-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PWeymLegRToEiXiiz+Dbh5yCgFGcT8chyDO+GU3UzhwGs0YmUDhnEP6qHp3+ICmE YRieWv6ZH1iqtFpjb2XnUA== 0000950123-09-037470.txt : 20090824 0000950123-09-037470.hdr.sgml : 20090824 20090824151206 ACCESSION NUMBER: 0000950123-09-037470 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090824 DATE AS OF CHANGE: 20090824 EFFECTIVENESS DATE: 20090824 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS VARIABLE INSURANCE TRUST CENTRAL INDEX KEY: 0001046292 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08361 FILM NUMBER: 091031190 BUSINESS ADDRESS: STREET 1: 4900 SEARS TOWER CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129934400 MAIL ADDRESS: STREET 1: 4900 SEARS TOWER CITY: CHICAGO STATE: IL ZIP: 60606 0001046292 S000009352 Goldman Sachs Structured U.S. Equity Fund C000025632 Goldman Sachs Structured U.S. Equity Fund C000025633 Institutional C000025634 Service 0001046292 S000009353 Goldman Sachs Core Fixed Income Fund C000025635 Goldman Sachs Core Fixed Income Fund C000025636 Service 0001046292 S000009354 Goldman Sachs Money Market Fund C000025637 Goldman Sachs Money Market Fund C000025638 Service 0001046292 S000009355 Goldman Sachs Structured Small Cap Equity Fund C000025639 Goldman Sachs Structured Small Cap Equity Fund C000025640 Institutional C000025641 Service 0001046292 S000009356 Goldman Sachs Capital Growth Fund C000025642 Goldman Sachs Capital Growth Fund C000025643 Institutional C000025644 Service 0001046292 S000009357 Goldman Sachs Growth and Income Fund C000025645 Goldman Sachs Growth and Income Fund C000025646 Institutional C000025647 Service 0001046292 S000009358 Goldman Sachs Mid Cap Value Fund C000025648 Goldman Sachs Mid Cap Value Fund C000025649 Institutional C000025650 Service 0001046292 S000009359 Goldman Sachs Strategic International Equity Fund C000025651 Goldman Sachs Strategic International Equity Fund C000025652 Institutional C000025653 Service 0001046292 S000009360 Goldman Sachs Growth Opportunities Fund C000025654 Goldman Sachs Growth Opportunities Fund C000025655 Service 0001046292 S000009361 Goldman Sachs Equity Index Fund C000025656 Goldman Sachs Equity Index Fund C000025657 Service 0001046292 S000009362 Goldman Sachs Government Income Fund C000025658 Goldman Sachs Government Income Fund C000025659 Service N-CSRS 1 e78324nvcsrs.htm FORM N-CSRS nvcsrs

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES

Investment Company Act file number 811-08361

Goldman Sachs Variable Insurance Trust

(Exact name of registrant as specified in charter)

71 South Wacker Drive, Chicago, Illinois 60606-6303

(Address of principal executive offices) (Zip code)
     
Peter V. Bonanno   Copies to:
Goldman, Sachs & Co.   Jack W. Murphy
One New York Plaza   Dechert LLP
New York, New York 10004   1775 I Street, N.W.
    Washington, DC 20006
(Name and address of agents for service)

Registrant’s telephone number, including area code: (312) 655-4400

Date of fiscal year end: December 31

Date of reporting period: June 30, 2009

     
ITEM 1.   REPORTS TO STOCKHOLDERS.
     
    The Semi-Annual Reports to Stockholders are filed herewith.

 

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
Core Fixed Income Fund
Equity Index Fund
Government Income Fund
Growth Opportunities Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

MARKET OVERVIEW
 
 

 
Market Review
 
The financial markets saw both ups and downs during the six-month reporting period. Although the U.S. economy remained in recession, conditions seemed to improve. Existing home sales, for example, rose from April to May, suggesting the housing market could be stabilizing. Meanwhile, the four-week moving average of jobless claims declined in June, even as the unemployment rate climbed to 9.5%. Consumer spending increased, rising to an annual rate of 2.2% during the first quarter. However, consumer confidence — which had improved in April and May — reflected a more pessimistic view in June. Crude oil prices moved higher.
 
The Federal Reserve Board (the “Fed”) left the federal funds rate unchanged at a range of between 0% and 0.25% and continued to pursue unconventional easing approaches, such as making verbal commitments to maintain low rates and buying assets to try to stimulate demand. The government also announced a number of programs, which received mixed reviews from investors. Perhaps most surprising during the period ending June 30th, 2009 was news that the Fed would purchase up to $300 billion in Treasury debt over six months, taking another massive step down the path of unconventional easing. Other major announcements included the Public-Private Investment Program, the Homeowner Affordability and Stability Plan, and the $787 billion American Recovery and Reinvestment Act.
 
EQUITY MARKETS
 
The major U.S. equity markets declined during the first quarter of 2009, as disappointing corporate earnings, rising unemployment and a contracting economy put downward pressure on stocks. Major retailers and automakers warned of additional sales and profit declines, while shares of large banks fell sharply through the beginning of March on speculation the government would nationalize some of the most troubled institutions.
 
During the second quarter, companies reported better-than-expected earnings, and the market heard relatively positive news about bank stress tests and the effects of government stimulus. Perhaps as a result, investors appeared to experience a sharp change in sentiment, trading out of the more defensive stocks they had favored in late 2008 and placing a premium on companies with greater growth prospects. The broad stock market rallied from a low on March 9th and posted four consecutive months of positive returns as of the end of June. The S&P 500 Index finished the second quarter up nearly 16%, its best quarterly return in a decade.
 
During the semi-annual period as a whole, growth stocks overall were solid winners across the capitalization spectrum. Despite big rebounds for financial shares as credit conditions eased, technology stocks helped most growth-oriented benchmarks outpace their value-oriented counterparts.
 
FIXED INCOME MARKETS
 
All spread, or non-Treasury, sectors performed well during the six-month reporting period. The best-performing sector within the Barclays U.S. Aggregate Bond Index was corporate bonds, which outperformed duration-matched Treasuries by 13.14% during the reporting period.
 
Spreads on the Barclays Capital Corporate Index (or the difference in yields between corporate bonds and duration-equivalent U.S. Treasury securities), which had widened significantly in 2008, narrowed by 2.49% during these six months. The flight to quality, which had benefited Treasuries in 2008 and early 2009, abated as investors sought out riskier assets. Lower quality issues outperformed those of higher quality.
 
 
1 

 

MARKET OVERVIEW
 
 

 
With short-term interest rates anchored by near-zero federal funds rates, the yield curve steepened, meaning longer-term interest rates rose more than shorter-term interest rates. Long-term rates — controlled by the market, not by the Fed — rose during the first quarter, as investors positioned themselves for a glut of stimulus-related issuance and inflationary concerns surfaced. Long-term rates continued to rise during the second quarter, as financial conditions improved and the economy showed signs of stabilization.
 
Looking Ahead
 
EQUITY MARKETS
 
Looking ahead, we believe equity markets may find it difficult to maintain the pace they enjoyed during the second quarter, but leading economic indicators have been on an upswing and global liquidity is ample. Share prices should thus, in our opinion, be able to avoid sustained reversals, and barring an unexpected institutional failure that spurs a wave of selling, they may see continued appreciation.
 
We continue to expect increased stock-level differentiation going forward, distinguishing higher quality companies with robust business models from those likely to remain challenged. In our view, this environment should allow businesses with competitive advantages, free cash flow and pricing power to take market share from weaker competitors. While we cannot predict the direction of the equity markets, we are encouraged by developments in the second quarter, including the strengthened balance sheets of banks.
 
FIXED INCOME MARKETS
 
We believe the U.S. economy is poised for a rebound during the second half of 2009, largely because of government spending, a turn in the inventory cycle and perhaps a modest pick-up in consumption.
 
At the end of June, inventories had declined and new manufacturing orders exceeded existing inventories. Historically, the ratio of new orders to existing inventories, which rose sharply in the latter months of the reporting period, has been tightly linked to manufacturing activity. Meanwhile, government spending had increased, mainly as a result of the fiscal stimulus package. Going forward, we believe the fiscal stimulus may also boost consumers’ discretionary income despite a rise in gasoline prices and mortgage rates. The question is whether consumers believe they have saved enough to spend the extra income.
 
Over the next 12 months, we believe the U.S. economy could expand at an annualized rate of about 1.7%. We expect inflation of about 1.1%, below consensus estimates of 1.8%. Consumer spending poses the biggest risk to our forecast. In our view, another downturn in investment prices, accelerated deterioration of the labor market, increasing commodity prices or ongoing credit constraints could dampen spending by effectively forcing consumers to save.
 
The economic and market forecasts presented herein have been generated by GSAM for informational purposes as of the date of this presentation. They are based on proprietary models and there can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks a total return consisting of capital appreciation and income that exceeds the total return of the Barclays Capital U.S. Aggregate Bond Index.
 
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Fixed Income Investment Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Core Fixed Income Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month reporting period ended June 30, 2009, the Fund’s Service Shares generated a cumulative total return of 5.21%. This return compares to the 1.90% cumulative total return of the Fund’s benchmark, the Barclays Capital U.S. Aggregate Bond Index (“Barclays Index”), during the same time period.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
The Fund benefited from its overweighted position in credit-sensitive mortgages. Also advantageous was a modestly overweighted allocation to investment-grade corporate bonds, which performed well. In addition, having a short duration position compared to the Barclays Index added to the Fund’s performance, as interest rates rose during the period. The Fund’s duration strategy was implemented by underweighting the long-term end of the yield curve, or spectrum of maturities. Duration is a measure of the Fund’s sensitivity to changes in interest rates. Underweighted positions in emerging market debt and asset-backed securities detracted from the Fund’s performance.
 
Which fixed income market sectors contributed the most to Fund performance?
 
As systemic risk decreased dramatically, the credit markets began a massive rally in mid-March. The Fund benefited from its overweighted position in non-agency adjustable-rate mortgages (ARMs), which performed well as supply and demand conditions improved and then continued to rally after the government’s announcement of the Public-Private Investment Program.
 
A modestly overweighted allocation to investment-grade corporate bonds also contributed to the Fund’s relative performance. Grave concern about the health of the financial system had pushed down the prices of many of these securities in 2008. To take advantage of a potential rebound, we had overweighted the sector within the Fund’s portfolio — a timely decision. The Fund’s allocation to these securities, especially to the debt of financial institutions, boosted its returns, as investors moved back into riskier assets and the government pledged to guarantee bank debt. During the second quarter, investment-grade corporate bonds delivered their best quarterly results on record.
 
Among residential mortgage securities, the Fund’s portfolio benefited from our focus on senior and super senior securities backed by Alt-A mortgages, which are mortgages that fall between prime and subprime in terms of the credit quality of the underlying borrowers, and Option ARMs, which give borrowers payment options. Investments in premium coupon pass-through mortgages also contributed to the Fund’s results, particularly during the second quarter.
 
What sectors detracted from the Fund’s performance?
 
The Fund’s underweighted exposure to emerging market debt hampered its relative performance. The sector rallied as investors rediscovered an appetite for risk. An underweighted position in asset-backed securities also detracted slightly from the Fund’s performance.
 
How did duration positioning decisions affect the Fund’s performance?
 
As mentioned, the Fund’s short duration positioning compared to the Barclays Index, via a modest position in the long-term end of the yield curve, contributed positively to its performance. In January, interest rates rose as market participants positioned themselves for a glut of stimulus-related issuance and longer-term inflationary concerns surfaced. Because we believed the risk-return trade-off had diminished, we moved the Fund’s duration position to a neutral one as compared with
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

the Barclays Index prior to the Fed’s announcement that it would be purchasing Treasuries. We subsequently reinitiated the Fund’s short duration stance during the second quarter, which added to returns, as interest rates moved higher with improved financial conditions and signs that macroeconomic data may be stabilizing.
 
What changes did you make to the Fund’s weightings during the reporting period and why?
 
Heavy buying by the Fed drove agency mortgage spreads tighter during the period, reducing their attractiveness relative to other low risk assets, such as agency securities. As a result, we reduced the Fund’s overweighted allocation to agency mortgage-backed securities and reinvested the proceeds in agency securities.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
The Fund had overweighted positions relative to the Barclays Index in residential mortgage-backed securities, non-agency ARMs and collateralized mortgage obligations (CMOs) at the end of the reporting period. The Fund had slightly overweighted allocations to both investment-grade and high-yield corporate bonds. We maintained a significantly underweighted position in U.S. Treasuries because we expect them to continue to underperform spread, or non-Treasury, sectors in the near term. The Fund had close to neutral exposure to agency securities and asset-backed securities compared with the Barclays Index at the end of June 2009.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
Because further intervention by the Fed seems unlikely, in our view, we lengthened the Fund’s short duration position somewhat. We also reduced its overweighted allocation to investment-grade corporate bonds, as spreads tightened to levels we believe accurately reflect current default expectations.
 
We believe market conditions have improved. As a result, we reduced the Fund’s underweighted exposure to agency securities and decreased its overweighted allocation to non-agency ARMs. As Prime and Alt-A mortgages have increased in price, we plan to continue selling them in favor of more attractively priced subprime and Option ARMs.
 
 
SECTOR ALLOCATION†
 
Percentage of Net Assets
 
(GRAPH)
 
† The percentage shown for each investment sector reflects the value of investments in that sector as a percentage of net assets. Short-term investments include investment companies, if any. “Agency Debentures” include agency securities offered by companies such as Fannie Mae and Freddie Mac, which operate under a government charter. While they have to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks to achieve investment results that correspond to the aggregate price and yield performance of a benchmark index that measures the investment returns of large capitalization stocks.
 
 
Portfolio Management Discussion and Analysis
Below, State Street Global Advisors, the Fund’s Subadvisor, discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Equity Index Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month reporting period ended June 30, 2009, the Fund’s Service Shares generated a cumulative total return of 3.32%. This return compares to the 3.16% cumulative total return of the Fund’s benchmark, the S&P 500 Index (with dividends reinvested) during the same period.
 
During the semi-annual period, which sectors and which industries in the S&P 500 Index were the strongest contributors to the Fund’s performance?
 
Since the beginning of 2009 through the end of June, only the technology and materials sectors showed double-digit gains, with the consumer discretionary sector being the only other outperformer within the S&P 500 Index. These three sectors were the strongest contributors to Fund returns.
 
The industries that added the most to the results of both the S&P 500 Index and the Fund were computers and peripherals; software; capital markets; semiconductors and semiconductor equipment; and communications equipment.
 
Which sectors and industries in the S&P 500 Index were the weakest?
 
Six out of the ten S&P 500 sectors lost ground during the reporting period, including financials — although the second-quarter rally lifted it out of last place. The industrials sector, which slipped nearly 6% during the first six months of 2009, was held back by a more than 25% year-to-date slide in the shares of General Electric. Given these results, the industrials sector was the weakest contributor to the Fund’s performance. Other particularly weak contributors included the consumer staples and energy sectors.
 
Industries generating a negative return were oil, gas and consumable fuels; commercial banks; industrial conglomerates; household products; and insurance.
 
Which individual stocks were the top performers, and which were the greatest detractors?
 
The largest sector by weighting in the S&P 500 Index at the end of the reporting period was information technology at a weighting of 18.34%, and it provided four of the reporting period’s top performers — Apple, Microsoft, International Business Machines (IBM) and Google. Goldman Sachs was another outstanding performer during the reporting period.
 
Detractors from S&P 500 Index and Fund returns were Exxon Mobil, General Electric, Procter & Gamble, Citigroup and Wells Fargo.
 
What changes were made to the makeup of the S&P 500 Index during the six-month period?
 
Fourteen stocks were removed from the S&P 500 Index during the reporting period, including General Motors, which filed for bankruptcy protection. Other notable deletions included Ingersoll-Rand, Tyco Electronics, Rohm & Haas and Embarq. There were also fourteen additions to the S&P 500 Index during the reporting period. Notable additions included Western Digital, Quanta Services and DeVry.
 
What is your Fund strategy for the months ahead?
 
In keeping with the Fund’s investment objective, we will seek to achieve investment results that correspond to the aggregate price and yield performance of the S&P 500 Index, which measures the investment returns of large capitalization stocks.
 
 
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND

 
 
TOP TEN PORTFOLIO HOLDINGS AS OF JUNE 30, 2009*
 
                 
Holding   % of Net Assets     Line of Business    
 
Exxon Mobil Corp. 
    4.2 %   Energy    
Microsoft Corp. 
    2.2     Software & Services    
Johnson & Johnson
    1.9     Pharmaceuticals, Biotechnology & Life Sciences    
The Procter & Gamble Co. 
    1.8     Household & Personal Products    
AT&T, Inc. 
    1.8     Telecommunication Services    
International Business Machines Corp. 
    1.7     Technology Hardware & Equipment    
JPMorgan Chase & Co. 
    1.6     Diversified Financials    
Chevron Corp. 
    1.6     Energy    
Apple, Inc. 
    1.6     Technology Hardware & Equipment    
General Electric Co. 
    1.5     Capital Goods    
 
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Short-term investments include investment companies.
 
 
 6

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks a high level of current income, consistent with safety of principal.
 
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Fixed Income Investment Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Government Income Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month reporting period ended June 30, 2009, the Fund’s Service Shares generated a cumulative total return of 2.20%. This return compares to the 0.00% cumulative total return of the Fund’s benchmark, the Barclays Capital Government/Mortgage Index (“Barclays Index”) during the same time period.
 
What key factors were responsible for the Fund’s performance during the reporting period?
 
The Fund’s short duration position as compared with the Barclays Index contributed to its relative outperformance, as interest rates rose during the period. The Fund’s duration strategy was implemented by underweighting the long-term end of the yield curve, or spectrum of maturities. Duration is a measure of the Fund’s sensitivity to changes in interest rates. The portfolio also benefited from an overweighted position in credit-sensitive mortgages, including a small allocation to non-agency adjustable-rate mortgages (ARMs). In addition, an overweighted allocation to commercial mortgage-backed securities (CMBS) enhanced the Fund’s results during the reporting period.
 
Which fixed income market sectors contributed the most to Fund performance?
 
As systemic risk decreased dramatically, the credit markets began a massive rally in mid-March. The Fund benefited from its overweighted position in non-agency ARMs, which performed well as supply and demand conditions improved and then continued to rally after the government’s announcement of the Public-Private Investment Program.
 
Similarly, as investors became less risk averse, CMBS and asset-backed securities (ABS) outperformed. Both also benefited from the success of the Term Asset-backed Loan Facility (TALF). Overweighted allocations to both sectors added to the Fund’s returns.
 
Among residential mortgages, the Fund benefited from our focus on senior and super senior securities backed by Alt-A and Option ARM collateral. Alt-A mortgages fall between prime and subprime in terms of credit quality of the underlying borrowers, while Option ARMs give borrowers payment options. Investments in premium coupon pass-through mortgages contributed, particularly during the second quarter. As the breakeven spreads, or differential in yields that would eliminate a given yield advantage, widened between taxable and tax-exempt yields, the Fund’s holdings in Treasury Inflation Protected Securities (TIPS) also boosted its returns.
 
What sectors detracted from performance?
 
No sectors detracted from the Fund’s performance during the reporting period.
 
How did duration positioning decisions affect the Fund’s performance?
 
As mentioned, the Fund’s short duration positioning compared to the Barclays Index, via a modest position in the long-term end of the yield curve, contributed positively to its performance. In January, interest rates rose as market participants positioned themselves for a glut of stimulus-related issuance and longer-term inflationary concerns surfaced. Because we believed the risk-return tradeoff had diminished, we moved the Fund’s duration position to a neutral one as compared with the Barclays Index prior to the Fed’s announcement that it would be purchasing Treasuries. We subsequently reinitiated the Fund’s short duration stance during the second quarter, which added to returns, as interest rates moved higher with improved financial conditions and signs that macroeconomic data may be stabilizing.
 
 
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND

 
What changes did you make to the Fund’s weightings during the reporting period and why?
 
Heavy buying by the Fed drove agency mortgage spreads tighter during the period, reducing their attractiveness relative to other low risk assets, such as agency securities. As a result, we reduced the Fund’s overweighted allocation to agency mortgage-backed securities and reinvested the proceeds in agency securities.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
The Fund had overweighted positions relative to the Barclays Index in residential mortgage-backed securities, non-agency ARMs and collateralized mortgage obligations (CMOs) at the end of the reporting period. The Fund maintained a significantly underweighted allocation to U.S. Treasuries because we expect them to continue to underperform spread, or non-Treasury, sectors in the near term. The Fund had a slightly overweighted exposure to agency securities and asset-backed securities compared with the Barclays Index at the end of June 2009.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
Because we believe further intervention by the Fed seems unlikely, we lengthened the Fund’s short duration position somewhat. Although we also reduced the portfolio’s underweighted allocation to agency securities but maintained our underweight position. Additionally we decreased the Fund’s overweight exposure to non-agency ARMs. However, we continue to favor agency mortgage-backed securities that offer insurance against rising prepayments. We also expect to continue to favor deeply distressed non-agency mortgage-backed securities during the months ahead.
 
 
SECTOR ALLOCATION†
 
Percentage of Net Assets
 
(GRAPH)
 
† The percentage shown for each investment sector reflects the value of investments in that sector as a percentage of net assets. Short-term investments include investment companies, if any. “Agency Debentures” include agency securities offered by companies such as Fannie Mae and Freddie Mac, which operate under a government charter. While they have to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities.
 
 
 8

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term growth of capital.
 
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Growth Equity Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Growth Opportunities Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month reporting period ended June 30, 2009, the Fund’s Service Shares generated a cumulative total return of 22.82%. This return compares to the 16.61% cumulative total return of the Fund’s benchmark, the Russell Midcap Growth Index (with dividends reinvested) (the “Russell Index”), during the same time period.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
In keeping with our investment approach, the Fund’s outperformance was largely the result of stock selection. In addition, the Fund benefited during the broad market rally as investors became less risk averse in their investment decisions and sought out companies with attractive growth prospects.
 
Which equity market sectors most significantly affected Fund performance?
 
Our bottom-up approach focuses on security selection, and as a result, we do not make active sector-level investment decisions. That said, on a sector level, energy was the Fund’s largest source of strength. Positions in the technology and consumer discretionary sectors also enhanced the Fund’s relative returns during the reporting period.
 
What were some of the Fund’s best-performing individual stocks?
 
Weatherford International was the Fund’s top contributor during the reporting period. The oil well services company announced at the end of May that it would acquire TNK-BP Oil Field Services, which is anticipated to greatly increase the company’s access to the critical Western Siberia and Volga-Urals regions in Russia. The company was also awarded a large drilling contract in the Buzurgan fields in Southern Iraq, which supports its strategy of developing its global business. In addition, Weatherford International benefited from rising oil prices.
 
Shares of CME Group, the world’s largest futures and options exchange, also contributed to the Fund’s returns. In March, the company reported that trading volumes had increased since the beginning of 2009. We believe CME Group’s integrated clearing house and exchanges and its unique product offering gives it a competitive advantage. Furthermore, we think its over-the-counter clearing business, Clearport, can provide a significant growth opportunity because it could meet customers’ demands for more transparency and less counterparty risk.
 
CB Richard Ellis, the world’s leading global commercial real estate services firm, was another notable performer for the Fund during the reporting period. The company continued to gain market share and implement an aggressive cost cutting plan. The management team reported an improving outlook for the commercial real estate market. As a services company, with strengths in investment sales, property leasing, property management and investment management, the firm’s business model is not capital intensive. Given the fragmented nature of the industry and the firm’s strong brand name, we continue to believe CB Richard Ellis should be well positioned to gain market share and boost profit margins while participating in the long-term growth of the commercial real estate business.
 
Which individual stocks detracted significantly from the Fund’s performance during the semi-annual period?
 
FLIR Systems detracted from Fund performance, primarily as a result of broader weakness within the defense and aerospace industries. The Obama Administration revealed that it is in the process of reviewing all of the defense procurement plans outlined by the Bush Administration. We believe it is likely that various programs will be cut, priorities will be restructured, and there will be some procurement reform. However, in our view, FLIR Systems is well positioned for this environment
 
 
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND

because it delivers lower-cost products with 80% of the performance for 20% of the cost. Plus, the company derives sales from areas other than defense.
 
Fortune Brands also detracted from Fund performance, as its shares declined after the company reported weak earnings. The company experienced weakness in several product areas during the consumer spending slowdown. Nevertheless, we continue to believe Fortune Brands has a strong, diversified product portfolio that should likely to benefit when consumers begin spending again.
 
Did the Fund make any significant purchases or sales during the first half of the fiscal year?
 
We purchased a number of retail companies, including Staples, Tiffany & Co. and Bed Bath & Beyond, during the first half of the fiscal year. Staples is a market share leader in the retail office products and delivery businesses. The company’s recent acquisition of Corporate Express changes the composition of its revenue base and now over 50% of its revenues come from the high margin, high return delivery business. In addition, two competitors, Office Max and Office Depot, are closing stores in the U.S., which could lead to market share gains for Staples.
 
Jewelry business Tiffany & Co. remains a leader in one of the most fragmented segments of retailing. Recent bankruptcies of national chains and high-end boutiques have left Tiffany & Co. well-positioned, in our view, to gain market share. Further, Tiffany & Co. has a strong, global brand that we believe will get stronger as it continues to penetrate international markets. The company protects its brand by having a no-discount policy, ensuring stable profits relative to most of the retail industry.
 
Bed Bath & Beyond is a chain of retail stores with well-known subsidiaries, Christmas Tree Shops and buybuy BABY. We believe the company is likely to gain market share following the bankruptcy of its major competitor, Linens ’n Things.
 
Were there any notable changes in the Fund’s weightings during the six-month period?
 
There were no notable changes in the Fund’s weightings during the reporting period.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
As mentioned, the Fund’s sector positioning relative to its benchmark index is the result of our stock selection, as we take a pure bottom-up, research-intensive approach to investing. From that perspective, at the end of the reporting period, the Fund’s portfolio was broadly diversified with overweighted positions in the health care, energy and utilities sectors compared with the Russell Index. The Fund had smaller weightings relative to the Russell Index in the cyclicals, producer goods and services, and technology sectors at the end of June 2009.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
As investor fears subside, volatility returns to more reasonable levels, and stock prices are driven once again by fundamentals, we believe the Fund’s holdings are likely to appreciate in value. We intend to continue to focus on high-quality growth companies that maintain, in our view, a competitive advantage and generate meaningful free cash flow.
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
Equinix, Inc. 
    2.9 %   Software & Services    
Charles River Laboratories International, Inc. 
    2.7     Pharmaceuticals, Biotechnology & Life Sciences    
PetSmart, Inc. 
    2.3     Retailing    
Global Payments, Inc. 
    2.3     Software & Services    
Cameron International Corp. 
    2.3     Energy    
American Tower Corp. Class A
    2.2     Telecommunication Services    
Activision Blizzard, Inc. 
    2.2     Software & Services    
Coach, Inc. 
    2.2     Consumer Durables & Apparel    
St. Jude Medical, Inc. 
    2.2     Health Care Equipment & Services    
C. R. Bard, Inc. 
    2.2     Health Care Equipment & Services    
 
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
 10

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND

 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of total value of investments (excluding investment in the securities lending reinvestment vehicle, if any). The securities lending reinvestment vehicle represents 13.5% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
11 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Corporate Bonds – 18.6%
Banks – 5.2%
ANZ Capital Trust I(a)(b)
$ 500,000       4.484 %     01/29/49     $ 490,300  
Bank of America Corp.
  200,000       5.750       12/01/17       178,729  
  175,000       7.625       06/01/19       174,396  
Bear Stearns Companies, Inc.
  550,000       6.400       10/02/17       554,345  
  950,000       7.250       02/01/18       1,007,514  
Capital One Bank USA NA
  500,000       8.800       07/15/19       510,812  
Charles Schwab Corp.
  450,000       4.950       06/01/14       457,729  
Citigroup, Inc.
  300,000       5.875       05/29/37       234,293  
  100,000       6.875       03/05/38       87,766  
JPMorgan Chase Bank NA
  400,000       6.000       10/01/17       389,335  
Merrill Lynch & Co., Inc.
  450,000       5.450       02/05/13       438,753  
  325,000       6.400       08/28/17       287,710  
  600,000       6.875       04/25/18       549,845  
Morgan Stanley & Co.
  275,000       5.750       08/31/12       286,579  
  400,000       5.950       12/28/17       383,991  
  725,000       6.625       04/01/18       719,323  
PNC Bank NA
  325,000       6.875       04/01/18       321,288  
Resona Bank Ltd.(a)(b)(c)
  1,250,000       5.850       09/29/49       887,500  
Santander Issuances SA(a)(c)
  200,000       5.805       06/20/16       160,876  
Wachovia Bank NA
  250,000       7.800       08/18/10       262,461  
  675,000       6.600       01/15/38       658,002  
Wells Fargo Capital XIII(b)(c)
  125,000       7.700       12/29/49       102,500  
                             
                          9,144,047  
 
 
Chemicals – 0.2%
Dow Chemical Co.
  325,000       7.600       05/15/14       334,750  
 
 
Consumer Products – 0.2%
Whirlpool Corp.
  125,000       8.000       05/01/12       129,385  
  175,000       8.600       05/01/14       180,105  
                             
                          309,490  
 
 
Electric – 1.7%
Arizona Public Service Co.
  250,000       6.375       10/15/11       262,181  
  225,000       6.250       08/01/16       212,997  
CenterPoint Energy, Inc. Series B
  1,000,000       7.250       09/01/10       1,016,159  
Commonwealth Edison Co.
  250,000       5.875       02/01/33       239,564  
  300,000       5.900       03/15/36       287,806  
 
 
MidAmerican Energy Holdings Co.
  450,000       6.125       04/01/36       444,751  
Progress Energy, Inc.
  200,000       5.625       01/15/16       203,290  
  350,000       7.000       10/30/31       380,742  
                             
                          3,047,490  
 
 
Energy – 1.0%
Canadian Natural Resources Ltd.
  50,000       5.850       02/01/35       46,771  
  400,000       6.500       02/15/37       404,383  
  75,000       6.250       03/15/38       72,907  
EQT Corp.
  70,000       8.125       06/01/19       74,926  
StatoilHydro ASA
  300,000       5.250       04/15/19       308,736  
Transocean, Inc.
  375,000       6.800       03/15/38       401,103  
XTO Energy, Inc.
  350,000       6.500       12/15/18       375,494  
                             
                          1,684,320  
 
 
Environmental – 0.2%
Waste Management, Inc.
  400,000       7.375       03/11/19       428,649  
 
 
Financial Companies – 0.4%
International Lease Finance Corp.
  275,000       4.950       02/01/11       236,500  
SLM Corp.
  450,000       5.400       10/25/11       404,725  
                             
                          641,225  
 
 
Food & Beverage – 0.2%
Anheuser-Busch InBev Worldwide, Inc.(a)
  350,000       7.750       01/15/19       382,780  
 
 
Gaming – 0.1%
International Game Technology
  250,000       7.500       06/15/19       251,320  
 
 
Healthcare – 0.7%
Express Scripts, Inc.
  175,000       5.250       06/15/12       178,506  
  175,000       6.250       06/15/14       176,403  
Pfizer, Inc.
  380,000       6.200       03/15/19       415,577  
Roche Holdings, Inc.(a)
  400,000       6.000       03/01/19       426,512  
                             
                          1,196,998  
 
 
Life Insurance – 0.5%
MetLife Capital Trust X(a)(b)(c)
  300,000       9.250       04/08/38       267,000  
Phoenix Life Insurance Co.(a)(b)
  450,000       7.150       12/15/34       124,629  
 
 
 
 
 12
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
 
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Corporate Bonds – (continued)
Life Insurance – (continued)
                             
Swiss Reinsurance Capital I LP(a)(b)(c)
$ 600,000       6.854 %     05/29/49     $ 330,240  
Symetra Financial Corp.(a)(c)
  325,000       8.300       10/15/37       140,563  
                             
                          862,432  
 
 
Media Cable – 1.5%
Comcast Corp.
  625,000       6.450       03/15/37       611,970  
COX Communications, Inc.
  1,075,000       4.625       01/15/10       1,080,095  
Rogers Cable, Inc.
  200,000       7.875       05/01/12       219,891  
Time Warner Cable, Inc.
  425,000       5.400       07/02/12       439,280  
Time Warner Entertainment Co. LP
  225,000       8.375       03/15/23       246,428  
                             
                          2,597,664  
 
 
Metals and Mining – 0.3%
ArcelorMittal
  650,000       6.125       06/01/18       568,750  
 
 
Pipelines – 1.6%
Boardwalk Pipelines LP
  575,000       5.875       11/15/16       537,428  
Energy Transfer Partners LP
  625,000       5.950       02/01/15       625,726  
  125,000       6.700       07/01/18       127,788  
Enterprise Products Operating LP Series B
  450,000       5.600       10/15/14       461,142  
  325,000       5.000       03/01/15       310,696  
Tennessee Gas Pipeline Co.
  150,000       8.000       02/01/16       158,404  
TEPPCO Partners LP
  550,000       6.650       04/15/18       558,315  
                             
                          2,779,499  
 
 
Property/Casualty Insurance – 1.8%
Ace INA Holdings, Inc.
  500,000       5.800       03/15/18       497,456  
Arch Capital Group Ltd.
  350,000       7.350       05/01/34       262,500  
Aspen Insurance Holdings Ltd.
  350,000       6.000       08/15/14       324,909  
Endurance Specialty Holdings Ltd.
  375,000       6.150       10/15/15       326,655  
Marsh & McClennan Companies, Inc.
  600,000       5.150       09/15/10       603,652  
QBE Insurance Group Ltd.(a)
  225,000       9.750       03/14/14       235,129  
White Mountains Reinsurance Group Ltd.(a)
  600,000       6.375       03/20/17       456,263  
ZFS Finance USA Trust IV(a)(b)(c)
  675,000       5.875       05/09/32       487,958  
                             
                          3,194,522  
 
 
REITs – 0.5%
Simon Property Group LP
  525,000       6.125       05/30/18       488,336  
Westfield Capital Corp. Ltd.(a)
  225,000       4.375       11/15/10       220,223  
Westfield Group(a)
  125,000       5.400       10/01/12       119,951  
  125,000       7.500       06/02/14       123,941  
                             
                          952,451  
 
 
Retailers – 0.7%
AutoZone, Inc.
  475,000       5.750       01/15/15       473,681  
CVS/Caremark Corp.
  425,000       5.750       06/01/17       427,196  
Marks & Spencer PLC(a)
  400,000       7.125       12/01/37       275,420  
                             
                          1,176,297  
 
 
Tobacco – 0.6%
Altria Group, Inc.
  275,000       9.700       11/10/18       314,639  
BAT International Finance PLC(a)
  300,000       9.500       11/15/18       352,603  
Philip Morris International, Inc.
  400,000       5.650       05/16/18       419,277  
                             
                          1,086,519  
 
 
Wireless Telecommunications – 0.6%
New Cingular Wireless Services, Inc.
  675,000       7.875       03/01/11       729,570  
  300,000       8.750       03/01/31       365,225  
                             
                          1,094,795  
 
 
Wirelines Telecommunications – 0.6%
Telecom Italia Capital SA
  225,000       4.000       01/15/10       226,078  
  300,000       4.875       10/01/10       302,353  
Telefonica Europe BV
  300,000       7.750       09/15/10       316,659  
Verizon Communications, Inc.
  150,000       6.400       02/15/38       147,778  
                             
                          992,868  
 
 
TOTAL CORPORATE BONDS
(Cost $34,381,144)
          $ 32,726,866  
 
 
                             
                             
Mortgage-Backed Obligations – 63.3%
Adjustable Rate FHLMC(c) – 2.5%
$ 2,159,276       4.846 %     09/01/35     $ 2,239,043  
  2,144,838       4.746       10/01/35       2,203,020  
                             
                          4,442,063  
 
 
Adjustable Rate FNMA(c) – 3.4%
  805,670       3.332       05/01/33       820,392  
  1,239,750       3.073       05/01/35       1,265,177  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
Schedule of Investments (continued)
 
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – (continued)
Adjustable Rate FNMA(c) – (continued)
                             
$ 2,025,044       5.331 %     09/01/35     $ 2,109,916  
  1,711,925       5.096       12/01/35       1,787,280  
                             
                          5,982,765  
 
 
Adjustable Rate Non-Agency(c) – 13.7%
American Home Mortgage Assets Trust Series 2007-1, Class A1
  2,461,473       2.040       02/25/47       809,839  
Bear Stearns Adjustable Rate Mortgage Trust Series 2004-1, Class 21A1
  45,032       4.271       04/25/34       31,919  
Bear Stearns Adjustable Rate Mortgage Trust Series 2005-3, Class 2A1
  104,663       5.084       06/25/35       62,945  
Bear Stearns Mortgage Funding Trust Series 2006-AR1, Class 2A1
  1,661,344       0.534       08/25/36       686,614  
Chase Mortgage Finance Corp. Series 2007-A1, Class 2A1
  1,861,557       4.179       02/25/37       1,637,707  
Countrywide Alternative Loan Trust Series 2005-38, Class A1
  326,044       2.840       09/25/35       153,024  
Countrywide Alternative Loan Trust Series 2006-OA10, Class 4A1
  1,808,273       0.504       08/25/46       735,637  
Countrywide Alternative Loan Trust Series 2006-OA16, Class A2
  3,377,966       0.504       10/25/46       1,370,113  
Countrywide Home Loan Mortgage Pass-Through Trust Series 2003-52, Class A1
  150,473       5.269       02/19/34       109,176  
Countrywide Home Loan Mortgage Pass-Through Trust Series 2004-HYB6, Class A2
  27,472       4.515       11/20/34       20,156  
Countrywide Home Loan Mortgage Pass-Through Trust Series 2005-HYB4, Class 2A1
  150,265       4.891       08/20/35       84,361  
Downey Savings & Loan Association Mortgage Loan Trust Series 2006-AR2, Class 2A1A
  1,433,952       0.513       11/19/37       556,338  
Harborview Mortgage Loan Trust Series 2005-14, Class 5A1A
  673,535       5.725       12/19/35       337,243  
Indymac Index Mortgage Loan Trust Series 2005-AR15, Class A1
  604,337       5.302       09/25/35       310,051  
Indymac Index Mortgage Loan Trust Series 2006-AR2, Class 1A1A
  1,298,004       0.534       04/25/46       496,393  
Indymac Index Mortgage Loan Trust Series 2006-AR4, Class A1A
  1,316,935       0.524       05/25/46       515,267  
J.P. Morgan Mortgage Trust Series 2007-A1, Class 1A1
  718,365       4.254       07/25/35       602,622  
J.P. Morgan Mortgage Trust Series 2007-A1, Class 2A2
  661,224       4.741       07/25/35       529,852  
J.P. Morgan Mortgage Trust Series 2007-A1, Class 5A2
  650,046       4.773       07/25/35       522,321  
 
 
Lehman XS Trust Series 2005-7N, Class 1A1A
  537,304       0.584       12/25/35       243,378  
Lehman XS Trust Series 2007-16N, Class 2A2
  925,133       1.164       09/25/47       338,114  
Luminent Mortgage Trust Series 2006-2, Class A1A
  1,361,624       0.514       02/25/46       525,415  
Luminent Mortgage Trust Series 2006-5, Class A1A
  611,296       0.504       07/25/36       253,350  
Master Adjustable Rate Mortgages Trust Series 2006-OA2, Class 4A1A
  737,261       2.190       12/25/46       204,517  
Merrill Lynch Mortgage Investors, Inc. Series 2005-A9, Class 2A1C
  3,000,000       5.155       12/25/35       1,437,927  
Residential Accredit Loans, Inc. Series 2005-QO5, Class A1
  1,030,909       2.340       01/25/46       463,744  
Residential Accredit Loans, Inc. Series 2007-QH9, Class A1
  2,825,710       6.540       11/25/37       786,366  
Residential Funding Mortgage Securities I Series 2005-SA4, Class 2A2
  664,797       5.184       09/25/35       477,163  
Structured Adjustable Rate Mortgage Loan Trust Series 2004-5, Class 3A2
  60,399       3.766       05/25/34       48,195  
Structured Adjustable Rate Mortgage Loan Trust Series 2004-12, Class 3A1
  28,396       5.192       09/25/34       18,303  
Structured Adjustable Rate Mortgage Loan Trust Series 2004-16, Class 3A1
  106,502       5.355       11/25/34       71,702  
Structured Asset Mortgage Investments, Inc. Series 2007-AR6, Class A1
  2,212,758       2.840       08/25/47       834,784  
Thornburg Mortgage Securities Trust Series 2006-4, Class A2B
  2,073,240       0.434       07/25/36       1,864,361  
Thornburg Mortgage Securities Trust Series 2006-5, Class A1
  1,820,524       0.434       09/25/46       1,620,365  
Washington Mutual Alternative Mortgage Pass-Through Certificates Series 2006-AR9, Class 2A
  2,373,623       2.180       11/25/46       817,022  
Washington Mutual Mortgage Pass-Through Certificates Series 2004-AR3, Class A2
  41,803       3.144       06/25/34       33,502  
Washington Mutual Mortgage Pass-Through Certificates Series 2005-AR10, Class 1A3
  2,000,000       4.830       09/25/35       1,030,188  
Washington Mutual Mortgage Pass-Through Certificates Series 2006-AR11, Class 1A
  2,520,247       2.300       09/25/46       915,407  
Washington Mutual Mortgage Pass-Through Certificates Series 2006-AR11, Class 3A1A
  703,415       2.260       09/25/46       254,126  
Washington Mutual Mortgage Pass-Through Certificates Series 2007-OA2, Class 1A
  758,531       2.040       03/25/47       254,730  
 
 
 
 
 14
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
 
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – (continued)
Adjustable Rate Non-Agency(c) – (continued)
                             
Wells Fargo Alternative Loan Trust Series 2007-PA6, Class A1
$ 2,363,259       6.590 %     12/28/37     $ 1,209,302  
Wells Fargo Mortgage Backed Securities Trust Series 2006-AR10, Class 5A3
  1,178,635       5.607       07/25/36       808,848  
                             
                          24,082,387  
 
 
Collateralized Mortgage Obligations – 3.4%
Interest Only(c)(d) – 0.0%
FHLMC Series 2006-3167, Class XI
  182,153       0.000       10/15/35       187  
FNMA Series 2004-71, Class DI
  507,341       0.000       04/25/34       3,298  
                             
