PT Tigarasa Satira 11,601
3,000 PT Wicaksana Overseas, International 8,250
--------
$ 154,016
--------
Broadcasting & Media - 0.6%
7,000 Star Publications $ 21,890
3,000 Tokyo Broadcasting System 53,200
--------
$ 75,090
--------
Computer Services - 0.2%
17,550 GVC Corp $ 23,789
--------
Hotel/Restaurant - 0.2%
4,500 Overseas Union Enterprise Ltd. $ 24,559
--------
Pharmaceuticals - 1.0%
15,000 F.H. Faulding & Co. Ltd. $ 90,193
4,200 Skandinaviska Enkilda Banken (Series A) 33,617
--------
$ 123,810
--------
TOTAL SERVICES $ 401,264
--------
TECHNOLOGY - 9.7%
Electronics - 8.3%
3,600 Advanced Semiconductors Engineering (G.D.R.)* $ 31,051
8,450 Amper S.A.* 110,243
300 Austria Mikro Systeme International AG 28,041
6,500 K.R. Precision Public Co. Ltd. 46,086
2,000 Nintendo Co. Ltd. 149,178
4,135 Samsung Electronics Co., Ltd. (G.D.S.) 100,275
4 Samsung Electronics Co., Ltd. (G.D.R.) 207
1,000 Secom Co. 66,181
32,000 Siliconware Precision Industries Co., Ltd. 46,630
11,680 Siliconware Precision Industries Co., Ltd. (G.D.R.) 91,982
1,700 SGS Thomson Microelectronics N.V.* 60,370
400 Sony Corp. 26,364
17,000 Tatung Co. Ltd. 37,684
3,000 TDK Corp. 179,343
8,050 Yageo Corp. (G.D.R.)* 62,913
--------
$1,036,548
--------
Computer Software - 0.3%
1,100 Dassault Systemes S.A. ( A.D.R.)* $ 34,102
--------
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
-------- ------------------------------------------------------ ---------
Telephone Networks - 1.1%
1,400 Nokia Corp. (Class A) $ 51,684
2,865 Telefonaktiebologet LM Ericsson (Series B) 61,870
10,950 Thailand Telephone & Communication Public Co. Ltd.* 23,507
--------
$ 137,061
--------
TOTAL TECHNOLOGY $1,207,711
--------
TRANSPORTATION - 1.8%
Ships & Shipping - 1.8%
1,300 Finnlines Oy $ 26,101
18,500 Great Eastern Shipping Co. (G.D.R.) 157,252
8,000 Railtrack Group Plc 144A+* 27,094
162,000 Shanghai Haixing Shipping Co. 10,675
--------
TOTAL TRANSPORTATION $ 221,122
--------
UTILITIES - 14.6%
Electric Utility - 3.3%
1,500 Centrais Electricas Brasileiras S.A. (A.D.R.) $ 21,561
18,600 CESC, Ltd. (G.D.R.)* 56,732
15,000 Consolidated Electric Power Asia Ltd. 24,806
12,500 Iberdrola S.A. 128,415
4,000 Nichicon Corp. 58,137
13,700 Shandong Huaneng Power Co. Ltd. (A.D.R.) 113,027
2,000 Union Electrica Fenosa S.A. 12,877
--------
$ 415,555
--------
Telecommunications - 11.3%
260 Alcatel Alsthom S.A. $ 22,695
354,466 Champion Technology Holdings Ltd. 41,673
5 DDI Corp. 43,695
3,500 Hellenic Telecommunications Organization S.A. 58,052
920 Intracom S.A. 16,305
22,170 Korea Mobile Telecommunications Corp. 374,305
3,000 Loxley Public Co. Ltd. 44,432
244,000 Olivetti SpA* 131,743
8,200 Portugal Telecom S.A. (A.D.R.) 215,252
11,000 Singapore Telecommunications, Ltd. 28,992
33,000 Stet Societa Finanziaria Telefonica SpA 111,604
9,000 Technology Resources Industries Bhd.* 31,391
1,600 Telecom Argentina Stet France S.A. (A.D.R.) 75,002
71,680 Telecom Italia SpA 154,200
1,550 Telefonica de Argentina S.A. (Class B) (Sponsored
A.D.R.) 45,921
4,600 Vodafone Group Plc 17,116
--------
$1,412,378
--------
TOTAL UTILITIES $1,827,933
--------
MISCELLANEOUS - 3.1%
Conglomerates & Holding Companies - 3.1%
6,914 ALFA, S.A. de C.V. $ 31,087
23,300 Benpres Holdings Corp. (G.D.R.)* 186,405
80,500 PT Bimantara Citra 101,168
1,500 Desc S.A. de C.V. (Class C) (Sponsored A.D.R.)* 31,504
500 G.I.B. Holdings, Ltd. 22,462
500 Kinnevik AB (B Shares) 15,181
--------
TOTAL MISCELLANEOUS $ 387,807
--------
TOTAL COMMON STOCKS (Cost $8,746,159) $8,848,323
--------
WARRANTS - 0.0%
14,000 Kumagai Gumi Ltd., 6/30/98* $ 2,138
1,750 Peregrine Investment Holdings Ltd., 5/15/98* 220
--------
TOTAL WARRANTS (Cost $944) $ 2,358
--------
TOTAL INVESTMENT IN SECURITIES (Cost $9,330,218)(b) $9,434,360
========
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
International Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Principal
Amount Value
-------- ------------------------------------------------------ ---------
TEMPORARY CASH INVESTMENT - 24.7%
Commercial Paper - 24.7%
$3,100,000 Chase Manhattan Corp., 5.40%, 07/01/96 $ 3,100,000
--------
TOTAL TEMPORARY CASH INVESTMENT (Cost $3,100,000) $ 3,100,000
--------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY
CASH INVESTMENT - 100.0% (Cost $12,430,218) (a) $12,534,360
========
* Non-income producing security.
+ Security purchased on an installment basis. Market value reflects only
those payments made through June 30, 1996. Additional subscription
payment GBP 1.90/share will be required on June 3, 1997.
144A Security exempted from registration under Rule 144A of Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1996, the value of these securities amounted to $60,476 or 0.5% of total
net assets.
(a) At June 30,1996, the net unrealized gain on investments based on cost for
federal income tax purposes of $12,448,303 was as follows:
Aggregate gross unrealized gain for the investments in which
there is an excess of value over tax cost $ 577,483
Aggregate gross unrealized loss for the investments in which
there is an excess of tax cost over value (491,426)
---------
Net unrealized gain $ 86,057
=========
(b) Investments by country of issue, as a percentage of total equity
investments, were as follows:
Japan 10.3%
South Korea 6.9
Thailand 6.5
France 6.4
Italy 6.4
Malaysia 5.1
Taiwan 5.0
Hong Kong 5.0
India 4.6
Indonesia 3.8
Portugal 3.8
Brazil 3.7
Spain 3.6
Germany 3.6
Sweden 3.6
Australia 3.2
United Kingdom 2.2
Philippines 2.0
Argentina 1.6
Netherlands 1.6
Denmark 1.6
Finland 1.5
South Africa 1.4
Mexico 1.3
China 1.2
Singapore 1.2
Others (individually less than 1%) 2.9
-----
100.0%
=====
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 1996 aggregated $11,204,453 and $4,604,746
respectively.
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
International Growth Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (including temporary cash investment of
$3,100,000) (cost $12,430,218; see Schedule of Investments and Note 1) $12,534,360
Cash 38,939
Foreign currencies, at value (Note 1) 547,244
Receivables--
Investment securites sold 64,973
Fund shares sold 117,463
Dividends and interest (net of foreign taxes withheld) (Note 1) 26,152
Due from Pioneering Management Corporation (Note 2) 24,767
Other 551
-----------
Total assets $13,354,449
-----------
Liabilities:
Payables--
Investment securities purchased $ 510,078
Forward foreign currency settlement contracts -- net (Notes 1 and 5) 705
Due to affiliates (Note 3) 2,908
Accrued expenses 28,482
-----------
Total liabilities $ 542,173
-----------
Net Assets:
Paid-in capital (Note 1) $12,384,037
Accumulated undistributed net investment income 71,602
Accumulated net realized gain on investments and foreign currency
transactions (Notes 1 and 5) 256,870
Net unrealized gain on investments (Note 1) 104,142
Net unrealized loss on forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (Notes 1 and 5) (4,375)
-----------
Total net assets (equivalent to $11.68 per share on 1,097,197 shares of
beneficial interest outstanding -- unlimited number of shares
authorized) $12,812,276
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
International Growth Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Dividends (net of foreign taxes withheld of $8,095) $ 90,760
Interest (net of foreign taxes withheld of $177) 36,421
--------
Total investment income $127,181
--------
Expenses:
Management fees (Note 2) $ 36,931
Transfer agent fees (Note 3) 910
Registration fees 1,274
Professional fees 11,481
Accounting (Note 2) 37,858
Custodian fees 22,802
Printing 364
Fees and expenses of nonaffliated trustees 425
Miscellaneous 2,357
--------
Total expenses $114,402
Less fees paid indirectly (Note 4) (1,687)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (57,136)
--------
Net expenses $ 55,579
--------
Net investment income $ 71,602
--------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain (loss) from:
Investments (Note 1) $264,318
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (Notes 1 and 5) (2,891)
--------
$261,427
--------
Change in net unrealized gain (loss) from:
Investments (Note 1) $ 66,740
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (Notes 1 and 5) (4,445)
--------
$ 62,295
--------
Net gain on investments and foreign currency transactions $323,722
--------
Net increase in net assets resulting from operations $395,324
========
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
International Growth Portfolio
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months March 1, 1995
Ended to
June 30, 1996 December 31,
(unaudited) 1995
------------- ----------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 71,602 $ 827
Net realized gain on investments and foreign currency
transactions 261,427 56,014
Net unrealized gain on investments and foreign
currency transactions 62,295 37,472
------------ ---------------
Net increase in net assets resulting from operations $ 395,324 $ 94,313
------------ ---------------
Distributions to Shareholders:
From net investment income ($0.00 and $0.00 per share,
respectively) $ -- $ (827)
In excess of net investment income ($0.00 and $0.02
per share, respectively) -- (2,895)
From net realized gain ($0.03 and $0.09 per share,
respectively) (34,412) (23,264)
------------ ---------------
Net decrease in net assets resulting from
distributions to shareholders $ (34,412) $ (26,986)
------------ ---------------
From Fund Share Transactions: Shares
-----------------
Net proceeds from sale of shares 860,268 253,350 $ 9,873,217 $2,725,200
Net asset value of shares issued to shareholders in
reinvestment of distributions 2,934 2,510 34,412 26,986
Cost of shares repurchased (37,499) (9,366) (423,000) (102,778)
------- ------ ------------ ---------------
Net increase in net assets resulting from
fund share transactions 825,703 246,494 $ 9,484,629 $2,649,408
======= ====== ------------ ---------------
Net increase in net assets $ 9,845,541 $2,716,735
Net Assets:
Beginning of period 2,966,735 250,000
------------ ---------------
End of period (including accumulated undistributed net
investment income of $71,602 and $0, respectively) $12,812,276 $2,966,735
============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
International Growth Portfolio
Financial Highlights
Selected Data for a Share Outstanding For the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.93 $ 10.00
--------------- ----------------
Increase from investment operations:
Net investment income $ 0.07 $ --
Net realized and unrealized gain on investments and
foreign currency transactions 0.71 1.04
--------------- ----------------
Net increase from investment operations $ 0.78 $ 1.04
Distributions to shareholders:
In excess of net investment income -- (0.02)
From net realized gain (0.03) (0.09)
--------------- ----------------
Net increase in net asset value $ 0.75 $ 0.93
--------------- ----------------
Net asset value, end of period $ 11.68 $ 10.93
=============== ================
Total return* 7.17% 10.42%
Ratio of net expenses to average net assets 1.54%**+ 2.10%**+
Ratio of net investment income (loss) to average net assets 1.88%**+ (0.25%)**+
Average commission rate paid per listed transaction++ $0.0048 --
Portfolio turnover rate 147.97%** 138.64%**
Net assets, end of period (in thousands) $12,812 $ 2,967
Ratios assuming no waiver of fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses 3.08%** 17.22%**
Net investment income (loss) 0.34%** (15.37%)**
Ratios assuming waiver of fees and assumption of expenses
by PMC and reduction for fees paid indirectly:
Net expenses 1.50%** 1.75%**
Net investment income 1.92%** 0.10%**
</TABLE>
+ Ratios assuming no reduction for fees paid indirectly.
++ Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
* 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.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
Capital Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
- -------- ----------------------------------------------------- ---------
COMMON STOCKS - 91.9%
BASIC INDUSTRIES - 1.8%
Paper Products - 1.8%
50,400 Aracruz Cellulose S.A. (A.D.R.) $ 478,800
-------
TOTAL BASIC INDUSTRIES $ 478,800
-------
CAPITAL GOODS - 14.5%
Construction & Engineering - 8.0%
30,000 Devcon International Corp.* $ 277,500
39,000 Insteel Industries, Inc. 287,625
35,000 Justin Industries 459,375
6,000 Lone Star Industries, Inc. 201,750
33,000 Perini Corp.* 396,000
54,200 Washington Construction Group, Inc. * 555,550
-------
$2,177,800
-------
Pollution & Waste - 1.0%
73,000 Catalytica, Inc.* $ 282,875
-------
Producer Goods - 5.5%
24,000 Griffon Corp.* $ 195,000
16,000 Insilico Corp.* 536,000
12,000 The Rival Co.* 276,000
20,000 U.S. Industries, Inc.* 482,500
-------
$1,489,500
-------
TOTAL CAPITAL GOODS $3,950,175
-------
CONSUMER DURABLES - 5.3%
Consumer Luxuries - 4.3%
50,000 Arctco, Inc. $ 625,000
22,400 Ladd Furniture 224,000
103,000 Meridian Sports, Inc.* 309,000
-------
$1,158,000
-------
Motor Vehicles - 1.0%
31,700 TBC Corp.* $ 273,413
-------
TOTAL CONSUMER DURABLES $1,431,413
-------
CONSUMER NON-DURABLES - 26.7%
Retail Non-Food - 21.7%
32,000 Fingerhut Co., Inc. $ 500,000
13,200 Fuqua Enterprises, Inc.* 382,800
58,000 Genesco, Inc.* 449,500
575,500 Grossman's, Inc.* 935,187
64,500 Kmart Corp. 798,188
57,400 Levitz Furniture, Inc.* 265,475
15,000 Melville Corp. 607,500
31,000 Stride Rite Corp. 255,750
115,000 Sunbelt Nursery Group, Inc. * 237,188
22,000 Swiss Army Brands, Inc.* 291,500
29,900 Syms Corp.* 220,513
10,000 Toys "R" Us, Inc.* 285,000
30,000 Woolworth Corp.* 675,000
-------
$5,903,601
-------
Textiles/Clothes - 5.0%
65,000 Hartmarx Corp.* $ 406,250
5,000 Oshkosh B' Gosh, Inc. (Class A) 90,000
40,000 Shaw Industries, Inc. 525,000
74,100 Tultex Corp.* 351,975
-------
$1,373,225
-------
TOTAL CONSUMER NON-DURABLES $7,276,826
-------
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
Capital Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
- -------- ----------------------------------------------------- ---------
ENERGY - 4.5%
Oil Refining and Drilling - 4.5%
14,000 Crystal Oil Co.* $ 467,250
146,400 Interlake Corp.* 475,800
75,000 Zapata Corp.* 271,875
-------
TOTAL ENERGY $1,214,925
-------
FINANCIAL - 9.6%
Financial Services - 1.0%
3,500 Arden Group Inc. (Class A)* $ 236,250
5,000 Express America Holdings Co.* 21,875
-------
$ 258,125
-------
Insurance - 6.8%
39,000 20th Century Industries* $ 648,375
35,000 American Annuity Group, Inc. 455,000
15,663 Financial Security Assurance Holdings Ltd. 428,774
18,000 Western National Corp. 330,750
-------
$1,862,899
-------
Real Estate - 1.8%
15,000 Amresco, Inc. $ 256,875
66,450 Bluegreen Corp.* 249,187
-------
$ 506,062
-------
TOTAL FINANCIAL $2,627,086
-------
SERVICES - 11.1%
Health Services & Personal Care - 2.6%
38,300 Aequitron Medical, Inc.* $ 287,250
60,000 Coastal Physician Group Inc.* 412,500
-------
$ 699,750
-------
Pharmaceuticals - 6.9%
129,800 American White Cross, Inc.* $ 154,137
35,000 Aronex Pharmaceuticals, Inc.* 183,750
26,400 Autoimmune, Inc.* 247,500
10,000 Ivax Corp. 158,750
18,000 Ligand Pharmaceuticals, Inc. (Class B)* 299,250
35,000 Medeva Plc (Sponsored A.D.R.) 542,500
20,000 Sepracor, Inc.* 300,000
-------
$1,885,887
-------
Publishing - 1.6%
12,500 Value Line, Inc. $ 425,000
-------
TOTAL SERVICES $3,010,637
-------
TECHNOLOGY - 18.4%
Business Machines - 2.6%
100,000 Unisys Corp.* $ 712,500
-------
Computer Services & Software - 6.0%
15,000 Banctec, Inc.* $ 303,750
60,000 CrossCom Corp.* 615,000
23,000 Equinox Systems, Inc.* 276,000
54,000 NetFRAME Systems, Inc.* 243,000
19,400 Walker Interactive Systems, Inc.* 194,000
-------
$1,631,750
-------
Electronics - 8.7%
20,000 Ballard Power Systems, Inc.* $ 438,931
14,000 Belden, Inc. 420,000
14,000 Marcam Corp.* 168,000
30,000 Teradyne, Inc.* 517,500
20,000 Vishay Intertechnology, Inc.* 472,500
20,000 Whittaker Corp.* 370,000
-------
$2,386,931
-------
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
Capital Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
- -------- ----------------------------------------------------- ---------
Telecommunications - 1.1%
5,000 AT&T Corp. $ 310,000
-------
TOTAL TECHNOLOGY $ 5,041,181
-------
TOTAL COMMON STOCKS (Cost $23,268,280) $25,031,043
-------
Principal
Amount
- --------
TEMPORARY CASH INVESTMENT - 8.1%
Repurchase Agreement - 8.1%
$2,200,000 Chase Manhattan Corp., 6/28/96, 5.40%, repurchase
price of $2,200,000 plus accrued interest on
7/1/96, collateralized by $2,214,000 U.S. Treasury
Notes, 5.50%, 12/31/97 $ 2,200,000
-------
TOTAL TEMPORARY CASH INVESTMENT (Cost $2,200,000) $ 2,200,000
-------
TOTAL INVESTMENT IN SECURITIES - 100% (Cost
$25,468,280)(a) $27,231,043
=======
* Non-income producing security.