                          3,485  
 
 
Planned Amortization Class – 1.8%
FNMA Series 2003-92, Class PD
  3,000,000       4.500       03/25/17       3,092,748  
 
 
Regular Floater(c) – 1.6%
FHLMC Series 2005-3038, Class XA(e)
  56,302       0.000       09/15/35       52,688  
FHLMC Series 2006-3167, Class X(e)
  95,785       0.000       06/15/36       88,034  
FHLMC Series 2007-3275, Class UF(e)
  58,366       0.000       02/15/37       58,366  
FHLMC Series 2007-3342, Class FT
  1,680,861       0.769       07/15/37       1,654,562  
FNMA Series 2006-68, Class FM
  872,549       0.764       08/25/36       859,714  
FNMA Series 2006-81, Class LF(e)
  50,606       0.000       09/25/36       49,912  
FNMA Series 2007-56, Class GY(e)
  70,181       0.000       06/25/37       67,965  
                             
                          2,831,241  
 
 
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS 		  $ 5,927,474  
 
 
Commercial Mortgage-Backed Securities – 5.2%
Adjustable Rate Non-Agency(c) – 1.5%
Wachovia Bank Commercial Mortgage Trust Series 2005-C21, Class A4
$ 3,000,000       5.384 %     10/15/44     $ 2,661,208  
 
 
Sequential Fixed Rate – 3.7%
GE Capital Commercial Mortgage Corp. Series 2002-1A, Class A3
  2,700,000       6.269       12/10/35       2,764,871  
J.P. Morgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP2, Class A4
  1,500,000       4.738       07/15/42       1,249,262  
Morgan Stanley Dean Witter Capital I Series 2003-TOP9, Class A2
  2,700,000       4.740       11/13/36       2,594,497  
                             
                          6,608,630  
 
 
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES   $ 9,269,838  
 
 
Federal Agencies – 35.1%
FHLMC – 5.6%
  19,541       7.000       08/01/10       20,159  
  9,392       7.000       11/01/11       9,837  
  10,260       7.000       12/01/11       10,746  
  54,924       7.500       06/01/15       58,602  
  193,641       7.000       07/01/16       206,094  
  1,078,094       5.500       02/01/18       1,136,690  
  77,887       5.500       04/01/18       82,120  
  148,529       4.500       05/01/18       154,094  
  32,047       4.500       06/01/18       33,247  
  129,850       4.500       09/01/18       134,715  
  149,091       5.500       09/01/18       157,194  
  102,922       4.500       10/01/18       106,777  
  105,074       4.500       11/01/18       109,010  
  731,268       4.500       12/01/18       758,663  
  39,556       4.500       01/01/19       41,038  
  75,909       4.500       03/01/19       78,641  
  18,368       9.500       08/01/19       20,226  
  869       9.500       08/01/20       959  
  277,651       6.500       10/01/20       299,635  
  90,374       6.000       03/01/29       95,349  
  924       6.000       04/01/29       975  
  57,788       7.500       12/01/29       63,097  
  979       7.500       11/01/30       1,069  
  526,852       7.000       05/01/32       571,180  
  2,193       6.000       08/01/32       2,305  
  314,120       7.000       12/01/32       340,550  
  95,609       5.000       11/01/35       97,641  
  194,195       5.000       12/01/35       198,309  
  50,601       5.000       03/01/36       51,677  
  419,281       5.000       06/01/36       428,195  
  22,827       6.000       11/01/36       23,829  
  71,584       6.000       09/01/37       75,395  
  109,368       6.000       11/01/37       114,191  
  100,266       6.000       02/01/38       105,636  
  24,448       6.000       04/01/38       25,526  
  563,051       5.500       06/01/38       582,017  
  389,121       6.000       07/01/38       409,610  
  21,087       6.000       09/01/38       22,010  
  70,474       6.000       10/01/38       74,303  
  25,948       6.000       11/01/38       27,277  
  25,612       6.000       02/01/39       26,760  
  3,000,000       5.000       06/01/39       3,054,087  
                             
                          9,809,435  
 
 
FNMA – 27.9%
  339       9.000       02/01/10       348  
  37,966       6.000       08/01/13       40,272  
  143,099       7.500       08/01/15       152,424  
  53,274       6.000       04/01/16       56,785  
  124,879       6.500       05/01/16       132,511  
  191,297       6.500       09/01/16       202,989  
  241,668       6.500       11/01/16       256,439  
  55,688       6.000       12/01/16       59,359  
  480,487       6.000       02/01/17       511,957  
  68,484       7.500       04/01/17       72,565  
  756,581       6.000       10/01/17       806,133  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
Schedule of Investments (continued)
 
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – (continued)
FNMA – (continued)
                             
$ 102,252       5.000 %     02/01/18     $ 107,086  
  810,725       5.500       02/01/18       855,154  
  606,558       5.000       04/01/18       635,233  
  1,057,495       5.000       05/01/18       1,108,384  
  549,747       4.500       06/01/18       570,355  
  122,391       5.000       06/01/18       128,177  
  71,275       6.500       08/01/18       76,664  
  338,044       7.000       08/01/18       371,594  
  3,103,745       4.000       09/01/18       3,165,514  
  198,673       5.000       11/01/18       208,065  
  159,224       4.500       12/01/18       162,700  
  135,033       5.000       02/01/19       141,137  
  1,024,036       5.000       03/01/19       1,070,325  
  777,537       5.000       04/01/19       812,684  
  511,019       5.000       08/01/19       534,118  
  223,227       5.000       10/01/19       233,318  
  925,339       5.000       11/01/19       967,167  
  878,727       4.500       05/01/23       898,419  
  16,148       5.000       06/01/23       16,721  
  1,154,094       5.500       09/01/23       1,211,903  
  186,393       5.500       10/01/23       196,150  
  505       7.000       07/01/25       552  
  8,514       7.000       11/01/25       9,314  
  61,456       9.000       11/01/25       67,296  
  280,485       7.000       08/01/26       308,054  
  3,978       7.000       08/01/27       4,370  
  18,771       7.000       09/01/27       20,617  
  113,629       6.000       12/01/27       119,386  
  670       7.000       01/01/28       736  
  572,852       6.000       02/01/29       605,727  
  520,045       6.000       06/01/29       549,864  
  5,977       7.000       09/01/29       6,556  
  77,853       8.000       10/01/29       85,113  
  35,782       7.000       12/01/29       39,243  
  1,595       8.500       04/01/30       1,740  
  7,966       8.000       05/01/30       8,659  
  465       8.500       06/01/30       507  
  36,565       7.000       05/01/32       40,006  
  257,018       7.000       06/01/32       280,914  
  317,521       7.000       08/01/32       347,042  
  80,962       8.000       08/01/32       88,209  
  198,711       5.500       03/01/33       205,932  
  597,420       5.000       05/01/33       611,240  
  159,510       5.500       05/01/33       165,307  
  19,496       5.000       06/01/33       19,947  
  26,999       5.500       06/01/33       27,980  
  32,398       5.000       07/01/33       33,147  
  319,687       5.500       07/01/33       331,304  
  49,595       5.000       08/01/33       50,742  
  26,614       5.000       09/01/33       27,230  
  4,340       5.500       09/01/33       4,502  
  83,130       5.000       10/01/33       85,054  
  54,136       5.000       11/01/33       55,389  
  40,009       5.000       02/01/34       40,935  
  5,501       5.500       02/01/34       5,705  
  42,326       5.000       03/01/34       43,305  
  29,563       5.000       04/01/34       30,247  
 
 
  477,508       5.500       04/01/34       494,861  
  153,132       5.500       06/01/34       158,696  
  634,624       5.000       07/01/34       648,943  
  60,939       5.500       12/01/34       63,198  
  421,680       6.000       04/01/35       443,979  
  19,788       5.000       09/01/35       20,223  
  7,456       5.500       09/01/35       7,731  
  21,256       6.000       09/01/36       22,245  
  19,738       6.000       10/01/36       20,656  
  211,213       6.000       11/01/36       221,036  
  2,960       5.500       12/01/36       3,068  
  19,968       5.500       01/01/37       20,631  
  1,012       5.500       02/01/37       1,049  
  5,370       5.500       03/01/37       5,566  
  119,386       5.500       04/01/37       123,558  
  436,579       5.500       05/01/37       452,058  
  10,884       5.500       06/01/37       11,272  
  1,000,245       6.000       06/01/37       1,046,654  
  46,125       5.500       07/01/37       47,689  
  20,367       6.000       07/01/37       21,409  
  73,062       5.500       08/01/37       75,515  
  82,689       6.000       08/01/37       86,572  
  98,222       6.000       09/01/37       102,747  
  36,228       5.500       10/01/37       37,525  
  48,918       6.000       10/01/37       51,309  
  71,457       6.000       11/01/37       74,898  
  129,420       6.000       12/01/37       136,482  
  58,102       5.500       01/01/38       60,174  
  304,619       5.500       02/01/38       315,461  
  244,531       6.000       02/01/38       256,854  
  720,033       5.500       03/01/38       744,427  
  959,536       6.000       03/01/38       1,004,458  
  699,902       5.500       04/01/38       725,345  
  239,969       5.500       05/01/38       249,098  
  61,978       6.000       05/01/38       65,389  
  1,505,802       5.500       06/01/38       1,562,891  
  86,837       6.000       06/01/38       91,523  
  1,358,343       5.500       07/01/38       1,410,551  
  155,405       6.000       07/01/38       163,942  
  464,910       5.500       08/01/38       481,802  
  51,389       6.000       08/01/38       54,249  
  544,280       5.500       09/01/38       564,385  
  452,050       6.000       09/01/38       474,599  
  360,814       5.500       10/01/38       373,777  
  75,865       6.000       10/01/38       80,088  
  251,694       5.500       11/01/38       261,268  
  74,684       6.000       11/01/38       78,841  
  136,802       5.500       12/01/38       141,398  
  1,846,293       5.000       01/01/39       1,888,002  
  193,146       5.500       01/01/39       199,814  
  26,546       6.000       01/01/39       27,743  
  57,989       5.500       02/01/39       60,075  
  9,260       5.500       03/01/39       9,594  
  1,000,000       5.500       TBA-15yr(f )     1,043,125  
  1,000,000       4.500       TBA-30yr(f )     997,812  
  7,000,000       5.000       TBA-30yr(f )     7,126,875  
 
 
 
 
 16
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
 
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – (continued)
FNMA – (continued)
                             
$ 1,000,000       5.500 %     TBA-30yr(f )   $ 1,032,188  
  3,000,000       6.000       TBA-30yr(f )     3,135,000  
                             
                          49,164,839  
 
 
GNMA – 1.6%
  18,396       7.000       03/15/12       18,821  
  20,620       7.000       10/15/25       22,462  
  24,776       7.000       11/15/25       26,990  
  4,276       7.000       02/15/26       4,660  
  17,671       7.000       04/15/26       19,258  
  7,099       7.000       03/15/27       7,723  
  1,311       7.000       06/15/27       1,427  
  8,373       7.000       10/15/27       9,109  
  148,725       7.000       11/15/27       161,791  
  7,729       7.000       01/15/28       8,411  
  47,792       7.000       02/15/28       52,009  
  16,837       7.000       03/15/28       18,323  
  4,324       7.000       04/15/28       4,706  
  969       7.000       05/15/28       1,055  
  19,323       7.000       06/15/28       21,027  
  38,202       7.000       07/15/28       41,572  
  114,839       7.000       08/15/28       124,971  
  55,393       7.000       09/15/28       60,280  
  5,429       7.000       11/15/28       5,908  
  5,693       7.500       11/15/30       6,112  
  3,699       7.000       10/15/31       4,025  
  653       7.000       12/15/31       711  
  37,009       7.500       10/15/32       40,335  
  1,132,990       6.000       08/20/34       1,187,926  
  256,236       6.000       08/15/38       267,237  
  350,653       6.000       09/15/38       365,707  
  278,874       6.000       12/15/38       291,401  
                             
                          2,773,957  
 
 
TOTAL FEDERAL AGENCIES   $ 61,748,231  
 
 
TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $134,979,372)
          $ 111,452,758  
 
 
                             
                             
Agency Debentures – 3.3%
Export Development Canada
$ 700,000       3.125 %     04/24/14     $ 703,928  
FHLMC
  2,300,000       3.000       07/28/14       2,308,333  
FNMA(g)
  200,000       0.000       10/09/19       101,820  
Tennessee Valley Authority
  700,000       4.375       06/15/15       740,365  
Tennessee Valley Authority(i)
  2,000,000       5.375       04/01/56       1,998,767  
 
 
TOTAL AGENCY DEBENTURES
(Cost $5,804,827)
          $ 5,853,213  
 
 
                             
                             
Asset-Backed Securities – 0.5%
Home Equity – 0.5%
GMAC Mortgage Corp. Loan Trust Series 2007-HE3, Class 1A1
$ 228,160       7.000 %     09/25/37     $ 102,252  
GMAC Mortgage Corp. Loan Trust Series 2007-HE3, Class 2A1
  251,545       7.000       09/25/37       83,064  
HFC Home Equity Loan Asset Backed Certificates Series 2007-3, Class APT(c)
  1,037,016       1.515       11/20/36       679,508  
 
 
TOTAL ASSET-BACKED SECURITIES
(Cost $1,517,621)
          $ 864,824  
 
 
                             
                             
Foreign Debt Obligations – 6.0%
Sovereign – 0.6%
Province of Ontario, Canada
$ 1,100,000       4.100 %     06/16/14     $ 1,120,502  
 
 
Supranational – 5.4%
Asian Development Bank
  5,000,000       1.000       10/01/15       4,192,305  
European Investment Bank
  1,800,000       3.000       04/08/14       1,796,619  
Inter-American Development Bank
  1,700,000       3.000       04/22/14       1,695,863  
International Finance Corp.
  1,700,000       3.000       04/22/14       1,695,863  
                             
                          9,380,650  
 
 
TOTAL FOREIGN DEBT OBLIGATIONS
(Cost $10,209,445)
          $ 10,501,152  
 
 
                             
                             
Government Guarantee Obligations(h) – 3.2%
Landwirtschaftliche Rentenbank
$ 1,400,000       4.125 %     07/15/13     $ 1,431,108  
LeasePlan Corp. NV(a)
  1,000,000       3.000       05/07/12       1,011,507  
Royal Bank of Scotland Group PLC(a)
  1,800,000       2.625       05/11/12       1,804,841  
Societe Financement de l’Economie Francaise(a)
  1,300,000       3.375       05/05/14       1,305,559  
 
 
TOTAL GOVERNMENT GUARANTEE OBLIGATIONS
(Cost $5,537,754)
          $ 5,553,015  
 
 
                             
                             
U.S. Treasury Obligations – 3.6%
United States Treasury Bond
$ 500,000       4.250 %     05/15/39     $ 494,845  
United States Treasury Inflation Protected Securities
  2,200,000       1.625       01/15/15       2,445,355  
  200,000       3.625       04/15/28       320,868  
 
 
The accompanying notes are an integral part of these financial statements.
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
Schedule of Investments (continued)
 
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
U.S. Treasury Obligations – (continued)
                             
United States Treasury Principal-Only STRIPS(g)
$ 3,400,000       0.000 %     11/15/21     $ 1,976,454  
  200,000       0.000       11/15/26       91,758  
  2,100,000       0.000       11/15/27       918,939  
 
 
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,083,772)
          $ 6,248,219  
 
 
             
    Interest
 		     
Shares   Rate   Value  
 
Preferred Stock – 0.2%
Banks – 0.2%
Royal Bank of Scotland Group PLC ADR
475,000
  9.118%   $ 387,125  
(Cost $487,251)
       
 
 
Shares   Rate   Value  
 
Investment Company(c) – 4.7%
JPMorgan U.S. Government Money Market Fund –
Capital Shares
8,307,796
  0.236%   $ 8,307,796  
(Cost $8,307,796)
       
 
 
TOTAL INVESTMENTS – 103.4%
(Cost $207,308,982)
  $ 181,894,968  
 
 
LIABILITIES IN EXCESS OF OTHER ASSETS – (3.4)%
    (5,900,348 )
 
 
NET ASSETS – 100.0%   $ 175,994,620  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
(a) Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the investment adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $9,603,795, which represents approximately 5.5% of net assets as of June 30, 2009.
 
(b) Securities with “Call” features with resetting interest rate. Maturity dates disclosed are the final maturity dates.
 
(c) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(d) Represents security with notional or nominal principal amount. The actual effective yield of this security is different than the stated interest rate.
 
(e) Security is issued with a zero coupon, and interest rate is contingent upon LIBOR reaching a predetermined level.
 
(f) TBA (To Be Announced) Securities are purchased on a forward commitment basis with an approximate principal amount and no defined maturity date. The actual principal and maturity date will be determined upon settlement when the specific mortgage pools are assigned. Total market value of TBA securities, (excluding forward sales contracts, if any) amounts to $13,335,000, which represents approximately 7.6% of net assets as of June 30, 2009.
 
(g) Security issued with a zero coupon. Income is recognized through the accretion of discount.
 
(h) Represents securities which are guaranteed by a foreign government. Total market value of these securities amounts to $5,553,015, which represents approximately 3.2% of net assets as of June 30, 2009.
 
(i) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
         
Investment Abbreviations:
ADR
  —   American Depositary Receipt
FHLMC
  —   Federal Home Loan Mortgage Corp.
FNMA
  —   Federal National Mortgage Association
GNMA
  —   Government National Mortgage Association
LIBOR
  —   London Inter Bank Offered Rate
REIT
  —   Real Estate Investment Trust
STRIPS
  —   Separate Trading of Registered Interest and Principal of Securities
 
 
 18
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
 
 
 
 
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS — At June 30, 2009, the Fund had outstanding forward foreign currency exchange contracts, both to purchase and sell foreign currencies:
 
                                     
Open Forward Foreign Currency
 		  Contract
 		  Expiration
 		    Value on
 		    Current
 		    Unrealized
 		 
Exchange Contracts with Unrealized Gain   Type   Date     Settlement Date     Value     Gain  
   
Australian Dollar
  Purchase     09/16/09     $ 822,896     $ 823,965     $ 1,069  
Australian Dollar
  Sale     09/16/09       158,137       157,844       293  
British Pound
  Purchase     09/16/09       761,516       778,840       17,324  
Canadian Dollar
  Sale     09/16/09       155,600       150,305       5,295  
Japanese Yen
  Purchase     09/16/09       436,000       436,317       317  
New Zealand Dollar
  Purchase     09/16/09       268,151       274,710       6,559  
Norwegian Krone
  Purchase     09/16/09       371,704       374,008       2,304  
Swedish Krona
  Sale     09/16/09       115,000       114,214       786  
Swiss Franc
  Sale     09/16/09       393,000       387,241       5,759  
 
 
                                     
TOTAL
                              $ 39,706  
 
 
 
                                     
Open Forward Foreign Currency
 		  Contract
 		  Expiration
 		    Value on
 		    Current
 		    Unrealized
 		 
Exchange Contracts with Unrealized Loss   Type   Date     Settlement Date     Value     Loss  
   
Australian Dollar
  Sale     09/16/09     $ 68,443     $ 69,708     $ (1,265 )
Australian Dollar
  Purchase     09/16/09       226,010       224,347       (1,663 )
British Pound
  Purchase     09/16/09       122,092       120,088       (2,004 )
British Pound
  Sale     09/16/09       321,893       324,074       (2,181 )
Canadian Dollar
  Purchase     09/16/09       567,000       547,308       (19,692 )
Euro
  Sale     09/16/09       611,208       618,592       (7,384 )
Japanese Yen
  Purchase     09/16/09       231,000       229,920       (1,080 )
Japanese Yen
  Sale     09/16/09       982,545       999,172       (16,627 )
New Zealand Dollar
  Purchase     09/16/09       172,587       172,157       (430 )
New Zealand Dollar
  Sale     09/16/09       90,783       91,193       (410 )
Norwegian Krone
  Purchase     09/16/09       91,000       89,827       (1,173 )
Swedish Krona
  Sale     09/16/09       110,851       112,917       (2,066 )
Swiss Franc
  Purchase     09/16/09       228,000       224,829       (3,171 )
Swiss Franc
  Sale     09/16/09       526,000       529,898       (3,898 )
 
 
                                     
TOTAL
                              $ (63,044 )
 
 
 
                                 
Open Forward Foreign Currency
 		                       
Cross Contracts with Unrealized Gain
 		  Expiration
 		    Purchase
 		    Sale
 		    Unrealized
 		 
(Purchase/Sale)   Date     Current Value     Current Value     Gain  
   
Australian Dollar/Japanese Yen
    09/16/09     $ 109,833     $ 110,571     $ 738  
British Pound/Japanese Yen
    09/16/09       124,972       125,024       52  
Euro/Australian Dollar
    09/16/09       180,423       182,357       1,934  
Euro/British Pound
    09/16/09       182,069       182,357       288  
Euro/Canadian Dollar
    09/16/09       95,068       98,192       3,124  
Japanese Yen/Australian Dollar
    09/16/09       298,862       299,099       237  
Swedish Krona/Norwegian Krone
    09/16/09       273,485       281,259       7,774  
Swiss Franc/Canadian Dollar
    09/16/09       171,718       174,796       3,078  
 
 
                                 
TOTAL
                          $ 17,225  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

 
Schedule of Investments (continued)
 
June 30, 2009 (Unaudited)
 
 
ADDITIONAL INVESTMENT INFORMATION (continued)
 
                                 
Open Forward Foreign Currency
 		                       
Cross Contracts with Unrealized Loss
 		  Expiration
 		    Purchase
 		    Sale
 		    Unrealized
 		 
(Purchase/Sale)   Date     Current Value     Current Value     Loss  
   
Euro/Australian Dollar
    09/16/09     $ 349,321     $ 346,478     $ (2,843 )
Euro/New Zealand Dollar
    09/16/09       232,953       230,050       (2,903 )
Japanese Yen/Australian Dollar
    09/16/09       116,981       114,611       (2,370 )
Japanese Yen/British Pound
    09/16/09       120,088       119,877       (211 )
Japanese Yen/Euro
    09/16/09       119,233       119,033       (200 )
New Zealand Dollar/British Pound
    09/16/09       141,474       140,750       (724 )
Swiss Franc/Australian Dollar
    09/16/09       279,633       274,577       (5,056 )
Swiss Franc/Japanese Yen
    09/16/09       348,251       339,003       (9,248 )
 
 
                                 
TOTAL
                          $ (23,555 )
 
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		                   
    Contracts
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Long (Short)     Month     Value     Gain (Loss)  
   
Eurodollars
    7       September 2009     $ 1,738,275     $ 34,539  
Eurodollars
    6       December 2009       1,486,425       4,874  
Eurodollars
    11       September 2010       2,697,200       2,239  
U.S. Treasury Bond
    31       September 2009       3,669,141       35,086  
2 Year U.S. Treasury Notes
    127       September 2009       27,459,781       (62,720 )
5 Year U.S. Treasury Notes
    (46 )     September 2009       (5,277,063 )     (31,367 )
10 Year U.S. Treasury Notes
    102       September 2009       11,859,094       118,873  
 
 
                                 
TOTAL
                          $ 101,524  
 
 
 
 
 20
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 98.5%
Automobiles & Components – 0.5%
67,713
  Ford Motor Co.*   $ 411,018  
5,000
  Harley-Davidson, Inc.      81,050  
12,835
  Johnson Controls, Inc.      278,776  
5,600
  The Goodyear Tire & Rubber Co.*     63,056  
             
          833,900  
 
 
Banks – 2.8%
13,900
  BB&T Corp.      305,522  
3,450
  Comerica, Inc.      72,967  
15,905
  Fifth Third Bancorp     112,925  
4,782
  First Horizon National Corp.*     57,388  
11,400
  Hudson City Bancorp, Inc.      151,506  
8,349
  Huntington Bancshares, Inc.      34,899  
15,300
  KeyCorp     80,172  
1,800
  M&T Bank Corp.      91,674  
6,100
  Marshall & Ilsley Corp.      29,280  
7,700
  People’s United Financial, Inc.      115,808  
9,957
  PNC Financial Services Group, Inc.      386,431  
24,925
  Regions Financial Corp.      100,697  
9,900
  SunTrust Banks, Inc.      162,855  
40,651
  U.S. Bancorp     728,466  
37,540
  Washington Mutual, Inc.      3,792  
99,434
  Wells Fargo & Co.      2,412,269  
2,800
  Zions Bancorporation     32,368  
             
          4,879,019  
 
 
Capital Goods – 7.0%
14,939
  3M Co.      897,834  
12,771
  Caterpillar, Inc.      421,954  
3,600
  Cooper Industries Ltd. Class A     111,780  
4,300
  Cummins, Inc.      151,403  
5,400
  Danaher Corp.      333,396  
9,179
  Deere & Co.      366,701  
4,050
  Dover Corp.      134,014  
3,600
  Eaton Corp.      160,596  
16,204
  Emerson Electric Co.      525,010  
2,800
  Fastenal Co.      92,876  
1,200
  Flowserve Corp.      83,772  
3,782
  Fluor Corp.      193,979  
8,306
  General Dynamics Corp.      460,069  
226,267
  General Electric Co.      2,651,849  
2,600
  Goodrich Corp.      129,922  
16,008
  Honeywell International, Inc.      502,651  
8,200
  Illinois Tool Works, Inc.      306,188  
4,000
  ITT Corp.      178,000  
2,600
  Jacobs Engineering Group, Inc.*     109,434  
2,500
  L-3 Communications Holdings, Inc.      173,450  
6,982
  Lockheed Martin Corp.      563,098  
7,400
  Masco Corp.      70,892  
6,992
  Northrop Grumman Corp.      319,395  
7,842
  PACCAR, Inc.      254,943  
2,700
  Pall Corp.      71,712  
3,548
  Parker Hannifin Corp.      152,422  
3,000
  Precision Castparts Corp.      219,090  
 
 
4,100
  Quanta Services, Inc.*     94,833  
8,379
  Raytheon Co.      372,279  
3,000
  Rockwell Automation, Inc.      96,360  
3,460
  Rockwell Collins, Inc.      144,386  
5,100
  Textron, Inc.      49,266  
15,467
  The Boeing Co.      657,347  
3,500
  The Manitowoc Co., Inc.      18,410  
20,037
  United Technologies Corp.      1,041,123  
1,328
  W.W. Grainger, Inc.      108,737  
             
          12,219,171  
 
 
Commercial & Professional Services – 0.7%
2,400
  Avery Dennison Corp.      61,632  
2,800
  Cintas Corp.      63,952  
2,750
  Equifax, Inc.      71,775  
3,900
  Iron Mountain, Inc.*     112,125  
3,000
  Monster Worldwide, Inc.*     35,430  
4,500
  Pitney Bowes, Inc.      98,685  
4,200
  R.R. Donnelley & Sons Co.      48,804  
7,010
  Republic Services, Inc.      171,114  
3,200
  Robert Half International, Inc.      75,584  
1,800
  Stericycle, Inc.*     92,754  
1,200
  The Dun & Bradstreet Corp.      97,452  
10,449
  Waste Management, Inc.      294,244  
             
          1,223,551  
 
 
Consumer Durables & Apparel – 0.9%
1,382
  Black & Decker Corp.      39,608  
3,100
  Centex Corp.      26,226  
6,900
  Coach, Inc.      185,472  
5,800
  D.R. Horton, Inc.      54,288  
6,500
  Eastman Kodak Co.      19,240  
3,200
  Fortune Brands, Inc.      111,168  
1,100
  Harman International Industries, Inc.      20,680  
2,521
  Hasbro, Inc.      61,109  
1,900
  KB HOME     25,992  
3,700
  Leggett & Platt, Inc.      56,351  
3,100
  Lennar Corp. Class A     30,039  
7,951
  Mattel, Inc.      127,614  
6,433
  Newell Rubbermaid, Inc.      66,968  
8,259
  NIKE, Inc. Class B     427,651  
1,200
  Polo Ralph Lauren Corp.      64,248  
4,900
  Pulte Homes, Inc.      43,267  
1,403
  Snap-On, Inc.      40,322  
1,800
  The Stanley Works     60,912  
1,900
  VF Corp.      105,165  
1,659
  Whirlpool Corp.      70,607  
             
          1,636,927  
 
 
Consumer Services – 1.7%
2,300
  Apollo Group, Inc. Class A*     163,576  
9,300
  Carnival Corp.      239,661  
3,000
  Darden Restaurants, Inc.      98,940  
1,300
  DeVry, Inc.      65,052  
7,500
  H&R Block, Inc.      129,225  
6,500
  International Game Technology     103,350  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
21 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Consumer Services – (continued)
             
6,323
  Marriott International, Inc. Class A   $ 139,554  
23,633
  McDonald’s Corp.      1,358,661  
15,556
  Starbucks Corp.*     216,073  
3,900
  Starwood Hotels & Resorts Worldwide, Inc.      86,580  
3,426
  Wyndham Worldwide Corp.      41,523  
1,300
  Wynn Resorts Ltd.*     45,890  
9,997
  Yum! Brands, Inc.      333,300  
             
          3,021,385  
 
 
Diversified Financials – 7.3%
25,169
  American Express Co.      584,928  
5,480
  Ameriprise Financial, Inc.      133,000  
172,739
  Bank of America Corp.      2,280,155  
9,433
  Capital One Financial Corp.      206,394  
7,900
  CIT Group, Inc.      16,985  
117,105
  Citigroup, Inc.      347,802  
1,418
  CME Group, Inc.      441,154  
10,317
  Discover Financial Services     105,956  
12,000
  E*Trade Financial Corp.*     15,360  
2,000
  Federated Investors, Inc. Class B     48,180  
3,230
  Franklin Resources, Inc.      232,592  
1,600
  IntercontinentalExchange, Inc.*     182,784  
8,400
  Invesco Ltd.      149,688  
3,700
  Janus Capital Group, Inc.      42,180  
83,394
  JPMorgan Chase & Co.      2,844,569  
3,100
  Legg Mason, Inc.      75,578  
3,800
  Leucadia National Corp.*     80,142  
4,000
  Moody’s Corp.      105,400  
28,834
  Morgan Stanley     822,057  
5,000
  Northern Trust Corp.      268,400  
5,500
  NYSE Euronext     149,875  
10,571
  SLM Corp.*     108,564  
10,367
  State Street Corp.      489,322  
5,400
  T. Rowe Price Group, Inc.      225,018  
25,415
  The Bank of New York Mellon Corp.      744,914  
19,986
  The Charles Schwab Corp.      350,554  
10,743
  The Goldman Sachs Group, Inc.(a)     1,583,948  
3,200
  The NASDAQ OMX Group, Inc.*     68,192  
             
          12,703,691  
 
 
Energy – 12.2%
10,518
  Anadarko Petroleum Corp.      477,412  
7,216
  Apache Corp.      520,634  
6,593
  Baker Hughes, Inc.      240,249  
6,400
  BJ Services Co.      87,232  
2,100
  Cabot Oil & Gas Corp.      64,344  
4,800
  Cameron International Corp.*     135,840  
12,317
  Chesapeake Energy Corp.      244,246  
42,784
  Chevron Corp.      2,834,440  
31,602
  ConocoPhillips     1,329,180  
4,000
  Consol Energy, Inc.      135,840  
5,500
  Denbury Resources, Inc.*     81,015  
9,416
  Devon Energy Corp.      513,172  
1,500
  Diamond Offshore Drilling, Inc.      124,575  
 
 
14,630
  El Paso Corp.      135,035  
3,000
  ENSCO International, Inc.      104,610  
5,393
  EOG Resources, Inc.      366,292  
104,335
  Exxon Mobil Corp.      7,294,060  
2,700
  FMC Technologies, Inc.*     101,466  
19,244
  Halliburton Co.      398,351  
6,000
  Hess Corp.      322,500  
15,108
  Marathon Oil Corp.      455,204  
2,000
  Massey Energy Co.      39,080  
4,100
  Murphy Oil Corp.      222,712  
6,400
  Nabors Industries Ltd.*     99,712  
8,818
  National-Oilwell Varco, Inc.*     287,996  
3,700
  Noble Energy, Inc.      218,189  
17,300
  Occidental Petroleum Corp.      1,138,513  
5,606
  Peabody Energy Corp.      169,077  
2,500
  Pioneer Natural Resources Co.      63,750  
3,400
  Range Resources Corp.      140,794  
2,300
  Rowan Companies, Inc.      44,436  
25,633
  Schlumberger Ltd.      1,387,002  
4,800
  Smith International, Inc.      123,600  
7,300
  Southwestern Energy Co.*     283,605  
13,933
  Spectra Energy Corp.      235,746  
2,600
  Sunoco, Inc.      60,320  
3,000
  Tesoro Corp.      38,190  
12,183
  The Williams Companies, Inc.      190,177  
11,513
  Valero Energy Corp.      194,455  
12,400
  XTO Energy, Inc.      472,936  
             
          21,375,987  
 
 
Food & Staples Retailing – 3.0%
9,287
  Costco Wholesale Corp.      424,416  
31,081
  CVS/Caremark Corp.      990,551  
9,000
  Safeway, Inc.      183,330  
4,273
  SUPERVALU, Inc.      55,335  
12,600
  Sysco Corp.      283,248  
13,832
  The Kroger Co.      304,996  
21,200
  Walgreen Co.      623,280  
47,709
  Wal-Mart Stores, Inc.      2,311,024  
3,000
  Whole Foods Market, Inc.      56,940  
             
          5,233,120  
 
 
Food, Beverage & Tobacco – 6.0%
44,480
  Altria Group, Inc.      729,027  
13,749
  Archer-Daniels-Midland Co.      368,061  
2,050
  Brown-Forman Corp. Class B     88,109  
4,300
  Campbell Soup Co.      126,506  
6,900
  Coca-Cola Enterprises, Inc.      114,885  
9,800
  ConAgra Foods, Inc.      186,788  
4,200
  Constellation Brands, Inc. Class A*     53,256  
3,300
  Dean Foods Co.*     63,327  
5,600
  Dr. Pepper Snapple Group, Inc.*     118,664  
7,100
  General Mills, Inc.      397,742  
6,700
  H.J. Heinz Co.      239,190  
1,600
  Hormel Foods Corp.      55,264  
5,400
  Kellogg Co.      251,478  
31,657
  Kraft Foods, Inc. Class A     802,188  
 
 
 
 
 22
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
 
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Food, Beverage & Tobacco – (continued)
             
3,547
  Lorillard, Inc.    $ 240,380  
2,900
  McCormick & Co., Inc.      94,337  
3,100
  Molson Coors Brewing Co. Class B     131,223  
3,025
  Pepsi Bottling Group, Inc.      102,366  
33,375
  PepsiCo, Inc.      1,834,290  
41,881
  Philip Morris International, Inc.      1,826,849  
3,745
  Reynolds American, Inc.      144,632  
14,900
  Sara Lee Corp.      145,424  
42,684
  The Coca-Cola Co.      2,048,405  
3,500
  The Hershey Co.      126,000  
2,634
  The J. M. Smucker Co.      128,171  
6,900
  Tyson Foods, Inc. Class A     87,009  
             
          10,503,571  
 
 
Health Care Equipment & Services – 4.2%
9,489
  Aetna, Inc.      237,699  
6,360
  AmerisourceBergen Corp.      112,826  
13,000
  Baxter International, Inc.      688,480  
5,200
  Becton, Dickinson and Co.      370,812  
32,106
  Boston Scientific Corp.*     325,555  
2,167
  C.R. Bard, Inc.      161,333  
7,632
  Cardinal Health, Inc.      233,158  
5,819
  CIGNA Corp.      140,180  
3,100
  Coventry Health Care, Inc.*     58,001  
2,300
  DaVita, Inc.*     113,758  
3,200
  DENTSPLY International, Inc.      97,664  
5,846
  Express Scripts, Inc.*     401,912  
3,290
  Hospira, Inc.*     126,731  
3,500
  Humana, Inc.*     112,910  
3,954
  IMS Health, Inc.      50,216  
790
  Intuitive Surgical, Inc.*     129,291  
2,300
  Laboratory Corp. of America Holdings*     155,917  
5,764
  McKesson Corp.      253,616  
10,237
  Medco Health Solutions, Inc.*     466,910  
24,058
  Medtronic, Inc.      839,384  
2,081
  Patterson Companies, Inc.*     45,158  
3,200
  Quest Diagnostics, Inc.      180,576  
7,493
  St. Jude Medical, Inc.*     307,962  
5,200
  Stryker Corp.      206,648  
8,150
  Tenet Healthcare Corp.*     22,983  
25,662
  UnitedHealth Group, Inc.      641,037  
2,600
  Varian Medical Systems, Inc.*     91,364  
10,460
  WellPoint, Inc.*     532,309  
4,617
  Zimmer Holdings, Inc.*     196,684  
             
          7,301,074  
 
 
Household & Personal Products – 2.8%
9,300
  Avon Products, Inc.      239,754  
10,686
  Colgate-Palmolive Co.      755,928  
8,840
  Kimberly-Clark Corp.      463,481  
3,000
  The Clorox Co.      167,490  
2,600
  The Estee Lauder Companies, Inc. Class A     84,942  
62,309
  The Procter & Gamble Co.      3,183,990  
             
          4,895,585  
 
 
Insurance – 2.3%
9,992
  Aflac, Inc.      310,651  
56,823
  American International Group, Inc.      65,915  
6,050
  Aon Corp.      229,113  
2,500
  Assurant, Inc.      60,225  
3,468
  Cincinnati Financial Corp.      77,510  
8,600
  Genworth Financial, Inc. Class A     60,114  
7,273
  Hartford Financial Services Group, Inc.      86,331  
5,358
  Lincoln National Corp.      92,211  
7,647
  Loews Corp.      209,528  
11,288
  Marsh & McLennan Companies, Inc.      227,227  
4,450
  MBIA, Inc.*     19,268  
17,581
  MetLife, Inc.      527,606  
6,832
  Principal Financial Group, Inc.      128,715  
9,848
  Prudential Financial, Inc.      366,543  
11,338
  The Allstate Corp.      276,647  
7,508
  The Chubb Corp.      299,419  
14,600
  The Progressive Corp.*     220,606  
12,499
  The Travelers Companies, Inc.      512,959  
1,741
  Torchmark Corp.      64,487  
6,918
  Unum Group     109,719  
7,600
  XL Capital Ltd. Class A     87,096  
             
          4,031,890  
 
 
Materials – 3.2%
4,500
  Air Products & Chemicals, Inc.      290,655  
2,200
  AK Steel Holding Corp.      42,218  
20,968
  Alcoa, Inc.      216,599  
2,151
  Allegheny Technologies, Inc.      75,134  
2,000
  Ball Corp.      90,320  
2,300
  Bemis Co., Inc.      57,960  
1,090
  CF Industries Holdings, Inc.      80,813  
19,338
  E.I. du Pont de Nemours & Co.      495,440  
1,600
  Eastman Chemical Co.      60,640  
3,512
  Ecolab, Inc.      136,933  
8,860
  Freeport-McMoRan Copper & Gold, Inc.      443,975  
1,700
  International Flavors & Fragrances, Inc.      55,624  
9,259
  International Paper Co.      140,089  
3,598
  MeadWestvaco Corp.      59,043  
11,654
  Monsanto Co.      866,358  
10,488
  Newmont Mining Corp.      428,644  
6,800
  Nucor Corp.      302,124  
3,700
  Owens-Illinois, Inc.*     103,637  
2,700
  Pactiv Corp.*     58,590  
3,600
  PPG Industries, Inc.      158,040  
6,600
  Praxair, Inc.      469,062  
3,616
  Sealed Air Corp.      66,715  
2,700
  Sigma-Aldrich Corp.      133,812  
22,613
  The Dow Chemical Co.      364,974  
1,500
  Titanium Metals Corp.      13,785  
3,120
  United States Steel Corp.      111,509  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
23 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Materials – (continued)
             
2,400
  Vulcan Materials Co.    $ 103,440  
4,592
  Weyerhaeuser Co.      139,735  
             
          5,565,868  
 
 
Media – 2.5%
14,564
  CBS Corp. Class B     100,783  
62,015
  Comcast Corp. Class A     898,597  
5,071
  Gannett Co., Inc.      18,103  
900
  Meredith Corp.      22,995  
49,286
  News Corp. Class A     448,995  
6,648
  Omnicom Group, Inc.      209,944  
1,900
  Scripps Networks Interactive, Inc. Class A     52,877  
11,200
  The DIRECTV Group, Inc.*     276,752  
10,271
  The Interpublic Group of Companies, Inc.*     51,869  
6,808
  The McGraw-Hill Companies, Inc.      204,989  
2,200
  The New York Times Co. Class A     12,122  
39,529
  The Walt Disney Co.      922,212  
133
  The Washington Post Co. Class B     46,840  
7,596
  Time Warner Cable, Inc.      240,565  
25,699
  Time Warner, Inc.      647,358  
12,944
  Viacom, Inc. Class B*     293,829  
             
          4,448,830  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 9.6%
33,000
  Abbott Laboratories     1,552,320  
6,500
  Allergan, Inc.      309,270  
21,658
  Amgen, Inc.*     1,146,575  
6,215
  Biogen Idec, Inc.*     280,607  
42,238
  Bristol-Myers Squibb Co.      857,854  
9,800
  Celgene Corp.*     468,832  
1,400
  Cephalon, Inc.*     79,310  
21,742
  Eli Lilly & Co.      753,143  
6,300
  Forest Laboratories, Inc.*     158,193  
5,700
  Genzyme Corp.*     317,319  
19,400
  Gilead Sciences, Inc.*     908,696  
58,882
  Johnson & Johnson     3,344,498  
5,666
  King Pharmaceuticals, Inc.*     54,564  
3,670
  Life Technologies Corp.*     153,112  
44,929
  Merck & Co., Inc.      1,256,215  
1,200
  Millipore Corp.*     84,252  
6,800
  Mylan, Inc.*     88,740  
2,800
  PerkinElmer, Inc.      48,720  
144,108
  Pfizer, Inc.      2,161,620  
35,046
  Schering-Plough Corp.      880,355  
9,068
  Thermo Fisher Scientific, Inc.*     369,702  
2,000
  Waters Corp.*     102,940  
2,400
  Watson Pharmaceuticals, Inc.*     80,856  
28,446
  Wyeth     1,291,164  
             
          16,748,857  
 
 
Real Estate – 1.0%
2,980
  Apartment Investment & Management Co. Class A (REIT)     26,373  
1,691
  AvalonBay Communities, Inc. (REIT)     94,595  
 
 
2,627
  Boston Properties, Inc. (REIT)     125,308  
4,300
  CB Richard Ellis Group, Inc. Class A*     40,248  
214
  Developers Diversified Realty Corp. (REIT)     1,044  
5,900
  Equity Residential (REIT)     131,157  
5,600
  HCP, Inc. (REIT)     118,664  
2,400
  Health Care REIT, Inc. (REIT)     81,840  
12,357
  Host Hotels & Resorts, Inc. (REIT)     103,675  
5,400
  Kimco Realty Corp. (REIT)     54,270  
3,500
  Plum Creek Timber Co., Inc. (REIT)     104,230  
9,300
  ProLogis (REIT)     74,958  
2,751
  Public Storage, Inc. (REIT)     180,135  
6,011
  Simon Property Group, Inc. (REIT)     309,131  
3,200
  Ventas, Inc. (REIT)     95,552  
3,155
  Vornado Realty Trust (REIT)     142,075  
             
          1,683,255  
 
 
Retailing – 3.2%
1,777
  Abercrombie & Fitch Co. Class A     45,118  
6,868
  Amazon.com, Inc.*     574,577  
2,172
  AutoNation, Inc.*     37,684  
779
  AutoZone, Inc.*     117,715  
5,472
  Bed Bath & Beyond, Inc.*     168,264  
7,250
  Best Buy Co., Inc.      242,803  
1,700
  Big Lots, Inc.*     35,751  
4,400
  Expedia, Inc.*     66,484  
3,100
  Family Dollar Stores, Inc.      87,730  
3,600
  GameStop Corp. Class A*     79,236  
3,498
  Genuine Parts Co.      117,393  
4,900
  J.C. Penney Co., Inc.      140,679  
6,519
  Kohl’s Corp.*     278,687  
5,700
  Limited Brands, Inc.      68,229  
31,500
  Lowe’s Companies, Inc.      611,415  
8,734
  Macy’s, Inc.      102,712  
3,224
  Nordstrom, Inc.      64,125  
6,600
  Office Depot, Inc.*     30,096  
3,000
  O’Reilly Automotive, Inc.*     114,240  
2,900
  RadioShack Corp.      40,484  
1,200
  Sears Holdings Corp.*     79,824  
15,197
  Staples, Inc.      306,523  
16,200
  Target Corp.      639,414  
9,650
  The Gap, Inc.      158,260  
36,494
  The Home Depot, Inc.      862,353  
2,100
  The Sherwin-Williams Co.      112,875  
8,793
  The TJX Companies, Inc.      276,628  
2,700
  Tiffany & Co.      68,472  
             
          5,527,771  
 
 
Semiconductors & Semiconductor Equipment – 2.5%
11,600
  Advanced Micro Devices, Inc.*     44,892  
6,574
  Altera Corp.      107,025  
6,100
  Analog Devices, Inc.      151,158  
28,300
  Applied Materials, Inc.      310,451  
 
 
 
 
 24
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
 
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Semiconductors & Semiconductor Equipment – (continued)
             
9,050
  Broadcom Corp. Class A*   $ 224,349  
119,249
  Intel Corp.      1,973,571  
3,725
  KLA-Tencor Corp.      94,056  
4,600
  Linear Technology Corp.      107,410  
14,300
  LSI Corp.*     65,208  
4,800
  MEMC Electronic Materials, Inc.*     85,488  
4,000
  Microchip Technology, Inc.      90,200  
16,943
  Micron Technology, Inc.*     85,732  
4,400
  National Semiconductor Corp.      55,220  
2,265
  Novellus Systems, Inc.*     37,826  
11,950
  NVIDIA Corp.*     134,915  
3,400
  Teradyne, Inc.*     23,324  
27,358
  Texas Instruments, Inc.      582,725  
6,000
  Xilinx, Inc.      122,760  
             
          4,296,310  
 
 
Software & Services – 7.0%
11,215
  Adobe Systems, Inc.*     317,384  
2,100
  Affiliated Computer Services, Inc. Class A*     93,282  
3,700
  Akamai Technologies, Inc.*     70,966  
4,900
  Autodesk, Inc.*     93,002  
10,800
  Automatic Data Processing, Inc.      382,752  
4,100
  BMC Software, Inc.*     138,539  
8,704
  CA, Inc.      151,711  
3,700
  Citrix Systems, Inc.*     117,993  
6,435
  Cognizant Technology Solutions Corp. Class A*     171,814  
3,200
  Computer Sciences Corp.*     141,760  
4,700
  Compuware Corp.*     32,242  
2,900
  Convergys Corp.*     26,912  
22,944
  eBay, Inc.*     393,031  
7,100
  Electronic Arts, Inc.*     154,212  
4,300
  Fidelity National Information Services, Inc.      85,828  
3,250
  Fiserv, Inc.*     148,525  
5,117
  Google, Inc. Class A*     2,157,276  
6,800
  Intuit, Inc.*     191,488  
1,500
  Mastercard, Inc. Class A     250,965  
3,200
  McAfee, Inc.*     135,008  
163,603
  Microsoft Corp.      3,888,843  
7,400
  Novell, Inc.*     33,522  
81,237
  Oracle Corp.      1,740,097  
6,731
  Paychex, Inc.      169,621  
2,300
  Salesforce.com, Inc.*     87,791  
17,412
  Symantec Corp.*     270,931  
4,500
  Total System Services, Inc.      60,255  
4,402
  VeriSign, Inc.*     81,349  
14,919
  Western Union Co.      244,672  
29,900
  Yahoo!, Inc.*     468,234  
             
          12,300,005  
 
 
Technology Hardware & Equipment – 8.6%
7,396
  Agilent Technologies, Inc.*     150,213  
3,600
  Amphenol Corp. Class A     113,904  
19,058
  Apple, Inc.*     2,714,431  
2,385
  Ciena Corp.*     24,685  
 
 
123,167
  Cisco Systems, Inc.*     2,295,833  
33,125
  Corning, Inc.      531,987  
37,600
  Dell, Inc.*     516,248  
43,172
  EMC Corp.*     565,553  
3,200
  FLIR Systems, Inc.*     72,192  
3,000
  Harris Corp.      85,080  
50,941
  Hewlett-Packard Co.      1,968,869  
28,209
  International Business Machines Corp.      2,945,584  
5,000
  Jabil Circuit, Inc.      37,100  
4,625
  JDS Uniphase Corp.*     26,455  
11,400
  Juniper Networks, Inc.*     269,040  
1,600
  Lexmark International, Inc. Class A*     25,360  
3,225
  Molex, Inc.      50,149  
48,535
  Motorola, Inc.      321,787  
7,211
  NetApp, Inc.*     142,201  
2,300
  QLogic Corp.*     29,164  
35,320
  QUALCOMM, Inc.      1,596,464  
4,800
  SanDisk Corp.*     70,512  
16,114
  Sun Microsystems, Inc.*     148,571  
8,700
  Tellabs, Inc.*     49,851  
3,900
  Teradata Corp.*     91,377  
4,700
  Western Digital Corp.*     124,550  
18,900
  Xerox Corp.      122,472  
             
          15,089,632  
 
 
Telecommunication Services – 3.5%
8,500
  American Tower Corp. Class A*     268,005  
126,068
  AT&T, Inc.      3,131,529  
2,100
  CenturyTel, Inc.      64,470  
2,940
  Embarq Corp.      123,656  
7,300
  Frontier Communications Corp.      52,122  
5,400
  MetroPCS Communications, Inc.*     71,874  
32,563
  Qwest Communications International, Inc.      135,137  
61,210
  Sprint Nextel Corp.*     294,420  
60,670
  Verizon Communications, Inc.      1,864,389  
8,981
  Windstream Corp.      75,081  
             
          6,080,683  
 
 
Transportation – 2.0%
5,922
  Burlington Northern Santa Fe Corp.      435,504  
3,600
  C.H. Robinson Worldwide, Inc.      187,740  
8,462
  CSX Corp.      293,039  
4,400
  Expeditors International of Washington, Inc.      146,696  
6,700
  FedEx Corp.      372,654  
7,935
  Norfolk Southern Corp.      298,912  
1,300
  Ryder System, Inc.      36,296  
16,218
  Southwest Airlines Co.      109,147  
10,820
  Union Pacific Corp.      563,289  
21,311
  United Parcel Service, Inc. Class B     1,065,337  
             
          3,508,614  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
25 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND
 
 

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
             
Utilities – 4.0%
14,700
  AES Corp.*   $ 170,667  
3,500
  Allegheny Energy, Inc.      89,775  
4,677
  Ameren Corp.      116,410  
10,091
  American Electric Power Co., Inc.      291,529  
7,198
  CenterPoint Energy, Inc.      79,754  
5,000
  CMS Energy Corp.      60,400  
5,800
  Consolidated Edison, Inc.      217,036  
4,350
  Constellation Energy Group, Inc.      115,623  
12,447
  Dominion Resources, Inc.      415,979  
3,600
  DTE Energy Co.      115,200  
27,342
  Duke Energy Corp.      398,920  
11,397
  Dynegy, Inc. Class A*     25,871  
7,069
  Edison International     222,391  
4,148
  Entergy Corp.      321,553  
2,700
  EQT Corp.      94,257  
14,181
  Exelon Corp.      726,209  
6,434
  FirstEnergy Corp.      249,317  
8,746
  FPL Group, Inc.      497,297  
1,731
  Integrys Energy Group, Inc.      51,913  
1,000
  Nicor, Inc.      34,620  
5,900
  NiSource, Inc.      68,794  
3,890
  Northeast Utilities     86,786  
4,900
  Pepco Holdings, Inc.      65,856  
7,931
  PG&E Corp.      304,868  
2,300
  Pinnacle West Capital Corp.      69,345  
7,951
  PPL Corp.      262,065  
5,777
  Progress Energy, Inc.      218,544  
10,742
  Public Service Enterprise Group, Inc.      350,511  
3,800
  Questar Corp.      118,028  
2,700
  SCANA Corp.      87,669  
5,313
  Sempra Energy     263,684  
16,867
  Southern Co.      525,576  
4,500
  TECO Energy, Inc.      53,685  
2,600
  Wisconsin Energy Corp.      105,846  
9,610
  Xcel Energy, Inc.      176,920  
             
          7,052,898  
 
 
TOTAL COMMON STOCKS
(Cost $199,203,476)
  $ 172,161,594  
 
 
                         
Principal
 		    Interest
 		    Maturity
 		     
Amount     Rate     Date   Value  
 
U.S. Government Obligation – 0.2%
United States Treasury Bill(b)(c)
$ 355,000       0.000 %   09/10/09   $     354,870  
(Cost $354,890)
           
 
 
             
Shares   Rate   Value  
 
Investment Company(d) – 1.3%
JPMorgan U.S. Government Money Market Fund –
Capital Shares
2,238,476
  0.236%   $ 2,238,476  
(Cost $2,238,476)
       
 
 
TOTAL INVESTMENTS – 100.0%
(Cost $201,796,842)
  $ 174,754,940  
 
 
OTHER ASSETS IN EXCESS
OF LIABILITIES – 0.0%
    43,310  
 
 
NET ASSETS – 100.0%   $ 174,798,250  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) Represents an affiliated issuer.
 
(b) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
(c) Security issued with a zero coupon. Income is recognized through the accretion of discount.
 
(d) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
Investment Abbreviation:
REIT—Real Estate Investment Trust
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Contracts Long     Month     Value     Loss  
   
S&P 500 E-mini
    69       September 2009     $ 3,158,475     $ (110,276 )
 
 
 
 
 26
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND
 
 

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – 69.1%
Adjustable Rate FHLMC(a) – 1.6%
$ 719,759       4.846 %     09/01/35     $ 746,348  
  536,210       4.746       10/01/35       550,755  
                             
                          1,297,103  
 
 
Adjustable Rate FNMA(a) – 1.9%
  268,557       3.332       05/01/33       273,464  
  619,875       3.073       05/01/35       632,588  
  570,412       5.096       12/01/35       595,521  
                             
                          1,501,573  
 
 
Adjustable Rate Non-Agency(a) – 4.8%
First Horizon Alternative Mortgage Securities Series 2005-AA7, Class 2A1
  528,883       5.403       09/25/35       259,217  
Harborview Mortgage Loan Trust Series 2006-6, Class 3A1A
  539,047       5.944       08/19/36       250,657  
Indymac Index Mortgage Loan Trust Series 2006-AR2, Class 1A1A
  519,202       0.534       04/25/46       198,557  
J.P. Morgan Mortgage Trust Series 2007-A1, Class 2A2
  661,224       4.741       07/25/35       529,852  
Lehman XS Trust Series 2007-4N, Class 3A2A
  827,040       2.090       03/25/47       312,267  
Luminent Mortgage Trust Series 2006-2, Class A1A
  544,650       0.514       02/25/46       210,166  
Merrill Lynch Mortgage Investors, Inc. Series 2005-A9, Class 2A1C
  1,000,000       5.155       12/25/35       479,309  
Residential Accredit Loans, Inc. Series 2005-QO5, Class A1
  515,455       2.340       01/25/46       231,872  
Residential Accredit Loans, Inc. Series 2007-QH9, Class A1
  941,903       6.540       11/25/37       262,122  
Structured Asset Mortgage Investments, Inc. Series 2007-AR6, Class A1
  829,784       2.840       08/25/47       313,044  
Washington Mutual Mortgage Pass-Through Certificates Series 2005-AR10, Class 1A3
  1,000,000       4.830       09/25/35       515,094  
Washington Mutual Mortgage Pass-Through Certificates Series 2006-AR11, Class 3A1A
  703,415       2.260       09/25/46       254,126  
                             
                          3,816,283  
 
 
Collateralized Mortgage Obligations – 8.8%
Interest Only(a)(b) – 0.0%
FNMA Series 2004-47, Class EI
  352,741       0.000       06/25/34       3,552  
FNMA Series 2004-62, Class DI
  161,806       0.000       07/25/33       2,286  
                             
                          5,838  
 
 
Planned Amortization Class – 4.1%
FHLMC Series 2003-2719, Class GC
  3,279,361       5.000       06/15/26       3,329,027  
 
 
Regular Floater(a) – 2.1%
FHLMC Series 2007-3325, Class SX(c)
  67,324       0.000       06/15/37       59,388  
 
 
FNMA Series 2007-2, Class FM
  769,971       0.564       02/25/37       750,017  
FNMA Series 2007-20, Class FP
  809,834       0.614       03/25/37       794,863  
FNMA Series 2007-53, Class UF(c)
  67,295       0.000       06/25/37       63,724  
                             
                          1,667,992  
 
 
Sequential Fixed Rate – 2.6%
Banc of America Funding Corp. Series 2007-8, Class 2A1
  674,833       7.000       10/25/37       460,706  
FHLMC Series 2007-3284, Class CA
  638,086       5.000       10/15/21       666,796  
FNMA Series 2007-36, Class AB
  907,815       5.000       11/25/21       947,359  
                             
                          2,074,861  
 
 
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS   $ 7,077,718  
 
 
Commercial Mortgage-Backed Security – 0.5%
Adjustable Rate Non-Agency(a) – 0.5%
Bear Stearns Commercial Mortgage Securities Series 2006-PW12, Class A4
$ 500,000       5.903 %     09/11/38     $ 427,088  
 
 
Federal Agencies – 51.5%
FHLMC – 8.2%
$ 1,246,814       4.500 %     12/01/18     $ 1,293,524  
  1,057,649       4.500       06/01/19       1,097,272  
  6,374       10.000       03/01/21       7,030  
  13,388       6.500       06/01/23       14,230  
  31,870       5.000       11/01/35       32,547  
  261,965       5.000       04/01/36       267,534  
  22,827       6.000       11/01/36       23,829  
  2,131       5.500       01/01/37       2,202  
  11,178       5.500       03/01/37       11,544  
  46,955       5.500       04/01/37       48,489  
  4,902       5.500       06/01/37       5,062  
  66,115       5.500       07/01/37       68,276  
  5,223       5.500       08/01/37       5,394  
  109,368       6.000       11/01/37       114,191  
  67,574       5.500       12/01/37       69,783  
  95,810       5.500       02/01/38       98,942  
  166,066       5.500       04/01/38       171,627  
  24,448       6.000       04/01/38       25,526  
  824,776       5.500       05/01/38       853,922  
  536,483       5.500       06/01/38       553,911  
  146,542       5.500       08/01/38       151,760  
  21,087       6.000       09/01/38       22,010  
  34,325       5.500       10/01/38       35,440  
  450,766       5.500       12/01/38       465,408  
  56,609       5.500       01/01/39       58,448  
  21,921       5.500       02/01/39       22,650  
  25,612       6.000       02/01/39       26,760  
  8,248       5.500       04/01/39       8,588  
  1,000,000       5.000       06/01/39       1,017,917  
                             
                          6,573,816  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
27 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND
 
 

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Mortgage-Backed Obligations – (continued)
                             
FNMA – 42.6%
$ 3,876       5.000 %     02/01/14     $ 3,984  
  54,197       5.000       11/01/17       56,534  
  297,427       5.000       12/01/17       310,251  
  206,653       5.000       01/01/18       215,562  
  87,645       5.000       02/01/18       91,788  
  223,427       5.000       03/01/18       233,989  
  878,922       5.000       04/01/18       920,473  
  345,940       5.000       05/01/18       362,294  
  711,820       5.000       06/01/18       745,470  
  19,393       5.000       07/01/18       20,310  
  1,241,498       4.000       09/01/18       1,266,205  
  471,433       5.000       11/01/18       493,720  
  591,216       5.000       12/01/18       619,165  
  43,599       5.000       01/01/19       45,660  
  115,743       5.000       02/01/19       120,974  
  478,396       5.000       03/01/19       500,020  
  928,644       5.500       03/01/19       982,332  
  1,027,002       5.000       04/01/19       1,074,689  
  550,520       5.000       06/01/19       576,545  
  341,704       6.000       09/01/19       364,084  
  511,933       5.000       12/01/19       535,257  
  427,571       6.000       12/01/20       455,575  
  17,108       8.000       09/01/21       18,712  
  29,500       5.000       04/01/23       30,547  
  814,852       4.500       06/01/23       832,836  
  103,296       5.000       06/01/23       106,962  
  79       6.000       03/01/32       84  
  588,109       5.500       12/01/32       609,249  
  198,711       5.500       03/01/33       205,932  
  194,008       5.500       04/01/33       201,058  
  597,420       5.000       05/01/33       611,240  
  159,510       5.500       05/01/33       165,307  
  10,048       6.000       05/01/33       10,589  
  19,496       5.000       06/01/33       19,947  
  26,999       5.500       06/01/33       27,980  
  32,398       5.000       07/01/33       33,147  
  319,687       5.500       07/01/33       331,304  
  49,595       5.000       08/01/33       50,742  
  26,614       5.000       09/01/33       27,230  
  83,130       5.000       10/01/33       85,054  
  54,136       5.000       11/01/33       55,389  
  3,557       6.000       12/01/33       3,744  
  273,403       5.500       01/01/34       283,337  
  40,009       5.000       02/01/34       40,935  
  42,326       5.000       03/01/34       43,305  
  29,563       5.000       04/01/34       30,247  
  476,629       5.500       04/01/34       493,948  
  153,132       5.500       06/01/34       158,696  
  2,503       6.000       12/01/34       2,632  
  5,890       6.000       04/01/35       6,189  
  32,056       6.000       07/01/35       33,680  
  71,985       6.000       11/01/35       75,633  
  94,187       6.000       01/01/36       98,959  
  8,490       6.000       02/01/36       8,910  
  32,406       6.500       03/01/36       34,539  
  1,400,000       5.500       09/01/36       1,453,430  
  21,256       6.000       09/01/36       22,245  
 
 
  230,147       6.000       10/01/36       241,594  
  333,007       6.000       11/01/36       348,905  
  19,968       5.500       01/01/37       20,631  
  69,652       6.000       01/01/37       73,126  
  106,281       5.500       04/01/37       109,982  
  425,634       5.500       05/01/37       440,719  
  98,137       6.000       05/01/37       102,986  
  360,401       5.500       07/01/37       372,505  
  304,304       6.000       08/01/37       319,138  
  304,830       6.000       09/01/37       319,532  
  29,536       6.000       10/01/37       30,921  
  42,036       6.000       11/01/37       43,973  
  64,484       5.500       02/01/38       66,955  
  29,763       6.000       02/01/38       31,105  
  363,611       5.000       03/01/38       371,111  
  825,728       5.500       03/01/38       852,660  
  829,462       6.000       03/01/38       867,672  
  178,164       5.500       04/01/38       184,734  
  221,909       5.500       05/01/38       230,250  
  595,984       5.500       06/01/38       618,469  
  146,373       5.500       07/01/38       152,050  
  266,172       5.500       08/01/38       275,780  
  468,632       6.000       08/01/38       492,009  
  146,110       5.500       09/01/38       151,509  
  93,842       5.500       10/01/38       96,940  
  432,664       6.000       10/01/38       454,314  
  332,207       6.000       11/01/38       348,831  
  96,348       5.500       12/01/38       99,488  
  83,064       5.500       01/01/39       85,771  
  26,546       6.000       01/01/39       27,743  
  1,000,000       4.500       TBA-30yr (d)     997,812  
  3,000,000       5.000       TBA-30yr (d)     3,054,375  
  2,000,000       5.500       TBA-30yr (d)     2,064,376  
  4,000,000       6.000       TBA-30yr (d)     4,180,000  
                             
                          34,336,585  
 
 
GNMA – 0.7%
  563,741       6.000       12/15/38       589,066  
 
 
TOTAL FEDERAL AGENCIES   $ 41,499,467  
 
 
TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $59,354,460)
          $ 55,619,232  
 
 
                             
                             
Agency Debentures – 16.5%
FFCB
$ 500,000       5.400 %     06/08/17     $ 545,844  
FHLMC
  1,400,000       2.050       03/09/11       1,411,421  
  800,000       2.000       03/16/11       806,520  
  1,500,000       5.125       11/17/17       1,648,104  
  3,500,000       1.750       07/27/11       3,512,444  
 
 
 
 
 28
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND
 
 

 


 
 
                             
Principal
 		    Interest
 		    Maturity
 		       
Amount     Rate     Date     Value  
 
Agency Debentures – (continued)
                             
FNMA
$ 1,500,000       2.050 %     04/01/11     $ 1,509,717  
  1,000,000       1.700       04/29/11       1,001,076  
  500,000       2.500       05/15/14       491,377  
  400,000       5.000       05/11/17       436,583  
  1,200,000       4.600       06/05/18       1,229,261  
Tennessee Valley Authority(f)
  700,000       5.375       04/01/56       699,569  
 
 
TOTAL AGENCY DEBENTURES
(Cost $13,113,520)
          $ 13,291,916  
 
 
                             
                             
Asset-Backed Securities – 0.9%
Credit Card – 0.6%
Chase Issuance Trust Series 2005-A11, Class A(a)
$ 500,000       0.389 %     12/15/14     $ 477,954  
 
 
Home Equity – 0.3%
GMAC Mortgage Corp. Loan Trust Series 2007-HE3, Class 1A1
  65,189       7.000       09/25/37       29,215  
GMAC Mortgage Corp. Loan Trust Series 2007-HE3, Class 2A1
  71,870       7.000       09/25/37       23,733  
HFC Home Equity Loan Asset Backed Certificates Series 2007-3, Class APT(a)
  333,327       1.515       11/20/36       218,413  
                             
                          271,361  
 
 
TOTAL ASSET-BACKED SECURITIES
(Cost $884,393)
          $ 749,315  
 
 
                             
                             
Government Guarantee Obligations(e) – 2.6%
Citigroup, Inc.(a)
$ 840,000       1.183 %     12/09/10     $ 848,841  
General Electric Capital Corp.
  500,000       2.125       12/21/12       496,559  
PNC Funding Corp.
  750,000       2.300       06/22/12       756,108  
 
 
TOTAL GOVERNMENT GUARANTEE OBLIGATIONS
(Cost $2,096,174)
          $ 2,101,508  
 
 
                             
                             
U.S. Treasury Obligations – 8.4%
United States Treasury Bond
$ 200,000       4.250 %     05/15/39     $ 197,938  
United States Treasury Inflation Protected Securities
  3,000,000       0.875       01/15/10       3,376,800  
  300,000       1.625       01/15/15       333,457  
  300,000       2.000       01/15/16       327,149  
  300,000       2.500       07/15/16       332,510  
  150,000       3.625       04/15/28       240,651  
United States Treasury Principal-Only STRIPS(g)
  1,800,000       0.000       08/15/20       1,122,696  
  300,000       0.000       08/15/26       139,114  
  800,000       0.000       11/15/26       367,032  
  800,000       0.000       11/15/27       350,072  
 
 
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,674,102)
          $ 6,787,419  
 
 
             
Shares   Rate   Value  
 
Investment Company(a) – 11.4%
JPMorgan U.S. Government Money Market Fund –
Capital Shares
9,202,525
  0.236%   $ 9,202,525  
(Cost $9,202,525)
       
 
 
TOTAL INVESTMENTS – 108.9%
(Cost $91,325,174)
  $ 87,751,915  
 
 
LIABILITIES IN EXCESS OF
OTHER ASSETS – (8.9)%
    (7,204,072 )
 
 
             
NET ASSETS – 100.0%
  $ 80,547,843  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
(a) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(b) Represents security with notional or nominal principal amount. The actual effective yield of this security is different than the stated interest rate.
 
(c) Security is issued with a zero coupon, and interest rate is contingent upon LIBOR reaching a predetermined level.
 
(d) TBA (To Be Announced) Securities are purchased on a forward commitment basis with an approximate principal amount and no defined maturity date. The actual principal and maturity date will be determined upon settlement when the specific mortgage pools are assigned. Total market value of TBA securities (excluding forward sales contracts, if any) amounts to $10,296,563, which represents approximately 12.8% of net assets as of June 30, 2009.
 
(e) This debt is guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program and is backed by the full faith and credit of the United States. The expiration date of the FDIC’s guarantee is the earlier of the maturity date of the debt or June 30, 2012. Total market value of these securities amounts to $2,101,508, which represents approximately 2.6% of net assets as of June 30, 2009.
 
(f) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
(g) Security issued with a zero coupon. Income is recognized through the accretion of discount.
 
 
The accompanying notes are an integral part of these financial statements.
29 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND
 
 

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
         
 
 
Investment Abbreviations:
FDIC
  —   Federal Deposit Insurance Corp.
FFCB
  —   Federal Farm Credit Bank
FHLMC
  —   Federal Home Loan Mortgage Corp.
FNMA
  —   Federal National Mortgage Association
GNMA
  —   Government National Mortgage Association
LIBOR
  —   London Inter Bank Offered Rate
STRIPS
  —   Separate Trading of Registered Interest and Principal of Securities
 
 
 
 
 30
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND
 
 

 


 
 
 
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Contracts Long     Month     Value     Gain (Loss)  
   
Eurodollars
    3       December 2009     $ 743,213     $ 2,437  
Eurodollars
    5       September 2010       1,226,000       1,018  
U.S. Treasury Bonds
    15       September 2009       1,775,391       52,151  
2 Year U.S. Treasury Notes
    39       September 2009       8,432,531       (1,396 )
5 Year U.S. Treasury Notes
    54       September 2009       6,194,812       (26,416 )
10 Year U.S. Treasury Notes
    27       September 2009       3,139,172       33,085  
 
 
TOTAL
                          $ 60,879  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
31 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND
 
 

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 98.0%
Automobiles & Components – 1.1%
99,700
  Gentex Corp.(a)   $ 1,156,520  
 
 
Banks – 1.9%
134,700
  People’s United Financial, Inc.     2,025,888  
 
 
Capital Goods – 5.4%
21,100
  Alliant Techsystems, Inc.*     1,737,796  
28,500
  Kennametal, Inc.     546,630  
13,900
  Precision Castparts Corp.     1,015,117  
18,990
  Rockwell Automation, Inc.     609,959  
16,800
  Roper Industries, Inc.     761,208  
13,500
  W.W. Grainger, Inc.     1,105,380  
             
          5,776,090  
 
 
Commercial & Professional Services – 2.0%
72,900
  Iron Mountain, Inc.*(a)     2,095,875  
 
 
Consumer Durables & Apparel – 4.4%
87,600
  Coach, Inc.     2,354,688  
40,510
  Fortune Brands, Inc.     1,407,317  
94,100
  Newell Rubbermaid, Inc.     979,581  
             
          4,741,586  
 
 
Consumer Services – 3.0%
58,621
  Marriott International, Inc. Class A(a)     1,293,758  
66,300
  Pinnacle Entertainment, Inc.*     615,927  
59,800
  Starwood Hotels & Resorts Worldwide, Inc.     1,327,560  
             
          3,237,245  
 
 
Diversified Financials – 3.8%
2,500
  CME Group, Inc.     777,775  
4,600
  IntercontinentalExchange, Inc.*     525,504  
30,900
  Northern Trust Corp.     1,658,712  
61,400
  Raymond James Financial, Inc.(a)     1,056,694  
             
          4,018,685  
 
 
Energy – 9.0%
85,900
  Cameron International Corp.*     2,430,970  
43,600
  Continental Resources, Inc.*(a)     1,209,900  
14,700
  Core Laboratories NV(a)     1,281,105  
39,900
  Dresser-Rand Group, Inc.*     1,041,390  
12,700
  Hess Corp.     682,625  
95,500
  Rex Energy Corp.*     544,350  
44,620
  Weatherford International Ltd.*     872,767  
43,700
  Whiting Petroleum Corp.*(a)     1,536,492  
             
          9,599,599  
 
 
Food, Beverage & Tobacco – 1.3%
45,600
  Hansen Natural Corp.*     1,405,392  
 
 
Health Care Equipment & Services – 11.4%
31,305
  C. R. Bard, Inc.     2,330,657  
25,500
  Express Scripts, Inc.*     1,753,125  
38,900
  Henry Schein, Inc.*     1,865,255  
6,900
  Laboratory Corp. of America Holdings*     467,751  
36,200
  NuVasive, Inc.*(a)     1,614,520  
 
 
56,900
  St. Jude Medical, Inc.*     2,338,590  
43,500
  Zimmer Holdings, Inc.*     1,853,100  
             
          12,222,998  
 
 
Household & Personal Products – 5.2%
68,300
  Avon Products, Inc.     1,760,774  
33,800
  Chattem, Inc.*     2,301,780  
27,600
  Energizer Holdings, Inc.*     1,441,824  
             
          5,504,378  
 
 
Materials – 1.6%
44,200
  Ecolab, Inc.     1,723,358  
 
 
Media – 0.9%
366,600
  Entravision Communications Corp. Class A*     175,968  
49,100
  Lamar Advertising Co. Class A*(a)     749,757  
             
          925,725  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 8.9%
132,800
  Amylin Pharmaceuticals, Inc.*     1,792,800  
85,290
  Charles River Laboratories International, Inc.*     2,878,538  
28,000
  Covance, Inc.*     1,377,600  
15,500
  Millipore Corp.*     1,088,255  
31,400
  Shire PLC ADR     1,302,472  
25,720
  Thermo Fisher Scientific, Inc.*     1,048,604  
             
          9,488,269  
 
 
Real Estate – 2.1%
244,100
  CB Richard Ellis Group, Inc. Class A*     2,284,776  
 
 
Retailing – 10.6%
15,500
  Bed Bath & Beyond, Inc.*     476,625  
62,000
  Dick’s Sporting Goods, Inc.*     1,066,400  
46,700
  GameStop Corp. Class A*     1,027,867  
43,931
  Netflix, Inc.*(a)     1,816,108  
115,900
  PetSmart, Inc.     2,487,214  
3,600
  Priceline.com, Inc.*     401,580  
81,600
  Staples, Inc.     1,645,872  
30,400
  Tiffany & Co.     770,944  
75,300
  Urban Outfitters, Inc.*     1,571,511  
             
          11,264,121  
 
 
Semiconductors & Semiconductor Equipment – 3.8%
74,800
  Broadcom Corp. Class A*     1,854,292  
64,100
  FormFactor, Inc.*     1,105,084  
46,000
  Linear Technology Corp.     1,074,100  
             
          4,033,476  
 
 
Software & Services – 12.7%
188,932
  Activision Blizzard, Inc.*     2,386,211  
78,220
  Cognizant Technology Solutions Corp. Class A*     2,088,474  
52,300
  Electronic Arts, Inc.*     1,135,956  
42,000
  Equinix, Inc.*(a)     3,055,080  
65,300
  Global Payments, Inc.     2,446,138  
 
 
 
 
 32
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND
 
 

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Software & Services – (continued)
             
14,200
  Salesforce.com, Inc.*(a)   $ 542,014  
115,100
  Western Union Co.     1,887,640  
             
          13,541,513  
 
 
Technology Hardware & Equipment – 3.8%
66,720
  Amphenol Corp. Class A     2,111,021  
88,200
  FLIR Systems, Inc.*(a)     1,989,792  
             
          4,100,813  
 
 
Telecommunication Services – 5.1%
75,700
  American Tower Corp. Class A*     2,386,821  
55,200
  Crown Castle International Corp.*     1,325,904  
167,700
  tw telecom, inc.*     1,722,279  
             
          5,435,004  
 
 
TOTAL COMMON STOCKS
(Cost $118,994,351)
  $ 104,581,311  
 
 
             
Shares   Rate   Value  
 
Investment Company(b) – 1.9%
JPMorgan U.S. Government Money Market Fund –
Capital Shares
2,038,434
  0.236%   $ 2,038,434  
(Cost $2,038,434)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES
LENDING REINVESTMENT VEHICLE
(Cost $121,032,785)
  $ 106,619,745  
 
 
             
             
Securities Lending Reinvestment Vehicle(b)(c) – 13.5%
Boston Global Investment Trust – Enhanced Portfolio
14,407,184
  0.267%   $ 14,363,963  
(Cost $14,321,055)
       
 
 
TOTAL INVESTMENTS – 113.4%
(Cost $135,353,840)
  $ 120,983,708  
 
 
LIABILITIES IN EXCESS OF OTHER ASSETS – (13.4)%
    (14,320,379 )
 
 
NET ASSETS – 100.0%
  $ 106,663,329  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(c) Represents an affiliated issuer.
 
Investment Abbreviation:
ADR — American Depositary Receipt
 
 
The accompanying notes are an integral part of these financial statements.
33 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Statements of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
                                 
                      Growth
 		 
    Core Fixed
 		    Equity Index
 		    Government
 		    Opportunities
 		 
    Income Fund     Fund     Income Fund     Fund  
 
Assets:
                                 
Investments in securities of unaffiliated issuers, at value (identified cost $207,308,982, $201,796,842, $91,325,174 and $121,032,785, respectively)(a)
  $ 181,894,968     $ 174,754,940     $ 87,751,915     $ 106,619,745  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $0, $0, $0 and $14,321,055, respectively)
    —       —       —       14,363,963  
Cash
    401,734       174,754       —       —  
Foreign currencies, at value (identified cost $877, $0, $0, and $0, respectively)
    885       —       —       —  
Receivables:
                               
Investment securities sold
    21,478,791       147,252       9,914,733       741,620  
Interest and dividends, at value
    1,146,633       241,040       289,626       29,857  
Forward foreign currency exchange contracts, at value
    56,931       —       —       —  
Fund shares sold
    41,537       48,863       10,014       25,630  
Reimbursement from adviser
    9,076       7,074       5,112       5,155  
Due from custodian
    —       —       745,617       —  
Securities lending income
    —       —       —       6,034  
Other assets
    1,110       1,017       741       661  
 
 
Total assets
    205,031,665       175,374,940       98,717,758       121,792,665  
 
 
 
Liabilities:
                                 
Due to custodian
    —       —       734,594       —  
Payables:
                               
Investment securities purchased
    28,755,046       296,276       17,035,295       400,044  
Amounts owed to affiliates
    95,200       83,513       54,129       104,726  
Forward foreign currency exchange contracts, at value
    86,599       —       —       —  
Fund shares redeemed
    23,741       78,202       282,473       78,329  
Due to broker — variation margin, at value
    23,625       19,665       18,243       —  
Payable upon return of securities loaned
    —       —       —       14,504,699  
Accrued expenses
    52,834       99,034       45,181       41,538  
 
 
Total liabilities
    29,037,045       576,690       18,169,915       15,129,336  
 
 
 
Net Assets:
                                 
Paid-in capital
    209,038,141       259,720,914       83,524,659       142,353,507  
Accumulated undistributed (distributions in excess of) net investment income (loss)
    (98,173 )     2,150,756       (63,697 )     (89,111 )
Accumulated net realized gain (loss) from investment, futures and foreign currency related transactions
    (7,603,600 )     (59,921,242 )     599,261       (21,230,935 )
Net unrealized loss on investments, futures and translation of assets and liabilities denominated in foreign currencies
    (25,341,748 )     (27,152,178 )     (3,512,380 )     (14,370,132 )
 
 
NET ASSETS
  $ 175,994,620     $ 174,798,250     $ 80,547,843     $ 106,663,329  
 
 
Total Service Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
    19,556,512       25,566,131       7,938,129       24,439,636  
Net asset value, offering and redemption price per share
  $ 9.00     $ 6.84     $ 10.15     $ 4.36  
 
 
 
(a) Includes loaned securities having a market value of $14,225,747 for the Growth Opportunities Fund.
 
 
 34
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Statements of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
                                 
                      Growth
 		 
    Core Fixed
 		    Equity Index
 		    Government
 		    Opportunities
 		 
    Income Fund     Fund     Income Fund     Fund  
 
Investment income:
Interest
  $ 4,732,473     $ —     $ 1,740,731     $ —  
Dividends(a)
    7,540       2,260,538       10,798       305,530  
Securities lending income — affiliated issuer
    —       —       —       73,653  
 
 
Total investment income
    4,740,013       2,260,538       1,751,529       379,183  
 
 
 
Expenses:
Management fees
    346,233       251,578       224,573       477,656  
Distribution and Service fees
    216,396       209,648       103,969       119,414  
Professional fees
    44,052       41,292       41,052       40,867  
Custody and accounting fees
    20,071       6,172       19,187       7,345  
Printing fees
    17,326       16,843       12,854       13,317  
Transfer Agent fees
    17,310       16,770       8,317       9,552  
Trustee fees
    8,460       8,460       8,460       8,460  
Other
    6,276       50,709       1,340       5,279  
 
 
Total expenses
    676,124       601,472       419,752       681,890  
 
 
Less — expense reductions
    (93,718 )     (71,050 )     (81,589 )     (116,401 )
 
 
Net expenses
    582,406       530,422       338,163       565,489  
 
 
NET INVESTMENT INCOME (LOSS)
    4,157,607       1,730,116       1,413,366       (186,306 )
 
 
 
Realized and unrealized gain (loss) from investment, futures and foreign currency related transactions:
Net realized gain (loss) from:
                               
Investment transactions — unaffiliated issuers
    (2,322,622 )     (2,624,058 )     665,218       (15,079,017 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    —       —       —       110,192  
Futures transactions
    718,881       62,111       559,570       —  
Foreign currency related transactions
    50,712       —       —       —  
Net change in unrealized gain (loss) on:
                               
Investments — unaffiliated issuers
    7,036,230       5,355,241       (91,885 )     35,167,010  
Securities lending reinvestment vehicle — affiliated issuer
    —       —       —       19,719  
Futures
    (1,058,272 )     (212,970 )     (744,967 )     —  
Translation of assets and liabilities denominated in foreign currencies
    33,453       —       —       —  
 
 
Net realized and unrealized gain from investment, futures and foreign currency related transactions
    4,458,382       2,580,324       387,936       20,217,904  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 8,615,989     $ 4,310,440     $ 1,801,302     $ 20,031,598  
 
 
 
(a) For the Growth Opportunities Fund, foreign taxes withheld on dividends were $598.
 