(a) At June 30, 1996, the net unrealized gain on
investments based on cost for federal income tax
purposes of $25,468,280 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost $ 2,907,230
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value (1,144,467)
-------
Net unrealized loss $ 1,762,763
=======
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 1996 aggregated $17,819,480 and $3,464,516,
respectively.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
Capital Growth Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Assets:
Investment in securities, at value (including temporary cash
investment of $2,200,000) (cost $25,468,280; see Schedule of
Investments and Note 1) $27,231,043
Cash 197,490
Receivables--
Investment securities sold 318,612
Fund shares sold 444,006
Dividends and interest 7,080
Other 1,007
-----------
Total assets $28,199,238
-----------
Liabilities:
Payable for investment securities purchased $ 188,750
Due to affiliates (Notes 2 and 3) 21,056
Accrued expenses 22,424
-----------
Total liabilities $ 232,230
-----------
Net Assets:
Paid-in capital (Note 1) $25,746,793
Accumulated net investment loss (Note 1) (5,225)
Accumulated net realized gain on investments (Note 1) 462,677
Net unrealized gain on investments (Note 1) 1,762,763
-----------
Total net assets (equivalent to $13.29 per share based on
2,103,966 shares of beneficial interest outstanding --
unlimited number of shares authorized) $27,967,008
===========
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
Capital Growth Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Interest $ 69,620
Dividends 22,919
----------
Total investment income $ 92,539
----------
Expenses:
Management fees (Note 2) $ 56,849
Transfer agent fees (Note 3) 910
Registration fees 1,392
Professional fees 2,656
Accounting (Note 2) 26,717
Custodian fees 12,825
Printing 364
Fees and expenses of nonaffiliated trustees 972
Miscellaneous 1,750
----------
Total expenses $ 104,435
Less fees paid indirectly (Note 4) (1,262)
Less management fees waived by
Pioneering Management Corporation (Note 2) (5,409)
----------
Net expenses $ 97,764
----------
Net investment loss $ (5,225)
----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments (Note 1) $ 462,841
Change in net unrealized loss on investments 1,801,050
----------
Net gain on investments $2,263,891
----------
Net increase in net assets resulting from operations $2,258,666
==========
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
Capital Growth Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months March 1, 1995
Ended to
June 30, 1996 December 31,
(unaudited) 1995
-------------- -------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income (loss) $ (5,225) $ 15,202
Net realized gain on investments 462,841 242,294
Change in net unrealized loss on investments 1,801,050 (38,287)
------------ ------------
Net increase in net assets resulting
from operations $ 2,258,666 $ 219,209
------------ ------------
Distributions to Shareholders:
From net investment income ($0.00 and $0.02 per share,
respectively) $ -- $ (15,202)
In excess of net investment income ($0.00 and $0.00 per
share, respectively) -- (1,654)
From net realized gain ($0.07 and $0.12 per share,
respectively) (146,944) (93,860)
------------ ------------
Decrease in net assets resulting from distributions to
shareholders $ (146,944) $ (110,716)
------------ ------------
From Fund Share Transactions:
Shares
-------------------
Net proceeds from sale of shares 1,342,960 812,531 $17,094,256 $9,287,478
Net asset value of shares issued to shareholders in
reinvestments of distributions 11,007 9,447 146,944 110,716
Cost of shares repurchased (58,984) (22,995) (742,848) (249,753)
-------- ------- ------------ ------------
Net increase in net assets resulting from
fund share transactions 1,294,983 798,983 $16,498,352 $9,148,441
======== ======= ------------ ------------
Net increase in net assets $18,610,074 $9,256,934
Net Assets:
Beginning of period 9,356,934 100,000
------------ ------------
End of period (including accumulated net investment loss
of $5,225 and $0, respectively) $27,967,008 $9,356,934
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
Capital Growth Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 11.57 $10.00
--------------- ----------------
Increase from investment operations:
Net investment income $ -- $ 0.02
Net realized and unrealized gain on investments 1.79 1.69
--------------- ----------------
Net increase from investment operations $ 1.79 $ 1.71
Distributions to shareholders from:
Net investment income -- (0.02)
Net realized gain (0.07) (0.12)
--------------- ----------------
Net increase in net asset value $ 1.72 $ 1.57
--------------- ----------------
Net asset value, end of period $ 13.29 $11.57
=============== ================
Total return* 15.49% 17.13%
Ratio of net expenses to average net assets 1.12%**+ 1.56%**+
Ratio of net investment income (loss) to average net assets (0.07%)**+ 0.48%**+
Portfolio turnover rate 45.56%** 46.09%**
Average commission rate paid per exchange listed transaction $0.0489 --
Net assets, end of period (in thousands) $27,967 $9,357
Ratios assuming no waiver of fees and assumption of expenses by
PMC and no reduction for fees paid indirectly:
Net expenses 1.19%** 3.95%**
Net investment loss (0.14%)** (1.91%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net expenses 1.11%** 1.49%**
Net investment income (loss) (0.06%)** 0.55%**
</TABLE>
+ 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 each period.
** Annualized.
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
Real Estate Growth Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
------- -----------
INVESTMENT IN SECURITIES - 100%
CAPITAL GOODS - 2.8%
Construction & Engineering - 2.8%
2,000 Belmont Homes, Inc.* $ 43,250
----------
TOTAL CAPITAL GOODS (Cost $44,375) $ 43,250
----------
REAL ESTATE INVESTMENT TRUSTS - 91.2%
5,500 Bedford Property Investors, Inc. $ 74,250
800 Bradley Real Estate, Inc. 11,600
3,000 Centerpoint Properties Corp. 72,750
2,000 Developers Diversified Realty Corp. 63,750
2,500 Duke Realty Investments, Inc. 75,625
2,200 Equity Residential Property Trust 72,325
3,000 Evans Withycombe Residential, Inc. 62,625
1,000 Excel Realty Trust, Inc. 20,500
1,900 Felcor Suite Hotels, Inc. 57,950
1,700 Gables Residential Trust 39,950
2,500 Highwoods Properties, Inc. 69,062
3,100 Horizon Group, Inc. 63,550
5,000 Innkeeper USA Trust 50,000
3,500 J.P. Realty, Inc. 74,812
4,500 Liberty Property Trust 89,438
3,500 Merry Land & Investments, Inc. 73,500
3,000 National Golf Properties, Inc. 72,750
3,500 Nationwide Health Properties, Inc. 73,938
4,000 Public Storage, Inc. 82,500
1,500 Spieker Properties, Inc. 40,875
1,000 Storage Trust Realty 20,500
3,000 Sun Communities, Inc. 80,625
1,400 Walden Residential Properties, Inc. 28,525
1,100 Weeks Corp. 28,600
----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $1,368,576) $1,400,000
----------
REAL ESTATE SERVICES - 2.2%
2,000 Amresco, Inc. $ 34,250
----------
TOTAL REAL ESTATE SERVICES (Cost $23,750) $ 34,250
----------
SERVICES - 3.8%
Hotels & Restaurants - 3.8%
5,000 Equity Inns, Inc. $ 57,500
----------
TOTAL SERVICES (Cost $57,493) $ 57,500
----------
TOTAL INVESTMENT IN SECURITIES
(Cost $1,494,194)(a) $1,535,000
==========
(a) At June 30, 1996, the net unrealized gain on
investments based on cost for federal income tax
purposes of $1,494,194 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost $ 51,673
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value (10,867)
----------
Net unrealized gain $ 40,806
==========
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 1996 aggregated $1,344,708 and $282,963,
respectively.
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
Real Estate Growth Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Assets:
Investment in securities, at value (cost $1,494,194; see
Schedule of Investments and Note 1) $1,535,000
Cash 155,705
Receivables--
Investment securities sold 42,270
Fund shares sold 18,403
Dividends 14,934
Due from Pioneering Management Corporation (Note 2) 28,457
Other 155
----------
Total assets $1,794,924
----------
Liabilities:
Payable for investment securities purchased $ 77,430
Due to affiliates (Note 3) 2,304
Accrued expenses 26,936
----------
Total liabilities $ 106,670
----------
Net Assets:
Paid-in capital (Note 1) $1,635,614
Distributions in excess of net investment income (Note 1) (2,650)
Accumulated net realized gain on investments (Note 1) 14,484
Net unrealized gain on investments (Note 1) 40,806
----------
Total net assets (equivalent to $11.51 per share based on
146,687 shares of beneficial interest outstanding --
unlimited number of shares authorized) $1,688,254
==========
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
Real Estate Growth Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Interest $ 176
Dividends 35,410
--------
Total investment income $ 35,586
--------
Expenses:
Management fees (Note 2) $ 4,667
Transfer agent fees (Note 3) 790
Registration fees 1,094
Professional fees 11,500
Accounting (Note 2) 21,383
Custodian fees 4,751
Printing 334
Fees and expenses of nonaffiliated trustees 364
Miscellaneous 1,531
--------
Total expenses $ 46,414
Less fees paid indirectly (Note 4) (1,241)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (39,347)
--------
Net expenses $ 5,826
--------
Net investment income $ 29,760
--------
Realized and Unrealized Gain on Investments:
Net realized gain on investments (Note 1) $ 14,484
Change in net unrealized gain on investments 8,184
--------
Net gain on investments $ 22,668
--------
Net increase in net assets resulting from operations $ 52,428
========
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
Real Estate Growth Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from March 1, 1995
(Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months March 1, 1995
Ended June 30, 1996 to
(unaudited) December 31, 1995
-------------------- -----------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 29,760 $ 6,087
Net realized gain on investments 14,484 950
Change in net unrealized gain on investments 8,184 32,622
------------------ ----------------
Net increase in net assets resulting
from operations $ 52,428 $ 39,659
------------------ ----------------
Distributions to Shareholders:
From net investment income ($0.29 and $0.23 per
share, respectively) $ (29,760) $ (5,705)
In excess of net investment income ($0.02 and
$0.00 per share, respectively) (2,650) --
From tax return of capital ($0.00 and $0.18 per
share, respectively) -- (4,425)
From net realized gain ($0.00 and $0.03 per
share, respectively) -- (1,332)
------------------ ----------------
Decrease in net assets resulting from
distributions to shareholders $ (32,410) $(11,462)
------------------ ----------------
From Fund Share Transactions: Shares
----------------
Net proceeds from sale of shares 99,966 37,073 $1,143,488 $400,041
Net asset value of shares issued to shareholders
in reinvestments of dividends 2,839 1,048 32,410 11,462
Cost of shares repurchased (1,749) (2,490) (20,158) (27,204)
------ ------ ------------------ ----------------
Net increase in net assets resulting from
fund share transactions 101,056 35,631 $1,155,740 $384,299
====== ====== ------------------ ----------------
Net increase in net assets $1,175,758 $412,496
Net Assets:
Beginning of period 512,496 100,000
------------------ ----------------
End of period (including distributions in excess
of net investment income of $2,650 and $0,
respectively) $1,688,254 $512,496
================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
Real Estate Growth Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period $ 11.23 $ 10.00
--------------- ----------------
Increase from investment operations:
Net investment income $ 0.29 $ 0.12
Net realized and unrealized gain on investments 0.30 1.55
--------------- ----------------
Net increase from investment operations $ 0.59 $ 1.67
Distributions to shareholders:
From net investment income (0.29) (0.23)
In excess of net investment income (0.02) --
From tax return of capital -- (0.18)
From net realized gain -- (0.03)
Net increase in net asset value $ 0.28 $ 1.23
--------------- ----------------
Net asset value, end of period $ 11.51 $ 11.23
=============== ================
Total return* 5.30% 16.96%
Ratio of net expenses to average net assets 1.50%**+ 2.10%**+
Ratio of net investment income to average net assets 6.08%**+ 2.68%**+
Portfolio turnover rate 61.36%** 1.43%**
Average commission rate paid per exchange listed transaction $0.0595 --
Net assets, end of period (in thousands) $ 1,688 $ 512
Ratios assuming no waiver of fees and assumption of expenses by
PMC and no reduction for fees paid indirectly:
Net expenses 9.89%** 45.96%**
Net investment loss (2.31%)** (41.18%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net expenses 1.25%** 1.57%**
Net investment income 6.33%** 3.21%**
</TABLE>
+ 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 each period.