 
The accompanying notes are an integral part of these financial statements.
35 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Statements of Changes in Net Assets
 
                 
    Core Fixed Income Fund  
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income (loss)
  $ 4,157,607     $ 11,251,844  
Net realized gain (loss) from investment, futures and foreign currency related transactions
    (1,553,029 )     34,753  
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies
    6,011,411       (31,893,306 )
 
 
Net increase (decrease) in net assets resulting from operations
    8,615,989       (20,606,709 )
 
 
 
Distributions to shareholders:
From net investment income
    (5,060,801 )     (11,427,285 )
From net realized gains
    —       —  
 
 
Total distributions to shareholders
    (5,060,801 )     (11,427,285 )
 
 
 
From share transactions:
Proceeds from sales of shares
    7,988,776       6,089,374  
Reinvestments of distributions
    5,060,801       11,427,285  
Cost of shares redeemed
    (23,587,872 )     (66,893,631 )
 
 
Net increase (decrease) in net assets resulting from share transactions
    (10,538,295 )     (49,376,972 )
 
 
TOTAL INCREASE (DECREASE)
    (6,983,107 )     (81,410,966 )
 
 
 
Net assets:
Beginning of period
    182,977,727       264,388,693  
 
 
End of period
  $ 175,994,620     $ 182,977,727  
 
 
Accumulated undistributed (distributions in excess of) net investment income
  $ (98,173 )   $ 805,021  
 
 
 
Summary of share transactions:
Shares sold
    900,956       621,878  
Shares issued on reinvestment of distributions
    575,818       1,216,339  
Shares redeemed
    (2,683,523 )     (7,184,850 )
 
 
NET INCREASE (DECREASE)
    (1,206,749 )     (5,346,633 )
 
 
 
 
 36
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
 
                                           
Equity Index Fund     Government Income Fund     Growth Opportunities Fund  
For the
 		        For the
 		          For the
 		       
Six Months Ended
 		  For the Fiscal
 		    Six Months Ended
 		    For the Fiscal
 		    Six Months Ended
 		    For the Fiscal
 		 
June 30, 2009
 		  Year Ended
 		    June 30, 2009
 		    Year Ended
 		    June 30, 2009
 		    Year Ended
 		 
(Unaudited)   December 31, 2008     (Unaudited)     December 31, 2008     (Unaudited)     December 31, 2008  
 
 
$ 1,730,116   $ 5,018,591     $ 1,413,366     $ 3,725,651     $ (186,306 )   $ (496,212 )
  (2,561,947)     3,965,893       1,224,788       2,710,769       (14,968,825 )     (4,819,017 )
 
5,142,271 		    (131,012,113 )     (836,852 )     (3,937,247 )     35,186,729       (65,335,820 )
 
 
  4,310,440     (122,027,629 )     1,801,302       2,499,173       20,031,598       (70,651,049 )
 
 
 
 
  —     (4,660,811 )     (1,716,750 )     (3,988,324 )     —       —  
  —     (8,990,210 )     —       —       —       (2,928,225 )
 
 
  —     (13,651,021 )     (1,716,750 )     (3,988,324 )     —       (2,928,225 )
 
 
 
 
  2,816,427     3,151,118       5,546,753       23,059,430       1,852,591       1,899,160  
  —     13,651,021       1,716,750       3,988,324       —       2,928,225  
  (19,712,078)     (58,028,078 )     (13,850,233 )     (24,486,231 )     (10,457,756 )     (36,156,952 )
 
 
  (16,895,651)     (41,225,939 )     (6,586,730 )     2,561,523       (8,605,165 )     (31,329,567 )
 
 
  (12,585,211)     (176,904,589 )     (6,502,178 )     1,072,372       11,426,433       (104,908,841 )
 
 
 
 
  187,383,461     364,288,050       87,050,021       85,977,649       95,236,896       200,145,737  
 
 
$ 174,798,250   $ 187,383,461     $ 80,547,843     $ 87,050,021     $ 106,663,329     $ 95,236,896  
 
 
$ 2,150,756   $ 420,640     $ (63,697 )   $ 239,687     $ (89,111 )   $ 97,195  
 
 
 
 
  442,076     413,869       547,454       2,254,712       462,505       479,778  
  —     2,163,395       169,434       395,078       —       879,347  
  (3,205,521)     (6,144,617 )     (1,364,416 )     (2,435,845 )     (2,860,255 )     (6,819,813 )
 
 
  (2,763,445)     (3,567,353 )     (647,528 )     213,945       (2,397,750 )     (5,460,688 )
 
 
 
 
The accompanying notes are an integral part of these financial statements.
37 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE FIXED INCOME FUND

Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                     
          Income (loss) from
 		                                        Ratios assuming no
 		           
          investment operations     Distributions to shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
 		    expenses
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    turnover
 		     
    of period     income     gain (loss)     operations     income     gains     distributions     period     return(a)     (in 000s)     net assets     net assets     net assets     rate(b)      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                     
2009
  $ 8.81     $ 0.21 (c)   $ 0.24     $ 0.45     $ (0.26 )   $ —     $ (0.26 )   $ 9.00       5.21 %   $ 175,995       0.67 %(d)     4.80 %(d)(e)     0.78 %(d)     70 %    
 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                     
2008
    10.13       0.47 (c)     (1.31 )     (0.84 )     (0.48 )     —       (0.48 )     8.81       (8.56 )     182,978       0.67       4.92 (e)     0.77       140      
 
 
2007
    9.94       0.48 (c)     0.17       0.65       (0.46 )     —       (0.46 )     10.13       6.81       264,389       0.54 (f)     4.82 (e)(f)     0.76 (f)     123      
 
 
2006(g)
    9.98       0.44 (c)     (0.03 )(h)     0.41       (0.45 )     —       (0.45 )     9.94       4.23 (i)     285,768       0.54       4.49 (e)     0.78       265      
 
 
2005(g)
    10.29       0.42 (j)     (0.24 )     0.18       (0.49 )     —       (0.49 )     9.98       1.84       332,861       0.64       4.05       0.64       110      
 
 
2004(g)
    10.58       0.41 (j)     —       0.41       (0.56 )     (0.14 )     (0.70 )     10.29       3.98       402,219       0.64       3.78       0.64       113      
 
 
 
(a) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. The Goldman Sachs Core Fixed Income Fund first began operations as the Allmerica Select Investment Grade Fund (the “Predecessor AIT Fund”) of the Allmerica Investment Trust. On January 9, 2006, the Predecessor AIT Fund was reorganized as a new portfolio of the Goldman Sachs Variable Insurance Trust. Performance prior to January 9, 2006 is that of the Predecessor AIT Fund. The Predecessor AIT Fund was considered the accounting survivor of the reorganization and as such, the historical total return information of the Predecessor AIT Fund is provided.
(b) The portfolio turnover rate excluding the effect of mortgage dollar rolls is 259%, 92%, 105% and 61% for the years ended December 31, 2006, 2007 and 2008, respectively, and for the six months ended June 30, 2009. Prior year ratios include the effect of mortgage dollar roll transactions.
(c) Calculated based on the average shares outstanding methodology.
(d) Annualized.
(e) Ratio of net investment income assuming no expense reductions is 4.25%, 4.58%(f) and 4.82% for the fiscal years ended December 31, 2006, 2007 and 2008, respectively, and 4.69%(d) for the six months ended June 30, 2009.
(f) Includes non-recurring expense for a special shareholder meeting, which amounted to approximately 0.02% of average net assets.
(g) The Predecessor AIT Fund was the accounting survivor of the reorganization and as such, the prior years’ financial highlights reflect the financial information of the Predecessor AIT Fund through January 8, 2006. In connection with such reorganization, the Goldman Sachs Core Fixed Income Fund issued Service Shares to the former shareholders of the Predecessor AIT Fund at $10.00 per share. Historical per-share amounts prior to the Fund reorganization have been adjusted to reflect the conversion ratio utilized for the reorganization.
(h) Reflects an increase of $0.04 due to payments received for class action settlements received this year.
(i) Total return reflects the impact of payments received for class action settlements received this year. Excluding such payment, the total return would have been 3.81%.
(j) Calculated based on the Securities and Exchange Commission (“SEC”) methodology.
 
The accompanying notes are an integral part of these financial statements.

38

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST EQUITY INDEX FUND

Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
                                                                                                                     
          Income (loss) from
 		                                        Ratios assuming no
 		           
          investment operations     Distributions to shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
 		    expenses
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    turnover
 		     
    of period     income     gain (loss)     operations     income     gains     distributions     period     return(a)     (in 000s)     net assets     net assets     net assets     rate      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                     
2009
  $ 6.61     $ 0.06 (b)   $ 0.17     $ 0.23     $ —     $ —     $ —     $ 6.84       3.32 %   $ 174,798       0.63 %(c)     2.06 %(c)(d)     0.72 %(c)     2 %    
 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                     
2008
    11.42       0.17 (b)     (4.46 )     (4.29 )     (0.18 )     (0.34 )     (0.52 )     6.61       (37.18 )     187,383       0.60       1.81 (d)     0.69       4      
 
 
2007
    11.04       0.18 (b)     0.41       0.59       (0.21 )     —       (0.21 )     11.42       5.32       364,288       0.41 (e)     1.57 (d)(e)     0.68 (e)     8      
 
 
2006(f)
    9.71       0.16 (b)     1.34       1.50       (0.17 )     —       (0.17 )     11.04       15.49 (g)     438,471       0.41       1.53 (d)     0.67       4      
 
 
2005(f)
    9.43       0.13 (h)(i)     0.28       0.41       (0.13 )     —       (0.13 )     9.71       4.38       489,587       0.52       1.35       0.52       7      
 
 
2004(f)(j)
    8.69       0.14 (h)     0.74       0.88       (0.14 )     —       (0.14 )     9.43       10.32       595,037       0.50       1.53       0.52       4      
 
 
 
(a) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. The Goldman Sachs Equity Index Fund first began operations as the Allmerica Equity Index Fund (the “Predecessor AIT Fund”) of the Allmerica Investment Trust. On January 9, 2006, the Predecessor AIT Fund was reorganized as a new portfolio of the Goldman Sachs Variable Insurance Trust. Performance prior to January 9, 2006 is that of the Predecessor AIT Fund. The Predecessor AIT Fund was considered the accounting survivor of the reorganization and as such, the historical total return information of the Predecessor AIT Fund is provided.
(b) Calculated based on the average shares outstanding methodology.
(c) Annualized.
(d) Ratio of net investment income assuming no expense reductions is 1.27%, 1.30%(e) and 1.72% for the years ended December 31, 2006, 2007 and 2008, respectively, and 1.97%(c)for the six months ended June 30, 2009.
(e) Includes non-recurring expense for a special shareholder meeting, which amounted to approximately 0.02% of average net assets.
(f) The Predecessor AIT Fund was the accounting survivor of the reorganization and as such, the prior years’ financial highlights reflect the financial information of the Predecessor AIT Fund through January 8, 2006. In connection with such reorganization, the Goldman Sachs Equity Index Fund issued Service Shares to the former shareholders of the Predecessor AIT Fund at $10.00 per share. Historical per-share amounts prior to the Fund reorganization have been adjusted to reflect the conversion ratio utilized for the reorganization.
(g) Total return reflects the impact of a payment from previous investment manager of a merged fund to compensate for possible adverse effects of trading activity of certain contract holders of the merged fund prior to January 9, 2006 received this year. Excluding such payments, the total return would have been 15.39%.
(h) Calculated based on the Securities and Exchange Commission (“SEC”) methodology.
(i) Investment income per share reflects a special dividend of $0.028 for the Predecessor AIT Fund.
(j) Effective January 1, 2005, brokerage commissions are included with realized gain or loss on investment transactions. Prior to January 1, 2005, these amounts were presented as a reduction of expenses. Prior year amounts have not been restated to reflect this change.
The accompanying notes are an integral part of these financial statements.

39

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GOVERNMENT INCOME FUND

Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                     
          Income (loss) from
 		                                        Ratios assuming no
 		           
          investment operations     Distributions to shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
 		    expenses
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    turnover
 		     
    of period     income     gain (loss)     operations     income     gains     distributions     period     return(a)     (in 000s)     net assets     net assets     net assets     rate(b)      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                     
2009
  $ 10.14     $ 0.17 (c)   $ 0.05     $ 0.22     $ (0.21 )   $ —     $ (0.21 )   $ 10.15       2.20 %   $ 80,548       0.81 %(d)     3.40 %(d)(e)     1.01 %(d)     118 %    
 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                     
2008
    10.27       0.42 (c)     (0.11 )     0.31       (0.44 )     —       (0.44 )     10.14       3.14       87,050       0.81       4.12 (e)     1.04       244      
 
 
2007
    9.96       0.42 (c)     0.29       0.71       (0.40 )     —       (0.40 )     10.27       7.34       85,978       0.67 (f)     4.19 (e)(f)     1.03 (f)     217      
 
 
2006(g)
    9.98       0.39 (c)     0.01       0.40       (0.42 )     —       (0.42 )     9.96       4.05       87,063       0.68       3.96 (e)     1.02       523      
 
 
2005(g)
    10.19       0.32 (h)     (0.16 )     0.16       (0.37 )     —       (0.37 )     9.98       1.55       102,769       0.74       3.18       0.74       44      
 
 
2004(g)
    10.39       0.28 (h)     (0.07 )     0.21       (0.39 )     (0.02 )     (0.41 )     10.19       2.12       128,860       0.73       3.02       0.73       77      
 
 
 
(a) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. The Goldman Sachs Government Income Fund first began operations as the Allmerica Government Bond Fund (the “Predecessor AIT Fund”) of the Allmerica Investment Trust. On January 9, 2006, the Predecessor AIT Fund was reorganized as a new portfolio of the Goldman Sachs Variable Insurance Trust. Performance prior to January 9, 2006 is that of the Predecessor AIT Fund. The Predecessor AIT Fund was considered the accounting survivor of the reorganization and as such, the historical total return information of the Predecessor AIT Fund is provided.
(b) The portfolio turnover rate excluding the effect of mortgage dollar rolls is 447%, 146%, 184% and 92% for the years ended December 31, 2006, 2007 and 2008, respectively, and for the six months ended June 30, 2009. Prior year ratios include the effect of mortgage dollar roll transactions.
(c) Calculated based on the average shares outstanding methodology.
(d) Annualized.
(e) Ratio of net investment income assuming no expense reductions is 3.62%, 3.82%(f) and 3.89% for the years ended December 31, 2006, 2007 and 2008, respectively, and 3.20%(d) for the six months ended June 30, 2009.
(f) Includes non-recurring expense for a special shareholder meeting, which amounted to approximately 0.03% of average net assets.
(g) The Predecessor AIT Fund was the accounting survivor of the reorganization and as such, the prior years’ financial highlights reflect the financial information of the Predecessor AIT Fund through January 8, 2006. In connection with such reorganization, the Goldman Sachs Government Income Fund issued Service Shares to the former shareholders of the Predecessor AIT Fund at $10.00 per share. Historical per-share amounts prior to the Fund reorganization have been adjusted to reflect the conversion ratio utilized for the reorganization.
(h) Calculated based on the Securities and Exchange Commission (“SEC”) methodology.
 
The accompanying notes are an integral part of these financial statements.

40

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH OPPORTUNITIES FUND

Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                             
          Income (loss) from
 		                                        Ratios assuming no
 		                 
          investment operations                                         expense reductions                  
                Net
 		          Distributions to
 		                            Ratio of
 		    Ratio of
 		                 
    Net asset
 		          realized
 		          shareholders
 		    Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		                 
    value,
 		    Net
 		    and
 		    Total from
 		    from net
 		    value,
 		          end of
 		    net expenses
 		    loss
 		    expenses
 		    Portfolio
 		           
    beginning
 		    investment
 		    unrealized
 		    investment
 		    realized
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    turnover
 		           
    of period     loss     gain (loss)     operations     gains     period     return(a)     (in 000s)     net assets     net assets     net assets     rate            
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                             
2009
  $ 3.55     $ (0.01 )(b)   $ 0.82     $ 0.81     $ —     $ 4.36       22.82 %   $ 106,663       1.18 %(c)     (0.39 )%(c)(d)     1.43 %(c)     38 %            
 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                             
2008
    6.20       (0.02 )(b)     (2.52 )     (2.54 )     (0.11 )     3.55       (40.72 )     95,237       1.18       (0.32 )(d)     1.37       78              
 
 
2007
    6.07       (0.03 )(b)     1.22       1.19       (1.06 )     6.20       19.37       200,146       1.14 (e)     (0.48 )(d)(e)     1.38 (e)     73              
 
 
2006(f)
    9.69       (0.06 )(b)     0.68       0.62       (4.24 )     6.07       5.74       215,251       1.15       (0.60 )(d)     1.37       82              
 
 
2005(f)
    10.90       (0.05 )(g)(h)     1.54       1.49       (2.70 )     9.69       14.68       273,823       1.15       (0.50 )     1.15       27              
 
 
2004(f)(i)
    10.13       (0.07 )(g)     1.78       1.71       (0.94 )     10.90       18.62       299,355       1.14       (0.70 )     1.15       38              
 
 
 
(a) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. The Goldman Sachs Growth Opportunities Fund first began operations as the Allmerica Select Capital Appreciation Fund (the “Predecessor AIT Fund”) of the Allmerica Investment Trust. On January 9, 2006, the Predecessor AIT Fund was reorganized as a new portfolio of the Goldman Sachs Variable Insurance Trust. Performance prior to January 9, 2006 is that of the Predecessor AIT Fund. The Predecessor AIT Fund was considered the accounting survivor of the reorganization and as such, the historical total return information of the Predecessor AIT Fund is provided.
(b) Calculated based on the average shares outstanding methodology.
(c) Annualized.
(d) Ratio of net investment loss assuming no expense reductions is (0.82)%, (0.73)%(e) and (0.51)% for the years ended December 31, 2006, 2007 and 2008, respectively, and (0.64%)(c)for the six months ended June 30, 2009.
(e) Includes non-recurring expense for a special shareholder meeting, which amounted to approximately 0.02% of average net assets.
(f) The Predecessor AIT Fund was the accounting survivor of the reorganization and as such, the prior years’ financial highlights reflect the financial information of the Predecessor AIT Fund through January 8, 2006. In connection with such reorganization, the Goldman Sachs Growth Opportunities Fund issued Service Shares to the former shareholders of the Predecessor AIT Fund at $10.00 per share. Historical per-share amounts prior to the Fund reorganization have been adjusted to reflect the conversion ratio utilized for the reorganization.
(g) Calculated based on the Securities and Exchange Commission (“SEC”) methodology.
(h) Investment income per share reflects a special dividend of $0.005 for the Predecessor AIT Fund.
(i) Effective January 1, 2005, brokerage commissions are included with realized gain or loss on investment transactions. Prior to January 1, 2005, these amounts were presented as a reduction of expenses. Prior year amounts have not been restated to reflect this change.
 
The accompanying notes are an integral part of these financial statements.

41

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Core Fixed Income Fund, Goldman Sachs Equity Index Fund, Goldman Sachs Government Income Fund and Goldman Sachs Growth Opportunities Fund (collectively, the “Funds” or individually a “Fund”). The Funds are diversified portfolios under the Act offering one class of shares — Service Shares.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Funds.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Funds. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Funds is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Funds’ investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Funds’ NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Funds, where applicable. Interest income is recorded on the basis of interest accrued, premium
 
 
 42

 

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2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
amortized and discount accreted. In addition, it is the Funds’ policy to accrue for foreign capital gains taxes, if applicable, on certain foreign securities held by the Funds, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the respective Fund based upon the relative proportion of net assets of each class.
In addition, distributions received from the Funds’ investments in real estate investment trusts (“REITs”) often include a “return of capital” which is recorded by the Funds as a reduction of the cost basis of the securities held. The Internal Revenue Code of 1986, as amended (the “Code”) requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the Funds’ distributions is deemed a return of capital and is generally not taxable to shareholders.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Funds on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is each Fund’s policy to comply with the requirements of the Code, applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid according to the following schedule:
 
                 
          Capital Gains
 		 
    Income Distributions
 		    Distributions
 		 
Fund   Declared and Paid     Declared and Paid  
   
Core Fixed Income and Government Income
    Quarterly       Annually  
 
 
Equity Index and Growth Opportunities
    Annually       Annually  
 
 
 
Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of each Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Funds’ tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Funds’ financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Foreign Currency Translations — The books and records of the Funds are accounted for in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars based upon 4:00 p.m. Eastern Time exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions as of 4:00 p.m. Eastern Time.
 
 
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Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Net realized and unrealized gain (loss) on foreign currency transactions represents: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) currency gains and losses between trade date and settlement date on investment security transactions and forward exchange contracts; and (iii) gains and losses from the difference between amounts of dividends, interest and foreign withholding taxes recorded and the amounts actually received. The effect of changes in foreign currency exchange rates on equity securities and derivative instruments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included with the net realized and unrealized gain (loss) on investments. The effect of changes in foreign currency exchange rates on fixed income securities are segregated in the Statements of Operations from the effects of changes in market prices of those investments, and are included with the net realized and unrealized gain (loss) on foreign currency related transactions. Net unrealized foreign exchange gains and losses arising from changes in the value of other assets and liabilities as a result of changes in foreign exchange rates are included as increases and decreases in unrealized gain (loss) on foreign currency related transactions.
 
F. Mortgage-Backed and Asset-Backed Securities — The Core Fixed Income, Government Income and Growth Opportunities Funds may invest in mortgage-backed and/or asset-backed securities. Mortgage-backed securities represent direct or indirect participations in, or are collateralized by and payable from, mortgage loans secured by residential and/or commercial real property. These securities may include mortgage pass-through securities, collateralized mortgage obligations, real estate mortgage investment conduit pass-through or participation certificates, and stripped mortgage-backed securities. Asset-backed securities include securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities also include home equity line of credit loans and other second-lien mortgages.
The value of certain mortgage-backed and asset-backed securities (including adjustable rate mortgage loans) may be particularly sensitive to changes in prevailing interest rates. The value of these securities may also fluctuate in response to the market’s perception of the creditworthiness of the issuers. Early repayment of principal on mortgage-backed or asset-backed securities may expose a Fund to the risk of earning a lower rate of return upon reinvestment of principal. Asset-backed securities may present credit risks that are not presented by mortgage-backed securities because they generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. Some asset-backed securities may only have a subordinated claim on collateral. In addition, while mortgage-backed and asset-backed securities may be supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers, if any, will meet their obligations.
Stripped mortgage-backed securities are usually structured with two different classes: one that receives substantially all of the interest payments (the interest-only, or “IO” and/or the high coupon rate with relatively low principal amount, or “IOette”), and the other that receives substantially all of the principal payments (the principal-only, or “PO”) from a pool of mortgage loans. Little to no principal will be received at the maturity of an IO; as a result, adjustments are made to the cost of the security on a daily basis until maturity. These adjustments are included in interest income. Payments received for PO’s, typically monthly, are treated as a proportionate reduction to the cost basis of the securities and excess amounts are recorded as gains. All gains and losses resulting from principal payments are classified as interest income in the accompanying Statements of Operations.
 
G. Mortgage Dollar Rolls — The Core Fixed Income and Government Income Funds may enter into mortgage dollar rolls (“dollar rolls”) in which the Funds sell securities in the current month for delivery and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Funds treat dollar rolls as two separate transactions: one involving the purchase of a security and a separate transaction involving a sale.
During the settlement period between sale and repurchase, the Funds will not be entitled to accrue interest and principal payments on the securities sold. Dollar roll transactions involve the risk that the market value of the securities sold by the Funds may decline below the repurchase price of those securities. In the event the buyer of the securities in a dollar roll
 
 
 44

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
transaction files for bankruptcy or becomes insolvent, the Funds’ use of proceeds from the transaction may be restricted pending a determination by, or with respect to, the other party.
 
H. When-Issued Securities and Forward Commitments — The Funds may purchase when-issued securities, including TBA (To Be Announced) securities and enter into contracts to purchase or sell securities for a fixed price at a future date beyond the customary settlement period. When-issued securities are securities that have been authorized but not yet issued in the market. A forward commitment involves the entering into a contract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period. The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although the Funds will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for their portfolios, the Funds may dispose of when-issued securities or forward commitments prior to settlement if GSAM deems it appropriate. When purchasing a security on a when-issued basis or entering into a forward commitment, the Funds must set aside liquid assets, or engage in other appropriate measures to cover their obligations under these contracts. The Funds may dispose of or renegotiate these contracts after they have been entered into and may sell these securities before they are delivered, which may result in a capital gain or loss.
 
I. Treasury Inflation-Protected Securities — The Core Fixed Income and Government Income Funds may invest in Treasury Inflation-Protected Securities (“TIPS”), including structured bonds in which the principal amount is adjusted daily to keep pace with inflation, as measured by the U.S. Consumer Pricing Index for Urban Consumers. The adjustments to principal due to inflation/deflation are reflected as increases/decreases to interest income with a corresponding adjustment to cost. Such adjustments may have a significant impact on the Funds’ distributions and may result in a return of capital to shareholders. The repayment of the original bond principal upon maturity is guaranteed by the full faith and credit of the U.S. Government.
 
J. Derivatives — The Funds may make investments in derivative instruments, including, but not limited to, options, futures, swaps and other derivatives relating to foreign currency transactions. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts (often referred to as over the counter (“OTC”) derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments or commodities at specified terms on a specified date, or to exchange interest payment streams or currencies based on a notional or contractual amount. Derivative instruments may involve a high degree of financial risk. The use of derivatives also involves the risk of loss if the investment adviser is incorrect in its expectation of the timing or level of fluctuations in securities prices, interest rates or currency prices. Investments in derivative instruments also include the risk of default by the counterparty, the risk that the investment may not be liquid and the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument.
 
Forward Foreign Currency Exchange Contracts — The Core Fixed Income Fund may enter into forward foreign currency exchange 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 transactions, portfolio positions or to seek to increase total return. All contracts are “marked-to-market” daily at the applicable forward rate and any resulting unrealized gains or losses are recorded by the Fund. The Fund records realized gains or losses on the settlement date of a contract.
Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
The contractual amounts of forward foreign currency exchange contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all
 
 
45 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
related and offsetting transactions are considered. The Fund must set aside liquid assets, or engage in other appropriate measures to cover its obligations under these contracts.
 
Futures Contracts — The Funds may purchase or sell futures contracts to hedge against changes in interest rates, securities prices, currency exchange rates, or to seek to increase total return. Futures contracts are valued at the last settlement price, or in the absence of a sale, the last bid price, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Funds deposit cash or securities in an account on behalf of the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Funds equal to the daily change in the contract value and are recorded as variation margin receivable or payable with a corresponding offset in unrealized gains or losses. The Funds recognize a realized gain or loss when a contract is closed or expires.
The use of futures contracts involves, to varying degrees, elements of market and counterparty risk which may exceed the amounts recognized in the Statements of Assets and Liabilities. Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day. Changes in the value of a futures contract may not directly correlate with changes in the value of the underlying securities. These risks may decrease the effectiveness of the Funds’ strategies and potentially result in a loss. The Funds must set aside liquid assets, or engage in other appropriate measures to cover their obligations under these contracts.
 
On June 30, 2009, the Funds adopted Statement of Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”) which requires enhanced disclosures about the Core Fixed Income Fund’s derivatives and hedging activities. The following table sets forth the fair value of the Fund’s derivative contracts by certain risk types as of June 30, 2009. Fair values in the table below exclude the effects of cash received or posted pursuant to derivative contracts, and therefore are not representative of the Fund’s net exposure.
 
                                         
    As of June 30, 2009  
    Balance Sheet
 		  Derivative
 		    Number of
 		    Balance Sheet
 		  Derivative
 		    Number of
 		 
Derivative contracts for trading activities   Location   Assets     Contracts     Location   Liabilities     Contracts  
   
Interest rates
  Receivables, Net Assets — Unrealized gain   $ 195,611       157     Payables, Net Assets — Unrealized loss   $ (94,087 )     173  
Currencies
  Receivables     56,931       25     Payables     (86,599 )     30  
 
 
Gross fair value of derivative contracts
      $ 252,542       182         $ (180,686 )     203  
 
 
 
 
 46

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
The following table sets forth by certain risk types the Fund’s gains (losses) related to derivative activities for the six months ended June 30, 2009 in accordance with FAS No. 161. These gains (losses) should be considered in the context that derivative contracts may have been executed to economically hedge securities and accordingly, gains or losses on derivative contracts may offset gains or losses attributable to securities. These gains (losses) are included in “Net realized or net change in unrealized gain (loss)” in the Statements of Operations:
 
                     
    Six Months Ended June 30, 2009  
    Location of Gain
 		        Change in
 		 
    (Loss) on Derivatives
 		  Realized
 		    Unrealized
 		 
    Recognized in Income   Gains     Gains (Losses)  
   
Interest rates
  Net realized gain from futures transactions/change in unrealized loss on futures   $ 718,881     $ (1,058,272 )
Currencies
  Net realized gain from foreign currency related transactions/change in unrealized gain on translation of assets and liabilities denominated in foreign currencies     34,764       32,597  
 
 
Total
      $ 753,645     $ (1,025,675 )
 
 
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Funds, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Funds’ average daily net assets.
For the six months ended June 30, 2009, contractual management fees with GSAM were at the following rates:
 
                                                 
    Contractual Management Rates  
    Up to
    Next
    Next
    Next
    Over
    Effective
 		 
Fund   $1 billion     $1 billion     $3 billion     $3 billion     $8 billion     Rate  
   
Core Fixed Income
    0.40 %     0.36 %     0.34 %     0.33 %     0.32 %     0.40 %
 
 
Government Income
    0.54       0.49       0.47       0.46       0.45       0.54  
 
 
Growth Opportunities
    1.00       1.00       0.90       0.86       0.84       1.00  
 
 
 
The Agreement for the Equity Index Fund provides for a management fee at an annual rate equal to 0.30% of the Fund’s average daily net assets. If the Fund’s average daily net assets are between $300 million and $400 million, 0.05% of the management fee will be waived on a voluntary basis. If the Fund’s average daily net assets exceed $400 million, 0.10% of the management fee will be waived on a voluntary basis. These waivers may be modified or terminated at any time without shareholder approval. The effective management fee was 0.30% for the six months ended June 30, 2009.
As authorized by the Agreement, GSAM has entered into a Sub-advisory Agreement with SSgA Funds Management, Inc. (“SSgA”) who serves as the sub-adviser to the Equity Index Fund and provides the day-to-day advice regarding the Fund’s portfolio transactions. As compensation for its services, SSgA is entitled to a fee, computed daily and payable monthly by GSAM, at the following annual rates of the Fund’s average daily net assets: 0.03% on the first $50 million, 0.02% on the next $200 million, 0.01% on the next $750 million and 0.008% over $1 billion. The effective Sub-advisory fee was 0.02% for the six months ended June 30, 2009.
 
 
47 

 

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Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
3. AGREEMENTS (continued)
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Funds, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Funds’ average daily net assets attributable to Service Shares. For the Growth Opportunities Fund, Goldman Sachs has voluntarily agreed to waive distribution and service fees so as not to exceed 0.16% of average daily net assets of the Fund. The waiver may be modified or terminated at any time at the option of Goldman Sachs.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Funds for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Funds.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Funds (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, a percentage rate of the average daily net assets of each Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Funds are not obligated to reimburse GSAM for prior period expense reimbursements, if any. The Other Expenses limitations for the Core Fixed Income, Equity Index, Government Income and Growth Opportunities Funds as an annual percentage rate of average daily net assets are 0.004%, 0.064%, 0.004% and 0.004%, respectively. In addition, the Funds have entered into certain offset arrangements with the custodian and the transfer agent resulting in a reduction in the Funds’ expenses.
For the six months ended June 30, 2009, these expense reductions, including any fee waivers and Other Expense reimbursements, were as follows (in thousands):
 
                                 
    Distribution and
 		    Transfer
             
    Service Fee
 		    Agent Fee
 		    Other Expense
 		    Total Expense
 		 
Fund   Waiver     Credit     Reimbursement     Reductions  
   
Core Fixed Income
  $ —     $ 1     $ 93     $ 94  
 
 
Equity Index
    —       1       70       71  
 
 
Government Income
    —       1       81       82  
 
 
Growth Opportunities
    43       — (a)     73       116  
 
 
(a) Amount rounds to less than $500.
 
As of June 30, 2009, the amounts owed to affiliates of the Funds were as follows (in thousands):
 
                                 
          Distribution and
 		    Transfer
       
Fund   Management Fees     Service Fees     Agent Fees     Total  
   
Core Fixed Income
  $ 57     $ 35     $ 3     $ 95  
 
 
Equity Index
    44       37       3       84  
 
 
Government Income
    36       17       1       54  
 
 
Growth Opportunities
    89       14       2       105  
 
 
 
E. Line of Credit Facility — The Funds participate in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Funds and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for
 
 
 48

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
 
3. AGREEMENTS (continued)
 
temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Funds based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Funds did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
The following is a summary of the Funds’ investments categorized in the fair value hierarchy:
 
                         
VIT Core Fixed Income   Level 1     Level 2     Level 3  
   
Assets
                       
Fixed Income
                       
Corporate Bonds
  $ —     $ 32,726,866     $ —  
Foreign Debt Obligations
    —       16,054,167       —  
U.S. Treasuries and Other U.S. Government Obligations and Agencies
    6,248,219       5,853,213       —  
Mortgage-Backed Obligations
                       
Commercial Mortgage-Backed Securities
    —       9,269,838       —  
Other Mortgage-Backed Obligations
    —       102,182,920       —  
Other
    —       864,824       —  
Preferred Stock
    —       387,125       —  
Short-term Investments
    8,307,796       —       —  
Derivatives
    195,611       56,931       —  
 
 
Total
  $ 14,751,626     $ 167,395,884     $ —  
 
 
Liabilities
                       
Derivatives
  $ 94,087     $ 86,599     $ —  
 
 
 
 
49 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
4. FAIR VALUE OF INVESTMENTS (continued)
 
                         
VIT Equity Index   Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 172,161,594     $ —     $ —  
Short-term Investments
    2,593,346       —       —  
 
 
Total
  $ 174,754,940     $ —     $ —  
 
 
Liabilities
                       
Derivatives
  $ (110,276 )   $ —     $ —  
 
 
 
                         
VIT Government Income   Level 1     Level 2     Level 3  
   
Assets
                       
Fixed Income
                       
U.S. Treasuries and Other U.S. Government Obligations and Agencies
  $ 6,787,419     $ 15,393,424     $ —  
Mortgage-Backed Obligations
                       
Commercial Mortgage-Backed Security
    —       427,088       —  
Other Mortgage-Backed Obligations
    —       55,192,144       —  
Other
    —       749,315       —  
Short-term Investments
    9,202,525       —       —  
Derivatives
    88,691       —       —  
 
 
Total
  $ 16,078,635     $ 71,761,971     $ —  
 
 
Liabilities
                       
Derivatives
  $ (27,812 )   $ —     $ —  
 
 
 
                         
VIT Growth Opportunities   Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 104,581,311     $ —     $ —  
Short-term Investments
    2,038,434       14,363,963       —  
 
 
Total
  $ 106,619,745     $ 14,363,963     $ —  
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Funds may lend their securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Funds’ securities lending procedures, the Funds receive cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Funds, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Funds on the next business day. As with other extensions of credit, the Funds may experience delay in the recovery of their securities or incur a loss should the borrower of the securities breach its agreement with the Funds or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
 
5. SECURITIES LENDING (continued)
 
The Funds invest the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio of Boston Global Investment Trust (“Enhanced Portfolio”), a Delaware statutory trust. The Enhanced Portfolio, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio. The Enhanced Portfolio invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Funds’ investment of cash collateral in the Enhanced Portfolio is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Funds and GSAL receive compensation relating to the lending of the Funds’ securities. The amounts earned by the Funds for the six months ended June 30, 2009, are reported under Investment Income on the Statement of Operations. A portion of this amount, $18,561, represents compensation earned by the Growth Opportunities Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $8,131 in fees as securities lending agent for the Growth Opportunities Fund. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $2,258,934 for the Growth Opportunities Fund.
The following table provides information about Fund’s investment in the Enhanced Portfolio for the six months ended June 30, 2009 (in thousands):
 
                                         
    Number of
 		                Number of
       
    Shares Held
 		    Shares
    Shares
    Shares Held
    Value at
 		 
Fund   Beginning of Period     Bought     Sold     End of Period     End of Period  
   
Growth Opportunities
    11,271       65,951       (62,815 )     14,407     $ 14,364  
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009, were as follows:
 
                                 
                      Sales and
 		 
          Purchases
 		    Sales and
 		    Maturities
 		 
    Purchases of
    (Excluding
    Maturities of
    (Excluding
 
    U.S. Government
    U.S. Government
    U.S. Government
    U.S. Government
 
    and Agency
    and Agency
    and Agency
    and Agency
 
Fund   Obligations     Obligations)     Obligations     Obligations)  
   
Core Fixed Income
  $ 96,894,211     $ 25,446,656     $ 115,040,384     $ 26,582,797  
 
 
Equity Index
    —       3,460,191       —       18,407,850  
 
 
Government Income
    90,437,299       9,149,258       98,310,250       10,132,223  
 
 
Growth Opportunities
    —       35,936,493       —       46,129,265  
 
 
 
For the six months ended June 30, 2009, Goldman Sachs earned approximately $1,000 and $100 in brokerage commissions from portfolio transactions, including futures transactions executed with Goldman Sachs as the Futures Commission Merchant on behalf of the Core Fixed Income and Government Income Funds, respectively. Goldman Sachs did not earn any brokerage commissions with respect to the Equity Index and Growth Opportunities Funds.
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
7. TAX INFORMATION
 
As of the Funds’ most recent fiscal year end, December 31, 2008, the Funds’ capital loss carryforwards and certain timing differences on a tax basis were as follows:
 
                                 
    Core Fixed
          Government
    Growth
 
    Income     Equity Index     Income     Opportunities  
   
Capital loss carryforward:(1)
                               
Expiring 2009
  $ —     $ (13,380,657 )   $ —     $ —  
Expiring 2010
    —       (13,380,657 )     —       —  
Expiring 2011
    —       (8,097,717 )     —       —  
Expiring 2012
    —       (2,961,297 )     —       —  
Expiring 2014
    (4,814,270 )     —       —       —  
 
 
Total capital loss carryforward
  $ (4,814,270 )   $ (37,820,328 )   $ —     $ —  
 
 
Timing differences (from post-October losses, straddles and deferred distributions from REITs)
  $ (60,994 )   $ (944,837 )   $ (173,286 )   $ (3,159,993 )
 
 
(1) Expiration occurs on December 31 of the year indicated. Due to fund reorganizations, utilization of the Equity Index Fund’s losses may be substantially limited under the Code.
 
At June 30, 2009, the Funds’ aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
                                 
    Core Fixed
    Equity
 		    Government
    Growth
 
    Income     Index     Income     Opportunities  
   
Tax cost
  $ 207,336,399     $ 220,237,913     $ 91,326,205     $ 138,358,762  
 
 
Gross unrealized gain
    3,722,529       27,721,419       1,839,104       6,279,452  
Gross unrealized loss
    (29,163,960 )     (73,204,392 )     (5,413,394 )     (23,654,506 )
 
 
Net unrealized security loss
  $ (25,441,431 )   $ (45,482,973 )   $ (3,574,290 )   $ (17,375,054 )
 
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes, tax treatment of partnership investments, return of capital distributions from underlying fund investments and section 1256 Futures and Forwards Contracts as of the most recent fiscal year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Funds may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Funds have unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Funds’ shares. Redemptions by these participating insurance companies or accounts in the Funds may impact the Funds’ liquidity and NAV. These redemptions may also force the Funds to sell securities, which may increase the Funds’ brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Funds enter into contracts that contain a variety of indemnification clauses.
 
 
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9. OTHER MATTERS (continued)
 
The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Funds that have not yet occurred. However, the Funds believe the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 14, 2009, the date that the financial statements were issued.
 
10. SUBSEQUENT EVENT
 
Effective July 1, 2009, GSAM has voluntarily agreed to waive a portion of its management fees for the Equity Index Fund in order to achieve the following annual rates after waivers:
 
                 
Management Rate  
    Over 300 million -
       
$0 - $300 million   $400 million     Over $400 million  
   
0.27%
    0.24 %     0.20 %
 
 
 
In addition, effective July 1, 2009, GSAM will reduce the “Other Expenses” limitation from 0.064% to 0.004% of average daily net assets for the Equity Index Fund.
 
 
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Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Core Fixed Income, Goldman Sachs Government Income, Goldman Sachs Growth Opportunities and Goldman Sachs Equity Index Funds (the “Funds”) are investment portfolios of Goldman Sachs Variable Insurance Trust (the “Trust”) that commenced investment operations on January 9, 2006. The Funds are accounting successors to investment portfolios of Allmerica Investment Trust, which were reorganized into the Funds. The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Funds at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Funds and the Sub-Advisory Agreement (the “Sub-Advisory Agreement”, and together with the Management Agreement, the “Agreements”) between the Investment Adviser and SSgA Funds Management, Inc. (the “Sub-Adviser”) on behalf of the Equity Index Fund.
The Agreements were most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Agreements or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Funds’ investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Funds by the Investment Adviser and its affiliates; (b) the Funds’ investment performance; (c) the Funds’ management fee arrangements; (d) the voluntary undertakings of the Investment Adviser and the Funds’ affiliated distributor to reimburse certain fees and expenses of the Funds that exceed specified levels and the estimated annualized savings realized by the Funds from those undertakings; (e) potential economies of scale and the levels of breakpoints in the fees payable by the applicable Funds under the Management Agreement; (f) the relative expense levels of the Funds as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of each of the Funds and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Funds; (j) capacity issues relating to the securities in which the Funds invest; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Funds, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Funds; (m) the current pricing of services provided by, and the profitability of, the Funds’ transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Funds by their unaffiliated service providers (including the Equity Income Fund’s Sub-Adviser) and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Funds; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Funds for transfer agency, securities lending (in the case of the Growth Opportunities and Equity Index Funds (the “Equity Funds”)), portfolio brokerage (in the case of the Equity Funds), distribution and other services; (h) the terms of the Agreements and agreements with other service providers entered into by the Trust on behalf of the Funds; (i) the administrative services provided under the Management
 
 
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Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Agreement, including the nature and extent of the Investment Adviser’s oversight of the Funds’ other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices (in the case of the Equity Funds) and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Funds’ distribution plan; (n) an annual review of the effectiveness of the Funds’ compliance program; and (o) with respect to the Equity Index Fund, the difference between the Investment Adviser’s management fee and the Sub-Adviser’s sub-advisory fee for the Fund and the services provided by the Investment Adviser to that Fund. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to each Fund, and each Fund’s investment performance, fees and expenses, including each Fund’s expense trends over time and any breakpoints in the fee rates payable by each Fund under the applicable Agreements.
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Funds’ assets, share purchase and redemption activity, the commission rates paid by the Funds on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Funds. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Funds and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Funds and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for all of the Funds and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Agreements as they applied to each Fund.
In evaluating the Agreements at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Funds. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Funds in comparison to the performance of similar mutual funds and benchmark performance indices; (b) general investment outlooks in the markets in which the Funds invest; (c) compliance reports; and (d) expenses borne by the Funds. In addition, the Trustees were provided with copies of disclosure materials regarding the Funds and their expenses, as well as information on the Funds’ competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Funds by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Funds and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Funds and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
 
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Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Investment Performance
The Independent Trustees also considered the investment performance of the Funds and the Investment Adviser. In this regard, they compared the investment performance of each Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed each Fund’s investment performance relative to its performance benchmark. This information on each Fund’s investment performance was provided for the one-year period ended December 31, 2008. The Independent Trustees also compared the performance of the Core Fixed Income and Growth Opportunities Funds to that of the Investment Adviser’s institutional composites of the performance of other accounts having similar investment objectives and policies. In addition, they considered the investment performance trends of the Funds over time, and reviewed the investment performance of each Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether each Fund had operated within its investment policies, and had complied with its investment limitations. In connection with the performance of the Core Fixed Income Fund, the Trustees noted that the Fund’s recent performance challenges were attributable in large part to investments in certain asset classes, such as non-agency mortgage-backed securities or corporate debt issued by financial services companies, that performed poorly in 2008 due to investor aversion to risk and resulting market illiquidity, which depressed the prices of these securities. The Trustees recognized that the market events of 2008 were in many respects unprecedented, and that there was potential for the Fund to recover some of the unrealized losses on certain portfolio holdings in the future. The Trustees concluded that the Investment Adviser’s continued management likely would benefit this Fund and its shareholders. The Trustees also concluded that the Government Income, Growth Opportunities and Equity Index Funds each had provided investment performance within a competitive range for long-term investors, and that the Investment Adviser’s continued management would benefit each of those Funds and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rates payable by each Fund under the Management Agreement and payable by the Investment Adviser under the Sub-Advisory Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Funds, which included both advisory and administrative services that were directed to the needs and operations of the Funds as registered mutual funds.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Funds. The analyses provided a comparison of the Funds’ management fees and (as applicable) breakpoints to those of relevant peer groups and category universes; an expense analysis which compared each Fund’s expenses to a peer group and a category universe; and a three-year history comparing each Fund’s expenses to the peer and category averages. The analyses also compared each Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer groups and peer group medians. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Funds.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertakings to limit the Funds’ “other expenses” ratios (excluding certain expenses) to certain specified levels and to waive a portion of the contractual management fees paid by the Equity Index Fund, as well as Goldman Sachs’ (the Funds’ distributor) voluntary undertaking to waive a portion of the distribution and service fees paid by the Growth Opportunities Fund’s Service Shares. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Funds, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Funds differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Funds’ shareholders invested in the Funds in part because of the Funds’ relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
 
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Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and each of the Funds. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and each Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Growth Opportunities, Core Fixed Income and Government Income Funds at the following annual percentage rates of the average daily net assets of the Funds:
                         
    Core
 		    Government
 		    Growth
 		 
    Fixed Income
 		    Income
 		    Opportunities
 		 
    Fund     Fund     Fund  
   
First $1 billion
    0.40 %     0.54 %     1.00 %
Next $1 billion
    0.36       0.49       1.00  
Next $3 billion
    0.34       0.47       0.90  
Next $3 billion
    0.33       0.46       0.86  
Over $8 billion
    0.32       0.45       0.84  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Funds and their shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing each Fund, and whether the Funds and their shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amounts of assets in the Funds; the Funds’ recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing fee rates charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the voluntary undertakings of the Investment Adviser and Goldman Sachs to limit fees and “other expenses” of the Funds to certain amounts. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
With respect to the Equity Index Fund, the Independent Trustees reviewed information regarding potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amounts of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the contractual fee rate charged by the Investment Adviser (which does not include fee breakpoints) with fee rates charged by other, unaffiliated investment managers to other variable annuity index funds. The Trustees noted that the fees actually paid by the Fund were reduced by the Investment Adviser’s voluntary undertakings to limit management fees and certain “other expenses” to certain amounts.
 
 
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Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
The Trustees also considered and approved the following breakpoints in the contractual fee rate in the Sub-Advisory Agreement:
 
         
    Equity Index Fund
 		 
    (Sub-Advisory Fee)  
   
First $50 million
    0.03 %
Next $200 million
    0.02  
Next $750 million
    0.01  
Over $1 billion
    0.008  
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Funds as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage (in the case of the Equity Funds) and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Funds; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Equity Funds; (d) trading efficiencies resulting from aggregation of orders of the Funds with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent for the Equity Funds (and fees earned by the Investment Adviser for managing the portfolio in which the cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Funds on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Funds; and (j) the Investment Adviser’s ability to leverage relationships with the Funds’ third party service providers to attract more firmwide business.
 
Other Benefits to the Funds and Their Shareholders
The Independent Trustees also noted that the Funds receive certain potential benefits as a result of their relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Funds with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Funds because of the reputation of the Goldman Sachs organization; (g) the Funds’ access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Funds’ access to certain affiliated distribution channels.
 
Approval of Sub-Advisory Agreement
The Trustees concluded that the Sub-Advisory Agreement with respect to the Equity Index Fund should be continued and approved. In reaching this determination, the Trustees relied on information provided by the Investment Adviser and the Sub-Adviser. The Trustees noted that the Fund had commenced operations in January 2006, and reviewed the Fund’s operations and investment performance since that time. The Trustees reviewed the respective services provided to the Fund by the Investment Adviser under its Management Agreement and by the Sub-Adviser under its Sub-Advisory Agreement. The Trustees noted that the compensation paid to the Sub-Adviser was paid by the Investment Adviser, not by the Fund, and that the retention of the Sub-Adviser did not increase the fees incurred by the Fund for advisory services or decrease the overall responsibility of the Investment Adviser for the management of the Fund. The Trustees also considered Sub-Adviser’s experience in index investing and its compliance policies and procedures and code of ethics. After deliberation and consideration of the information provided, the Trustees concluded that the sub-advisory fee to be paid by the Investment Adviser to the Sub-Adviser with respect to the Equity Index Fund is reasonable in light of the services to be provided by the Sub-Adviser and the Fund’s reasonably foreseeable asset levels, and that the Sub-Advisory Agreement should be approved and continued.
 
 
 58

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by each of the Funds were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and each Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to each Fund until June 30, 2010.
 
 
59 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST FUNDS
 
 
 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of the Service Shares of the Funds, you incur ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Funds, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                                                                                                                         
      Core Fixed Income Fund     Equity Index Fund     Government Income Fund     Growth Opportunities Fund
                  Expenses
 		                Expenses
 		                Expenses
 		                Expenses
                  Paid for the
 		                Paid for the
 		                Paid for the
 		                Paid for the
      Beginning
 		    Ending
 		    6 Months
 		    Beginning
 		    Ending
 		    6 Months
 		    Beginning
 		    Ending
 		    6 Months
 		    Beginning
 		    Ending
 		    6 Months
      Account value
 		    Account Value
 		    Ended
 		    Account value
 		    Account Value
 		    Ended
 		    Account value
 		    Account Value
 		    Ended
 		    Account value
 		    Account Value
 		    Ended
      1/01/09     6/30/09     6/30/09*     1/01/09     6/30/09     6/30/09*     1/01/09     6/30/09     6/30/09*     1/01/09     6/30/09     6/30/09*
Actual
    $ 1,000       $ 1,052.10       $ 3.41       $ 1,000       $ 1,033.20       $ 3.18       $ 1,000       $ 1,022.00       $ 4.06       $ 1,000       $ 1,228.20       $ 6.52  
Hypothetical 5% return
      1,000         1,021.47 +       3.36         1,000         1,021.67 +       3.16         1,000         1,020.77 +       4.06         1,000         1,018.94 +       5.91  
 
*   Expenses are calculated using each Fund’s annualized net expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were as follows:
 
             
Fund                  
       
Core Fixed Income
    0.67 %    
Equity Index
    0.63 %    
Government Income
    0.81 %    
Growth Opportunities
    1.18 %    
 
     
     
+  Hypothetical expenses are based on each Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 

60

 

 
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
  James A. McNamara, President
John P. Coblentz, Jr.
  John M. Perlowski, Senior Vice
Diana M. Daniels
    President and Treasurer
Patrick T. Harker
  Peter V. Bonanno, Secretary
James A. McNamara
   
Jessica Palmer
   
Alan A. Shuch
   
Richard P. Strubel
   
     
     
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
     
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York, New York 10005    
     
     
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
     
     
 
The reports concerning the Funds included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
 
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
 
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov within 60 days after the Funds’ first and third fiscal quarters. The Funds’ Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Funds’ entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
     
     
    Toll Free (in U.S.): 800-292-4726
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Funds.
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust Funds.
     
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITSVCSAR/25764.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
 
Goldman Sachs
Growth and Income Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term growth of capital and growth of income.
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Value Portfolio Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Growth and Income Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of -2.01% and -2.13%, respectively. These returns compare to the -2.87% cumulative total return of the Fund’s benchmark, the Russell 1000 Value Index (with dividends reinvested) (the “Russell Index”) during the same time period.
 
What economic and market factors most influenced the equity markets as a whole during the semi-annual period?
 
The equity markets faced two distinct periods during the six months ended June 30, 2009. The major U.S. equity markets opened 2009 with sharp losses, as the deepening credit crisis, disappointing corporate earnings, rising unemployment and a contracting economy put downward pressure on stocks. Weakness in the financial sector in the last months of 2008 spilled into 2009, as the nation’s largest banks experienced an extremely challenging period. Headlines continued to focus on the relative health of banks as well as on the likely political response to the ongoing recession. Equity market volatility declined from record levels, but remained above normal, and we saw more differentiation between stock returns than seen at the end of 2008. U.S. equity indices reached their lows for the semi-annual period in early March.
 
Then, as economic data seemed to indicate a deceleration in the pace of the economic slowdown, the U.S. equity markets jumped from their early-March low and rallied through most of the second quarter. Crude oil prices rose and the housing market showed some stability, with existing home sales rising from April to May. Volatility trended downward, with the June unemployment rate at 9.5% and the four-week moving average of jobless claims declining. Headlines continued to focus on the relative health of banks and the effects of government stimulus. Driven by a renewed tolerance for risk, investors propelled the U.S. equity markets to their fourth consecutive month of positive returns in June. Consumer confidence, however, reflected a more pessimistic view in June after improving in April and May. Driven by weak economic data around housing and unemployment that indicated the recovery may take longer and be less robust in terms of future growth than anticipated, the U.S. equity market rally stalled somewhat. Still, for the second quarter overall, the S&P 500 Index experienced its first positive return in the last seven quarters and its best quarterly return of the decade.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
Effective stock selection and sector allocation overall contributed in virtually equal part to the Fund’s performance during the six-month reporting period.
 
Which equity market sectors most significantly affected Fund performance?
 
Stock selection in the services and energy sectors helped the Fund’s performance most. Having underweighted allocations to the financial, industrials, and real estate investment trust (REIT) sectors, which lagged the Russell Index, and an overweighted exposure to the health care sector, which outpaced the Russell Index, also contributed positively to the Fund’s results. Detracting somewhat from the Fund’s performance was weak stock selection in the consumer cyclicals, insurance, technology and REITs sectors. Having underweighted allocations to basic materials and consumer cyclicals, which each significantly outperformed the Russell Index, also hurt the Fund’s relative results.
 
What were some of the Fund’s best-performing individual stocks?
 
The Fund benefited most relative to the Russell Index from positions in telecommunications giant Sprint Nextel, pharmaceutical manufacturer Genentech, industrial chemicals and gas manufacturer Air Products & Chemicals, and global integrated oil company Hess.
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Sprint Nextel ranked as a top contributor to the Fund’s results, as ongoing signs of progress in its turnaround, including improved fundamentals, bolstered its share price. Its shares also were buoyed by the company’s release of a competitive prepaid wireless plan and new handsets. Genentech’s shares rose upon the announcement that it would be acquired by Roche. Shares of Air Products & Chemicals advanced on a combination of long-term contracts, stable pricing and high barriers to entry. Shares of Hess performed well, as oil prices rose and as, in our opinion, many investors believe this oil company in particular is poised to benefit from strong resource potential, execution of projects and cost management.
 
Which individual stocks detracted significantly from the Fund’s performance during the semi-annual period?
 
Detracting most from the Fund’s results relative to its benchmark index were tax services provider H&R Block, pharmaceutical manufacturer Biogen IDEC, oil and gas exploration and production company Devon Energy, and electric power company FirstEnergy.
 
H&R Block, the biggest U.S. tax preparer, was challenged, as consumer volume was lighter than expected. Biogen Idec experienced declines in its stock price after reporting disappointing short-term trends. Devon Energy, one of the largest North American independent exploration and production companies, was challenged as the company revalued assets to reflect 2008’s pricing environment. Shares of FirstEnergy declined due primarily to broad utility sector weakness, despite its sizeable free cash flow and strong balance sheet.
 
Did the Fund make any significant purchases or sales during the first half of the fiscal year?
 
During the period, we moved from a defensive position to a more balanced approach with sales of several names that had helped us build a defensive posture early in the fiscal year. In health care, we sold the Fund’s position in Amgen and reduced its holding in Becton Dickinson. We also reduced the Fund’s holdings in Visa and Wal-Mart Stores, two sizable holdings that had held up well during the prior year, in favor of other names that we believed to have more favorable risk/reward profiles.
 
We became more positive on the long-term outlook for select financial companies, so we established a Fund position in Bank of America, which we liked due to its strong earnings power following its acquisitions of Merrill Lynch and Countrywide Financial. Within energy, we shifted some of the Fund’s exposure to include additional oil and oil services companies and increased the Fund’s position in Occidental Petroleum. The Fund purchased shares of Thermo Fisher Scientific, a high quality health care company with a diversified portfolio of products, which we believe could benefit from an economic recovery through pricing, new products and an expanded global presence. The Fund also invested in DISH Network, a low-priced satellite TV provider that we believe is poised to benefit in a cost-sensitive environment.
 
Were there any notable changes in the Fund’s weightings during the six-month period?
 
During the semi-annual period, we decreased the Fund’s exposure to health care, while still maintaining its overweighted allocation compared to the Russell Index. We significantly increased the Fund’s exposure to financials and materially decreased the Fund’s position in utilities. The Fund’s allocation to consumer staples shifted from a neutral position relative to the Russell Index to an overweighted exposure. Similarly, the Fund’s exposure to consumer cyclicals went from a modestly underweighted allocation at the start of the reporting period to a moderately overweighted position compared to the benchmark index by the end of June 2009.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
At the end of June 2009, the Fund had overweighted positions relative to the Russell Index in the health care, consumer staples, insurance, and consumer cyclicals sectors. On the same date, the Fund had underweighted positions compared to the Russell Index in energy, industrials, and services and was rather neutrally weighted to the Index in financials, utilities, REITs, basic materials and technology.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
We continue to expect increased stock-level differentiation going forward, distinguishing higher quality companies with robust business models from those likely to remain challenged. As fundamental stock pickers, we welcome such volatility. In our view, this environment should allow businesses with competitive advantages to take market share from weaker competitors and benefit from improved pricing power. While we cannot predict the near term direction of the ongoing recession or the broader markets, we are encouraged by developments in the second quarter, such as the strengthened
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

balance sheets of banks. As always, and ever more so in this uncertain environment, deep research resources, a forward-looking investment process and truly actively managed portfolios are keys, in our view, to both preserving capital and outperforming the market over the long term.
 
Portfolio Composition
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
Johnson & Johnson
    4.2 %   Pharmaceuticals, Biotechnology & Life Sciences    
JPMorgan Chase & Co. 
    3.3     Diversified Financials    
Bank of America Corp. 
    3.2     Diversified Financials    
Entergy Corp. 
    2.8     Utilities    
Philip Morris International, Inc. 
    2.7     Food, Beverage & Tobacco    
Occidental Petroleum Corp. 
    2.6     Energy    
The Travelers Companies, Inc. 
    2.3     Insurance    
Hess Corp. 
    2.1     Energy    
BP PLC ADR
    2.1     Energy    
Hewlett-Packard Co. 
    2.1     Technology Hardware & Equipment    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 1.1% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 90.1%
Automobiles & Components – 1.4%
355,400
  Ford Motor Co.*   $ 2,157,278  
305,653
  Johnson Controls, Inc.     6,638,783  
             
          8,796,061  
 
 
Banks – 1.5%
521,500
  New York Community Bancorp, Inc.(a)     5,574,835  
176,900
  Wells Fargo & Co.     4,291,594  
             
          9,866,429  
 
 
Capital Goods – 4.0%
214,000
  Emerson Electric Co.     6,933,600  
245,400
  Honeywell International, Inc.     7,705,560  
259,800
  The Boeing Co.     11,041,500  
             
          25,680,660  
 
 
Commercial & Professional Services – 0.7%
157,766
  Waste Management, Inc.     4,442,691  
 
 
Consumer Durables & Apparel – 0.7%
82,500
  NIKE, Inc. Class B(a)     4,271,850  
 
 
Consumer Services – 1.3%
493,624
  H&R Block, Inc.     8,505,142  
 
 
Diversified Financials – 10.7%
336,653
  AllianceBernstein Holding LP     6,763,359  
1,520,900
  Bank of America Corp.     20,075,880  
615,452
  JPMorgan Chase & Co.     20,993,067  
361,100
  Morgan Stanley     10,294,961  
205,700
  State Street Corp.     9,709,040  
             
          67,836,307  
 
 
Energy – 15.6%
283,900
  BP PLC ADR     13,536,352  
193,300
  Chevron Corp.     12,806,125  
184,643
  Devon Energy Corp.     10,063,043  
150,679
  EOG Resources, Inc.     10,234,118  
163,123
  Exxon Mobil Corp.     11,403,929  
254,082
  Hess Corp.     13,656,908  
247,979
  Occidental Petroleum Corp.     16,319,498  
112,200
  Schlumberger Ltd.     6,071,142  
65,600
  Transocean Ltd.*     4,873,424  
             
          98,964,539  
 
 
Food & Staples Retailing – 1.1%
138,406
  Wal-Mart Stores, Inc.     6,704,387  
 
 
Food, Beverage & Tobacco – 6.0%
96,400
  General Mills, Inc.     5,400,328  
388,638
  Philip Morris International, Inc.     16,952,389  
96,199
  The Coca-Cola Co.     4,616,590  
471,370
  Unilever NV ADR     11,397,727  
             
          38,367,034  
 
 
Health Care Equipment & Services – 2.3%
179,218
  Baxter International, Inc.     9,491,385  
72,400
  Becton, Dickinson and Co.     5,162,844  
             
          14,654,229  
 
 
Household & Personal Products – 1.5%
52,619
  The Clorox Co.     2,937,719  
131,900
  The Procter & Gamble Co.     6,740,090  
             
          9,677,809  
 
 
Insurance – 7.1%
128,000
  Aflac, Inc.     3,979,520  
87,300
  Everest Re Group Ltd.     6,248,061  
120,600
  Marsh & McLennan Companies, Inc.     2,427,678  
88,087
  PartnerRe Ltd.     5,721,251  
106,800
  Prudential Financial, Inc.     3,975,096  
196,675
  The Allstate Corp.     4,798,870  
71,200
  The Chubb Corp.     2,839,456  
362,628
  The Travelers Companies, Inc.     14,882,253  
             
          44,872,185  
 
 
Materials – 2.9%
96,800
  Freeport-McMoRan Copper & Gold, Inc.     4,850,648  
557,100
  The Dow Chemical Co.     8,991,594  
103,000
  The Mosaic Co.     4,562,900  
             
          18,405,142  
 
 
Media – 3.8%
896,000
  Comcast Corp. Class A     12,983,040  
307,200
  DISH Network Corp. Class A*     4,979,712  
241,529
  Time Warner, Inc.     6,084,116  
             
          24,046,868  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 8.4%
219,200
  Biogen Idec, Inc.*     9,896,880  
471,334
  Johnson & Johnson     26,771,771  
161,300
  Thermo Fisher Scientific, Inc.*     6,576,201  
226,521
  Wyeth     10,281,788  
             
          53,526,640  
 
 
Real Estate Investment Trust – 1.8%
188,800
  Annaly Capital Management, Inc.     2,858,432  
60,200
  Federal Realty Investment Trust(a)     3,101,504  
155,000
  Health Care REIT, Inc.     5,285,500  
             
          11,245,436  
 
 
Retailing – 4.0%
131,000
  J.C. Penney Co., Inc.     3,761,010  
266,500
  Staples, Inc.     5,375,305  
101,000
  Target Corp.     3,986,470  
265,000
  The Home Depot, Inc.     6,261,950  
194,400
  The TJX Companies, Inc.     6,115,824  
             
          25,500,559  
 
 
Semiconductors & Semiconductor Equipment – 0.4%
166,500
  Intel Corp.     2,755,575  
 
 
Software & Services – 0.9%
271,300
  Oracle Corp.     5,811,246  
 
 
Technology Hardware & Equipment – 2.1%
348,199
  Hewlett-Packard Co.     13,457,891  
 
 
             
 
 
 4
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
             
Telecommunication Services – 4.6%
492,823
  AT&T, Inc.   $ 12,241,723  
114,884
  Embarq Corp.     4,832,021  
2,504,849
  Sprint Nextel Corp.*     12,048,324  
             
          29,122,068  
 
 
Transportation – 0.5%
76,700
  Norfolk Southern Corp.     2,889,289  
 
 
Utilities – 6.8%
206,713
  American Electric Power Co., Inc.     5,971,938  
72,706
  Edison International     2,287,331  
229,269
  Entergy Corp.     17,772,933  
205,638
  FirstEnergy Corp.     7,968,472  
279,956
  PPL Corp.     9,227,350  
             
          43,228,024  
 
 
TOTAL COMMON STOCKS
(Cost $611,881,334)
  $ 572,628,061  
 
 
                 
        Interest
 		     
Shares       Rate   Value  
 
Preferred Stock – 1.3%
Diversified Financials – 1.3%
9,721,000
  JPMorgan Chase & Co.   $7.900%   $   8,506,847  
(Cost $8,167,266)
           
 
 
             
Shares   Rate   Value  
 
Investment Company(b) – 3.0%
JPMorgan U.S. Government Money Market Fund –
Capital Shares
18,781,998
  0.236%   $ 18,781,998  
(Cost $18,781,998)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES LENDING REINVESTMENT VEHICLE
(Cost $638,830,598)
  $ 599,916,906  
 
 
Securities Lending Reinvestment Vehicle(b)(c) – 1.1%
Boston Global Investment Trust – Enhanced Portfolio
7,320,883
  0.267%   $ 7,298,920  
(Cost $7,277,533)
       
 
 
TOTAL INVESTMENTS – 95.5%
(Cost $646,108,131)
  $ 607,215,826  
 
 
OTHER ASSETS IN EXCESS OF LIABILITIES – 4.5%
    28,580,651  
 
 
NET ASSETS – 100.0%   $ 635,796,477  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(c) Represents an affiliated issuer.
 
Investment Abbreviation:
ADR—American Depositary Receipt
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
Investments in securities of unaffiliated issuers, at value (identified cost $638,830,598)(a)
  $ 599,916,906  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $7,277,533)
    7,298,920  
Receivables:
       
Fund shares sold
    89,380,867  
Dividends and interest
    1,051,511  
Investment securities sold
    915,045  
Securities lending income
    522  
Other assets
    2,376  
 
 
Total assets
    698,566,147  
 
 
 
Liabilities:
Payables:
       
Investment securities purchased
    54,309,661  
Payable upon return of securities loaned
    7,248,975  
Fund shares redeemed
    741,943  
Amounts owed to affiliates
    378,677  
Accrued expenses
    90,414  
 
 
Total liabilities
    62,769,670  
 
 
 
Net Assets:
Paid-in capital
    853,491,799  
Accumulated undistributed net investment income
    6,923,189  
Accumulated net realized loss from investment transactions
    (185,726,206 )
Net unrealized loss on investments
    (38,892,305 )
 
 
NET ASSETS
  $ 635,796,477  
 
 
Net Assets:
       
Institutional
  $ 422,624,112  
Service
    213,172,365  
 
 
Total Net Assets
  $ 635,796,477  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    54,074,551  
Service
    27,273,909  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 7.82  
Service
    7.82  
 
 
 
(a) Includes loaned securities having a market value of $7,077,945.
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Dividends
  $ 6,932,237  
Interest
    332,552  
Securities lending income — affiliated issuer
    13,928  
 
 
Total investment income
    7,278,717  
 
 
 
Expenses:
Management fees
    1,723,429  
Distribution and Service fees — Service Shares
    131,201  
Printing fees
    57,131  
Transfer Agent fees(a)
    45,955  
Professional fees
    44,269  
Custody and accounting fees
    18,075  
Trustee fees
    8,460  
Other
    10,081  
 
 
Total expenses
    2,038,601  
 
 
Less — expense reductions
    (2,082 )
 
 
Net expenses
    2,036,519  
 
 
NET INVESTMENT INCOME
    5,242,198  
 
 
 
Realized and unrealized gain (loss) from investment transactions:
Net realized gain (loss) from:
       
Investment transactions — unaffiliated issuers
    (112,272,117 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    28,558  
Net change in unrealized gain on:
       
Investments — unaffiliated issuers
    103,563,729  
Securities lending reinvestment vehicle — affiliated issuer
    21,387  
 
 
Net realized and unrealized loss from investment transactions
    (8,658,443 )
 
 
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ (3,416,245 )
 
 
 
(a) Institutional and Service Shares had Transfer Agent fees of $35,459 and $10,496, respectively.
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 5,242,198     $ 12,505,942  
Net realized loss from investment transactions
    (112,243,559 )     (70,374,348 )
Net change in unrealized gain (loss) on investments
    103,585,116       (161,720,945 )
 
 
Net decrease in net assets resulting from operations
    (3,416,245 )     (219,589,351 )
 
 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (10,426,044 )
Service Shares
    —       (1,665,474 )
From net realized gains
               
Institutional Shares
    —       (51,614 )
Service Shares
    —       (8,404 )
 
 
Total distributions to shareholders
    —       (12,151,536 )
 
 
                 
 
From share transactions:
Proceeds from sales of shares
    225,515,144       158,271,882  
Reinvestments of distributions
    —       12,151,536  
Cost of shares redeemed
    (43,340,181 )     (53,617,957 )
 
 
Net increase in net assets resulting from share transactions
    182,174,963       116,805,461  
 
 
TOTAL INCREASE (DECREASE)
    178,758,718       (114,935,426 )
 
 
                 
 
Net assets:
Beginning of period
    457,037,759       571,973,185  
 
 
End of period
  $ 635,796,477     $ 457,037,759  
 
 
Accumulated undistributed net investment income
  $ 6,923,189     $ 1,680,991  
 
 
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                             
          Income (loss) from
 		                                                    Ratios assuming no
 		           
          investment operations     Distributions to
 		                                  expense reductions            
                Net
 		          shareholders                             Ratio of
 		    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		    net investment
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income to
 		    expenses
 		    income to
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    average
 		    to average
 		    average
 		    turnover
 		     
Year - Share Class   of period     income(a)     gain (loss)     operations     income     gains     distributions     period     return(b)     (in 000s)     net assets     net assets     net assets     net assets     rate      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                             
2009 - Institutional
  $ 7.97     $ 0.09     $ (0.24 )   $ (0.15 )   $ —     $ —     $ —     $ 7.82       (2.01 )%   $ 422,624       0.83 %(c)     2.33 %(c)     0.83 %(c)     2.33 %(c)     43 %    
2009 - Service
    7.98       0.08       (0.24 )     (0.16 )     —       —       —       7.82       (2.13 )     213,172       1.08 (c)     2.09 (c)     1.08 (c)     2.09 (c)     43      

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                             
2008 - Institutional
    12.53       0.25       (4.59 )     (4.34 )     (0.22 )     — (d)     (0.22 )     7.97       (34.45 )     389,838       0.81       2.36       0.81       2.36       69      
2008 - Service
    12.52       0.19       (4.51 )     (4.32 )     (0.22 )     — (d)     (0.22 )     7.98       (34.32 )     67,200       1.06       2.15       1.06       2.15       69      
 
 
2007 - Institutional
    13.91       0.25       (0.03 )     0.22       (0.26 )     (1.34 )     (1.60 )     12.53       1.49       571,883       0.85       1.75       0.85       1.75       79      
2007 - Service
(commenced July 24, 2007)
    14.71       0.15       (0.74 )     (0.59 )     (0.26 )     (1.34 )     (1.60 )     12.52       (4.02 )     90       0.94 (c)     3.11 (c)     1.09 (c)     2.96 (c)     79      
 
 
2006 - Institutional
    11.97       0.28       2.43       2.71       (0.23 )     (0.54 )     (0.77 )     13.91       22.63       432,016       0.86       2.15       0.87       2.14       52      
 
 
2005 - Institutional
    11.71       0.21       0.25       0.46       (0.20 )     —       (0.20 )     11.97       3.93       313,152       0.88       1.77       0.88       1.77       46      
 
 
2004 - Institutional
    10.00       0.19       1.69       1.88       (0.17 )     —       (0.17 )     11.71       18.80       276,395       0.86       1.75       0.86       1.75       58      
 
 
 
(a) Calculated based on the average shares outstanding methodology.
(b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(c) Annualized.
(d) Amount is less than $0.005 per share.
 
The accompanying notes are an integral part of these financial statements.

9

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Growth and Income Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable,
 
 
 10

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
In addition, distributions received from the Fund’s investments in real estate investment trusts (“REITs”) often include a “return of capital” which is recorded by the Fund as a reduction of the cost basis of the securities held. The Internal Revenue Code of 1986, as amended (the “Code”) requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the Fund’s distributions is deemed a return of capital and is generally not taxable to shareholders.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Code applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
For the six months ended June 30, 2009, contractual management fees with GSAM were at the following rates:
 
                     
Contractual Management Rate
Up to $1 billion   Next $1 billion   Next $3 billion   Next $3 billion   Over $8 billion   Effective Rate
 
0.75%
  0.68%   0.65%   0.64%   0.63%   0.75%
 
 
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee
 
 
11 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
3. AGREEMENTS (continued)
 
accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.114% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAM did not make any reimbursements to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $2,100.
As of June 30, 2009, amounts owed to affiliates were approximately $336,000, $33,700 and $9,000 for management, distribution and service and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
 
 12

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
 
4. FAIR VALUE OF INVESTMENTS (continued)
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 572,628,061     $ 8,506,847     $ —  
Short-term Investments
    18,781,998       7,298,920       —  
 
 
Total
  $ 591,410,059     $ 15,805,767     $ —  
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio of Boston Global Investment Trust (“Enhanced Portfolio”), a Delaware statutory trust. The Enhanced Portfolio, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio. The Enhanced Portfolio invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $3,440, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $1,546 in fees as securities lending agent.
The following table provides information about Fund’s investment in the Enhanced Portfolio for the six months ended June 30, 2009 (in thousands):
 
                 
Number of
 		               
Shares Held
 		          Number of Shares
 		  Value at
Beginning of Period   Shares Bought   Shares Sold   Held End of Period   End of Period
 
—
  64,720   (57,399)   7,321   $7,299
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $351,389,276 and $198,392,325, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $79,900 in brokerage commissions from portfolio transactions executed on behalf of the Fund.
 
 
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforwards and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2010
  $ (152,979 )
Expiring 2016
    (59,284,938 )
 
 
Total capital loss carryforward
  $ (59,437,917 )
 
 
Timing differences (post — October losses)
  $ (6,441,430 )
 
 
 
(1) Expiration occurs on December 31 of the year indicated.
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 652,173,589  
 
 
Gross unrealized gain
    18,465,192  
Gross unrealized loss
    (63,422,955 )
 
 
Net unrealized security loss
  $ (44,957,763 )
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes and the tax treatment of partnership investments as of the most recent year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
 
 14

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 17, 2009, the date that the financial statements were issued.
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    9,745,123     $ 73,784,864       7,131,945     $ 79,934,336  
Reinvestment of distributions
    —       —       1,380,456       10,477,658  
Shares redeemed
    (4,580,138 )     (33,155,703 )     (5,228,338 )     (53,298,013 )
 
 
      5,164,985       40,629,161       3,284,063       37,113,981  
 
 
Service Shares
                               
Shares sold
    20,230,489       151,730,280       8,227,960       78,337,546  
Reinvestment of distributions
    —       —       220,080       1,673,878  
Shares redeemed
    (1,373,995 )     (10,184,478 )     (37,799 )     (319,944 )
 
 
      18,856,494       141,545,802       8,410,241       79,691,480  
 
 
NET INCREASE
    24,021,479     $ 182,174,963       11,694,304     $ 116,805,461  
 
 
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Growth and Income Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertaking of the Investment Adviser to reimburse certain expenses of the Fund that exceed a specified level; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether the Fund had operated within its investment policies, and had complied with its investment limitations. The Trustees believed that the Fund had provided investment performance within a competitive
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
range for long-term investors, and that the Investment Adviser’s continued management would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a two-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
 
         
First $1 billion
    0.75 %
Next $1 billion
    0.68  
Next $3 billion
    0.65  
Next $3 billion
    0.64  
Over $8 billion
    0.63  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the Investment Adviser’s voluntary undertaking to limit “other expenses” to a certain amount. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of Institutional or Service Shares of the Fund, you incur ongoing costs, including management fees; distribution and service (12b-1) fees (with respect to Service Shares); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in Institutional and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account value
 		      Account Value
 		      Ended
 		 
Share Class     1/01/09       6/30/09       6/30/09*  
Institutional
                             
Actual
    $ 1,000       $ 979.90       $ 4.07  
Hypothetical 5% return
      1,000         1,020.67 +       4.16  
 
Service
                             
Actual
      1,000         978.70         5.30  
Hypothetical 5% return
      1,000         1,019.43 +       5.41  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 0.83% and 1.08% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
 20

 

  
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
John P. Coblentz, Jr.
Diana M. Daniels
Patrick T. Harker
James A. McNamara
Jessica Palmer
Alan A. Shuch
Richard P. Strubel 		  James A. McNamara, President
John M. Perlowski, Senior Vice
  President and Treasurer
Peter V. Bonanno, Secretary
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York
New York 10005
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
     
     
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Growth and Income Fund.
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITG_ISAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
Goldman Sachs
Capital Growth Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term growth of capital.
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Growth Portfolio Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Capital Growth Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of 21.62% and 21.65%, respectively. These returns compare to the 11.53% cumulative total return of the Fund’s benchmark, the Russell 1000 Growth Index (with dividends reinvested) (the “Russell Index”) during the same time period.
 
What economic and market factors most influenced the equity markets as a whole during the semi-annual period?
 
The equity markets faced two distinct periods during the six months ended June 30, 2009. The major U.S. equity markets opened 2009 with sharp losses, as the deepening credit crisis, disappointing corporate earnings, rising unemployment and a contracting economy put downward pressure on stocks. Weakness in the financial sector in the last months of 2008 spilled into 2009, as the nation’s largest banks experienced an extremely challenging period. Headlines continued to focus on the relative health of banks as well as on the likely political response to the ongoing recession. Equity market volatility declined from record levels, but remained above normal, and we saw more differentiation between stock returns than seen at the end of 2008. U.S. equity indices reached their lows for the semi-annual period in early March.
 
Then, as economic data seemed to indicate a deceleration in the pace of the economic slowdown, the U.S. equity markets jumped from their early-March low and rallied through most of the second quarter. Crude oil prices rose and the housing market showed some stability, with existing home sales rising from April to May. Volatility trended downward, with the June unemployment rate at 9.5% and the four-week moving average of jobless claims declining. Headlines continued to focus on the relative health of banks and the effects of government stimulus. Driven by a renewed tolerance for risk, investors propelled the U.S. equity markets to their fourth consecutive month of positive returns in June. Consumer confidence, however, reflected a more pessimistic view in June after improving in April and May. Driven by weak economic data around housing and unemployment that indicated the recovery may take longer and be less robust in terms of future growth than anticipated, the U.S. equity market rally stalled somewhat. Still, for the second quarter overall, the S&P 500 Index experienced its first positive return in the last seven quarters and its best quarterly return of the decade.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
Effective stock selection overall contributed most to the Fund’s performance during the six-month reporting period. Sector allocation also boosted the Fund’s results relative to the Russell Index, though to a more modest degree.
 
Which equity market sectors most significantly affected Fund performance?
 
Stock selection in the energy, technology, finance, utilities, consumer discretionary and health care sectors helped the Fund’s performance most. Having underweighted allocations to the cyclicals and consumer staples sectors, which lagged the Russell Index, and an overweighted exposure to the finance sector, which outpaced the Russell Index, also contributed positively to the Fund’s results. Detracting somewhat from the Fund’s performance was weak stock selection in the consumer staples sector and sector positioning in the consumer discretionary, technology and utilities sectors.
 
What were some of the Fund’s best-performing individual stocks?
 
The Fund benefited most relative to the Russell Index from positions in Apple, the consumer electronics and software manufacturing giant; CB Richard Ellis Group, the world’s leading global commercial real estate services firm; CME Group, the world’s largest future and options exchange; Weatherford International, an oilwell services company; and Suncor Energy, a Canadian oil refiner and natural gas exploration and production company.
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
In January, we increased the Fund’s position in Apple, seeking to take advantage of the sell-off related to concerns over CEO Steve Jobs’ health. Subsequently, the company reported a strong fiscal fourth quarter due to sales of its iPod and iPhone products. Apple’s shares continued to rise during the second quarter, after the company reported strong sales of its new iPhone 3GS. Despite the macroeconomic headwinds, Apple did not see a slowdown in demand for its iPhone products and downloadable applications and music. Shares of CB Richard Ellis Group rose, as the company gained market share and continued to work through the aggressive cost-cutting plan it had initially outlined in 2008. As evidenced by its first quarter earnings announcement, the company’s management team has a proven track record of effectively managing the business through cyclical downturns. CME Group, comprised of the Chicago Mercantile Exchange, Chicago Board of Trade and New York Mercantile Exchange, was a strong performer during the period primarily due to solid trading activity. Weatherford International benefited in large part from the rising price of oil during the semi-annual period. Suncor Energy saw its shares advance upon the announcement of its merger with Petro-Canada, which is expected to form the largest energy company in Canada.
 
Which individual stocks detracted significantly from the Fund’s performance during the semi-annual period?
 
Detracting most from the Fund’s results relative to its benchmark index were several positions in the health care industry, including Merck, Gilead Sciences and Johnson & Johnson. In our view, the weakness in these shares was more a statement on what investors were seeking as opposed to problems with the fundamental businesses. We believe that health care companies are viewed as more defensive businesses and are often used as safe havens, potentially offering a degree of downside protection, when the market is under pressure. As the economy showed signs of a muted recovery and investors became decidedly more optimistic as the semi-annual period progressed, we believe many investors exited positions in more defensive businesses in favor of companies with more operating or financial leverage.
 
Home improvement retailer Lowe’s detracted from performance during the semi-annual period, as a challenging housing market and slowing consumer spending weighed on the stock and the company posted a decline in first quarter net income. It is worth noting that, despite these headwinds, Lowe’s was able to gain market share during the reporting period.
 
Fortune Brands, which manufactures, produces and sells home and hardware products, spirits and wine and golf products, also detracted significantly from the Fund’s results. Fortune Brands’ shares fell after reporting disappointing earnings resulting from weakness in several product areas due to the consumer spending slowdown.
 
Did the Fund make any significant purchases or sales during the first half of the fiscal year?
 
We eliminated the Fund’s position in Fortune Brands by the end of the semi-annual period. We sold out of the Fund’s positions in both Genentech and Schering-Plough, after each company announced that it would be acquired. We believe that acquisitions demonstrate one method by which the valuation gap between a company’s stock prices and the intrinsic worth of the franchise can close quickly when other business buyers recognize the company’s long-term growth potential. Other holdings the Fund exited during the reporting period included Newell-Rubbermaid, MetroPCS Communications, Advance Auto Parts, Amazon.com, Best Buy, Precision Castparts and Chesapeake Energy. Several of these companies’ stocks had appreciated significantly and reached what we considered to be full valuation. We therefore sold the Fund’s positions and allocated proceeds to holdings that we believed had greater return potential.
 
During the first half of the fiscal year, the Fund purchased shares of Procter & Gamble, a dominant consumer brands manufacturer with what we consider to be significant pricing power and consistent growth. In our view, Procter & Gamble, due to its size, is able to maintain a diversified portfolio of products that includes both low-end value brands that perform well in a recessionary environment and higher quality, luxury brands that may benefit from economic recovery. The Fund also purchased Oracle, a software company that specializes in database management systems, during the reporting period. We believe Oracle has an attractive business model that focuses on recurring revenue through maintenance and support contracts. In the recent downturn, Oracle was able to take market share from its competitors due to its consistent cash flow generation. We believe the company should benefit from the long-term growth in enterprise spending on IT and software. Other Fund purchases during the reporting period included Morgan Stanley, McDonald’s, International Business Machines (IBM), C.R. Bard, Avon Products and People’s United Financial.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Were there any notable changes in the Fund’s weightings during the six-month period?
 
During the semi-annual period, the Fund’s exposure to consumer discretionary shifted from a modestly overweighted position to a sizably underweighted allocation compared to the Russell Index. The Fund’s overweighted exposure to energy increased further. We significantly increased the Fund’s exposure to financials and technology and materially decreased the Fund’s position in health care.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
At the end of June 2009, the Fund had overweighted positions relative to the Russell Index in the energy, finance, health care, technology and telecommunication services sectors. On the same date, the Fund had underweighted positions compared to the Russell Index in consumer discretionary, consumer staples, industrials, and to a lesser degree, producer goods and services, and was rather neutrally weighted to the Index in media.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
We continue to expect increased stock-level differentiation going forward, distinguishing higher quality companies with robust business models from those likely to remain challenged. As fundamental stock pickers, we welcome such volatility. In our view, this environment should allow businesses with competitive advantages to take market share from weaker competitors and benefit from improved pricing power. While we cannot predict the near term direction of the ongoing recession or the broader markets, we are encouraged by developments in the second quarter, such as the strengthened balance sheets of banks. As always, and ever more so in this uncertain environment, deep research resources, a forward-looking investment process and truly actively managed portfolios are keys, in our view, to both preserving capital and outperforming the market over the long term.
 