** Annualized.
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
Equity-Income Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------- ------------------------------------------------------------------ ------------
<S> <C> <C>
INVESTMENT IN SECURITIES - 96.1%
PREFERRED STOCKS - 3.1%
3,000 Greif Brothers Corp. (Class A) $ 96,000
10,000 Kmart Financing Corp., Convertible, 7.75%, 6/15/16 542,500
100 Reynolds Metals Co., Convertible, 7.00%, 12/31/97 4,638
2,000 Rouse Co. (Series A), Convertible, 6.50%, 12/31/49 121,750
570 Sprint Corp., Convertible, 8.25%, 3/31/00 22,942
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $707,992) $ 787,830
-----------
COMMON STOCKS - 93.0%
BASIC INDUSTRIES - 7.6%
Chemicals - 3.9%
5,441 ARCO Chemical Co. $ 282,932
21,000 Borden Chemicals and Plastics, L.P. 217,875
5,100 E.I. du Pont de Nemours and Co. 403,537
4,000 A. Schulman, Inc. 98,000
-----------
$1,002,344
-----------
Metals & Mining - 3.3%
3,400 Aluminum Co. of America $ 195,075
10,400 Phelps Dodge Corp. 648,700
-----------
$ 843,775
-----------
Paper Products - 0.4%
2,100 Union Camp Corp. $ 102,375
-----------
TOTAL BASIC INDUSTRIES $1,948,494
-----------
CAPITAL GOODS - 3.0%
Producer Goods - 3.0%
7,000 Gorman-Rupp Co. $ 92,750
4,300 Manitowoc Co., Inc. 154,263
5,000 Helix Technology Corp. 193,750
17,500 Westinghouse Electric Corp. 328,125
-----------
TOTAL CAPITAL GOODS $ 768,888
-----------
CONSUMER DURABLES - 5.3%
Motor Vehicles - 5.3%
3,500 Chrysler Corp. $ 217,000
24,800 Ford Motor Co. 802,900
6,500 General Motors Corp. 340,437
-----------
TOTAL CONSUMER DURABLES $1,360,337
-----------
CONSUMER NON-DURABLES - 8.1%
Agriculture & Food - 2.7%
4,100 CPC International, Inc. $ 295,200
13,000 H.J. Heinz Co. 394,875
-----------
$ 690,075
-----------
Consumer Luxuries - 0.7%
4,600 Cedar Fair L. P. $ 171,925
-----------
Retail Non-Food - 4.7%
1,950 J.C. Penney Co., Inc. $ 102,375
15,550 May Department Stores Co. 680,313
7,450 Mercantile Stores Co., Inc. 436,756
-----------
$1,219,444
-----------
TOTAL CONSUMER NON-DURABLES $2,081,444
-----------
ENERGY - 9.5%
Oil & Gas Extraction - 9.2%
5,680 Amoco Corp. $ 411,090
6,300 Chevron Corp. 371,700
14,000 Mobil Corp. 1,569,750
-----------
$2,352,540
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
Equity-Income Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------- ------------------------------------------------------------------ ------------
<S> <C> <C>
Oil Services - 0.3%
1,000 Schlumberger, Ltd. $ 84,250
-----------
TOTAL ENERGY $2,436,790
-----------
FINANCIAL - 19.2%
Commercial Banks - 12.7%
8,000 BankAmerica Corp. $ 606,000
14,700 Bank of New York Co., Inc. 753,375
1,000 Corestates Financial Corp. 38,500
1,456 First Bank System 84,448
12,000 First Chicago NBD Corp. 469,500
3,600 First Security Corp. 86,400
400 First Tennessee National Corp. 12,250
24,220 Huntington Bancshares, Inc. 578,252
13,510 Old Kent Financial Corp. 528,592
3,500 PNC Bank Corp. 104,125
-----------
$3,261,442
-----------
Financial Services - 0.1%
300 Eaton Vance Corp. $ 10,875
-----------
Insurance - 5.7%
9,000 Chubb Corp. $ 448,875
4,000 SAFECO Corp. 371,438
12,000 St. Paul Companies, Inc. 642,000
-----------
$1,462,313
-----------
Savings & Loan - 0.7%
7,000 H.F. Ahmanson & Co. $ 189,000
-----------
TOTAL FINANCIAL $4,923,630
-----------
SERVICES - 10.0%
Health & Personal Care - 3.6%
8,000 Becton Dickinson & Co. $ 642,000
5,400 U.S. Healthcare, Inc. 297,000
-----------
$ 939,000
-----------
Pharmaceuticals - 5.2%
6,200 Bristol-Myers Squibb Co. $ 558,000
12,700 Schering-Plough Corp. 796,925
$1,354,925
-----------
Publishing - 1.2%
6,600 McGraw-Hill Companies, Inc. $ 301,950
-----------
TOTAL SERVICES $2,595,875
-----------
TECHNOLOGY - 5.0%
Business Machines - 2.7%
1,000 Hewlett Packard Co. $ 99,625
6,000 IBM Corp. 594,000
-----------
$ 693,625
-----------
Electronics - 2.2%
3,000 Diebold, Inc. $ 289,500
3,100 General Motors Corp. (Class H) 186,388
2,360 Thomas & Betts Corp. 88,500
-----------
$ 564,388
-----------
Photo/Instrumentation - 0.1%
200 Eastman Kodak Co. $ 15,550
-----------
TOTAL TECHNOLOGY $1,273,563
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
Equity-Income Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------- ------------------------------------------------------------------ ------------
<S> <C> <C>
TRANSPORTATION - 0.6%
Railroad & Bus - 0.6%
2,000 Union Pacific Corp. $ 139,750
-----------
TOTAL TRANSPORTATION $ 139,750
-----------
UTILITIES - 24.7%
Electric Utilities - 5.9%
4,000 Allegheny Power System, Inc. $ 123,500
50,000 DPL, Inc. 1,218,750
5,600 Western Resources, Inc. 167,300
-----------
$ 1,509,550
-----------
Gas Utilities - 1.5%
5,600 Brooklyn Union Gas Co. $ 152,600
14,000 Public Service Co. of N.C. 238,000
-----------
$ 390,600
-----------
Telecommunications - 17.2%
16,600 Ameritech Corp. $ 985,625
5,000 AT &T Corp. 310,000
5,500 Bell Atlantic Corp. 350,625
6,200 BellSouth Corp. 262,725
6,800 Frontier Corp. 208,250
6,000 GTE Corp. 268,500
34,800 Lincoln Telecommunications Co. 569,850
11,800 NYNEX Corp. 560,500
3,700 Pacific Telesis Group 124,875
15,000 SBC Communications, Inc. 738,750
1,300 U.S. West Communications Group 41,438
-----------
$ 4,421,138
-----------
Utility/Other - 0.1%
800 E'Town Corp. $ 22,200
-----------
TOTAL UTILITIES $ 6,343,488
-----------
TOTAL COMMON STOCKS (Cost $23,357,102) $23,872,259
-----------
TOTAL INVESTMENT IN SECURITIES (Cost $24,065,094) $24,660,089
-----------
Principal
Amount
- ---------
TEMPORARY CASH INVESTMENT - 3.9%
Repurchase Agreement-3.9%
$1,000,000 Aubrey Lanston, 6/28/96, 5.20%, repurchase price of $1,000,000
plus accrued interest on 7/1/96, collateralized by $1,040,000
U.S. Treasury Bills, 0.0%, 11/7/96 $ 1,000,000
-----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $1,000,000) $ 1,000,000
-----------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY CASH INVESTMENT -
100.0% (Cost $25,065,094)(a) $25,660,089
===========
(a) At June 30, 1996, the net unrealized gain on investments based
on cost for federal income tax purposes of $25,065,094 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 1,166,100
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (571,105)
-----------
Net unrealized gain $ 594,995
===========
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 1996 aggregated $18,858,525 and $803,558,
respectively.