Portfolio Composition
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
Microsoft Corp. 
    5.4 %   Software & Services    
Cisco Systems, Inc. 
    3.8     Technology Hardware & Equipment    
Apple, Inc. 
    3.4     Technology Hardware & Equipment    
Schlumberger Ltd. 
    3.0     Energy    
The Procter & Gamble Co. 
    2.9     Household & Personal Products    
QUALCOMM, Inc. 
    2.8     Technology Hardware & Equipment    
American Tower Corp. Class A
    2.8     Telecommunication Services    
Baxter International, Inc. 
    2.8     Health Care Equipment & Services    
Thermo Fisher Scientific, Inc. 
    2.7     Pharmaceuticals, Biotechnology & Life Sciences    
Johnson & Johnson
    2.7     Pharmaceuticals, Biotechnology & Life Sciences    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 3.9% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 110.9%
Banks – 0.8%
152,300
  People’s United Financial, Inc.   $ 2,290,592  
 
 
Capital Goods – 2.9%
149,494
  ABB Ltd. ADR     2,359,015  
22,500
  Danaher Corp.     1,389,150  
57,530
  United Technologies Corp.     2,989,259  
22,610
  W.W. Grainger, Inc.     1,851,307  
             
          8,588,731  
 
 
Commercial & Professional Services – 1.7%
182,600
  Iron Mountain, Inc.*     5,249,750  
 
 
Consumer Durables & Apparel – 1.5%
165,000
  Coach, Inc.     4,435,200  
 
 
Consumer Services – 3.4%
161,831
  Marriott International, Inc. Class A(a)     3,571,610  
60,600
  McDonald’s Corp.     3,483,894  
138,800
  Starwood Hotels & Resorts Worldwide, Inc.     3,081,360  
             
          10,136,864  
 
 
Diversified Financials – 6.2%
20,900
  CME Group, Inc.     6,502,199  
164,600
  Morgan Stanley     4,692,746  
34,900
  Northern Trust Corp.     1,873,432  
306,730
  The Charles Schwab Corp.     5,380,044  
             
          18,448,421  
 
 
Energy – 7.7%
67,700
  Cameron International Corp.*     1,915,910  
61,800
  Halliburton Co.     1,279,260  
88,900
  Hess Corp.     4,778,375  
164,640
  Schlumberger Ltd.     8,908,670  
143,040
  Suncor Energy, Inc.     4,339,834  
97,100
  Weatherford International Ltd.*     1,899,276  
             
          23,121,325  
 
 
Food & Staples Retailing – 1.3%
85,500
  Costco Wholesale Corp.     3,907,350  
 
 
Food, Beverage & Tobacco – 5.5%
99,800
  Kraft Foods, Inc. Class A     2,528,932  
144,300
  PepsiCo, Inc.     7,930,728  
121,900
  The Coca-Cola Co.     5,849,981  
             
          16,309,641  
 
 
Health Care Equipment & Services – 8.4%
156,600
  Baxter International, Inc.     8,293,536  
42,900
  C. R. Bard, Inc.     3,193,905  
54,800
  Express Scripts, Inc.*     3,767,500  
12,900
  Laboratory Corp. of America Holdings*     874,491  
126,900
  St. Jude Medical, Inc.*     5,215,590  
91,000
  Zimmer Holdings, Inc.*     3,876,600  
             
          25,221,622  
 
 
Household & Personal Products – 3.9%
118,900
  Avon Products, Inc.     3,065,242  
167,800
  The Procter & Gamble Co.     8,574,580  
             
          11,639,822  
 
 
Materials – 2.4%
55,500
  Monsanto Co.     4,125,870  
44,200
  Praxair, Inc.     3,141,294  
             
          7,267,164  
 
 
Media – 1.5%
151,000
  Comcast Corp. Class A     2,187,990  
104,974
  Viacom, Inc. Class B*     2,382,910  
             
          4,570,900  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 12.8%
235,634
  Amylin Pharmaceuticals, Inc.*(a)     3,181,059  
94,928
  Charles River Laboratories International, Inc.*(a)     3,203,820  
131,053
  Gilead Sciences, Inc.*     6,138,522  
140,900
  Johnson & Johnson     8,003,120  
170,000
  Merck & Co., Inc.     4,753,200  
39,900
  Shire PLC ADR     1,655,052  
62,600
  Teva Pharmaceutical Industries Ltd. ADR     3,088,684  
200,400
  Thermo Fisher Scientific, Inc.*     8,170,308  
             
          38,193,765  
 
 
Real Estate – 2.0%
635,500
  CB Richard Ellis Group, Inc. Class A*     5,948,280  
 
 
Retailing – 4.1%
266,040
  Lowe’s Companies, Inc.     5,163,836  
181,300
  Target Corp.     7,155,911  
             
          12,319,747  
 
 
Semiconductors & Semiconductor Equipment – 2.4%
133,500
  Broadcom Corp. Class A*     3,309,465  
160,179
  Linear Technology Corp.     3,740,180  
             
          7,049,645  
 
 
Software & Services – 22.3%
502,100
  Activision Blizzard, Inc.*     6,341,523  
160,540
  Cognizant Technology Solutions Corp. Class A*     4,286,418  
181,025
  Electronic Arts, Inc.*     3,931,863  
89,600
  Equinix, Inc.*(a)     6,517,504  
86,900
  Global Payments, Inc.     3,255,274  
12,254
  Google, Inc. Class A*     5,166,164  
10,100
  MasterCard, Inc. Class A     1,689,831  
681,268
  Microsoft Corp.     16,193,740  
364,200
  Oracle Corp.     7,801,164  
90,900
  Visa, Inc. Class A     5,659,434  
341,791
  Western Union Co.     5,605,373  
             
          66,448,288  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Technology Hardware & Equipment – 15.7%
128,700
  Amphenol Corp. Class A   $ 4,072,068  
71,000
  Apple, Inc.*(a)     10,112,530  
606,790
  Cisco Systems, Inc.*     11,310,566  
424,800
  Dell, Inc.*     5,832,504  
31,100
  International Business Machines Corp.     3,247,462  
185,291
  QUALCOMM, Inc.     8,375,153  
53,800
  Research In Motion Ltd.*     3,822,490  
             
          46,772,773  
 
 
Telecommunication Services – 3.7%
264,590
  American Tower Corp. Class A*     8,342,523  
114,850
  Crown Castle International Corp.*     2,758,697  
             
          11,101,220  
 
 
Transportation – 0.7%
27,100
  Burlington Northern Santa Fe Corp.     1,992,934  
 
 
TOTAL COMMON STOCKS
(Cost $362,279,998)
  $ 331,014,034  
 
 
 
                 
Shares   Rate     Value  
 
Investment Company(b) – 1.7%
JPMorgan U.S. Government Money Market Fund – Capital Shares
 5,092,402
    0.236 %   $ 5,092,402  
(Cost $5,092,402)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES LENDING REINVESTMENT VEHICLE
(Cost $367,372,400)
  $ 336,106,436  
 
 
                 
                 
Securities Lending Reinvestment Vehicle(b)(c) – 3.9%
Boston Global Investment Trust – Enhanced Portfolio
11,648,400
    0.267 %     11,613,455  
(Cost $11,597,513)
       
 
 
TOTAL INVESTMENTS – 116.5%
(Cost $378,969,913)
  $ 347,719,891  
 
 
LIABILITIES IN EXCESS OF OTHER ASSETS – (16.5)%
    (49,349,043)  
 
 
NET ASSETS – 100.0%   $ 298,370,848  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(c) Represents an affiliated issuer.
 
Investment Abbreviation:
ADR—American Depositary Receipt
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
Investments in securities of unaffiliated issuers, at value (identified cost $367,372,400)(a)
  $ 336,106,436  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $11,597,513)
    11,613,455  
Receivables:
       
Investment securities sold
    714,643  
Dividends and interest
    230,163  
Fund shares sold
    130,727  
Securities lending income
    481  
Other assets
    1,305  
 
 
Total assets
    348,797,210  
 
 
 
Liabilities:
Payables:
       
Investment securities purchased
    38,146,516  
Payable upon return of securities loaned
    11,716,244  
Amounts owed to affiliates
    228,425  
Fund shares redeemed
    227,540  
Accrued expenses
    107,637  
 
 
Total liabilities
    50,426,362  
 
 
 
Net Assets:
Paid-in capital
    547,055,457  
Accumulated undistributed net investment income
    552,309  
Accumulated net realized loss from investment transactions
    (217,986,896 )
Net unrealized loss on investments
    (31,250,022 )
 
 
NET ASSETS
  $ 298,370,848  
 
 
Net Assets:
       
Institutional
  $ 109,011,899  
Service
    189,358,949  
 
 
Total Net Assets
  $ 298,370,848  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    12,103,631  
Service
    21,062,461  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 9.01  
Service
    8.99  
 
 
 
(a) Includes loaned securities having a market value of $11,485,606.
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Dividends(a)
  $ 1,609,894  
Securities lending income — affiliated issuer
    44,550  
 
 
Total investment income
    1,654,444  
 
 
 
Expenses:
Management fees
    994,085  
Distribution and Service fees — Service Shares
    210,799  
Professional fees
    44,622  
Printing fees
    38,257  
Transfer Agent fees(b)
    26,507  
Custody and accounting fees
    18,545  
Trustee fees
    8,460  
Other
    13,764  
 
 
Total expenses
    1,355,039  
 
 
Less — expense reductions
    (1,699 )
 
 
Net expenses
    1,353,340  
 
 
NET INVESTMENT INCOME
    301,104  
 
 
 
Realized and unrealized gain (loss) from investment transactions:
Net realized gain (loss) from:
       
Investment transactions — unaffiliated issuers (including commissions recaptured of $23,095)
    (33,752,735 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    91,037  
Net change in unrealized gain on:
       
Investments — unaffiliated issuers
    86,563,982  
Securities lending reinvestment vehicle — affiliated issuer
    14,962  
 
 
Net realized and unrealized gain from investment transactions
    52,917,246  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 53,218,350  
 
 
 
(a) Foreign taxes withheld on dividends were $2,147.
 
(b) Institutional and Service Shares had Transfer Agent fees of $9,644 and $16,863, respectively.
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 301,104     $ 156,317  
Net realized loss from investment transactions
    (33,661,698 )     (30,858,930 )
Net change in unrealized gain (loss) on investments
    86,578,944       (167,203,794 )
 
 
Net increase (decrease) in net assets resulting from operations
    53,218,350       (197,906,407 )
 
 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (178,949 )
 
 
 
From share transactions:
Proceeds from sales of shares
    10,333,163       18,849,778  
Reinvestments of distributions
    —       178,949  
Cost of shares redeemed
    (28,328,565 )     (73,313,122 )
 
 
Net decrease in net assets resulting from share transactions
    (17,995,402 )     (54,284,395 )
 
 
TOTAL INCREASE (DECREASE)
    35,222,948       (252,369,751 )
 
 
 
Net assets:
Beginning of period
    263,147,900       515,517,651  
 
 
End of period
  $ 298,370,848     $ 263,147,900  
 
 
Accumulated undistributed net investment income
  $ 552,309     $ 251,205  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                         
          Income (loss) from
 		                                        Ratios assuming no
 		       
          investment operations     Distributions
 		                                  expense reductions        
                Net
 		          to
 		    Net
 		          Net
 		    Ratio of
 		    Ratio of
 		    Ratio of
 		    Ratio of
 		       
    Net asset
 		    Net
 		    realized
 		          shareholders
 		    asset
 		          assets,
 		    net
 		    net investment
 		    total
 		    net investment
 		       
    value,
 		    investment
 		    and
 		    Total from
 		    from net
 		    value,
 		          end of
 		    expenses
 		    income (loss)
 		    expenses
 		    income (loss)
 		    Portfolio
 		 
    beginning
 		    income
 		    unrealized
 		    investment
 		    investment
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    to average
 		    turnover
 		 
Year - Share Class   of period     (loss)(a)     gain (loss)     operations     income     period     return(b)     (in 000s)     net assets     net assets     net assets     net assets     rate  
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                         
2009 - Institutional
  $ 7.40     $ 0.02     $ 1.59     $ 1.61     $ —     $ 9.01       21.62 %   $ 109,012       0.86 %(c)     0.39 %(c)     0.86 %(c)     0.39 %(c)     34 %
2009 - Service
    7.39       0.01       1.59       1.60       —       8.99       21.65       189,359       1.11 (c)     0.14 (c)     1.11 (c)     0.14 (c)     34  
                                                                                                         

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                         
2008 - Institutional
    12.73       0.02       (5.34 )     (5.32 )     (0.01 )     7.40       (41.67 )     95,218       0.81       0.20       0.81       0.20       44  
2008 - Service
    12.73       (0.01 )     (5.33 )     (5.34 )     —       7.39       (41.86 )     167,930       1.06       (0.05 )     1.06       (0.05 )     44  
 
 
2007 - Institutional
    11.58       0.02 (d)     1.15       1.17       (0.02 )     12.73       10.13       172,418       0.86 (e)     0.18 (d)(e)     0.86 (e)     0.18 (d)(e)     53  
2007 - Service
    11.58       0.01 (d)     1.15       1.16       (0.01 )     12.73       10.01       343,100       0.96 (e)     0.08 (d)(e)     0.11 (e)     (0.07 )(d)(e)     53  
 
 
2006 - Institutional
    10.68       0.01       0.90       0.91       (0.01 )     11.58       8.56       165,877       0.84       0.12       0.85       0.11       70  
2006 - Service (commenced January 9, 2006)
    11.03       — (f)     0.55       0.55       — (f)     11.58       5.01       386,526       0.94 (c)     0.03 (c)     1.10 (c)     (0.13 )(c)     70  
 
 
2005 - Institutional
    10.39       0.02       0.29       0.31       (0.02 )     10.68       2.94       168,054       0.90       0.15       0.90       0.15       35  
 
 
2004 - Institutional
    9.59       0.07       0.80       0.87       (0.07 )     10.39       9.09       186,688       0.89       0.69       0.89       0.69       45  
 
 
 
(a) Calculated based on the average shares outstanding methodology.
(b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(c) Annualized.
(d) Reflects income recognized from a special dividend which amounted to $0.01 per share and 0.09% of average net assets.
(e) Includes non-recurring expense for a special shareholder meeting which amounted to approximately 0.02% of average net assets.
(f) Amount is less than $0.005 per share.
 
The accompanying notes are an integral part of these financial statements.

10

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Capital Growth Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable,
 
 
11 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Commission Recapture — The Fund may direct portfolio trades, subject to obtaining best execution, to various brokers who have agreed to rebate a portion of the commissions generated. Such rebates are made directly to the Fund as cash payments and are included in net realized gain (loss) on investments in the Statement of Operations.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
For the six months ended June 30, 2009, contractual management fees with GSAM were at the following rates:
 
                                         
Contractual Management Rate  
Up to $1 billion   Next $1 billion     Next $3 billion     Next $3 billion     Over $8 billion     Effective Rate  
   
0.75%
    0.68 %     0.65 %     0.64 %     0.63 %     0.75 %
 
 
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares.
 
 
 12

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
 
3. AGREEMENTS (continued)
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.114% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAM did not make any reimbursements to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $1,700.
As of June 30, 2009, amounts owed to affiliates were approximately $184,500, $39,000 and $4,900 for management, distribution and service and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
 
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
4. FAIR VALUE OF INVESTMENTS (continued)
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 331,014,034     $ —     $ —  
Short-term Investments
    5,092,402       11,613,455       —  
 
 
Total
  $ 336,106,436     $ 11,613,455     $ —  
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio of Boston Global Investment Trust (“Enhanced Portfolio”), a Delaware statutory trust. The Enhanced Portfolio, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio. The Enhanced Portfolio invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $19,690, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $4,910 in fees as securities lending agent. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $2,006,458.
The following table provides information about Fund’s investment in the Enhanced Portfolio for the six months ended June 30, 2009 (in thousands):
 
                                 
Number of
 		                       
Shares Held
 		              Number of Shares
 		    Value at
 		 
Beginning of Period   Shares Bought     Shares Sold     Held End of Period     End of Period  
   
8,767
    72,053       (69,172 )     11,648     $ 11,613  
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $108,125,862 and $89,567,058, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $24,800 in brokerage commissions from portfolio transactions executed on behalf of the Fund.
 
 
 14

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforwards and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2009
  $ (92,315,074 )
Expiring 2010
    (59,269,469 )
Expiring 2011
    (1,064,803 )
Expiring 2016
    (23,473,891 )
 
 
Total capital loss carryforward
  $ (176,123,237 )
 
 
Timing differences (post — October losses)
  $ (6,882,991 )
 
 
(1) Expiration occurs on December 31 of the year indicated. Due to fund mergers, utilization of these losses may be substantially limited under the Code.
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 380,198,912  
 
 
Gross unrealized gain
    12,053,376  
Gross unrealized loss
    (44,532,397 )
 
 
Net unrealized security loss
  $ (32,479,021 )
 
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes and differences related to the tax treatment of partnership investments as of the most recent fiscal year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
9. OTHER MATTERS (continued)
 
about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 17, 2009, the date that the financial statements were issued.
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    635,854     $ 5,049,142       1,326,309     $ 14,164,973  
Reinvestment of distributions
    —       —       25,195       178,949  
Shares redeemed
    (1,403,518 )     (10,741,007 )     (2,027,851 )     (21,687,907 )
 
 
      (767,664 )     (5,691,865 )     (676,347 )     (7,343,985 )
 
 
Service Shares
                               
Shares sold
    660,877       5,284,021       532,320       4,684,805  
Reinvestment of distributions
    —       —       —       —  
Shares redeemed
    (2,312,976 )     (17,587,558 )     (4,774,952 )     (51,625,215 )
 
 
      (1,652,099 )     (12,303,537 )     (4,242,632 )     (46,940,410 )
 
 
NET DECREASE
    (2,419,763 )   $ (17,995,402 )     (4,918,979 )   $ (54,284,395 )
 
 
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
 
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Capital Growth Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertaking of the Investment Adviser to reimburse certain expenses of the Fund that exceed a specified level; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether the Fund had operated within its investment policies, and had complied with its investment limitations. The Trustees noted that the Fund’s performance challenges were attributable in large part to investments in certain economic sectors that performed poorly in 2008. The Trustees also noted that the Investment Adviser had taken a number of steps intended to improve Fund performance, including making changes to the leadership and personnel on the portfolio management team and to the investment process used in selecting investments for the Fund
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
(which among other things included renewed emphasis on team-based research and accountability for the implementation of investment ideas). The Trustees discussed these measures at length with senior management of the Investment Adviser and concluded that the Investment Adviser’s continued management likely would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a three-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
 
         
First $1 billion
    0.75 %
Next $1 billion
    0.68  
Next $3 billion
    0.65  
Next $3 billion
    0.64  
Over $8 billion
    0.63  
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the Investment Adviser’s voluntary undertaking to limit “other expenses” to a certain amount. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
 20

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of Institutional or Service Shares of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (with respect to Service Shares) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Institutional Shares and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account value
 		      Account Value
 		      Ended
 		 
Share Class     1/1/09       6/30/09       6/30/09*  
Institutional
                             
Actual
    $ 1,000       $ 1,216.20       $ 4.73  
Hypothetical 5% return
      1,000         1,020.53 +       4.31  
 
Service
                             
Actual
      1,000         1,216.50         6.10  
Hypothetical 5% return
      1,000         1,019.29 +       5.56  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 0.86% and 1.11% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
21 

 

 
     
     
TRUSTEES
Ashok N. Bakhru, Chairman
John P. Coblentz, Jr.
Diana M. Daniels
Patrick T. Harker
James A. McNamara
Jessica Palmer
Alan A. Shuch
Richard P. Strubel 		  OFFICERS
James A. McNamara, President
John M. Perlowski, Senior Vice
  President and Treasurer
Peter V. Bonanno, Secretary
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York, New York 10005
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
     
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Capital Growth Fund.
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
     
VITCGSAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
Goldman Sachs
Mid Cap Value Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
(GOLDMAN SACHS LOGO)

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term capital appreciation.
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Value Portfolio Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Mid Cap Value Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of 5.08% and 4.95%, respectively. These returns compare to the 3.19% cumulative total return of the Fund’s benchmark, the Russell Midcap Value Index (with dividends reinvested) (the “Russell Index”) during the same time period.
 
What economic and market factors most influenced the equity markets as a whole during the semi-annual period?
 
The equity markets faced two distinct periods during the six months ended June 30, 2009. The major U.S. equity markets opened 2009 with sharp losses, as the deepening credit crisis, disappointing corporate earnings, rising unemployment and a contracting economy put downward pressure on stocks. Weakness in the financial sector in the last months of 2008 spilled into 2009, as the nation’s largest banks experienced an extremely challenging period. Headlines continued to focus on the relative health of banks as well as on the likely political response to the ongoing recession. Equity market volatility declined from record levels, but remained above normal, and we saw more differentiation between stock returns than seen at the end of 2008. U.S. equity indices reached their lows for the semi-annual period in early March.
 
Then, as economic data seemed to indicate a deceleration in the pace of the economic slowdown, the U.S. equity markets jumped from their early-March low and rallied through most of the second quarter. Crude oil prices rose and the housing market showed some stability, with existing home sales rising from April to May. Volatility trended downward, with the June unemployment rate at 9.5% and the four-week moving average of jobless claims declining. Headlines continued to focus on the relative health of banks and the effects of government stimulus. Driven by a renewed tolerance for risk, investors propelled the U.S. equity markets to their fourth consecutive month of positive returns in June. Consumer confidence, however, reflected a more pessimistic view in June after improving in April and May. Driven by weak economic data around housing and unemployment that indicated the recovery may take longer and be less robust in terms of future growth than anticipated, the U.S. equity market rally stalled somewhat. Still, for the second quarter overall, the S&P 500 Index experienced its first positive return in the last seven quarters and its best quarterly return of the decade.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
Effective stock selection and sector allocation overall contributed to the Fund’s performance during the six-month reporting period.
 
Which equity market sectors most significantly affected Fund performance?
 
An underweighted allocation to real estate investment trusts (REITs), which significantly underperformed the Russell Index, and overweighted positions in the energy and health care sectors, which substantially outpaced the Russell Index, helped the Fund’s performance most. Stock selection in the basic materials, energy, utilities and services sectors also contributed positively to the Fund’s results. Detracting somewhat from the Fund’s performance was weak stock selection in the REITs, consumer staples, insurance and health care sectors.
 
What were some of the Fund’s best-performing individual stocks?
 
The Fund benefited most relative to the Russell Index from overweighted positions in oil and natural gas producer Range Resources, interactive entertainment software publisher Activision Blizzard, telecommunications giant Sprint Nextel, and industrial chemicals and gas manufacturer Air Products & Chemicals.
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Range Resources, a low cost, high margin natural gas producer, was a top contributor, as the company reported incremental positive exploration activity. The Fund also benefited from its holdings in Activision Blizzard, as the company successfully gained market share amidst relatively low competition. Sprint Nextel was a top performer, as ongoing signs of progress in its turnaround, including improved fundamentals, bolstered its share price. Its shares also were buoyed by the company’s release of a competitive prepaid wireless plan and new handsets. Shares of Air Products & Chemicals gained ground through a combination of long-term contracts, stable pricing and high barriers to entry.
 
Which individual stocks detracted significantly from the Fund’s performance during the semi-annual period?
 
Detracting most from the Fund’s results relative to its benchmark index were overweighted positions in insurance underwriter W.R. Berkley, tax services provider H&R Block, and integrated electric power companies Entergy and FirstEnergy.
 
Shares of W.R. Berkley declined after industry pricing trends suggested a later-than-expected pricing cycle. H&R Block, the biggest U.S. tax preparer, was challenged, as consumer volume was lighter than expected. Shares of Entergy and FirstEnergy declined due primarily to pricing pressures amidst broad utility sector weakness, despite sizeable free cash flows and strong balance sheets.
 
Did the Fund make any significant purchases or sales during the first half of the fiscal year?
 
During the period, we selectively added to a variety of oil services names that we believe are well-positioned to benefit from a recovery in the sector. We were focused on companies with a history of strong operational performance, experienced management and high value-added product lines as well as companies with positive secular trends. In our view, Whiting Petroleum and Smith International met these criteria. We also increased the Fund’s position in J.C. Penney, a company that has been expanding its private label business and should, in our view, have the opportunity for margin improvement in an economic recovery. Within financials, we sought to take advantage of the sector’s relative weakness by adding to the Fund’s position in Invesco.
 
In the health care sector, the Fund profited when we reduced its position in Laboratory Corp. of America. In utilities, we reduced the Fund’s investment in PG&E. We became more aggressive in the financials sector during the period, which led us to eliminate the Fund’s position in People’s United Financial, a highly defensive company with a strong capital base that we believe lacked a near-term catalyst. We also sold one of the Fund’s key financial holdings, Franklin Resources, as the stock appreciated beyond the mid-cap size characteristics of the Fund’s portfolio criteria.
 
Were there any notable changes in the Fund’s weightings during the six-month period?
 
During the semi-annual period, we decreased the Fund’s exposure to health care, moving from an overweighted to a neutral position compared to the Russell Index. The Fund’s allocation to utilities shifted from a modestly overweighted position to a slightly underweighted position, and its allocation to consumer cyclicals went from an underweighted exposure at the start of the reporting period to an equally-weighted position relative to the Russell Index by the end of June 2009.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
At the end of June 2009, the Fund had overweighted positions relative to the Russell Index in the consumer discretionary sector. On the same date, the Fund had underweighted positions compared to the Russell Index in REITs, industrials, basic materials and consumer staples and was rather neutrally weighted to the Index in financials, energy, health care, telecommunication services, technology and utilities.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
We continue to expect increased stock-level differentiation going forward, distinguishing higher quality companies with robust business models from those likely to remain challenged. As fundamental stock pickers, we welcome such volatility. In our view, this environment should allow businesses with competitive advantages to take market share from weaker competitors and benefit from improved pricing power. While we cannot predict the near term direction of the ongoing recession or the broader markets, we are encouraged by developments in the second quarter, such as the strengthened balance sheets of banks. As always, and ever more so in this uncertain environment, deep research resources, a forward-looking investment process and truly actively managed portfolios are keys, in our view, to both preserving capital and outperforming the market over the long term.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Portfolio Composition
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
Invesco Ltd. 
    2.4 %   Diversified Financials    
PPL Corp. 
    2.4     Utilities    
Newfield Exploration Co. 
    2.2     Energy    
Range Resources Corp. 
    2.1     Energy    
W. R. Berkley Corp. 
    2.0     Insurance    
Entergy Corp. 
    2.0     Utilities    
Republic Services, Inc. 
    2.0     Commercial & Professional Services    
Activision Blizzard, Inc. 
    1.9     Software & Services    
H&R Block, Inc. 
    1.8     Consumer Services    
DISH Network Corp. Class A
    1.7     Media    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 7.3% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 98.3%
Automobiles & Components – 0.8%
321,759
  Johnson Controls, Inc.   $ 6,988,605  
 
 
Banks – 3.0%
253,200
  Fifth Third Bancorp     1,797,720  
585,700
  KeyCorp     3,069,068  
47,430
  M&T Bank Corp.(a)     2,415,610  
538,742
  New York Community Bancorp, Inc.(a)     5,759,152  
1,508,700
  Regions Financial Corp.     6,095,148  
246,400
  SunTrust Banks, Inc.     4,053,280  
693,200
  Synovus Financial Corp.(a)     2,072,668  
             
          25,262,646  
 
 
Capital Goods – 4.3%
62,799
  Alliant Techsystems, Inc.*     5,172,125  
171,294
  Cooper Industries Ltd. Class A     5,318,679  
143,000
  Cummins, Inc.     5,035,030  
184,081
  Eaton Corp.     8,211,853  
101,971
  Lennox International, Inc.     3,274,289  
121,354
  Parker Hannifin Corp.     5,213,368  
101,200
  Rockwell Automation, Inc.     3,250,544  
             
          35,475,888  
 
 
Commercial & Professional Services – 3.2%
371,221
  Iron Mountain, Inc.*(a)     10,672,604  
665,461
  Republic Services, Inc.     16,243,903  
             
          26,916,507  
 
 
Consumer Durables & Apparel – 3.4%
172,606
  Fortune Brands, Inc.     5,996,332  
67,900
  M.D.C. Holdings, Inc.(a)     2,044,469  
63,800
  Mohawk Industries, Inc.*     2,276,384  
401,600
  Newell Rubbermaid, Inc.     4,180,656  
18,900
  NVR, Inc.*     9,495,171  
138,800
  Snap-On, Inc.     3,989,112  
             
          27,982,124  
 
 
Consumer Services – 2.6%
885,160
  H&R Block, Inc.     15,251,307  
294,300
  Starwood Hotels & Resorts Worldwide, Inc.     6,533,460  
             
          21,784,767  
 
 
Diversified Financials – 5.9%
407,400
  Discover Financial Services     4,183,998  
1,139,500
  Invesco Ltd.     20,305,890  
660,200
  Janus Capital Group, Inc.     7,526,280  
88,226
  Lazard Ltd. Class A     2,375,044  
61,477
  Northern Trust Corp.     3,300,085  
64,500
  Raymond James Financial, Inc.     1,110,045  
611,230
  SLM Corp.*(a)     6,277,332  
195,100
  The NASDAQ OMX Group, Inc.*     4,157,581  
             
          49,236,255  
 
 
Energy – 10.4%
209,900
  Dril-Quip, Inc.*     7,997,190  
567,228
  Newfield Exploration Co.*     18,531,339  
217,000
  Noble Energy, Inc.     12,796,490  
 
 
212,000
  Pride International, Inc.*     5,312,720  
420,611
  Range Resources Corp.(a)     17,417,502  
331,170
  Smith International, Inc.     8,527,627  
397,500
  Weatherford International Ltd.*     7,775,100  
238,700
  Whiting Petroleum Corp.*(a)     8,392,692  
             
          86,750,660  
 
 
Food & Staples Retailing – 0.5%
200,100
  Safeway, Inc.     4,076,037  
 
 
Food, Beverage & Tobacco – 3.0%
78,778
  Campbell Soup Co.     2,317,649  
212,882
  Coca-Cola Enterprises, Inc.     3,544,485  
341,482
  ConAgra Foods, Inc.     6,508,647  
114,800
  H. J. Heinz Co.     4,098,360  
80,300
  Molson Coors Brewing Co. Class B     3,399,099  
102,200
  The J. M. Smucker Co.     4,973,052  
             
          24,841,292  
 
 
Health Care Equipment & Services – 4.9%
67,700
  Becton, Dickinson and Co.     4,827,687  
54,700
  C. R. Bard, Inc.     4,072,415  
138,270
  Edwards Lifesciences Corp.*     9,406,508  
290,500
  Kinetic Concepts, Inc.*(a)     7,916,125  
50,546
  Laboratory Corp. of America Holdings*     3,426,513  
224,200
  WellPoint, Inc.*     11,409,538  
             
          41,058,786  
 
 
Household & Personal Products – 1.6%
31,505
  Alberto-Culver Co.     801,172  
40,000
  Energizer Holdings, Inc.*     2,089,600  
189,639
  The Clorox Co.(a)     10,587,546  
             
          13,478,318  
 
 
Insurance – 12.4%
154,594
  Arch Capital Group Ltd.*     9,056,116  
162,089
  Everest Re Group Ltd.     11,600,710  
242,500
  Hartford Financial Services Group, Inc.     2,878,475  
372,100
  Lincoln National Corp.     6,403,841  
559,600
  Marsh & McLennan Companies, Inc.     11,264,748  
72,611
  PartnerRe Ltd.     4,716,084  
323,300
  Principal Financial Group, Inc.     6,090,972  
765,100
  The Progressive Corp.*     11,560,661  
106,005
  Torchmark Corp.     3,926,425  
401,903
  Unum Group     6,374,182  
789,899
  W. R. Berkley Corp.     16,959,132  
350,852
  Willis Group Holdings Ltd.     9,027,422  
314,000
  XL Capital Ltd. Class A     3,598,440  
             
          103,457,208  
 
 
             
 
 
 4
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Materials – 6.2%
202,800
  Airgas, Inc.   $ 8,219,484  
276,300
  Celanese Corp. Class A     6,562,125  
321,500
  Intrepid Potash, Inc.*(a)     9,027,720  
594,196
  Steel Dynamics, Inc.     8,752,507  
186,100
  Terra Industries, Inc.     4,507,342  
187,600
  Vulcan Materials Co.(a)     8,085,560  
168,600
  Walter Energy, Inc.     6,110,064  
             
          51,264,802  
 
 
Media – 2.9%
868,200
  DISH Network Corp. Class A*     14,073,522  
429,400
  Viacom, Inc. Class B*     9,747,380  
             
          23,820,902  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 0.5%
85,400
  Biogen Idec, Inc.*     3,855,810  
 
 
Real Estate Investment Trust – 4.4%
172,118
  Alexandria Real Estate Equities, Inc.(a)     6,160,103  
178,602
  Boston Properties, Inc.     8,519,315  
541,600
  Douglas Emmett, Inc.     4,868,984  
65,000
  Essex Property Trust, Inc.(a)     4,044,950  
82,800
  Federal Realty Investment Trust(a)     4,265,856  
123,606
  Health Care REIT, Inc.(a)     4,214,965  
569,996
  Host Hotels & Resorts, Inc.     4,782,267  
             
          36,856,440  
 
 
Retailing – 4.8%
19,734
  AutoZone, Inc.*     2,982,005  
301,601
  J.C. Penney Co., Inc.     8,658,964  
149,900
  Kohl’s Corp.*     6,408,225  
179,683
  Ross Stores, Inc.     6,935,764  
359,400
  The TJX Companies, Inc.     11,306,724  
170,800
  Urban Outfitters, Inc.*     3,564,596  
             
          39,856,278  
 
 
Semiconductors & Semiconductor Equipment – 1.2%
132,300
  KLA-Tencor Corp.(a)     3,340,575  
139,600
  Linear Technology Corp.     3,259,660  
439,400
  Teradyne, Inc.*     3,014,284  
             
          9,614,519  
 
 
Software & Services – 4.5%
1,283,691
  Activision Blizzard, Inc.*     16,213,017  
90,600
  Affiliated Computer Services, Inc. Class A*     4,024,452  
194,197
  CA, Inc.     3,384,854  
125,700
  Hewitt Associates, Inc. Class A*     3,743,346  
310,000
  IAC/InterActiveCorp*     4,975,500  
408,200
  Parametric Technology Corp.*     4,771,858  
             
          37,113,027  
 
 
Technology Hardware & Equipment – 2.4%
347,469
  Amphenol Corp. Class A     10,993,919  
327,800
  CommScope, Inc.*     8,608,028  
             
          19,601,947  
 
 
Telecommunication Services – 2.0%
165,882
  Embarq Corp.     6,976,997  
1,995,100
  Sprint Nextel Corp.*     9,596,431  
             
          16,573,428  
 
 
Transportation – 0.9%
108,639
  Landstar System, Inc.     3,901,227  
103,400
  Norfolk Southern Corp.     3,895,078  
             
          7,796,305  
 
 
Utilities – 12.5%
458,790
  American Electric Power Co., Inc.     13,254,443  
447,895
  CMS Energy Corp.(a)     5,410,572  
434,699
  DPL, Inc.     10,071,976  
419,433
  Edison International     13,195,362  
214,671
  Entergy Corp.     16,641,296  
224,955
  EQT Corp.     7,853,179  
189,862
  FirstEnergy Corp.     7,357,152  
217,200
  NV Energy, Inc.     2,343,588  
73,904
  PG&E Corp.     2,840,870  
615,401
  PPL Corp.     20,283,617  
54,722
  Sempra Energy     2,715,853  
132,600
  Xcel Energy, Inc.     2,441,166  
             
          104,409,074  
 
 
TOTAL COMMON STOCKS
(Cost $892,656,994)
  $ 818,071,625  
 
 
Shares   Rate   Value  
 
Investment Company(b)  – 0.7%
JPMorgan U.S. Government Money Market Fund —
Capital Shares
6,179,631
  0.236%   $ 6,179,631  
(Cost $6,179,631)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES
LENDING REINVESTMENT VEHICLE
(Cost $898,836,625)
  $ 824,251,256  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Rate   Value  
 
Securities Lending Reinvestment Vehicle(b)(c) – 7.3%
Boston Global Investment Trust — Enhanced Portfolio
61,261,575
  0.267%   $ 61,077,790  
(Cost $60,845,006)
       
 
 
TOTAL INVESTMENTS – 106.3%
(Cost $959,681,631)
  $ 885,329,046  
 
 
LIABILITIES IN EXCESS OF
OTHER ASSETS – (6.3)%
    (52,575,151 )
 
 
NET ASSETS — 100.0%   $ 832,753,895  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
(b) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
(c) Represents an affiliated issuer.
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
 
         
Assets:
Investments in securities of unaffiliated issuers, at value (identified cost $898,836,625)(a)
  $ 824,251,256  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $60,845,006)
    61,077,790  
Receivables:
       
Investment securities sold
    31,105,887  
Dividends and interest
    1,475,104  
Fund shares sold
    645,224  
Securities lending income
    25,121  
Other assets
    3,441  
 
 
Total assets
    918,583,823  
 
 
 
Liabilities:
Payables:
       
Payable upon return of securities loaned
    61,468,922  
Investment securities purchased
    22,934,447  
Fund shares redeemed
    679,605  
Amounts owed to affiliates
    590,651  
Accrued expenses
    156,303  
 
 
Total liabilities
    85,829,928  
 
 
 
Net Assets:
Paid-in capital
    1,283,377,828  
Accumulated undistributed net investment income
    11,135,720  
Accumulated net realized loss from investment transactions
    (387,407,068 )
Net unrealized loss on investments
    (74,352,585 )
 
 
NET ASSETS
  $ 832,753,895  
 
 
Net Assets:
       
Institutional
  $ 726,755,733  
Service
    105,998,162  
 
 
Total Net Assets
  $ 832,753,895  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    79,867,915  
Service
    11,638,093  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 9.10  
Service
    9.11  
 
 
 
(a) Includes loaned securities having a market value of $59,513,804.
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
 
         
Investment income:
Dividends
  $ 9,045,291  
Securities lending income — affiliated issuer
    241,776  
 
 
Total investment income
    9,287,067  
 
 
 
Expenses:
Management fees
    3,157,139  
Distribution and Service fees — Service Shares
    126,066  
Transfer Agent fees(a)
    78,922  
Printing fees
    65,354  
Professional fees
    46,183  
Custody and accounting fees
    27,846  
Trustee fees
    8,460  
Other
    32,264  
 
 
Total expenses
    3,542,234  
 
 
Less — expense reductions
    (5,918 )
 
 
Net expenses
    3,536,316  
 
 
NET INVESTMENT INCOME
    5,750,751  
 
 
 
Realized and unrealized gain (loss) from investment transactions:
Net realized gain (loss) from:
       
Investment transactions — unaffiliated issuers (including commissions recaptured of $130,090)
    (164,428,706 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    534,464  
Net change in unrealized gain on:
       
Investments — unaffiliated issuers
    193,209,676  
Securities lending reinvestment vehicle — affiliated issuer
    75,227  
 
 
Net realized and unrealized gain from investment transactions
    29,390,661  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 35,141,412  
 
 
 
(a) Institutional and Service Shares had Transfer Agent fees of $68,837 and $10,085, respectively.
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 5,750,751     $ 15,229,693  
Net realized loss from investment transactions
    (163,894,242 )     (194,282,032 )
Payments by affiliate relating to certain investment transactions
    —       143,867  
Net change in unrealized gain (loss) on investments
    193,284,903       (370,227,817 )
 
 
Net increase (decrease) in net assets resulting from operations
    35,141,412       (549,136,289 )
 
 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (11,191,862 )
Service Shares
    —       (1,243,513 )
From net realized gains
               
Institutional Shares
    —       (2,004,006 )
Service Shares
    —       (300,378 )
 
 
Total distributions to shareholders
    —       (14,739,759 )
 
 
 
From share transactions:
Proceeds from sales of shares
    21,563,969       67,763,165  
Reinvestments of distributions
    —       14,739,759  
Cost of shares redeemed
    (84,069,854 )     (442,712,207 )
 
 
Net decrease in net assets resulting from share transactions
    (62,505,885 )     (360,209,283 )
 
 
TOTAL DECREASE
    (27,364,473 )     (924,085,331 )
 
 
 
Net assets:
Beginning of period
    860,118,368       1,784,203,699  
 
 
End of period
  $ 832,753,895     $ 860,118,368  
 
 
Accumulated undistributed net investment income
  $ 11,135,720     $ 5,384,969  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                             
          Income (loss) from
 		                                        Ratios assuming no
 		           
          investment operations     Distributions to shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		    net investment
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end
 		    net expenses
 		    income
 		    expenses
 		    income
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    of period
 		    to average
 		    to average
 		    to average
 		    to average
 		    turnover
 		     
Years - Share Class   of period     income(a)     gain (loss)     operations     income     gains     distributions     period     return(b)     (in 000s)     net assets     net assets     net assets     net assets     rate      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                             
2009 - Institutional
  $ 8.66     $ 0.06     $ 0.38     $ 0.44     $ —     $ —     $ —     $ 9.10       5.08 %   $ 726,756       0.86 %(c)     1.49 %(c)     0.86 %(c)     1.49 %(c)     55 %    
2009 - Service
    8.68       0.05       0.38       0.43       —       —       —       9.11       4.95       105,998       1.11 (c)     1.24 (c)     1.11 (c)     1.24 (c)     55      

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                             
2008 - Institutional
    14.02       0.14 (d)     (5.34 )     (5.20 )     (0.14 )     (0.02 )     (0.16 )     8.66       (36.97 )     748,682       0.84       1.16 (d)     0.84       1.16 (d)     93      
2008 - Service
    14.03       0.11 (d)     (5.34 )     (5.23 )     (0.10 )     (0.02 )     (0.12 )     8.68       (37.13 )     111,437       1.09       0.91 (d)     1.09       0.91 (d)     93      
 
 
2007 - Institutional
    16.09       0.14 (e)     0.39       0.53       (0.13 )     (2.47 )     (2.60 )     14.02       3.20       1,559,013       0.87 (f)     0.85 (e)(f)     0.87 (f)     0.85 (e)(f)     84      
2007 - Service
    16.09       0.12 (e)     0.40       0.52       (0.11 )     (2.47 )     (2.58 )     14.03       3.16       225,190       0.97 (f)     0.75 (e)(f)     1.12 (f)     0.60 (e)(f)     84      
 
 
2006 - Institutional
    15.53       0.13       2.39       2.52       (0.16 )     (1.80 )     1.96       16.09       16.16       1,673,896       0.86       0.80       0.87       0.79       57      
2006 - Service
(commenced January 9, 2006)
    15.96       0.12       1.95       2.07       (0.14 )     (1.80 )     1.94       16.09       12.91       273,903       0.96 (c)     0.72 (c)     1.12 (c)     0.56 (c)     57      
 
 
2005 - Institutional
    15.28       0.13       1.82       1.95       (0.10 )     (1.60 )     (1.70 )     15.53       12.83       1,430,814       0.87       0.83       0.87       0.83       53      
 
 
2004 - Institutional
    13.37       0.10       3.34       3.44       (0.09 )     (1.44 )     (1.53 )     15.28       25.88       917,151       0.88       0.67       0.88       0.67       72      
 
 
 
(a) Calculated based on the average shares outstanding methodology.
(b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(c) Annualized.
(d) Reflects income recognized from a special dividend which amounted to $0.01 per share and 0.11% of average net assets.
(e) Reflects income recognized from a special dividend which amounted to $0.01 per share and 0.06% of average net assets.
(f) Includes non-recurring expense for a special shareholder meeting which amounted to approximately 0.02% of average net assets.
 
The accompanying notes are an integral part of these financial statements.

10

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Mid Cap Value Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable,
 
 
11 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
In addition, distributions received from the Fund’s investments in real estate investment trusts (“REITs”) often include a “return of capital” which is recorded by the Fund as a reduction of the cost basis of the securities held. The Internal Revenue Code of 1986, as amended (the “Code”) requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the Fund’s distributions is deemed a return of capital and is generally not taxable to shareholders.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Code applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Commission Recapture — The Fund may direct portfolio trades, subject to obtaining best execution, to various brokers who have agreed to rebate a portion of the commissions generated. Such rebates are made directly to the Fund as cash payments and are included in net realized gain (loss) on investments in the Statement of Operations.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
For the six months ended June 30, 2009, contractual management fees with GSAM were at the following rates:
 
                                 
Contractual Management Rate  
First $2 billion   Next $3 billion     Next $3 billion     Over $8 billion     Effective Rate  
   
0.80%
    0.72 %     0.68 %     0.67 %     0.80 %
 
 
 
 
 12

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
 
3. AGREEMENTS (continued)
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.054% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAM did not make any reimbursements to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $5,900.
As of June 30, 2009, amounts owed to affiliates were approximately $554,800, $22,000 and $13,900 for management, distribution and service and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
 
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
 
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
4. FAIR VALUE OF INVESTMENTS (continued)
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 818,071,625     $ —     $ —  
Short-term Investments
    6,179,631       61,077,790       —  
 
 
Total
  $ 824,251,256     $ 61,077,790     $ —  
 
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio of Boston Global Investment Trust (“Enhanced Portfolio”), a Delaware statutory trust. The Enhanced Portfolio, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio. The Enhanced Portfolio invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $42,589, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $26,807 in fees as securities lending agent. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $24,453,984.
The following table provides information about the Fund’s investment in the Enhanced Portfolio for the six months ended June 30, 2009 (in thousands).
 
                                 
Number of
 		                       
Shares Held
 		              Number of Shares
 		    Value at
 		 
Beginning of Period   Shares Bought     Shares Sold     Held End of Period     End of Period  
   
69,764
    264,094       (272,596 )     61,262     $ 61,078  
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $434,834,835 and $495,796,501, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $59,100 in brokerage commissions from portfolio transactions executed on behalf of the Fund.
 
 
 14

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforward and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2016
  $ (145,355,619 )
 
 
Timing differences (post — October losses)
  $ (63,707,065 )
 
 
(1) Expiration occurs on December 31 of the year indicated.
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 973,792,736  
 
 
Gross unrealized gain
    44,378,280  
Gross unrealized loss
    (132,841,970 )
 
 
Net unrealized security loss
  $ (88,463,690 )
 
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes and differences related to the tax treatment of partnership investments as of the most recent fiscal year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 17, 2009, the date that the financial statements were issued.
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    2,400,979     $ 19,986,867       6,105,718     $ 65,852,855  
Reinvestment of distributions
    —       —       1,623,108       13,195,869  
Shares redeemed
    (8,951,218 )     (72,872,365 )     (32,499,851 )     (399,001,871 )
 
 
      (6,550,239 )     (52,885,498 )     (24,771,025 )     (319,953,147 )
 
 
Service Shares
                               
Shares sold
    182,246       1,577,102       179,463       1,910,310  
Reinvestment of distributions
    —       —       189,434       1,543,890  
Shares redeemed
    (1,378,778 )     (11,197,489 )     (3,588,997 )     (43,710,336 )
 
 
      (1,196,532 )     (9,620,387 )     (3,220,100 )     (40,256,136 )
 
 
NET DECREASE
    (7,746,771 )   $ (62,505,885 )     (27,991,125 )   $ (360,209,283 )
 
 
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Mid Cap Value Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertaking of the Investment Adviser to reimburse certain expenses of the Fund that exceed a specified level; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. The Independent Trustees also compared the performance of the Fund to that of the Investment Adviser’s institutional composite of the performance of other accounts having similar investment objectives and policies. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether the Fund had operated within its investment policies, and had complied with its investment limitations.
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
The Trustees believed that the Fund had provided investment performance within a competitive range for long-term investors, and that the Investment Adviser’s continued management would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a three-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
 
         
First $2 billion
    0.80 %
Next $3 billion
    0.72  
Next $3 billion
    0.68  
Over $8 billion
    0.67  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other mutual funds in the peer group; and the Investment Adviser’s voluntary undertaking to limit “other expenses” to a certain amount. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
 20

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP VALUE FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of Institutional or Service Shares of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (with respect to Service Shares) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Institutional Shares and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account Value
 		      Account Value
 		      Ended
 		 
Share Class     1/1/09       6/30/09       6/30/09*  
Institutional
Actual 		    $ 1,000       $ 1,050.80       $ 4.37  
Hypothetical 5% return
      1,000         1,020.53 +       4.31  
 
Service
Actual 		      1,000         1,049.50         5.64  
Hypothetical 5% return
      1,000         1,019.29 +       5.56  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 0.86% and 1.11% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
21 

 

 
     
TRUSTEES
Ashok N. Bakhru, Chairman
John P. Coblentz, Jr.
Diana M. Daniels
Patrick T. Harker
James A. McNamara
Jessica Palmer
Alan A. Shuch
Richard P. Strubel 		  OFFICERS
James A. McNamara, President
John M. Perlowski, Senior Vice
  President and Treasurer
Peter V. Bonanno, Secretary
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York,
New York 10005
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital international Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
     
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Funds.
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Mid Cap Value Fund.
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITMIDCAPSAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
                               Goldman Sachs
                               Strategic International Equity Fund
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term capital appreciation. The Fund seeks this objective by investing in the stocks of leading companies within developed and emerging countries around the world, outside the U.S.
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs International Equity Portfolio Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Strategic International Equity Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of 7.18% and 7.01%, respectively. These returns compare to the 8.42% cumulative total return of the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index (unhedged, with dividends reinvested) (the “MSCI EAFE Index”) during the same time period.
 
What economic and market factors most influenced the international equity markets as a whole during the semi-annual period?
 
The international equity markets faced two distinct periods during the six months ended June 30, 2009. International equity markets posted sharp declines during the first quarter of the year, as a drumbeat of negative data points concerning the global economic and financial crises extended and amplified 2008 headwinds. In addition, concerns about the financial health of banks and insurance companies drove challenging performance across geographies. International equity indices reached their lows for the semi-annual period in early March.
 
Then, as speculation grew surrounding a potential global economic stabilization and data became less negative, the international equity markets jumped from their early-March lows and rallied through most of the second quarter. Encouraging results from U.S. and U.K. governments’ “stress tests” and upbeat announcements from several banks sparked the broad equity market rally. Other indicators pointing to a moderation in the pace of economic decline included the Baltic Dry Index (BDI), a barometer of economic growth, which continued to rise. China’s central bank reported that its economy performed better than expected during the first quarter, suggesting its stimulus plan was gaining traction. Additionally, the G-20 committed to increasing the International Monetary Fund’s (IMF’s) resources by US$750 billion, bolstering equity markets around the world. The Chicago Board Options Exchange (CBOE) Volatility Index dropped below 30 for the first time since September 2008, while commodity prices rallied, with crude oil rising back to nearly $70 per barrel. The exuberant rally in April and May was led primarily by the riskiest segments of the international equity markets, including financials, materials, and consumer discretionary, as well as by the emerging markets.
 
Signs of recovery, however, were accompanied by stark reminders of the serious challenges still pressuring the global economy. Ongoing headwinds were highlighted by projections of a deeper recession, continued bankruptcies, and weakness in the housing market. We believe rising unemployment levels prompted caution by investors in June, with concerns about the sustainability of the second quarter rally moderating earlier optimism. Despite ongoing headwinds related to financial solvency and global recession, the second quarter was remarkable for the stark turnaround staged by the equity markets.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
During the reporting period, the Fund underperformed the MSCI EAFE Index due primarily to sector allocation overall and due to the currency effect of most foreign currencies appreciating against the U.S. dollar, as the U.S. dollar lost its safe haven appeal. Security selection and regional allocation as a whole contributed positively to the Fund’s relative results.
 
Which regions most significantly affected Fund performance?
 
Security selection in Japan contributed most positively to the Fund’s performance relative to the MSCI EAFE Index during the reporting period. Having exposure to the emerging markets, though a modest position, also helped. Conversely, having a moderately underweighted allocation to developed Asia ex-Japan detracted, with the currency effect in this region hurting most.
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Which equity market sectors most significantly affected Fund performance?
 
Security selection within the information technology, energy, industrials and financials sectors contributed most positively to the Fund’s performance relative to the MSCI EAFE Index during the reporting period. Having an underweighted position compared to the benchmark index in utilities also helped. Detracting from the Fund’s results was security selection in the consumer staples and consumer discretionary sectors. Also hurting the Fund’s performance was having modestly underweighted exposure to the financials and materials sectors, which rallied strongly during the second quarter, and having an overweighted allocation to health care, which lagged.
 
What were some of the Fund’s best-performing individual stocks?
 
The Fund benefited most relative to the MSCI EAFE Index from positions in U.K. software and services company Autonomy, U.K. energy company Venture Production, Hong Kong real estate developer Sun Hung Kai Properties, Italian diversified financials firm Azimut Holding, and Japanese video and other electronic equipment manufacturer Funai Electric.
 
Autonomy, whose technology allows enterprises and governments to search media files in a conceptual, rather than structural, manner, was the Fund’s top contributor to performance. Demand for Autonomy’s products, driven by regulation and litigation, as well as by government spending, rose even in a difficult macroeconomic environment. Autonomy announced new contract wins, better-than-expected full year results and an accretive acquisition during the reporting period. Venture Production benefited from a stabilization of energy industry fundamentals, a rebound in commodity prices and merger and acquisition rumors. Sun Hung Kai Properties performed well on the back of the Chinese government’s response to the global financial crisis, as Hong Kong, being the gateway to China, was a key beneficiary of the stimulus programs and liquidity measures. Additionally, Sun Hung Kai Properties successfully completed development projects in Guangzhou. Shares of Italian asset manager Azimut Holdings benefited from the rising equity market and widespread strength in the financials sector. Shares of Funai Electric rose as the company gained market share in the LCD TV manufacturing segment of the electronic equipment industry.
 
Which individual stocks detracted significantly from the Fund’s performance during the semi-annual period?
 
Detracting most from the Fund’s results relative to its benchmark index were positions in French media conglomerate Vivendi, Japanese utility Kansai Electric Power, Swiss pharmaceutical manufacturer Novartis, and Japanese telecommunication services company KDDI. Also, not holding a position in U.K. commercial banking giant Barclays detracted.
 
Vivendi was a significant detractor after posting declining net profits, as interest payments on debt rose. Kansai Electric Power experienced weak sales results, reflecting Japan’s worst economic downturn since the end of World War II. Novartis disappointed based on weakness in the pharmaceutical sector overall and, more specifically, on less than favorable foreign exchange rates, generic patent expirations coming due and weakness in the overall economy. KDDI saw its shares decline upon reports of its fiscal year results coming in below expectations.
 
An underweight in European banks overall pressured relative returns, especially as the more leveraged banks were among the leaders of the equity market rally. In particular, not owning Barclays hurt, as it soared 120% in the second quarter. Regardless of the recent rally, we continue to take a long-term view and prefer to own what we consider to be more resilient and higher quality companies that face little risk of recapitalization, such as asset managers and reinsurers.
 
Did the Fund make any significant purchases or sales during the first half of the fiscal year?
 
We reduced the Fund’s exposure to Australian mining company BHP Billiton after the company rebounded from 2008 lows in the first quarter of 2009. We also reduced the Fund’s position in Nestle, the Swiss food and nutrition company, due to our concerns that consumer down-trading could negatively impact the company.
 
We sold out of Singapore-based bank DBS Group after concerns about bad debts and slower loan growth pressured the firm. We eliminated Australian bank Westpac Banking from the Fund’s portfolio, as the stock’s risk/reward profile became less attractive to us. The Fund profited when we eliminated Japanese food manufacturer Q.P. Corp. from its portfolio. We sold out of the Fund’s position in Vodafone, the U.K. mobile phone and service provider. We felt the stock’s valuation did not accurately reflect what we believe to be more economic sensitivity in the mobile phone business than many had previously expected.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Within the telecommunication services sector, we initiated a position in Telefonica, the leading telecommunications operator in the Spanish and Portuguese-speaking world. We favored the company’s dominant market share and good free cash flow. In financials, we initiated a Fund position in Banco Santander, Spain’s largest bank. We believe Banco Santander may benefit from increased market share in the wake of industry weakness in Europe, cost synergies from recent acquisitions and potential stabilization of non-performing loans in Spain. At the time of purchase, we did not believe the bank’s valuation reflected these positive developments. We also added Nordea, the largest Scandinavian bank, to the Fund’s portfolio. Nordea has a well-diversified business and the highest “tier one” assets of its peers. We believe Nordea should prove resilient relative to its competitors.
 
Were there any notable changes in the Fund’s weightings during the six-month period?
 
During the six-month period, we increased the Fund’s weighting in telecommunication services, decreased its exposure to consumer staples and slightly moderated its underweighted allocation in consumer discretionary. From a regional perspective, we reduced the Fund’s allocation to Developed Asia ex-Japan.
 
How was the Fund positioned relative to its benchmark index at the end of June 2009?
 
The Fund had slightly greater weightings than the MSCI EAFE Index in the consumer discretionary and health care sectors at the end of the reporting period. The Fund had significantly underweighted allocations to the consumer staples and utilities sectors and more modestly underweighted allocations to the financials, industrials, materials and telecommunication services sectors compared to the benchmark index at the end of June 2009. The Fund was virtually equal weighted to the MSCI EAFE Index in the energy and information technology sectors.
 
From a regional perspective, the Fund had modestly underweighted positions in Japan and Developed Asia ex-Japan and a rather neutral exposure to Europe compared to the MSCI EAFE Index at the end of June 2009.
 
What is the Fund’s tactical view and strategy for the months ahead?
 
Given recent tumult in the equity markets, the deck has been reshuffled and investors are now presented with the challenge of identifying quality investments in an uncertain market environment. While overall volatility has retreated from record highs in 2008, we believe the dispersion of returns at the stock level will likely remain elevated, particularly as companies begin to trade more on fundamentals rather than on fear or hope. We believe this type of environment, with abundant winners and losers, is ripe for fundamental stock-pickers to generate added value. We also believe the case for equities as an asset class is strong, with equity markets still trading, at the end of the reporting period, at a discount to historical averages and with bankruptcy risk virtually eliminated for many companies. We look to take advantage in the months ahead of select opportunities, particularly where sound businesses have been punished during broad sell-offs. We continue to focus on building the Fund’s quality portfolio through intense bottom-up research and believe such a disciplined strategy will help us position the Fund effectively in these uncertain times.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Portfolio Composition
 
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                     
Holding   % of Net Assets     Line of Business   Country    
 
BP PLC
    2.9 %   Energy   United Kingdom    
Roche Holding AG
    2.4     Pharmaceuticals, Biotechnology & Life Sciences   Switzerland    
Nestle SA (Registered)
    2.4     Food, Beverage & Tobacco   Switzerland    
HSBC Holdings PLC
    2.4     Banks   United Kingdom    
Tesco PLC
    2.0     Food & Staples Retailing   United Kingdom    
Total SA
    2.0     Energy   France    
Telefonica SA
    1.7     Telecommunication Services   Spain    
Vivendi
    1.7     Media   France    
Banco Santander SA
    1.6     Banks   Spain    
Air Liquide SA
    1.5     Materials   France    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 7.3% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 91.1%
Austria – 0.2%
8,246
  Verbund – Oesterreichische Elektrizitaetswirtschafts AG Class A (Utilities)   $ 420,666  
 
 
Bermuda – 0.3%
131,876
  Hiscox Ltd. (Insurance)     628,269  
 
 
Cyprus – 0.4%
162,492
  ProSafe SE (Energy)     818,287  
 
 
Denmark – 1.2%
46,577
  Novo Nordisk A/S Class B (Pharmaceuticals, Biotechnology & Life Sciences)     2,536,828  
 
 
Finland – 0.7%
78,494
  Nokian Renkaat Oyj (Automobiles & Components)     1,477,068  
 
 
France – 9.2%
33,168
  Air Liquide SA (Materials)     3,043,347  
20,291
  Alstom SA (Capital Goods)(a)     1,204,806  
117,021
  AXA SA (Insurance)     2,214,841  
26,735
  Eutelsat Communications (Media)     691,985  
12,662
  Ipsen SA (Pharmaceuticals, Biotechnology & Life Sciences)     554,754  
36,129
  SCOR SE (Insurance)     742,318  
29,498
  Societe Generale (Banks)     1,619,159  
27,330
  Sodexo (Consumer Services)     1,407,158  
75,216
  Total SA (Energy)     4,076,737  
142,909
  Vivendi (Media)(b)     3,430,357  
             
          18,985,462  
 
 
Germany – 4.1%
78,686
  E.ON AG (Utilities)     2,793,176  
14,153
  Muenchener Rueckversicherungs-Gesellschaft AG (Registered) (Insurance)     1,912,138  
18,174
  Salzgitter AG (Materials)     1,601,861  
55,232
  SAP AG (Software & Services)     2,226,853  
             
          8,534,028  
 
 
Hong Kong – 2.9%
769,000
  BOC Hong Kong (Holdings) Ltd. (Banks)     1,337,990  
65,800
  Hang Seng Bank Ltd. (Banks)     920,947  
231,000
  Hutchison Whampoa Ltd. (Capital Goods)     1,502,688  
169,000
  Sun Hung Kai Properties Ltd. (Real Estate)     2,098,609  
             
          5,860,234  
 
 
Ireland – 0.8%
75,477
  CRH PLC (Materials)     1,734,772  
 
 
Italy – 6.6%
117,157
  Azimut Holding SpA (Diversified Financials)     1,113,206  
145,610
  Banca Popolare Di Milano Scarl (Banks)     868,861  
 
 
126,671
  Eni SpA (Energy)     3,004,256  
488,648
  Intesa Sanpaolo SpA (Banks)*     1,579,070  
146,765
  Mediobanca SpA (Diversified Financials)     1,748,902  
609,730
  Snam Rete Gas SpA (Utilities)     2,678,397  
495,424
  Terna Rete Elettrica Nazionale SpA (Utilities)(a)     1,652,285  
76,901
  Unione di Banche Italiane ScpA (Banks)     1,002,112  
             
          13,647,089  
 
 
Japan – 22.8%
37,500
  ABC-Mart, Inc. (Retailing)     962,669  
48,600
  Daiichi Sankyo Co. Ltd. (Pharmaceuticals, Biotechnology & Life Sciences)     867,483  
32,000
  East Japan Railway Co. (Transportation)     1,926,588  
61,700
  FUJIFILM Holdings Corp. (Technology Hardware & Equipment)     1,963,590  
303,000
  Fujitsu Ltd. (Technology Hardware & Equipment)     1,645,967  
29,700
  Funai Electric Co. Ltd. (Consumer Durables & Apparel)     1,225,455  
57,000
  Hitachi Metals Ltd. (Materials)     485,178  
40,700
  Honda Motor Co. Ltd. (Automobiles & Components)     1,119,691  
321
  Japan Tobacco, Inc. (Food, Beverage & Tobacco)     1,003,392  
417
  KDDI Corp. (Telecommunication Services)     2,212,621  
45,000
  Koito Manufacturing Co. Ltd. (Automobiles & Components)     544,644  
123,200
  Komatsu Ltd. (Capital Goods)     1,902,153  
123,000
  Kuraray Co. Ltd. (Materials)     1,363,548  
19,800
  Kyocera Corp. (Technology Hardware & Equipment)     1,486,467  
20,900
  Mabuchi Motor Co. Ltd. (Technology Hardware & Equipment)     1,008,307  
55,000
  McDonald’s Holdings Co. (Japan) Ltd. (Consumer Services)     1,021,304  
67,000
  Mitsubishi Corp. (Capital Goods)     1,236,365  
156,000
  Mitsubishi Tanabe Pharma Corp. (Pharmaceuticals, Biotechnology & Life Sciences)     1,792,228  
425,800
  Mitsubishi UFJ Financial Group, Inc. (Banks)     2,629,228  
137,800
  Mitsui & Co. Ltd. (Capital Goods)     1,632,886  
92,000
  Mitsui Fudosan Co. Ltd. (Real Estate)     1,595,663  
75,000
  Nippon Electric Glass Co. Ltd. (Technology Hardware & Equipment)     838,460  
257,000
  Nippon Sheet Glass Co. Ltd. (Capital Goods)     748,866  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Japan – (continued)
161,000
  Nippon Yusen Kabushiki Kaisha (Transportation)   $ 693,296  
19,700
  Nissha Printing Co. Ltd. (Commercial & Professional Services)     943,668  
108,300
  Nomura Holdings, Inc. (Diversified Financials)     914,144  
8,930
  ORIX Corp. (Diversified Financials)     531,515  
75,500
  Panasonic Corp. (Consumer Durables & Apparel)     1,017,180  
34,200
  Seven & I Holdings Co. Ltd. (Food & Staples Retailing)     802,079  
13,100
  Shin-Etsu Chemical Co. Ltd. (Materials)     607,564  
58,100
  Showa Shell Sekiyu K.K. (Energy)     614,770  
235
  Sony Financial Holdings, Inc. (Insurance)     647,934  
407,000
  Sumitomo Metal Industries Ltd. (Materials)     1,081,919  
91,000
  Sumitomo Metal Mining Co. Ltd. (Materials)     1,278,355  
31,100
  Sumitomo Mitsui Financial Group, Inc. (Banks)     1,258,471  
188,000
  The Chiba Bank Ltd. (Banks)     1,226,954  
113,000
  Toppan Printing Co. Ltd. (Commercial & Professional Services)     1,138,480  
214,000
  Toshiba Corp. (Technology Hardware & Equipment)     775,310  
59,800
  Toyota Motor Corp. (Automobiles & Components)     2,261,479  
             
          47,005,871  
 
 
Jersey – 0.4%
11,784
  Randgold Resources Ltd. (Materials)     759,420  
 
 
Luxembourg – 0.4%
40,559
  SES SA FDR (Media)     775,566  
 
 
Netherlands – 1.4%
211,215
  Koninklijke KPN NV (Telecommunication Services)     2,914,277  
 
 
Norway – 0.3%
113,069
  Petroleum Geo-Services ASA (Energy)*     705,066  
 
 
Singapore – 1.2%
527,000
  Singapore Press Holdings Ltd. (Media)     1,146,795  
124,000
  United Overseas Bank Ltd. (Banks)     1,251,258  
             
          2,398,053  
 
 
Spain – 4.5%
264,351
  Banco Santander SA (Banks)     3,195,507  
73,797
  Grifols SA (Pharmaceuticals, Biotechnology & Life Sciences)     1,309,068  
 
 
27,853
  Inditex SA (Retailing)     1,340,478  
152,550
  Telefonica SA (Telecommunication Services)     3,464,339  
             
          9,309,392  
 
 
Sweden – 1.4%
98,000
  Atlas Copco AB Class B (Capital Goods)     890,310  
240,208
  Nordea Bank AB (Banks)     1,909,023  
             
          2,799,333  
 
 
Switzerland – 11.8%
41,881
  Credit Suisse Group AG (Registered) (Diversified Financials)     1,918,820  
4,787
  Geberit AG (Registered) (Capital Goods)     589,804  
16,457
  Kuehne + Nagel International AG (Registered) (Transportation)     1,292,708  
509
  Lindt & Spruengli AG (Food, Beverage & Tobacco)     951,401  
131,740
  Nestle SA (Registered) (Food, Beverage & Tobacco)     4,974,298  
27,044
  Novartis AG (Registered) (Pharmaceuticals, Biotechnology & Life Sciences)     1,100,886  
36,812
  Roche Holding AG (Pharmaceuticals, Biotechnology & Life Sciences)     5,015,717  
6,639
  Straumann Holding AG (Registered) (Health Care Equipment & Services)(a)     1,211,456  
8,055
  Syngenta AG (Registered) (Materials)     1,874,124  
23,981
  Synthes, Inc. (Health Care Equipment & Services)     2,318,841  
169,367
  UBS AG (Registered) (Diversified Financials)*     2,079,558  
85,123
  Xstrata PLC (Materials)     925,140  
             
          24,252,753  
 
 
United Kingdom – 20.5%
387,745
  Aegis Group PLC (Media)     589,732  
177,610
  Amlin PLC (Insurance)     885,452  
43,582
  Autonomy Corp. PLC (Software & Services)*     1,032,664  
63,079
  Berkeley Group Holdings PLC (Residential)*     836,215  
152,081
  BG Group PLC (Energy)     2,560,999  
24,698
  BHP Billiton PLC (Materials)     556,660  
747,300
  BP PLC (Energy)     5,905,031  
245,309
  Capita Group PLC (Commercial & Professional Services)     2,892,386  
19,466
  Close Brothers Group PLC (Diversified Financials)     210,782  
1,004,136
  Friends Provident Group PLC (Insurance)     1,085,867  
 
 
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
United Kingdom – (continued)
583,231
  HSBC Holdings PLC (Banks)   $ 4,859,004  
90,572
  Imperial Tobacco Group PLC (Food, Beverage & Tobacco)     2,357,369  
111,588
  Inmarsat PLC (Telecommunication Services)     1,003,702  
122,418
  Land Securities Group PLC (REIT)     951,990  
64,278
  Rio Tinto PLC (Materials)     2,226,041  
154,706
  Schroders PLC (Diversified Financials)     2,093,316  
162,572
  Serco Group PLC (Commercial & Professional Services)     1,131,323  
160,759
  Shire PLC (Pharmaceuticals, Biotechnology & Life Sciences)     2,218,770  
89,570
  Smiths Group PLC (Capital Goods)     1,036,397  
26,514
  Soco International PLC (Energy)*     499,266  
416,077
  Standard Life PLC (Insurance)     1,277,975  
722,947
  Tesco PLC (Food & Staples Retailing)     4,221,908  
258,614
  WPP PLC (Media)     1,719,784  
             
          42,152,633  
 
 
TOTAL COMMON STOCKS
(Cost $183,781,092)
  $ 187,715,067  
 
 
             
             
Exchange Traded Fund – 5.4%
Australia – 5.4%
657,392
  iShares MSCI Australia Index Fund(a)   $ 11,044,185  
(Cost $7,696,460)
       
 
 
 
                 
        Expiration
 		   
Units   Description   Month   Value
 
Right* – 0.2%
United Kingdom – 0.2%
27,792
  Rio Tinto PLC (Materials)   07/09     $319,149  
(Cost $301,586)
           
 
 
             
Shares   Rate   Value  
 
Investment Company(c) – 2.3%
JPMorgan U.S. Government Money Market Fund – Capital Shares
4,780,499
  0.236%   $ 4,780,499  
(Cost $4,780,499)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES
LENDING REINVESTMENT VEHICLE
(Cost $196,559,637)
  $ 203,858,900  
 
 
             
 
Securities Lending Reinvestment Vehicle(c)(d) – 7.3%
Boston Global Investment Trust – Enhanced Portfolio
15,091,800
  0.267%   $ 15,046,525  
(Cost $15,024,461)
       
 
 
TOTAL INVESTMENTS – 106.3%
(Cost $211,584,098)
  $ 218,905,425  
 
 
LIABILITIES IN EXCESS OF OTHER ASSETS – (6.3)%
    (12,891,767 )
 
 
NET ASSETS – 100.0%   $ 206,013,658  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
(c) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(d) Represents an affiliated issuer.
 
         
 
 
Investment Abbreviations:
REIT
  —   Real Estate Investment Trust
FDR
  —   Fiduciary Depositary Receipt
 
 
 
 
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		                   
    Contracts
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Long     Month     Value     Gain (Loss)  
   
Dow Jones EURO STOXX 50 Index
    63       September 2009     $ 2,119,342     $ 24,720  
FTSE 100 Index
    15       September 2009       1,040,918       (2,205 )
 
 
TOTAL
                          $ 22,515  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
Investments in securities of unaffiliated issuers, at value (identified cost $196,559,637)(a)
  $ 203,858,900  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $15,024,461)
    15,046,525  
Cash
    93,033  
Foreign currencies, at value (identified cost $471,555)
    473,709  
Receivables:
       
Investment securities sold, at value
    3,205,016  
Dividends and interest, at value
    282,321  
Foreign tax reclaims, at value
    164,284  
Fund shares sold
    36,841  
Securities lending income
    23,014  
Reimbursement from adviser
    8,475  
Other assets
    1,023  
 
 
Total assets
    223,193,141  
 
 
 
Liabilities:
Payables:
       
Payable upon return of securities loaned
    14,852,635  
Investment securities purchased, at value
    1,869,788  
Amounts owed to affiliates
    175,485  
Fund shares redeemed
    112,504  
Due to broker — variation margin, at value
    39,743  
Accrued expenses
    129,328  
 
 
Total liabilities
    17,179,483  
 
 
         
 
Net Assets:
Paid-in capital
    368,498,535  
Accumulated undistributed net investment income
    3,176,439  
Accumulated net realized loss from investment, futures and foreign currency related transactions
    (173,022,981 )
Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies
    7,361,665  
 
 
NET ASSETS
  $ 206,013,658  
 
 
Net Assets:
       
Institutional
  $ 74,500,831  
Service
    131,512,827  
 
 
Total Net Assets
  $ 206,013,658  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    10,845,481  
Service
    19,137,186  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 6.87  
Service
    6.87  
 
 
 
(a) Includes loaned securities having a market value of $14,088,287.
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Dividends(a)
  $ 3,752,993  
Securities lending income — affiliated issuer
    182,537  
 
 
Total investment income
    3,935,530  
 
 
 
Expenses:
Management fees
    849,433  
Distribution and Service fees — Service Shares
    139,961  
Custody and accounting fees
    65,739  
Professional fees
    49,928  
Printing fees
    47,141  
Transfer Agent fees(b)
    18,016  
Trustee fees
    8,460  
Other
    7,804  
 
 
Total expenses
    1,186,482  
 
 
Less — expense reductions
    (31,341 )
 
 
Net expenses
    1,155,141  
 
 
NET INVESTMENT INCOME
    2,780,389  
 
 
 
Realized and unrealized gain (loss) from investment, futures and foreign currency related transactions:
Net realized gain (loss) from:
       
Investment transactions — unaffiliated issuers
    (32,414,329 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    158,983  
Futures transactions
    (414,861 )
Foreign currency related transactions
    131,314  
Net change in unrealized gain (loss) on:
       
Investments — unaffiliated issuers
    43,522,931  
Securities lending reinvestment vehicle — affiliated issuer
    15,545  
Futures
    (6,703 )
Translation of asset and liabilities denominated in foreign currencies
    6,460  
 
 
Net realized and unrealized gain from investment, futures and foreign currency related transactions
    10,999,340  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 13,779,729  
 
 
 
(a) Foreign taxes withheld on dividends were $438,879.
 
(b) Institutional and Service Shares had Transfer Agent fees of $6,820 and $11,196, respectively.
 
 
The accompanying notes are an integral part of these financial statements.
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009     Year Ended  
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 2,780,389     $ 7,548,785  
Net realized loss from investment, futures and foreign currency related transactions
    (32,538,893 )     (130,486,653 )
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies
    43,538,233       (37,470,918 )
 
 
Net increase (decrease) in net assets resulting from operations
    13,779,729       (160,408,786 )
 
 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (3,309,583 )
Service Shares
    —       (4,673,550 )
From net realized gains
               
Institutional Shares
    —       (6,448,599 )
Service Shares
    —       (9,909,643 )
 
 
Total distributions to shareholders
    —       (24,341,375 )
 
 
                 
 
From share transactions:
Proceeds from sales of shares
    19,155,422       29,908,159  
Reinvestments of distributions
    —       24,341,375  
Cost of shares redeemed
    (14,905,736 )     (44,201,132 )
 
 
Net increase in net assets resulting from share transactions
    4,249,686       10,048,402  
 
 
TOTAL INCREASE (DECREASE)
    18,029,415       (174,701,759 )
 
 
                 
 
Net assets:
Beginning of period
    187,984,243       362,686,002  
 
 
End of period
  $ 206,013,658     $ 187,984,243  
 
 
Accumulated undistributed net investment income
  $ 3,176,439     $ 396,050  
 
 
 
 
 10
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                         
          Income (loss) from
 		                                        Ratios assuming no
 		       
          investment operations     Distributions to shareholders                                   expense reduction        
                Net
 		                                                    Ratio of
 		    Ratio of
 		    Ratio of
 		       
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		    net investment
 		       
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
 		    expenses
 		    income
 		    Portfolio
 		 
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    to average
 		    turnover
 		 
Year - Share Class   of period     income(a)     gain (loss)     operations     income     gains     distributions     period     return(b)     (in 000s)     net assets     net assets     net assets     net assets     rate  
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                         
2009 - Institutional
  $ 6.41     $ 0.10     $ 0.36     $ 0.46     $ —     $ —     $ —     $ 6.87       7.18 %   $ 74,501       1.12 %(c)     3.22 %(c)     1.16 %(c)     3.18 %(c)     59 %
2009 - Service
    6.42       0.09       0.36       0.45       —       —       —       6.87       7.01       131,513       1.37 (c)     3.02 (c)     1.41 (c)     2.98 (c)     59  

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                         
2008 - Institutional
    13.76       0.32 (d)     (6.69 )     (6.37 )     (0.33 )     (0.65 )     (0.98 )     6.41       (45.87 )     74,149       1.12       2.95 (d)     1.12       2.95 (d)     165  
2008 - Service
    13.76       0.28 (d)     (6.67 )     (6.39 )     (0.30 )     (0.65 )     (0.95 )     6.42       (46.00 )     113,836       1.37       2.64 (d)     1.37       2.64 (d)     165  
 
 
2007 - Institutional
    14.49       0.20       0.92       1.12       (0.21 )     (1.64 )     (1.85 )     13.76       7.88       136,785       1.16 (e)     1.30 (e)     1.16 (e)     1.30 (e)     134  
2007 - Service
    14.49       0.20       0.92       1.12       (0.21 )     (1.64 )     (1.85 )     13.76       7.86       225,901       1.18 (e)     1.30 (e)     1.41 (e)     1.07 (e)     134  
 
 
2006 - Institutional
    12.05       0.22       2.44 (f)     2.66       (0.22 )     —       (0.22 )     14.49       22.10 (g)     127,795       1.15       1.64       1.16       1.63       76  
2006 - Service (commenced January 9, 2006)
    12.71       0.22       1.78 (f)     2.00       (0.22 )     —       (0.22 )     14.49       15.74 (g)     260,251       1.17 (c)     1.68 (c)     1.41 (c)     1.44 (c)     76  
 
 
2005 - Institutional
    10.62       0.09       1.38       1.47       (0.04 )     —       (0.04 )     12.05       13.70       109,399       1.20       0.81       1.36       0.66       56  
 
 
2004 - Institutional
    9.48       0.07       1.18       1.25       (0.11 )     —       (0.11 )     10.62       13.48       108,624       1.20       0.75       1.35       0.60       63  
 
 
 
(a) Calculated based on the average shares outstanding methodology.
(b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(c) Annualized.
(d) Reflects income recognized from a special dividend which amounted to $0.12 per share and 1.12% of average net assets.
(e) Includes non-recurring expense for a special shareholder meeting which amounted to approximately 0.02% of average net assets.
(f) Reflects an increase of $0.05 due to payments by previous investment manager of a merged fund to compensate for possible adverse affects of the trading activity by certain contract holders of the acquired fund prior to January 9, 2006.
(g) Performance has not been restated to reflect the impact of payments by previous investment manager of a merged fund recorded during the period related to (f) above. If restated, the performance would have been 21.69% and 15.26% for Institutional and Service Shares, respectively.
 
The accompanying notes are an integral part of these financial statements.

11

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Strategic International Equity Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management International (“GSAMI”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities traded on a foreign securities exchange are valued daily at fair value determined by an independent fair value service (if available) under valuation procedures approved by the trustees consistent with applicable regulatory guidance. The independent fair value service takes into account multiple factors including, but not limited to, movements in the United States (“U.S.”) securities markets, certain depositary receipts, futures contracts and foreign currency exchange rates that have occurred subsequent to the close of the foreign securities exchanges. While the independent service may not take into account market or security specific information, under the valuation procedures, these securities might also be fair valued by GSAMI by taking into consideration market or security specific information as discussed below.
Investments in equity securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. Investments in equity securities and investment companies traded on a foreign securities exchange for which an independent fair value service cannot provide a quote are valued daily at their last sale price or official closing price on the principal exchange on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAMI believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAMI, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings;
 
 
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2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable, on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAMI has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Foreign Currency Translations — The books and records of the Fund are accounted for in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars based upon 4:00 p.m. Eastern Time exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions as of 4:00 p.m. Eastern Time.
Net realized and unrealized gain (loss) on foreign currency transactions represents: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) currency gains and losses between trade date and settlement date on investment security transactions and forward exchange contracts; and (iii) gains and losses from the difference between amounts of dividends, interest and foreign withholding taxes recorded and the amounts actually received. The effect of changes in foreign currency exchange rates on equity securities and derivative instruments are not segregated in the
 
 
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Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Statement of Operations from the effects of changes in market prices of those investments, but are included with the net realized and unrealized gain (loss) on investments. The effect of changes in foreign currency exchange rates on fixed income securities are segregated in the Statement of Operations from the effects of changes in market prices of those investments, and are included with the net realized and unrealized gain (loss) on foreign currency related transactions. Net unrealized foreign exchange gains and losses arising from changes in the value of other assets and liabilities as a result of changes in foreign exchange rates are included as increases and decreases in unrealized gain (loss) on foreign currency related transactions.
 
F. Derivatives — The Fund may make investments in derivative instruments, including, but not limited to, options, futures, swaps and other derivatives relating to foreign currency transactions. On June 30, 2009, the Fund adopted Statement of Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”) which requires enhanced disclosures about the Fund’s derivatives and hedging activities. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts (often referred to as over the counter (“OTC”) derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments or commodities at specified terms on a specified date, or to exchange interest payment streams or currencies based on a notional or contractual amount. Derivative instruments may involve a high degree of financial risk. The use of derivatives also involves the risk of loss if the investment adviser is incorrect in its expectation of the timing or level of fluctuations in securities prices, interest rates or currency prices. Investments in derivative instruments also include the risk of default by the counterparty, the risk that the investment may not be liquid and the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument.
 
Futures Contracts — The Fund may purchase or sell futures contracts to hedge against changes in interest rates, securities prices, currency exchange rates, or to seek to increase total return. Futures contracts are valued at the last settlement price, or in the absence of a sale, the last bid price, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund deposits cash or securities in an account on behalf of the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable with a corresponding offset in unrealized gains or losses. The Fund recognizes a realized gain or loss when a contract is closed or expires.
The use of futures contracts involves, to varying degrees, elements of market and counterparty risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day. Changes in the value of a futures contract may not directly correlate with changes in the value of the underlying securities. These risks may decrease the effectiveness of the Fund’s strategies and potentially result in a loss. The Fund must set aside liquid assets, or engage in other appropriate measures to cover its obligations under these contracts.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAMI manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAMI is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
 
3. AGREEMENTS (continued)
 
For the six months ended June 30, 2009, contractual management fees with GSAMI were at the following rates:
 
 
                                         
    Contractual Management Rate  
    First
 		    Next
 		    Next
 		    Next
 		    Over
 		 
    $1 billion     $1 billion     $3 billion     $3 billion     $8 billion  
   
For the Period April 30, 2009 to June 30, 2009
    0.85 %     0.77 %     0.73 %     0.72 %     0.71 %
For the Period January 1, 2009 to April 29, 2009
    1.00       0.90       0.86       0.84       0.82  
 
 
Effective April 30, 2009, GSAMI contractually reduced its management fees for the Fund. As a result, the effective management rate for the six months ended June 30, 2009 was 0.94%.
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAMI has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.164% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAMI for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAMI reimbursed approximately $31,200 to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $100.
As of June 30, 2009, amounts owed to affiliates were approximately $145,000, $27,100 and $3,400 for management, distribution and service and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAMI or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
4. FAIR VALUE OF INVESTMENTS (continued)
 
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
 
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments(a)
  $ 11,044,185     $ 188,034,216     $ —  
Short-term Investments
    4,780,499       15,046,525       —  
Derivatives
    24,720       —       —  
 
 
Total
  $ 15,849,404     $ 203,080,741     $ —  
 
 
Liabilities
                       
Derivatives
  $ (2,205 )   $ —     $ —  
 
 
 
(a) To adjust for the time difference between local market close and the calculation of the net asset value, the Fund may utilize fair value model prices for international equities provided by an independent service resulting in a Level 2 classification.
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio of Boston Global Investment Trust (“Enhanced Portfolio”), a Delaware statutory trust. The Enhanced Portfolio, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by Goldman Sachs Asset Management, L.P. (“GSAM”), for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio. The Enhanced Portfolio invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $27,242, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $20,338 in fees as securities lending agent. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $3,923,500.
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
 
5. SECURITIES LENDING (continued)
 
The following table provides information about the Fund’s investment in the Enhanced Portfolio for the six months ended June 30, 2009 (in thousands).
 
                                     
Number of
 		                         
Shares Held
 		                Number of Shares Held
 		    Value at
 		 
Beginning of Period     Shares Bought     Shares Sold     End of Period     End of Period  
   
  3,751       120,323       (108,982 )     15,092     $ 15,047  
 
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $111,240,192 and $102,512,733, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $2,100 in brokerage commissions from portfolio transactions, including futures transactions executed with Goldman Sachs as the Futures Commission Merchant, on behalf of the Fund.
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforwards and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2009
  $ (2,072,911 )
Expiring 2010
    (6,928,702 )
Expiring 2011
    (609,034 )
Expiring 2016
    (74,993,642 )
 
 
Total capital loss carryforward
  $ (84,604,289 )
 
 
Timing differences (post — October losses)
  $ (41,819,006 )
 
 
(1)  Expiration occurs on December 31 of the year indicated. Due to fund mergers, utilization of these losses may be substantially limited under the Code.
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 225,632,232  
 
 
Gross unrealized gain
    5,798,608  
Gross unrealized loss
    (12,525,415 )
 
 
Net unrealized security loss
  $ (6,726,807 )
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes and differences related to the tax treatment of partnership investments as of the most recent year end.
 