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
Equity-Income Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (including temporary cash investment of
$1,000,000) (cost $25,065,094; see Schedule of Investments and Note 1) $25,660,089
Cash 82,163
Receivables--
Fund shares sold 65,548
Investment securities sold 90,068
Dividends and interest 55,195
Other 332
-----------
Total assets $25,953,395
-----------
Liabilities:
Payable for investment securities purchased $ 925,179
Due to affiliates (Note 2 and 3) 18,423
Accrued expenses 24,993
-----------
Total liabilities $ 968,595
-----------
Net Assets:
Paid-in capital (Note 1) $24,359,344
Accumulated undistributed net investment income (Note 1) 9,608
Accumulated undistributed net realized gain on investments (Note 1) 20,853
Net unrealized gain on investments (Note 1) 594,995
-----------
Total net assets (equivalent to $12.55 per share based on 1,990,768
shares of beneficial interest outstanding -- unlimited number of
shares authorized) $24,984,800
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
Equity-Income Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Dividends $261,799
Interest 20,185
--------
Total investment income $281,984
--------
Expenses:
Management fees (Note 2) $ 49,143
Transfer agent fees (Note 3) 740
Registration fees 368
Professional fees 6,614
Accounting (Note 2) 23,836
Custodian fees 10,618
Printing 910
Fees and expenses of nonaffiliated trustees 546
Regulatory reporting 910
Miscellaneous 1,719
--------
Total expenses $ 95,404
Less fees paid indirectly (Note 4) (1,468)
Less management fees waived by Pioneering Management Corporation
(Note 2) (6,631)
--------
Net expenses $ 87,305
--------
Net investment income $194,679
--------
Realized and Unrealized Gain on Investments:
Net realized gain on investments (Note 1) $ 20,851
Change in net unrealized gain on investments 241,326
--------
Net gain on investments $262,177
--------
Net increase in net assets resulting from operations $456,856
========
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
Equity-Income Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 194,679 $ 51,707
Net realized gain on investments 20,851 2
Change in net unrealized gain on investments 241,326 353,669
-------------- ----------------
Net increase in net assets resulting
from operations $ 456,856 $ 405,378
-------------- ----------------
Distributions to Shareholders from:
Net investment income ($0.13 and $0.18 per share,
respectively) $ (187,639) $ (49,139)
-------------- ----------------
From Fund Share Transactions: Shares
-------------------
Net proceeds from sale of shares 1,431,010 566,392 $17,906,580 $6,550,913
Net asset value of shares issued to shareholders
in reinvestments of distributions 14,981 4,147 187,639 49,139
Cost of shares repurchased (23,228) (12,534) (292,325) (142,602)
-------- ------- -------------- ----------------
Net increase in net assets resulting
from fund share transactions 1,422,763 558,005 $17,801,894 $6,457,450
======== ======= -------------- ----------------
Net increase in net assets $18,071,111 $6,813,689
Net Assets:
Beginning of period 6,913,689 100,000
-------------- ----------------
End of period (including accumulated
undistributed net investment income of $9,608
and $2,568, respectively) $24,984,800 $6,913,689
============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
Equity-Income Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- -----------------
<S> <C> <C>
Net asset value, beginning of period $ 12.17 $10.00
-------------- ----------------
Increase from investment operations:
Net investment income $ 0.13 $ 0.19
Net realized and unrealized gain on investments 0.38 2.16
-------------- ----------------
Net increase from investment operations $ 0.51 $ 2.35
Distributions to shareholders from:
Net investment income (0.13) (0.18)
-------------- ----------------
Net increase in net asset value $ 0.38 $ 2.17
-------------- ----------------
Net asset value, end of period $ 12.55 $12.17
============== ================
Total return* 4.19% 23.62%
Ratio of net expenses to average net assets 1.20%**+ 1.63%**+
Ratio of net investment income to average net assets 2.60%**+ 2.89%**+
Portfolio turnover rate 10.93%** --
Average commission rate paid per exchange listed transaction $0.0581 --
Net assets, end of period (in thousands) $24,985 $6,914
Ratios assuming no waiver of fees and assumption of expenses by
PMC and no reduction for fees paid indirectly:
Net expenses 1.29%** 5.32%**
Net investment income (loss) 2.51%** (0.80%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net expenses 1.18%** 1.47%**
Net investment income 2.62%** 3.05%**
</TABLE>
+ 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 each period.
** Annualized.
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
Balanced Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Principal
Amount Value
- --------- ----------------------------------------------------- -----------
INVESTMENT IN SECURITIES - 97.2%
DEBT OBLIGATIONS - 36.1%
Telecommunications - 17.5%
$200,000 Associates Corp. N.A., 6.0%, 1999 $ 197,032
210,000 Chase Manahattan Corp., 5.50%, 2001 199,006
211,000 GMAC, 5.625%, 2001 200,583
110,000 ITT Hartford Group, Inc., 6.375%, 2002 105,943
150,000 Lockheed Martin Corp., 6.85%, 2001 149,629
220,000 Merrill Lynch & Co, Inc., 6.375%, 2006 200,842
200,000 Salomon, Inc., 7.0%, 2003 193,274
----------
$1,246,309
----------
U.S. Government Obligations - 18.6%
475,000 U.S. Treasury Notes, 5.25%, 2001 $ 453,476
945,000 U.S. Treasury Notes, 5.625%, 2006 877,078
----------
$1,330,554
----------
TOTAL DEBT OBLIGATIONS (Cost $2,641,744) $2,576,863
----------
Shares CONVERTIBLE PREFERRED STOCK - 1.6%
- ---------
2,780 Sprint Corp., 8.25%, 2000 $ 111,895
----------
TOTAL CONVERTIBLE PREFERRED STOCK (Cost $107,482) $ 111,895
----------
COMMON STOCKS - 59.5%
BASIC INDUSTRIES - 6.2%
Chemicals - 1.9%
2,035 ARCO Chemical Co. $ 105,820
1,200 A. Schulman, Inc. 29,400
----------
$ 135,220
----------
Containers - 0.5%
1,200 Greif Brothers Corp. (Class A) $ 38,400
----------
Forest Products - 0.7%
1,000 Mead Corp. $ 51,875
----------
Non-Ferrous Metals - 2.4%
200 Aluminum Co. of America $ 11,475
2,500 Phelps Dodge Corp. 155,938
----------
$ 167,413
----------
Paper Products - 0.7%
1,000 Union Camp Corp. $ 48,750
----------
TOTAL BASIC INDUSTRIES $ 441,658
----------
CAPITAL GOODS - 3.6%
Producer Goods - 3.6%
6,000 Gorman-Rupp Co. $ 79,500
9,500 Westinghouse Electric Co. 178,125
----------
TOTAL CAPITAL GOODS $ 257,625
----------
CONSUMER DURABLES - 3.9%
Motor Vehicles - 3.9%
1,950 Chrysler Corp. $ 120,900
2,350 Ford Motor Co. 76,081
1,600 General Motors Corp. 83,800
----------
TOTAL CONSUMER DURABLES $ 280,781
----------
CONSUMER NON-DURABLES - 4.8%
Agriculture & Food - 1.0%
2,250 H.J. Heinz Co. $ 68,344
----------
Retail Non-Food - 3.8%
3,600 The May Department Stores Co. $ 157,500
2,000 Mercantile Stores Co., Inc 117,250
----------
$ 274,750
----------
TOTAL CONSUMER NON-DURABLES $ 343,094
----------
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
Balanced Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
- --------- ----------------------------------------------------- -----------
ENERGY - 3.6%
Oil & Gas Extraction - 3.6%
1,200 Chevron Corp. $ 70,800
1,000 Mobil Corp. 112,125
1,000 Amoco Corp. 72,375
----------
TOTAL ENERGY $255,300
----------
FINANCIAL - 12.7%
Financial Services - 1.7%
3,300 Eaton Vance Corp. (Non-Voting) $119,625
----------
Commercial Bank - 5.7%
3,200 The Bank of New York Co., Inc. $164,000
1,500 First Chicago NBD Corp. 58,688
4,750 First Security Corp. 114,000
1,796 Old Kent Financial Corp. 70,249
----------
$406,937
----------
Insurance - 4.0%
5,000 Safeco Corp. $176,875
2,000 St. Paul Companies, Inc. 107,000
----------
$283,875
----------
Savings & Loan - 1.3%
3,500 H.F. Ahmanson & Co. $ 94,500
----------
TOTAL FINANCIAL $904,937
----------
SERVICES - 4.8%
Health & Personal Care - 1.1%
1,000 Becton Dickinson & Co. $ 80,250
----------
Broadcasting & Media - 2.1%
5,250 Gaylord Entertainment Co. (Class A) $148,313
----------
Pharmaceuticals - 1.6%
1,800 Schering-Plough Corp. $112,950
----------
TOTAL SERVICES $341,513
----------
TECHNOLOGY - 8.8%
Business Machines - 2.4%
1,500 Diebold, Inc. $ 72,375
1,000 International Business Machines Corp. 99,000
----------
$171,375
----------
Computer Services - 2.7%
7,000 Advent Software, Inc.* $196,000
----------
Electronics - 3.7%
10,000 DuPont Photomasks, Inc.* $205,000
1,000 General Motors Corp. (Class H) 60,125
$265,125
----------
TOTAL TECHNOLOGY $632,500
----------
UTILITIES - 11.1%
Gas Utility - 2.4%
10,000 Public Service Co. of North Carolina, Inc. $170,000
----------
Telecommunications - 8.7%
1,800 Ameritech Corp. $106,875
1,500 Bell Atlantic Corp. 95,625
2,200 BellSouth Corp. 93,225
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
Balanced Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Shares Value
- --------- ----------------------------------------------------- -----------
Telecommunications (Continued)
3,500 Frontier Corp. 107,188
1,300 NYNEX Corp. 61,750
3,000 SBC Communications, Inc. 147,750
400 U.S. West Communications Group 12,750
----------
$ 625,163
----------
TOTAL UTILITES $ 795,163
----------
TOTAL COMMON STOCKS (Cost $4,028,745) $4,252,571
----------
TOTAL INVESTMENT IN SECURITIES (Cost $6,777,971) $6,941,329
----------
Principal
Amount
- ---------
TEMPORARY CASH INVESTMENT - 2.8%
Repurchase Agreement - 2.8%
$ 200,000 Aubrey Lanston, 6/28/96, 5.2%, repurchase price of
at $200,000 plus accrued interest on 7/1/96,
collateralized by $208,000 U.S. Treasury Bills,
0.00%, 11/7/96 $ 200,000
----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $200,000) $ 200,000
----------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY CASH
INVESTMENT - 100% (Cost $6,977,971)(a) $7,141,329
==========
* Non-income producing security.
(a) At June 30, 1996, the net unrealized gain on
investments based on cost for federal income tax
purposes of $6,977,971 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost $ 324,419
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value (161,061)
----------
Net unrealized gain $ 163,358
==========
Purchases and sales of securities (excluding
temporary cash investments) for the six months
ended June 30, 1996 were as follows:
Purchases Sales
---------- -----------
Long-term U.S. Government $1,382,628 $ 68,623
Other Long-term Securities 3,953,407 1,019,035
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
Balanced Portfolio
Balance Sheet - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (including temporary cash investment
of $200,000) (cost $6,977,971; see Schedule of Investments and Note 1) $7,141,329
Cash 71,443
Receivables--
Dividends and interest 58,854
Fund shares sold 19,816
Due from Pioneering Management Corporation (Note 2) 16,028
Other 961
----------
Total assets $7,308,431
----------
Liabilities:
Payable for investment securities purchased $ 200,336
Due to affiliates (Note 3) 2,416
Accrued expenses 21,278
----------
Total liabilities $ 224,030
----------
Net Assets:
Paid-in capital (Note 1) $6,829,359
Accumulated undistributed net investment income (Note 1) 10,559
Accumulated undistributed net realized gain on investments (Note 1) 81,125
Net unrealized gain on investments (Note 1) 163,358
----------
Total net assets (equivalent to $12.34 per share based on 574,091
shares of beneficial interest outstanding -- unlimited number of
shares authorized) $7,084,401
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
Balanced Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Interest $ 43,858
Dividends 49,798
--------
Total investment income $ 93,656
--------
Expenses:
Management fees (Note 2) $ 15,007
Transfer agent fees (Note 3) 910
Registration fees 1,274
Professional fees 1,105
Accounting (Note 2) 27,131
Custodian fees 6,998
Printing 364
Fees and expenses of nonaffiliated trustees 352
Regulatory reporting 728
Miscellaneous 1,023
--------
Total expenses $ 54,892
Less fees paid indirectly (Note 4) (2,320)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (23,712)
--------
Net expenses $ 28,860
--------
Net investment income $ 64,796
--------
Realized and Unrealized Gain on Investments:
Net realized gain on investments (Note 1) $ 81,125
Change in net unrealized gain on investments 52,772
--------
Net gain on investments $133,897
--------
Net increase in net assets resulting from operations $198,693
========
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
Balanced Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 64,796 $ 20,164
Net realized gain on investments 81,125 --
Change in net unrealized gain on investments 52,772 110,586
-------------- ----------------
Net increase in net assets resulting from
operations $ 198,693 $ 130,750
-------------- ----------------
Distributions to Shareholders from:
Net investment income ($0.12 and $0.20 per share,
respectively) $ (54,237) $ (20,164)
Tax return of capital ($0.00 and $0.00 per share,
respectively) -- (450)
-------------- ----------------
Decrease in net assets resulting from
distributions to shareholders $ (54,237) $ (20,614)
-------------- ----------------
From Fund Share Transactions:
Shares
-----------------
Net proceeds from sale of shares 378,935 214,614 $4,628,864 $2,454,594
Net asset value of shares issued to shareholders
in reinvestments of distributions 4,440 1,781 54,237 20,614
Cost of shares repurchased (33,503) (2,176) (404,419) (24,081)
------- ------ -------------- ----------------
Net increase in net assets resulting from
fund share transactions 349,872 214,219 $4,278,682 $2,451,127
======= ====== -------------- ----------------
Net increase in net assets $4,423,138 $2,561,263
Net Assets:
Beginning of period 2,661,263 100,000
-------------- ----------------
End of period (including accumulated
undistributed net investment income of $10,559
and $0, respectively) $7,084,401 $2,661,263
============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
Balanced Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
----------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 11.87 $ 10.00
--------------- -----------------
Increase from investment operations:
Net investment income $ 0.14 $ 0.20
Net realized and unrealized gain on investments 0.45 1.87
--------------- -----------------
Net increase from investment operations $ 0.59 $ 2.07
Distributions to shareholders from:
Net investment income (0.12) (0.20)
--------------- -----------------
Net increase in net asset value $ 0.47 $ 1.87
--------------- -----------------
Net asset value, end of period $ 12.34 $ 11.87
=============== =================
Total return* 4.98% 20.84%
Ratio of net expenses to average net assets 1.35%**+ 1.76%**+
Ratio of net investment income to average net assets 2.69%**+ 2.99%**+
Portfolio turnover rate 47.40%** --
Average commission rate paid per exchange listed transaction $0.0578 --
Net assets, end of period (in thousands) $ 7,084 $ 2,661
Ratios assuming no waiver of fees and assumption of expenses by
PMC and no reduction for fees paid indirectly:
Net expenses 2.37%** 14.77%**
Net investment income (loss) 1.67%** (10.02%)**
Ratios assuming waiver of fees and assumption of expenses by PMC
and reduction for fees paid indirectly:
Net expenses 1.25%** 1.45%**
Net investment income 2.79%** 3.30%**
</TABLE>
+ 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 each period.
** Annualized.
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
Swiss Franc Bond Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Principal Moody's
Amount Ratings Value
--------- ------- -------------------------------------------------------- -----------
<S> <C> <C> <C>
DEBT OBLIGATIONS - 70.1%
Austria - 2.6%
$100,000 AAA/Aaa Republic of Austria, 4.0%, 2/9/06 $ 76,428
25,000 AAA/Aaa Republic of Austria, 4.5%, 2/12/00 20,687
----------
$ 97,115
----------
Belgium - 2.4%
100,000 AA+ Kingdom of Belgium, 7.25%, 3/19/01 $ 89,786
----------
Canada - 6.5%
300,000 AA-/Aa3 Ontario Province, 4.0%, 6/29/01 $ 239,962
----------
Denmark - 6.7%
300,000 AA+/Aa1 Kingdom of Denmark, 4.25%, 9/30/99 $ 247,160
----------
European Community - 6.7%
300,000 AAA/Aaa European Investment Bank, 3.75%, 1/28/99 $ 244,461
----------
France - 2.3%
100,000 AAA/Aaa Societe National Chemins de France, 5.25%, 7/27/00 $ 83,787
----------
Germany - 4.9%
25,000 NR/Aaa Deutsche Siedlungs, 4.25%, 12/28/98 $ 20,597
200,000 AAA/Aaa KFW International Finance Inc., 4.0%, 11/15/02 160,374
----------
$ 180,971
----------
Ireland - 11.9%
500,000 AA/Aa2 Republic of Ireland, 6.5%, 1/15/01 $ 435,930
----------
New Zeland - 4.2%
200,000 AA+/Aa1 Trans Power Finance, 4.25%, 6/10/04 $ 155,975
----------
South Korea - 10.9%
500,000 AA-/A1 Korea Development Bank, 4.25%, 3/29/01 $ 399,456
----------
Sweden - 2.3%
100,000 A/A2 City of Gothenburg, 6.375%, 12/10/99 $ 85,490
----------
United States - 8.7%
300,000 AAA/Aaa G.E. Capital Corp., 3.5%, 5/29/00 $ 238,701
100,000 A+/A1 IBM Credit Corp., 3.5%, 11/22/99 79,987
----------
$ 318,688
----------
TOTAL DEBT OBLIGATIONS (Cost $2,626,489) (a) $2,578,781
----------
TEMPORARY CASH INVESTMENTS - 29.9%
U.S. GOVERNMENT OBLIGATION - 24.5%
900,000 U.S. Treasury Bill, 4.59%, 7/11/96 $ 899,026
----------
REPURCHASE AGREEMENT - 5.4%
200,000 Aubrey Lanston, 6/28/96, 5.20%, repurchase price of
$200,000 plus accrued interest on 7/1/96,
collateralized by U.S. Treasury Bills, 0.0%, 11/7/96 $ 200,000
----------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $1,099,026) $1,099,026
----------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost 3,725,515)(b) $3,677,807
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
Swiss Franc Bond Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
NR Not rated.
(a) Distribution of investments by country of issue, as a
percentage of total equity holdings, is as follows:
Ireland 16.9%
South Korea 15.5
United States 12.4
Denmark 9.6
European Community 9.5
Canada 9.3
Germany 7.0
New Zealand 6.0
Austria 3.8
Belgium 3.5
Sweden 3.3
France 3.2
-----
100.0%
=====
(b) At June 30 1996, the net unrealized gain on investments based
on cost for federal income tax purposes of $3,725,515 was as
follows:
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 8,378
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (56,086)
--------
Net unrealized loss $(47,708)
========
Purchases and sales of securities (excluding temporary
cash investments) for the six months ended June 30, 1996
aggregated $2,599,568 and $42,102, respectively.
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
Swiss Franc Bond Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (including temporary cash investments
of $1,099,026) (cost $3,725,515; see Schedule of Investments and Note 1) $3,677,807
Cash 605,802
Foreign currencies, at value (Note 1) 58,431
Receivables--
Forward foreign currency portfolio hedge contracts, open-net
(Notes 1 and 5) 3,740
Fund shares sold 68,918
Dividends, interest and foreign taxes withheld (Note 1) 43,644
Due from Pioneering Management Corporation (Note 2) 24,930
Other 324
----------
Total assets $4,483,596
----------
Liabilities:
Due to affiliates (Notes 3) $ 972
Accrued expenses 19,245
----------
Total liabilities $ 20,217
----------
Net Assets:
Paid-in capital (Note 1) $4,513,668
Accumulated undistributed net investment income (Note 1) 17,116
Accumulated net realized loss on investments and foreign currency
transactions (Note 1) (23,409)
Net unrealized loss on investments (Note 1) (47,708)
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies (Notes 1 and 5) 3,712
----------
Total net assets (equivalent to $13.90 per share on 321,155 shares
of beneficial interest outstanding -- unlimited number of shares
authorized) $4,463,379
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
47
<PAGE>
Swiss Franc Bond Portfolio
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Investment Income (Note 1):
Interest $ 24,079
---------
Expenses:
Management fees (Note 2) $ 3,609
Transfer agent fees (Note 3) 728
Registration fees 910
Professional fees 8,963
Accounting (Note 2) 15,836
Custodian fees 6,703
Printing 182
Fees and expenses of nonaffiliated trustees 389
Miscellaneous 4,532
---------
Total expenses $ 41,852
Less fees paid indirectly (Note 4) (759)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (34,151)
---------
Net expenses $ 6,942
---------
Net investment income $ 17,137
---------
Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions:
Net realized gain (loss) from:
Investments (Note 1) $ 115
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies
(Notes 1 and 5) (23,524)
---------
$(23,409)
---------
Change in net unrealized gain (loss) from:
Investments (Note 1) $(47,504)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies
(Notes 1 and 5) 3,714
---------
(43,790)
---------
Net loss on investments and foreign currency
transactions $(67,199)
---------
Net decrease in net assets resulting from operations $(50,062)
=========
The accompanying notes are an integral part of these financial statements.
48
<PAGE>
Swiss Franc Bond Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, 1996 and for the Period from
November 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended November 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 17,137 $ 537
Net realized loss on investments and foreign
currency transactions (23,409) --
Change in net unrealized loss on investments and
foreign currency transactions (43,790) (206)
-------------- ----------------
Net increase (decrease) in net assets resulting
from operations $ (50,062) $ 331
-------------- ----------------
Distributions to Shareholders From:
Net investment income ($0.00 And $0.00 per share,
respectively) $ (558) $ --
-------------- ----------------
Decrease in net assets resulting from
distributions to shareholders $ (558) $ --
-------------- ----------------
From Fund Share Transactions: Shares
---------------
Net proceeds from sale of shares 335,505 5,908 $4,697,691 $ 88,994
Net asset value of shares issued to shareholders
in reinvestment of distributions 40 -- 558 --
Cost of shares repurchased (26,965) -- (373,575) --
------- ---- -------------- ----------------
Net increase in net assets resulting from fund
share transactions 308,580 5,908 $4,324,674 $ 88,994
======= ==== -------------- ----------------
Net increase in net assets $4,274,054 $ 89,325
Net Assets:
Beginning of period 189,325 100,000
-------------- ----------------
End of period (including accumulated
undistributed net investment income of $17,116
and $537, respectively) $4,463,379 $189,325
============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE>
Swiss Franc Bond Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended November 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 15.06 $ 15.00
-------------- -----------------
Increase (decrease) from investment operations:
Net investment income $ 0.01 $ 0.04
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (1.17) 0.02
-------------- -----------------
Net increase (decrease) in net asset value $ (1.16) $ 0.06
-------------- -----------------
Net asset value, end of period $ 13.90 $ 15.06
============== =================
Total return* (7.69%) 0.40%
Ratio of net expenses to average net assets 1.36% **+ 2.25% **+
Ratio of net investment income to average net assets 2.89% **+ 1.70% **+
Portfolio turnover rate 10.01% ** --
Net assets, end of period (in thousands) $ 4,463 $ 189
Ratios assuming no waiver of fees and assumption of
expenses and no reduction for fees paid indirectly:
Net expenses 7.39%** 69.22%**
Net investment loss (3.14%)** (65.27%)**
Ratios assuming waiver of fees and assumption of expenses
and reduction for fees paid indirectly:
Net expenses 1.25%** 1.25%**
Net investment income 3.00% ** 2.70% **
</TABLE>
+ 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.
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
America Income Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------------------------------------------------------------------- -----------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 79.5%
$110,000 Federal Home Loan Mortgage Corp., 6.55%, 2000 $ 110,000
300,000 Federal Home Loan Mortgage Corp., 7.125%, 2002 305,811
225,000 Federal National Mortgage Association, 6.8%, 2003 225,245
100,000 Federal National Mortgage Association, 6.85%, 2004 99,672
278,337 Government National Mortgage Association, 7.5%, 2022 to 2023 275,674
100,928 Government National Mortgage Association, 8.0%, 2025 94,931
591,339 Government National Mortgage Association, 7.0%, 2025 to 2026 566,945
200,000 Student Loan Marketing Association, 7.5%, 2000 206,032
100,000 Tennessee Valley Authority, Global Bond, 6.375%, 2005 96,109
100,000 U.S. Treasury Notes, 6.0%, 1997 100,016
410,000 U.S. Treasury Notes, 7.125%, 2000 419,291
200,000 U.S. Treasury Notes, 7.875%, 2004 214,968
----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $2,798,648) $2,714,694
----------
TEMPORARY CASH INVESTMENT - 20.5%
Repurchase Agreement - 20.5%
700,000 Aubrey Lanston, 6/28/96, 5.20%, repurchase price of $700,000 plus
accrued interest on 7/1/96, collateralized by $728,000 U.S. Treasury
Bills, 0.0%, 11/07/96 $ 700,000
----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $700,000) $ 700,000
----------
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $3,498,648)(a) $3,414,694
==========
(a) At June 30, 1996, the net unrealized loss on investments based on cost
for federal income tax purposes of $3,498,648 was as follows:
Aggregate gross unrealized gain of all investments in which there is
an excess of tax cost over value $ 500
Aggregate gross unrealized loss of all investments in which there is
an excess of tax cost over value (84,454)
----------
Net unrealized loss $ (83,954)
==========
Note: The Portfolio'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 six months ended June 30, 1996 were $2,264,426
and $2,204,174, respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
51
<PAGE>
America Income Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (including temporary cash investment of
$700,000) (cost $3,498,648; see Schedule of Investments and Note 1) $3,414,694
Cash 40,755
Receivables--
Interest 40,923
Fund shares sold 68,855
Due from Pioneering Management Corporation (Note 2) 18,805
Other 332
----------
Total assets $3,584,364
----------
Liabilities:
Dividends Payable $ 424
Due to affiliates (Note 3) 2,244
Acrued expenses 19,926
----------
Total liabilities $ 22,594
----------
Net Assets:
Paid-in capital (Note 1) $3,718,482
Distributions in excess of net investment income (Note 1) (130)
Accumulated net realized loss (Note 1) (72,628)
Net unrealized loss on investments (Note 1) (83,954)
----------
Total net assets (equivalent to $9.70 per share on 367,301 shares of
beneficial interest outstanding -- unlimited number of shares authorized) $3,561,770
==========
</TABLE>
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Investment Income (Note 1):
Interest $ 112,663
----------
Expenses:
Management fees (Note 2) $ 9,628
Transfer agent fees (Note 3) 724
Registration fees 1,016
Professional fees 4,410
Accounting (Note 2) 21,177
Custodian fees 6,256
Printing 1,810
Fees and expenses of nonaffiliated trustees 359
Miscellaneous 2,019
----------
Total expenses $ 47,399
Less fees paid indirectly (Note 4) (1,731)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (23,816)
----------
Net expenses $ 21,852
----------
Net investment income $ 90,811
----------
Realized and Unrealized Loss on Investments:
Net realized loss on investments (Note 1) $ (72,430)
Change in unrealized gain on investments (Note 1) (134,453)
----------
Net loss on investments $ (206,883)
----------
Net decrease in net assets from operations $ (116,072)
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE>
America Income Portfolio
Statement of Changes in Net Assets
For the Six Months Ended June 30, and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
----------------- -----------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 90,811 $ 37,752
Net realized loss on investments (72,430) (198)
Change in net unrealized gain on investments (134,453) 50,499
--------------- ----------------
Net increase (decrease) in net assets
resulting from operations $ (116,072) $ 88,053
--------------- ----------------
Distributions to Shareholders:
From investment income ($0.25 and $0.38 per share,
respectively) $ (90,811) $ (37,752)
In excess of net investment income ($0.00 and
$0.00 per share, respectively) (130) --
--------------- ----------------
Decrease in net assets resulting
from distributions to shareholders (90,941) $ (37,752)
--------------- ----------------
From Fund Share Transactions: Shares
-------------------
Net proceeds from sale of shares 357,278 364,974 $ 3,552,839 $3,661,407
Net asset value of shares issued to shareholders
in reinvestments of distributions 9,189 3,744 90,517 37,752
Cost of shares repurchased (344,463) (33,421) (3,388,865) (335,168)
-------- ------- --------------- ----------------
Net increase in net assets resulting
from fund share transactions 22,004 335,297 $ 254,491 $3,363,991
======== ======= --------------- ----------------
Net increase in net assets $ 47,478 $3,414,292
Net Assets:
Beginning of period 3,514,292 100,000
--------------- ----------------
End of period (including distributions in excess
of net investment income of $130 and $0,
respectively) $ 3,561,770 $3,514,292
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
53
<PAGE>
America Income Portfolio
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.18 $ 10.00
-------------- -----------------
Increase (decrease) from investment operations:
Net investment income $ 0.25 $ 0.38
Net realized and unrealized gain (loss) on investments (0.48) 0.18
-------------- -----------------
Net increase (decrease) from investment operations $ (0.23) $ 0.56
Distributions to shareholders from net investment income (0.25) (0.38)
-------------- -----------------
Net increase (decrease) in net asset value $ (0.48) $ 0.18
-------------- -----------------
Net asset value, end of period $ 9.70 $ 10.18
============== =================
Total return* (2.22%) 5.68%
Ratio of net expenses to average net assets 1.34%**+ 1.12%**+
Ratio of net investment income to average net assets 5.07%**+ 5.22%**+
Portfolio turnover rate 147.03%** 96.38%**
Net assets, end of period (in thousands) $ 3,562 $ 3,514
Ratios assuming no waiver of management fees and assumption
of expenses by PMC and no reduction for fees paid indirectly:
Net expenses 2.70% ** 11.86% **
Net investment income (loss) 3.71% ** (5.52%)**
Ratios assuming waiver of management fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net expenses 1.25% ** 0.99% **
Net investment income 5.16%** 5.35%**
</TABLE>
+ 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.
The accompanying notes are an integral part of these financial statements.
54
<PAGE>
Money Market Portfolio
Schedule of Investments - June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
Principal
Amount Value
--------- --------------------------------------------------- -----------
COMMERCIAL PAPER - 77.9%
$300,000 Abbott Laboratories, 5.31%, 8/2/96 $ 298,584
340,000 American Express Credit Corp., 5.31%, 7/15/96 339,298
400,000 American General Finance Corp., 5.37%, 7/11/96 399,403
350,000 Banc One Corp., 5.36%, 8/7/96 348,072
380,000 Beneficial Corp., 5.25%, 7/3/96 379,889
370,000 Chevron Oil Finance Co., 5.32%, 7/10/96 369,508
325,000 Coca-Cola Co., 5.10%, 7/19/96 324,171
335,000 Commercial Credit Co., 5.38%, 7/8/96 334,650
400,000 Ford Motor Credit Co., 5.45%, 7/5/96 399,758
360,000 General Electric Capital Corp., 5.34%, 7/9/96 359,573
400,000 H.J. Heinz Co., 5.27%, 7/1/96 400,000
300,000 Motorola, Inc., 5.30%, 7/26/96 298,887
300,000 National Rural Utilities Corp., 5.20%, 7/12/96 299,523
400,000 Norwest Financial Inc., 5.33%, 7/16/96 399,112
300,000 Pepsico Inc., 5.27%, 7/12/96 299,517
340,000 Pitney Bowes Inc., 5.24%, 8/5/96 338,268
360,000 Prudential Funding Corp., 5.23%, 7/2/96 359,948
350,000 Raytheon Co., 5.26%, 7/8/96 349,642
----------
Total Commercial Paper $6,297,803
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 22.1%
$600,000 Federal Home Loan Mortgage Corp., 5.60%, 7/1/96 $ 600,000
300,000 Federal Home Loan Mortgage Corp., 5.26%, 7/22/96 299,079
530,000 Federal Home Loan Mortgage Corp., 5.28%, 7/31/96 527,668
360,000 Federal National Mortgage Association, 5.26%,
7/23/96 358,843
----------
Total U.S. Government Agencies $1,785,590
----------
TOTAL INVESTMENT IN SECURITIES - 100.0% $8,083,393
==========
The accompanying notes are an integral part of these financial statements.
55
<PAGE>
Money Market Portfolio
Balance Sheet
June 30, 1996 (unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value based on amortized cost
(See Schedule of Investments and Note 1) $8,083,393
Due from Pioneering Management Corporation (Note 2) 19,489
Other 197
----------
Total assets $8,103,079
----------
Liabilities:
Payable for fund shares repurchased $ 129,183
Due to bank 100
Due to affiliates (Note 3) 2,424
Accrued expenses 25,744
----------
Total liabilities $ 157,451
----------
Net Assets:
Fund shares (unlimited number of shares authorized), amount paid in
on 7,945,628 shares outstanding $7,945,628
----------
Total net assets (equivalent to $1.00 per share) $7,945,628
==========
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
Investment Income (Note 1):
Interest $ 149,783
----------
Expenses:
Management fees (Note 2) $ 13,765
Transfer agent fees (Note 3) 905
Registration fees 225
Professional fees 7,602
Accounting (Note 2) 19,731
Custodian fees 8,742
Printing 362
Fees and expenses of nonaffiliated trustees 362
Regulatory reporting 724
Miscellaneous 776
----------
Total expenses $ 53,194
Less fees paid indirectly (Note 4) (296)
Less management fees waived and expenses assumed by
Pioneering Management Corporation (Note 2) (25,388)
----------
Net expenses $ 27,510
----------
Net investment income $ 122,273
----------
Net increase in net assets resulting from operations $ 122,273
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
56
<PAGE>
Money Market Portfolio
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Period from
March 1, 1995 (Commencement of Operations) to December 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
---------------- ------------------
<S> <C> <C>
From Operations:
Net investment income $ 122,273 $ 50,903
-------------- -----------------
Net increase in net assets resulting
from operations $ 122,273 $ 50,903
-------------- -----------------
Distributions to Shareholders from:
Net investment income ($0.02 and $0.04 per share,
respectively) $ (122,273) $ (50,903)
-------------- -----------------
From Fund Share Transactions (at $1.00 per share):
Net proceeds from sale of shares $ 15,505,661 $ 8,860,820
Net asset value of shares issued to shareholders in
reinvestments of distributions 122,273 50,885
Cost of shares repurchased (11,097,878) (5,596,133)
-------------- -----------------
Net increase in net assets resulting from fund
share transactions $ 4,530,056 $ 3,315,572
-------------- -----------------
Net increase in net assets $ 4,530,056 $ 3,315,572
Net Assets:
Beginning of period 3,415,572 100,000
-------------- -----------------
End of period $ 7,945,628 $ 3,415,572
============== =================
</TABLE>
Financial Highlights
Selected Data for a Share Outstanding for the Periods Presented
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended March 1, 1995
June 30, 1996 to
(unaudited) December 31, 1995
-------------- -----------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
-------------- -----------------
Increase from investment operations:
Net investment income $ 0.02 $ 0.04
Distributions to shareholders from:
Net investment income (0.02) (0.04)
-------------- -----------------
Net asset value, end of period $ 1.00 $ 1.00
============== =================
Total return* 2.20% 4.35%
Ratio of net expenses to average net assets 1.01%**+ 0.81%**+
Ratio of net investment income to average net assets 4.38%**+ 5.00%**+
Net assets, end of period (in thousands) $7,946 $3,416
Ratios assuming no waiver of fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses 1.91%** 8.34%**
Net investment income (loss) 3.48%** (2.53%)**
Ratios assuming waiver of fees and assumption of
expenses by PMC and reduction for fees paid indirectly:
Net expenses 1.00%** 0.74%**
Net investment income 4.39%** 5.07%**
</TABLE>
+ 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 each period.
** Annualized.
The accompanying notes are an integral part of these financial statements.
57
<PAGE>
Notes to Financial Statements - June 30, 1996 (unaudited)
- -------------------------------------------------------------------------------
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 be only purchased by insurance companies for the purpose
of funding variable annuity or variable life insurance contracts.
Each Portfolio has its own distinct investment objective. International
Growth Portfolio seeks long-term capital growth by investing in foreign
equity securities and related depositary receipts. Capital Growth Portfolio
seeks capital appreciation through a diversified portfolio consisting
primarily of common stocks. Real Estate Growth Portfolio pursues long-term
capital growth, with income as a secondary objective. 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. Balanced
Portfolio is designed to seek capital growth and current income. Swiss Franc
Bond Portfolio invests to approximate the performance of the Swiss franc
relative to the U.S. dollar while earning reasonable income. America Income
Portfolio seeks high level of current income as consistent with preservation
of capital. Money Market Portfolio invests for current income consistent with
preserving capital and providing liquidity.
The Trust's financial statements have been prepared in conformity with
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. Short-term
debt obligations maturing in sixty days or less are valued at amortized cost.
Securities for which market quotations are not readily available are
valued at their fair values as determined by, or under the direction of, the
Board of Trustees. Dividend income is recorded on the ex-dividend date,
except 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.
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 a
greater degree of risk than in a developed market. Risks associated with
these developing
58
<PAGE>
Notes to Financial Statements - June 30, 1996 (unaudited)
- -------------------------------------------------------------------------------
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.
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 that 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 six
months ended June 30, 1996, no capital gains taxes realized on the sale of
certain foreign securities were paid.
B. Foreign Currency Translation - The books and records of 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 Fund as a
reduction of the cost basis of the securities held.
E. Fund Shares - The Portfolios record sales and repurchases of their fund
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 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
59
<PAGE>
Notes to Financial Statements - June 30, 1996 (unaudited)
- -------------------------------------------------------------------------------
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:
Management Fee as a Percentage
of Each Portfolio's Average
Portfolio Daily Net Assets
- --------------------------------------- -------------------------------
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%
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:
Expense Limitation as a
Percentage of Each Portfolio's
Portfolio Average Daily Net Assets
- --------------------------------------- -------------------------------
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 1.25%
Money Market Portfolio 1.00%
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. Included in due to affiliates are management fees and
accounting fees payable to PMC at June 30, 1996:
Management Accounting
Fee Payable Fee Payable
Portfolio Amount Amount
- ------------------------------------------ ------------- --------------
Capital Growth Portfolio $14,176 $ 4,464
Equity-Income Portfolio 10,932 5,227
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 June 30, 1996:
Portfolio Amount
- ------------------------------------------------------------------ -------
International Growth Portfolio $2,908
Capital Growth Portfolio 2,416
Real Estate Growth Portfolio 2,304
Equity-Income Portfolio 2,264
Balanced Portfolio 2,416
Swiss Franc Bond Portfolio 972
America Income Portfolio 2,244
Money Market Portfolio 2,424
60
<PAGE>
Notes to Financial Statements - June 30, 1996 (unaudited)
- -------------------------------------------------------------------------------
4. The Trust has entered into certain expense offset arrangements resulting
in a reduction in the Portfolios' total expenses. For the six months ended
June 30, 1996, the Portfolios' expenses were reduced under such arrangements
as follows:
Portfolio Amount
- ------------------------------------------------------------------ ------
International Growth Portfolio $1,687
Capital Growth Portfolio 1,262
Real Estate Growth Portfolio 1,241
Equity-Income Portfolio 1,468
Balanced Portfolio 2,320
Swiss Franc Bond Portfolio 759
America Income Portfolio 1,731
Money Market Portfolio 296
5. At June 30, 1996, 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 Portfolio may close out such contracts by entering into an
offsetting hedge contract. As of June 30, 1996, the Swiss Franc Bond
Portfolio's open portfolio hedges were as follows:
In
Contracts Exchange Settlement Net Unrealized
Currency to Receive For Date Value Gain (Loss)
- --------- ---------- ---------- --------- ---------- --------------
CHF 760,000 $ 607,903 7/5/96 $ 607,465 $ (438)
CHF 795,000 635,085 7/10/96 635,695 610
CHF 550,000 435,885 7/10/96 439,789 3,904
CHF 160,000 126,984 7/10/96 127,939 955
CHF 155,000 122,870 7/10/96 123,940 1,070
--------- --------- -------------
$1,928,727 $1,934,828 $6,101
========= ========= =============
In
Contracts Exchange Settlement Net Unrealized
Currency to Deliver For Date Value Gain (Loss)
- --------- ---------- -------- --------- -------- --------------
CHF 300,000 $237,718 7/10/96 $240,079 $(2,361)
------- ------- -------------
$237,718 $240,079 $(2,361)
======= ======= =============
The International Growth Portfolio's gross forward foreign currency
settlement contracts receivable and payable were $213,085 and $213,790,
respectively, resulting in a net payable of $705.
Results of March 5, 1996, Real Estate Growth Portfolio Contract Owner Meeting
(unaudited)
On March 5, 1996, Pioneer Variable Contracts Trust -- Real Estate Growth
Portfolio held a special meeting of contract owners. The Proposal was
approved by contract owner vote. Following are the detailed results of the
vote for the Proposal presented.
Proposal 1 -- Approve a new subadvisory agreement with Boston Financial
Securities, Inc.
Affirmative 54,610.466
Abstain 0
Against 0
61
<PAGE>
[BACKPAGE]
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PIONEER VISION(SM)
VARIABLE ANNUITY
Variable Contracts Trust
Officers
John F. Cogan, Jr., Chairman and President
David D. Tripple, 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, Policy Form A3023-95
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Policy Form A3023-95 GRC.
General Distributor
Allmerica Investments, Inc.
440 Lincoln Street
Worcester, MA 01653
Pioneer Vision(SM) may not be available in all states.
This report must be preceded or accompanied by a prospectus for Pioneer
Vision(SM) variable annuity, which includes more information about charges and
expenses. Please read the prospectus carefully before you invest or send
money.
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