8. OTHER RISKS
 
Foreign Custody Risk — A Fund that invests in foreign securities may hold such securities and foreign currency with foreign banks, agents, and securities depositories (each a “Foreign Custodian”) appointed by the Fund’s custodian. Investments in emerging markets may be subject to greater custody risks than investments in more developed markets. Custody services in emerging market countries are often undeveloped and may be less regulated than in more developed countries, and thus may not afford the same level of investor protection as would apply in developed countries. In some countries, Foreign Custodians may be subject to little or no regulatory oversight or independent evaluation of their
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
8. OTHER RISKS (continued)
 
operations. Further, the laws of certain countries may place limitations on a Fund’s ability to recover its assets if a Foreign Custodian enters into bankruptcy.
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
Investing in foreign markets may involve special risks and considerations not typically associated with investing in the U.S. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, be subject to government ownership controls, have delayed settlements, and their prices may be more volatile than those of comparable securities in the U.S.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 17, 2009, the date that the financial statements were issued.
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    187,569     $ 1,118,039       1,115,703     $ 12,353,890  
Reinvestment of distributions
    —       —       1,597,083       9,758,182  
Shares redeemed
    (910,991 )     (5,456,573 )     (1,084,971 )     (10,876,786 )
 
 
      (723,422 )     (4,338,534 )     1,627,815       11,235,286  
 
 
Service Shares
                               
Shares sold
    2,990,780       18,037,383       2,062,515       17,554,269  
Reinvestment of distributions
    —       —       2,382,870       14,583,193  
Shares redeemed
    (1,585,385 )     (9,449,163 )     (3,130,455 )     (33,324,346 )
 
 
      1,405,395       8,588,220       1,314,930       (1,186,884 )
 
 
NET INCREASE
    681,973     $ 4,249,686       2,942,745     $ 10,048,402  
 
 
 
 
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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Strategic International Equity Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management International (the “Investment Adviser”) on behalf of the Fund.
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertaking of the Investment Adviser to reimburse certain expenses of the Fund that exceed a specified level; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s
 
 
 20

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether the Fund had operated within its investment policies, and had complied with its investment limitations. The Trustees noted that the Investment Adviser had taken a number of steps intended to improve Fund performance, including making changes to the leadership and personnel on the portfolio management team and to the
 
 
21 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
investment process used in selecting investments for the Fund (which among other things included a renewed emphasis on regionally-based research and stock selection). The Trustees discussed these measures at length with senior management of the Investment Adviser and concluded that the Investment Adviser’s continued management likely would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement, including the Investment Adviser’s decision to reduce contractually the Fund’s management fee rate, which took effect in 2009. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund (which did not reflect the recent reduction in the Fund’s management fee rate). The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a three-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
 
 22

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
 
         
First $1 billion
    0.85 %
Next $1 billion
    0.77  
Next $3 billion
    0.73  
Next $3 billion
    0.72  
Over $8 billion
    0.71  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its shareholders as assets under management reach those asset levels. The Trustees further noted that in 2009 the Investment Adviser agreed to reduce contractually the Fund’s management fee rate at each breakpoint to the rates indicated above. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the Investment Adviser’s voluntary undertaking to limit “other expenses” to a certain amount. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by an affiliate of the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
 
23 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
 24

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRATEGIC INTERNATIONAL EQUITY FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of the Institutional or Service Shares of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (with respect to Service Shares) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Institutional Shares and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account Value
 		      Account Value
 		      Ended
 		 
Share Class     1/1/09       6/30/09       6/30/09*  
Institutional
                             
Actual
    $ 1,000       $ 1,071.80       $ 5.75  
Hypothetical 5% return
      1,000         1,019.24 +       5.61  
 
Service
                             
Actual
      1,000         1,070.10         7.03  
Hypothetical 5% return
      1,000         1,018.00 +       6.85  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 1.12% and 1.37% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
25 

 

  
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
John P. Coblentz, Jr.
Diana M. Daniels
Patrick T. Harker
James A. McNamara
Jessica Palmer
Alan A. Shuch
Richard P. Strubel 		  James A. McNamara, President
John M. Perlowski, Senior Vice President and
  Treasurer
Peter V. Bonanno, Secretary
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
 
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
Investment Adviser
32 Old Slip, New York, New York 10005
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
     
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
     
     
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Strategic International Equity Fund.
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITINTLSAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
Goldman Sachs
Structured Small Cap Equity Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity investments in U.S. issuers.
 
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Quantitative Investment Strategies Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Structured Small Cap Equity Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of 0.29% and 0.14%, respectively. These returns compare to the 2.64% cumulative total return of the Fund’s benchmark, the Russell 2000 Index (with dividends reinvested) (the “Russell Index”) during the same time period.
 
What economic and market factors most influenced the equity markets as a whole during the semi-annual period?
 
The equity markets faced two distinct periods during the six months ended June 30, 2009. As the new year began, the global financial markets were still reeling from extraordinary conditions during the fourth quarter of 2008. Persistently elevated levels of credit spreads (i.e., the difference in yields between U.S. Treasury securities and other investment sectors) as well as both implied and realized volatilities and investor risk aversion had created an unprecedented period of market distress. Indeed, with global equity indices down over 40% on average in 2008, equity markets continued to struggle in early 2009, as signs of an economic recovery remained hard to find. At the beginning of the first quarter, major retailers and automakers worldwide warned of declines in sales and profits in upcoming months, causing their shares to decline dramatically. As speculation increased that governments globally might nationalize troubled financial institutions, shares of large banks also fell sharply through the beginning of March. Concurrently, unemployment rates continued to rise around the world, with U.S. unemployment reaching 8.5% by the end of March, its highest level in over 25 years.
 
Then, a slight improvement in the liquidity profile of the market, a stabilizing of commodity prices, including oil, and positive responses to certain large banks’ earnings reports and Treasury Secretary Tim Geithner’s plan to fix the banking system brought a glimmer of hope to the equity markets in March. Indeed, March was the best month since 2002 for the major U.S. equity market indices, trimming first quarter losses substantially. Driven by investor relief, as signs indicated that the global financial crisis could be calming and the economy may be stabilizing, we saw a continuation of the strong rebound in equity markets through most of the second quarter. During the second quarter, liquidity improved, the wave of new regulatory programs slowed, and consumer sentiment improved. The U.S. equity market rally stalled somewhat in the last weeks of June, given weak economic data around housing and unemployment that indicated the recovery may take longer and be less robust in terms of future growth than anticipated. Still, the second quarter overall saw the best quarterly gain for the Dow Jones Industrial Index since the second quarter of 2003 and the biggest gain for the Standard & Poor’s 500 Index since the fourth quarter of 1998. The equity market rally was broad based, with international equities rising sharply as well.
 
For the semi-annual period overall, the U.S. small-cap equity market, as measured by the Russell 2000 Index, lagged its large-cap counterparts, as measured by the Russell 1000 Index. This was due primarily to the large-cap equity index’s greater weighting in financials, which performed well. Within the U.S. small-cap equity market, growth stocks significantly outperformed value stocks during the six-month period. The Russell 2000 Growth Index returned 11.36% for the semi-annual period compared to the -5.17% return of the Russell 2000 Value Index. The Russell 2000 Growth Index has a heavier weighting in the information technology sector, which performed strongly during the six months ended June 30, 2009.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
As expected, and in keeping with our investment approach, our quantitative model and its six investment themes (Valuation, Profitability, Quality, Management, Momentum and Sentiment) had the greatest impact on relative performance. We use these themes to take a long-term view of market patterns and look for inefficiencies, selecting stocks for the Fund and
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

overweighting or underweighting the ones chosen by the model. Over time and by design, the performance of any one of the model’s investment themes tends to have a low correlation with the model’s other themes, demonstrating the diversification benefit of the Fund’s theme-driven quantitative model. The variance in performance supports our research indicating that the diversification provided by the Fund’s different investment themes is a significant investment advantage over the long term, even though the Fund may experience underperformance in the short term.
 
Overall, the Fund underperformed during the six months with the Fund’s Management theme detracting the most, followed by Profitability. The Management theme assesses the characteristics, policies and strategic decisions of company management. The Profitability theme assesses whether a company is earning more than its cost of capital. Valuation, which attempts to capture potential mispricings of securities, typically by comparing a measure of the company’s intrinsic value to its market value, also negatively impacted relative returns, though to a lesser extent.
 
Momentum was by far the best-performing theme during the reporting period. Momentum seeks to predict drifts in stock prices caused by under-reaction to company-specific information. Also adding value were Sentiment and Quality. Sentiment reflects selected investment views and decisions of individuals and financial intermediaries. Quality evaluates whether the company’s earnings are coming from more persistent, cash-based sources, as opposed to accruals.
 
How did the Fund’s sector allocations affect relative performance?
 
In constructing the Fund’s portfolio, we focus on picking stocks rather than making industry or sector bets. We seek to outpace the Russell 2000 Index by overweighting stocks that we expect to outperform and underweighting those that we think may lag. We also build positions based on our thematic views. For example, the Fund aims to hold a basket of stocks with more favorable Momentum characteristics than the benchmark index.
 
That said, stock selection in the telecommunication services, energy and consumer staples sectors made the biggest positive contribution to the Fund’s results relative to the Russell 2000 Index. Conversely, stock selection in the financials and industrials sectors detracted most from the Fund’s results relative to its benchmark index.
 
Which individual stock positions contributed the most to the Fund’s relative returns during the first half of the fiscal year?
 
The Fund benefited most from overweight positions in casual dining restaurant franchiser O’Charley’s, lawn and garden products manufacturer Central Garden & Pet Co., and crude oil refiner Western Refining. We chose to overweight O’Charley’s and Central Garden & Pet Co. because of our positive views on Valuation, Quality and Momentum. The overweight in Western Refining was the result of our positive views on Sentiment and Profitability.
 
Which individual positions detracted from the Fund’s results during the reporting period?
 
Detracting most from the Fund’s results relative to its benchmark index were overweight positions in commercial banks, First Bancorp and Susquehanna Bancshares, and in immunobiotics manufacturer, Emergent BioSolutions. Our positive views on Valuation led us to overweight First Bancorp and Susquehanna Bancshares. The Fund had an overweighted position in Emergent BioSolutions because of our positive views on Profitability.
 
Did you make any enhancements to your quantitative models during the reporting period?
 
We continuously look for ways to improve our investment process. Accordingly, during the reporting period, we introduced a number of enhancements to the proprietary quantitative model we use in the Fund. During the first quarter of 2009, we added a new factor to our global models (excluding emerging markets), which extends the Fund’s Momentum theme by examining additional relationships across firms. This enhancement is part of our ongoing research effort in developing cross-company linkage signals. We believe that this new factor has predictive ability and should further add value to our process over time.
 
During the second quarter of 2009, we introduced an enhanced risk model to our process. The key features are the dynamic adjustment of volatility decay rates based on the market environment as well as the decomposition of factor exposures into different lags and the inclusion of short interest as a control factor. The expected benefits of these rather complex features are the ability to react to changing markets in a more timely manner, avoiding stale exposures and better controlling active exposure to heavily shorted companies.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
What is your strategy going forward for the Fund?
 
In the coming months, we believe that less expensive stocks should outpace more expensive stocks, and stocks with good momentum are likely to outperform those with poor momentum. Our focus will remain on companies with increasingly strong fundamentals, sustainable earnings, good profitability and a track record of using capital to enhance shareholder value. As such, we anticipate remaining fully invested with long-term performance likely to be the result of stock selection rather than sector or size allocations.
 
We stand behind our investment philosophy that sound economic investment principles, coupled with a disciplined quantitative approach, can provide strong, uncorrelated returns over the long run. Our research agenda is robust, and we continue to enhance our existing models, add new proprietary forecasting signals, and improve our trading execution as we seek to provide the most value to our shareholders.
 
 
CHANGES MADE TO THE TEAM’S MANAGEMENT
 
Mark Carhart and Ray Iwanowski, formerly co-heads of Quantitative Investment Strategies (QIS), have retired, each to pursue separate personal and professional objectives. Giorgio De Santis, co-head of QIS Research, also decided to retire.
 
Katinka Domotorffy, Head of Strategy for QIS, has assumed the role of Chief Investment Officer (CIO) and Head of QIS. Since joining Goldman Sachs in 1998, she has been a senior portfolio manager, researcher and strategist with the QIS team. Bob Jones will remain as co-CIO of the QIS equity team. Kent Daniel, senior portfolio manager and co-head of QIS Research, has joined Katinka and Bob as co-CIO of the equity business.
 
Bob Litterman will remain as the Chairman of QIS. The QIS team includes more than 115 professionals across all areas of the company, with 30 more in the information technology division.
 
Portfolio Composition
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
USA Mobility, Inc. 
    1.2 %   Telecommunication Services    
Rayonier, Inc. 
    1.1     Real Estate Investment Trust    
Sanderson Farms, Inc. 
    1.1     Food, Beverage & Tobacco    
Federal Realty Investment Trust
    1.0     Real Estate Investment Trust    
PharMerica Corp. 
    1.0     Health Care Equipment & Services    
Fred’s, Inc. Class A
    1.0     Retailing    
Realty Income Corp. 
    0.9     Real Estate Investment Trust    
Aeropostale, Inc. 
    0.9     Retailing    
Aspen Insurance Holdings Ltd. 
    0.9     Insurance    
Facet Biotech Corp. 
    0.8     Pharmaceuticals, Biotechnology & Life Sciences    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 22.1% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 98.0%
Automobiles & Components – 1.1%
6,637
  Amerigon, Inc.*   $ 40,486  
23,421
  ArvinMeritor, Inc.      102,818  
13,672
  Cooper Tire & Rubber Co.      135,626  
9,705
  Dana Holding Corp.*     12,423  
5,786
  Dorman Products, Inc.*     80,020  
21,535
  Exide Technologies*     80,326  
7,412
  Federal Mogul Corp.*     70,043  
30,186
  Modine Manufacturing Co.      144,893  
11,684
  Standard Motor Products, Inc.      96,627  
9,475
  Tenneco, Inc.*     100,435  
18,213
  TRW Automotive Holdings Corp.*(a)     205,807  
3,259
  Winnebago Industries     24,214  
             
          1,093,718  
 
 
Banks – 5.0%
3,894
  1st Source Corp.      67,249  
17,737
  Associated Banc-Corp(a)     221,713  
16,126
  Bancorpsouth, Inc.      331,067  
5,808
  CapitalSource, Inc.      28,343  
31,164
  Cathay General Bancorp(a)     296,370  
6,760
  Central Pacific Financial Corp.      25,350  
487
  City National Corp.      17,936  
934
  Cullen/Frost Bankers, Inc.      43,076  
34,911
  CVB Financial Corp.(a)     208,419  
23,030
  First Bancorp     123,026  
41,713
  First Financial Northwest, Inc.      326,196  
5,670
  First Midwest Bancorp, Inc.      41,448  
8,096
  Great Southern Bancorp, Inc.(a)     166,373  
50,477
  International Bancshares Corp.(a)     520,418  
4,503
  MGIC Investment Corp.      19,813  
17,164
  Pinnacle Financial Partners, Inc.*(a)     228,624  
11,542
  Renasant Corp.      173,361  
37,203
  Sterling Bancshares, Inc.      235,495  
62,642
  Susquehanna Bancshares, Inc.(a)     306,319  
5,301
  SVB Financial Group*     144,293  
7,588
  TCF Financial Corp.(a)     101,452  
2,753
  Texas Capital Bancshares, Inc.*     42,589  
12,942
  Trustmark Corp.(a)     250,039  
17,649
  Washington Federal, Inc.(a)     229,437  
5,516
  Whitney Holding Corp.(a)     50,527  
39,943
  Wilshire Bancorp, Inc.      229,672  
22,728
  Wintrust Financial Corp.(a)     365,466  
             
          4,794,071  
 
 
Capital Goods – 8.3%
5,306
  AAR Corp.*(a)     85,161  
12,463
  Acuity Brands, Inc.      349,587  
6,429
  AGCO Corp.*(b)     186,891  
22,020
  Albany International Corp. Class A     250,588  
5,498
  Alliant Techsystems, Inc.*(a)     452,815  
6,858
  American Woodmark Corp.      164,249  
15,951
  Apogee Enterprises, Inc.      196,197  
5,276
  Applied Signal Technology, Inc.      134,591  
39,033
  Belden, Inc.      651,851  
5,323
  Briggs & Stratton Corp.      71,009  
 
 
8,421
  Builders FirstSource, Inc.*(a)     35,031  
2,822
  Cascade Corp.      44,390  
7,812
  Ceradyne, Inc.*     137,960  
1,542
  Cubic Corp.      55,188  
2,841
  Ducommun, Inc.      53,382  
14,296
  Dycom Industries, Inc.*     158,257  
13,671
  DynCorp International, Inc. Class A*     229,536  
12,701
  Encore Wire Corp.(a)     271,166  
21,466
  EnerSys*     390,467  
9,992
  EnPro Industries, Inc.*(a)     179,956  
3,510
  Esterline Technologies Corp.*     95,016  
4,758
  Fushi Copperweld, Inc.*     39,349  
1,649
  General Cable Corp.*(a)     61,969  
13,049
  Gibraltar Industries, Inc.      89,647  
6,093
  Granite Construction, Inc.      202,775  
12,539
  Insteel Industries, Inc.      103,321  
5,135
  Integrated Electrical Services, Inc.*     40,104  
8,348
  John Bean Technologies Corp.      104,517  
12,068
  Kadant, Inc.*     136,248  
43,981
  LSI Industries, Inc.      239,696  
2,711
  Miller Industries, Inc.*     23,857  
6,976
  Mueller Industries, Inc.      145,101  
11,341
  NACCO Industries, Inc. Class A     325,714  
7,466
  Polypore International, Inc.*     83,022  
14,459
  Power-One, Inc.*(a)     21,544  
26,285
  Quanex Building Products Corp.      294,918  
1,532
  Raven Industries, Inc.      39,219  
68,874
  Taser International, Inc.*(a)     314,065  
6,663
  Tennant Co.      122,533  
24,053
  Toro Co.(a)     719,185  
7,350
  TriMas Corp.*     24,770  
4,132
  Trinity Industries, Inc.      56,278  
3,303
  Universal Forest Products, Inc.      109,296  
1,411
  Vicor Corp.      10,187  
3,210
  Watsco, Inc.(a)     157,065  
16,842
  Woodward Governor Co.      333,472  
             
          7,991,140  
 
 
Commercial & Professional Services – 3.8%
7,331
  Administaff, Inc.      170,592  
3,523
  ATC Technology Corp.*     51,083  
17,398
  CDI Corp.      193,988  
18,231
  Comfort Systems USA, Inc.      186,868  
1,197
  Consolidated Graphics, Inc.*     20,852  
7,079
  Diamond Management & Technology Consultants, Inc.      29,732  
403
  G&K Services, Inc. Class A     8,523  
18,718
  HNI Corp.      338,047  
14,348
  ICT Group, Inc.*     125,258  
36,850
  Kelly Services, Inc. Class A     403,507  
37,573
  Kforce, Inc.*     310,729  
22,187
  Kimball International, Inc. Class B     138,447  
91,517
  MPS Group, Inc.*     699,190  
5,448
  Robert Half International, Inc.      128,682  
67,280
  Spherion Corp.*     277,194  
21,351
  The Standard Register Co.(a)     69,604  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Commercial & Professional Services – (continued)
16,550
  TrueBlue, Inc.*   $ 139,020  
5,998
  United Stationers, Inc.*     209,210  
25,416
  Volt Information Sciences, Inc.*     159,358  
             
          3,659,884  
 
 
Consumer Durables & Apparel – 2.3%
28,302
  American Greetings Corp. Class A     330,567  
9,467
  Blyth, Inc.      310,423  
24,891
  Carter’s, Inc.*(a)     612,568  
18,548
  Harman International Industries, Inc.(a)     348,702  
1,852
  Hooker Furniture Corp.      21,261  
12,078
  iRobot Corp.*     156,773  
39,999
  La-Z-Boy, Inc.(a)     188,795  
8,015
  Perry Ellis International, Inc.*     58,349  
6,508
  Polaris Industries, Inc.(a)     209,037  
             
          2,236,475  
 
 
Consumer Services – 2.9%
2,393
  Ameristar Casinos, Inc.(a)     45,539  
654
  Buffalo Wild Wings, Inc.*     21,268  
1,457
  California Pizza Kitchen, Inc.*     19,364  
1,616
  CEC Entertainment, Inc.*     47,640  
4,289
  Choice Hotels International, Inc.      114,130  
8,720
  Domino’s Pizza, Inc.*     65,313  
8,867
  Gaylord Entertainment Co.*     112,700  
4,122
  Lakes Entertainment, Inc.*     11,995  
18,215
  Landry’s Restaurants, Inc.*     156,649  
31,066
  O’Charleys, Inc.      287,360  
4,413
  Panera Bread Co. Class A*(b)     220,032  
26,254
  Papa John’s International, Inc.*(a)     650,837  
4,456
  PF Chang’s China Bistro, Inc.*     142,859  
1,110
  Pre-Paid Legal Services, Inc.*     48,385  
3,235
  Steiner Leisure Ltd.*     98,765  
3,898
  The Cheesecake Factory, Inc.*(a)     67,435  
46,553
  The Steak N Shake Co.*     406,873  
2,516
  Vail Resorts, Inc.*     67,479  
4,771
  WMS Industries, Inc.*     150,334  
3,292
  Wyndham Worldwide Corp.      39,899  
             
          2,774,856  
 
 
Diversified Financials – 4.6%
82,208
  Advance America, Cash Advance Centers, Inc.      364,182  
43,906
  Allied Capital Corp.      152,793  
13,606
  American Capital Ltd.      43,675  
73,983
  Apollo Investment Corp.      443,898  
6,965
  BGC Partners, Inc. Class A     26,397  
20,442
  BlackRock Kelso Capital Corp.      127,354  
1,547
  Cash America International, Inc.      36,184  
13,519
  Cohen & Steers, Inc.      202,109  
29,424
  Compass Diversified Holdings     238,040  
677
  Diamond Hill Investment Group, Inc.*     27,202  
23,422
  E*Trade Financial Corp.*     29,980  
4,279
  Eaton Vance Corp.(a)     114,463  
1,468
  Evercore Partners, Inc. Class A     28,832  
 
 
20,013
  FBR Capital Markets Corp.*     94,061  
6,838
  Federated Investors, Inc. Class B(a)     164,727  
13,141
  Fifth Street Finance Corp.      131,936  
10,846
  GAMCO Investors, Inc. Class A     526,031  
3,500
  Gladstone Capital Corp.      26,355  
26,375
  Hercules Technology Growth Capital, Inc.      220,495  
579
  International Assets Holding Corp.*     8,610  
1,601
  Investment Technology Group, Inc.*     32,644  
13,891
  Kohlberg Capital Corp.      87,791  
6,431
  LaBranche & Co., Inc.*     27,653  
54,640
  MCG Capital Corp.*     132,775  
23,644
  MF Global Ltd.*(a)     140,209  
12,164
  MVC Capital, Inc.      102,907  
17,800
  NGP Capital Resources Co.      104,486  
1,791
  Oppenheimer Holdings, Inc. Class A     37,916  
2,287
  Penson Worldwide, Inc.*     20,469  
3,505
  Piper Jaffray Cos, Inc.*     153,063  
53,481
  Primus Guaranty Ltd.*     126,215  
16,881
  Pzena Investment Management, Inc. Class A     127,958  
5,950
  Rewards Network, Inc.*     22,491  
6,473
  SEI Investments Co.      116,773  
7,528
  The First Marblehead Corp.*     15,207  
2,211
  Virtus Investment Partners, Inc.*     32,480  
7,090
  World Acceptance Corp.*(a)     141,162  
             
          4,429,523  
 
 
Energy – 4.9%
6,877
  Alpha Natural Resources, Inc.*     180,659  
19,466
  Basic Energy Services, Inc.*     132,953  
19,221
  Berry Petroleum Co. Class A(a)     357,318  
13,484
  Bill Barrett Corp.*(a)     370,271  
35,017
  Cal Dive International, Inc.*(a)     302,197  
20,753
  Cimarex Energy Co.      588,140  
5,860
  Complete Production Services, Inc.*     37,270  
9,676
  Exterran Holdings, Inc.*(a)     155,203  
2,169
  Hercules Offshore, Inc.*     8,611  
2,710
  Overseas Shipholding Group, Inc.(a)     92,248  
5,036
  Patterson-UTI Energy, Inc.(a)     64,763  
22,510
  Petroquest Energy, Inc.*(a)     83,062  
8,765
  Pioneer Drilling Co.*     41,984  
24,428
  Rosetta Resources, Inc.*(a)     213,745  
13,293
  St. Mary Land & Exploration Co.(a)     277,425  
13,844
  Swift Energy Co.*(a)     230,503  
5,090
  Union Drilling, Inc.*     33,696  
7,622
  Unit Corp.*     210,138  
50,974
  Venoco, Inc.*     390,970  
9,111
  W&T Offshore, Inc.      88,741  
17,330
  Willbros Group, Inc.*     216,798  
14,205
  World Fuel Services Corp.(a)     585,672  
             
          4,662,367  
 
 
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Food & Staples Retailing – 0.6%
17,292
  Casey’s General Stores, Inc.(a)   $ 444,232  
3,903
  Ingles Markets, Inc. Class A     59,482  
5,229
  The Pantry, Inc.*     86,801  
             
          590,515  
 
 
Food, Beverage & Tobacco – 3.8%
2,429
  Boston Beer Co., Inc. Class A*     71,874  
2,515
  Chiquita Brands International, Inc.*(a)     25,804  
22,274
  Hansen Natural Corp.*(a)     686,485  
22,653
  Imperial Sugar Co.      274,328  
12,841
  J&J Snack Foods Corp.      460,992  
2,554
  Lancaster Colony Corp.      112,555  
12,177
  Lance, Inc.      281,654  
35,870
  National Beverage Corp.*     382,015  
22,797
  Sanderson Farms, Inc.(a)     1,025,865  
11,130
  Smithfield Foods, Inc.*(a)     155,486  
5,856
  Universal Corp.      193,892  
             
          3,670,950  
 
 
Health Care Equipment & Services – 7.5%
26,058
  Align Technology, Inc.*(a)     276,215  
5,975
  American Medical Systems Holdings, Inc.*     94,405  
31,887
  AMN Healthcare Services, Inc.*     203,439  
15,327
  Angiodynamics, Inc.*     203,389  
2,576
  Aspect Medical Systems, Inc.*     15,224  
14,548
  Assisted Living Concepts, Inc. Class A*     211,673  
739
  Atrion Corp.      99,092  
4,613
  Beckman Coulter, Inc.      263,587  
10,298
  BioScrip, Inc.*     60,964  
2,508
  Cardiac Science Corp.*     10,082  
14,932
  Computer Programs & Systems, Inc.(a)     572,045  
5,347
  DexCom, Inc.*     33,098  
13,883
  ev3, Inc.*(a)     148,826  
4,247
  Gen-Probe, Inc.*     182,536  
31,882
  HealthSpring, Inc.*     346,238  
10,735
  Hill-Rom Holdings, Inc.      174,122  
12,151
  Idexx Laboratories, Inc.*     561,376  
2,786
  I-Flow Corp.*     19,335  
16,005
  Invacare Corp.      282,488  
9,606
  IRIS International, Inc.*     113,351  
28,383
  Kindred Healthcare, Inc.*     351,098  
15,371
  LCA-Vision, Inc.*(a)     64,866  
3,771
  LifePoint Hospitals, Inc.*     98,989  
7,408
  Magellan Health Services, Inc.*     243,131  
18,492
  Medcath Corp.*     217,466  
18,639
  Medical Action Industries, Inc.*     213,417  
6,193
  MedQuist, Inc.      37,653  
12,263
  Molina Healthcare, Inc.*     293,331  
72,598
  Nighthawk Radiology Holdings, Inc.*     268,613  
2,664
  Palomar Medical Technologies, Inc.*     39,054  
47,718
  PharMerica Corp.*(a)     936,704  
6,032
  RTI Biologics, Inc.*     25,877  
 
 
4,060
  Skilled Healthcare Group, Inc. Class A*     30,450  
5,611
  STERIS Corp.      146,335  
35,595
  Theragenics Corp.*     45,918  
9,664
  TomoTherapy, Inc.*     26,576  
26,408
  Universal American Corp.*     230,278  
1,035
  WellCare Health Plans, Inc.*     19,137  
             
          7,160,378  
 
 
Household & Personal Products – 0.7%
56,435
  Central Garden & Pet Co. Class A*     555,885  
46,558
  Mannatech, Inc.(a)     153,641  
             
          709,526  
 
 
Insurance – 2.1%
20,749
  American Equity Investment Life Holding Co.      115,779  
38,255
  Aspen Insurance Holdings Ltd.      854,617  
28,471
  CNA Surety Corp.*     384,074  
2,846
  Employers Holdings, Inc.      38,563  
1,438
  First American Corp.      37,259  
3,038
  Infinity Property & Casualty Corp.      110,765  
5,672
  National Financial Partners Corp.(a)     41,519  
462
  National Western Life Insurance Co. Class A     53,939  
2,777
  Reinsurance Group of America, Inc.      96,945  
4,509
  Safety Insurance Group, Inc.      137,795  
9,813
  Selective Insurance Group, Inc.      125,312  
             
          1,996,567  
 
 
Materials – 3.8%
17,276
  A. Schulman, Inc.      261,040  
4,217
  Allied Nevada Gold Corp.*(a)     33,989  
6,325
  AM Castle & Co.      76,406  
4,626
  Balchem Corp.      113,430  
13,187
  Brush Engineered Materials, Inc.*     220,882  
39,576
  Buckeye Technologies, Inc.*     177,696  
6,563
  Clearwater Paper Corp.*     165,978  
1,794
  Domtar Corp.*     29,745  
2,629
  Haynes International, Inc.*     62,307  
4,963
  Innospec, Inc.      53,352  
16,414
  Kaiser Aluminum Corp.      589,427  
36,451
  Louisiana-Pacific Corp.*     124,663  
2,690
  Minerals Technologies, Inc.      96,894  
2,817
  OM Group, Inc.*     81,749  
9,909
  Omnova Solutions, Inc.*     32,303  
51,648
  PolyOne Corp.*     139,966  
2,695
  Reliance Steel & Aluminum Co.      103,461  
27,410
  Spartech Corp.      251,898  
15,111
  Sutor Technology Group Ltd.*     49,413  
27,148
  Westlake Chemical Corp.(a)     553,548  
30,924
  Worthington Industries, Inc.      395,518  
             
          3,613,665  
 
 
Media – 0.7%
11,971
  Arbitron, Inc.      190,219  
4,375
  Ascent Media Corp. Class A*     116,287  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Media – (continued)
6,140
  CTC Media, Inc.*   $ 72,575  
8,897
  Journal Communications, Inc. Class A     9,342  
23,320
  Live Nation, Inc.*     113,335  
9,627
  National CineMedia, Inc.      132,468  
3,823
  RCN Corp.*     22,823  
             
          657,049  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 7.8%
71,500
  Accelrys, Inc.*     422,565  
1,409
  Albany Molecular Research, Inc.*     11,821  
41,613
  Alkermes, Inc.*     450,253  
5,380
  Bio-Rad Laboratories, Inc. Class A*     406,082  
3,217
  Cambrex Corp.*     13,254  
6,189
  Caraco Pharmaceutical Laboratories Ltd.*     19,000  
5,287
  Cepheid, Inc.*(a)     49,804  
1,259
  Charles River Laboratories International, Inc.*     42,491  
13,981
  Cubist Pharmaceuticals, Inc.*     256,272  
81,142
  Depomed, Inc.*     263,711  
10,522
  Dionex Corp.*     642,158  
31,005
  Enzon Pharmaceuticals, Inc.*(a)     244,009  
23,742
  eResearchTechnology, Inc.*     147,438  
81,520
  Facet Biotech Corp.*     757,321  
5,101
  Harvard Bioscience, Inc.*     20,149  
6,006
  Human Genome Sciences, Inc.*     17,177  
5,591
  Idera Pharmaceuticals, Inc.*(a)     32,763  
100,993
  Insmed, Inc.*(a)     100,993  
20,544
  Isis Pharmaceuticals, Inc.*(a)     338,976  
32,530
  Lexicon Pharmaceuticals, Inc.*     40,337  
6,511
  MAP Pharmaceuticals, Inc.*     79,564  
26,279
  Martek Biosciences Corp.*(a)     555,801  
27,473
  Maxygen, Inc.*     184,619  
20,181
  Molecular Insight Pharmaceuticals, Inc.*(a)     104,336  
3,919
  Myriad Genetics, Inc.*     139,712  
1,798
  Myriad Pharmaceuticals, Inc.*     8,361  
75,018
  Nabi Biopharmaceuticals*     181,544  
77,805
  PDL BioPharma, Inc.      614,659  
51,126
  Progenics Pharmaceuticals, Inc.*     263,299  
73,144
  Questcor Pharmaceuticals, Inc.*     365,720  
11,141
  Regeneron Pharmaceuticals, Inc.*     199,647  
23,306
  Synta Pharmaceuticals Corp.*(a)     53,837  
2,636
  The Medicines Co.*     22,116  
10,086
  Varian, Inc.*(a)     397,691  
             
          7,447,480  
 
 
Real Estate Investment Trust – 6.4%
1,670
  AMB Property Corp.      31,413  
18,570
  BRE Properties, Inc.      441,223  
27,896
  Chimera Investment Corp.      97,357  
3,224
  Digital Realty Trust, Inc.      115,581  
2,455
  Duke Realty Corp.      21,530  
18,285
  Federal Realty Investment Trust(a)     942,043  
27,469
  Franklin Street Properties Corp.(a)     363,964  
4,897
  Hospitality Properties Trust     58,225  
 
 
19,345
  Liberty Property Trust(a)     445,709  
15,844
  LTC Properties, Inc.      324,010  
4,985
  Mack-Cali Realty Corp.      113,658  
10,278
  Nationwide Health Properties, Inc.(a)     264,556  
10,488
  Omega Healthcare Investors, Inc.      162,774  
29,921
  Rayonier, Inc.(a)     1,087,628  
41,015
  Realty Income Corp.(a)     899,049  
10,785
  Regency Centers Corp.(a)     376,504  
23,575
  Senior Housing Properties Trust     384,744  
             
          6,129,968  
 
 
Retailing – 6.6%
17,448
  99 Cents Only Stores*(a)     236,944  
25,262
  Aeropostale, Inc.*(a)     865,729  
7,599
  Asbury Automotive Group, Inc.      77,814  
1,512
  Blue Nile, Inc.*     65,001  
26,380
  Brown Shoe Co., Inc.      190,991  
22,162
  Build-A-Bear Workshop, Inc.*(a)     99,064  
7,293
  Charlotte Russe Holding, Inc.*     93,934  
15,682
  Chico’s FAS, Inc.*(a)     152,586  
6,735
  Citi Trends, Inc.*     174,302  
4,298
  Conn’s, Inc.*     53,725  
9,272
  Dollar Tree, Inc.*     390,351  
7,394
  Dress Barn, Inc.*(a)     105,734  
8,213
  Family Dollar Stores, Inc.      232,428  
72,531
  Fred’s, Inc. Class A     913,891  
2,165
  Gaiam, Inc. Class A*     11,843  
12,377
  Genesco, Inc.*     232,316  
23,732
  HOT Topic, Inc.*(a)     173,481  
8,386
  HSN, Inc.*     88,640  
5,553
  Jo-Ann Stores, Inc.*     114,780  
9,258
  Netflix, Inc.*(a)     382,726  
20,165
  NutriSystem, Inc.      292,392  
14,235
  PetSmart, Inc.      305,483  
50,069
  Stage Stores, Inc.      555,766  
26,510
  The Cato Corp. Class A(a)     462,334  
33,955
  Tuesday Morning Corp.*     114,428  
             
          6,386,683  
 
 
Semiconductors & Semiconductor Equipment – 4.6%
2,512
  Actel Corp.*     26,954  
66,899
  Amkor Technology, Inc.*(a)     316,432  
5,364
  Anadigics, Inc.*     22,475  
44,485
  Applied Micro Circuits Corp.*     361,663  
14,428
  Cirrus Logic, Inc.*     64,926  
8,682
  Cohu, Inc.      77,964  
48,089
  CSR PLC*     277,982  
16,160
  Cypress Semiconductor Corp.*(a)     148,672  
22,265
  DSP Group, Inc.*     150,511  
11,661
  Entegris, Inc.*     31,718  
8,745
  Entropic Communications, Inc.*     19,676  
44,862
  Exar Corp.*     322,558  
13,059
  Integrated Device Technology, Inc.*     78,876  
217,196
  Lattice Semiconductor Corp.*     408,328  
25,618
  Micrel, Inc.      187,524  
51,992
  MIPS Technologies, Inc.*     155,976  
2,272
  MKS Instruments, Inc.*     29,968  
25,918
  PLX Technology, Inc.*     97,711  
 
 
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Semiconductors & Semiconductor Equipment – (continued)
19,642
  RF Micro Devices, Inc.*   $ 73,854  
18,864
  Rudolph Technologies, Inc.*     104,129  
3,331
  Sigma Designs, Inc.*     53,429  
186,615
  Silicon Image, Inc.*     429,215  
109,498
  Silicon Storage Technology, Inc.*     204,761  
7,933
  Standard Microsystems Corp.*     162,230  
19,287
  Ultratech, Inc.*     237,423  
5,385
  Volterra Semiconductor Corp.*     70,759  
24,492
  Zoran Corp.*     266,963  
             
          4,382,677  
 
 
Software & Services – 8.8%
39,880
  Acxiom Corp.(a)     352,140  
11,455
  ArcSight, Inc.*     203,555  
42,314
  Art Technology Group, Inc.*     160,793  
18,606
  Blackbaud, Inc.(a)     289,323  
11,258
  Chordiant Software, Inc.*     40,867  
80,925
  Ciber, Inc.*     250,868  
37,100
  CommVault Systems, Inc.*(a)     615,118  
12,576
  CSG Systems International, Inc.*     166,506  
13,052
  Dice Holdings, Inc.*     60,692  
9,540
  DivX, Inc.*     52,375  
62,457
  EarthLink, Inc.*     462,806  
7,408
  Epicor Software Corp.*     39,262  
8,692
  ExlService Holdings, Inc.*     97,437  
29,207
  FalconStor Software, Inc.*     138,733  
37,579
  Internap Network Services Corp.*     131,151  
1,960
  Kenexa Corp.*     22,677  
7,932
  Lawson Software, Inc.*     44,261  
49,826
  Lionbridge Technologies, Inc.*     91,680  
9,736
  Liquidity Services, Inc.*     95,997  
5,286
  LivePerson, Inc.*     21,144  
18,870
  Manhattan Associates, Inc.*     343,811  
58,317
  Marchex, Inc. Class B     196,528  
39,309
  Mentor Graphics Corp.*     215,020  
7,086
  MicroStrategy, Inc. Class A*     355,859  
30,669
  ModusLink Global Solutions, Inc.*     210,389  
2,631
  Monotype Imaging Holdings, Inc.*     17,917  
9,747
  Ness Technologies, Inc.*     38,111  
12,434
  NeuStar, Inc. Class A*     275,537  
78,762
  OpenTV Corp. Class A*     103,966  
35,401
  Parametric Technology Corp.*(a)     413,838  
4,847
  Perficient, Inc.*     33,881  
9,244
  PROS Holdings, Inc.*     75,061  
17,966
  QAD, Inc.      58,390  
2,568
  Rackspace Hosting, Inc.*     35,592  
134,042
  RealNetworks, Inc.*     400,786  
13,553
  Renaissance Learning, Inc.(a)     124,823  
11,591
  RightNow Technologies, Inc.*     136,774  
15,427
  StarTek, Inc.*     123,725  
24,774
  SumTotal Systems, Inc.*     119,163  
60,596
  Symyx Technologies*     354,487  
12,094
  TeleTech Holdings, Inc.*     183,224  
24,010
  The Hackett Group, Inc.*     55,943  
25,182
  TIBCO Software, Inc.*     180,555  
23,565
  TiVo, Inc.*     246,961  
12,030
  Unica Corp.*     65,924  
25,735
  United Online, Inc.      167,535  
 
 
38,901
  Valueclick, Inc.*     409,239  
8,988
  VeriFone Holdings, Inc.*(a)     67,500  
22,974
  Web.com Group, Inc.*     129,344  
             
          8,477,268  
 
 
Technology Hardware & Equipment – 7.2%
52,491
  3Com Corp.*(a)     247,233  
32,493
  Acme Packet, Inc.*     328,829  
18,001
  Agilysys, Inc.      84,245  
9,594
  Airvana, Inc.*     61,114  
480
  Arrow Electronics, Inc.*     10,195  
23,832
  Aruba Networks, Inc.*     208,292  
17,262
  Avid Technology, Inc.*     231,483  
2,157
  Avnet, Inc.*     45,362  
1,860
  Avocent Corp.*     25,966  
7,104
  Bel Fuse, Inc. Class B     113,948  
19,797
  Benchmark Electronics, Inc.*     285,077  
20,346
  BigBand Networks, Inc.*     105,189  
66,625
  Brightpoint, Inc.*     417,739  
29,134
  Cray, Inc.*     229,576  
5,672
  CTS Corp.      37,152  
17,178
  Electronics for Imaging, Inc.*     183,117  
56,797
  Extreme Networks*     113,594  
40,505
  Harris Stratex Networks, Inc. Class A*     262,472  
58,574
  Imation Corp.      445,748  
32,833
  Ingram Micro, Inc. Class A*(a)     574,577  
10,137
  Insight Enterprises, Inc.*     97,923  
22,026
  Isilon Systems, Inc.*     93,390  
11,289
  Ixia*     76,088  
14,892
  Methode Electronics, Inc.      104,542  
3,036
  Netezza Corp.*     25,259  
5,306
  Netgear, Inc.*     76,459  
11,851
  Novatel Wireless, Inc.*     106,896  
3,740
  PC Mall, Inc.*     25,282  
13,002
  PC-Tel, Inc.*     69,561  
5,928
  Plantronics, Inc.      112,098  
186,698
  Powerwave Technologies, Inc.*(a)     300,584  
131,842
  Quantum Corp.*     109,429  
16,202
  Radisys Corp.*     145,980  
8,553
  Seachange International, Inc.*     68,681  
57,387
  ShoreTel, Inc.*     459,096  
13,577
  Smart Modular Technologies (WWH), Inc.*     30,820  
26,723
  Sonus Networks, Inc.*     43,024  
7,900
  STEC, Inc.*(a)     183,201  
7,883
  Super Micro Computer, Inc.*     60,384  
30,589
  Symmetricom, Inc.*     176,499  
8,506
  Tech Data Corp.*     278,231  
28,380
  Tellabs, Inc.*     162,617  
18,178
  Tollgrade Communications, Inc.*     95,253  
             
          6,912,205  
 
 
Telecommunication Services – 2.0%
6,002
  Centennial Communications Corp.*     50,177  
101,179
  PAETEC Holding Corp.*     273,183  
28,799
  Syniverse Holdings, Inc.*     461,648  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Telecommunication Services – (continued)
88,363
  USA Mobility, Inc.    $ 1,127,512  
10,747
  Virgin Mobile USA, Inc. Class A*     43,203  
             
          1,955,723  
 
 
Transportation – 1.4%
6,333
  Dollar Thrifty Automotive Group, Inc.*     88,345  
14,346
  Hertz Global Holdings, Inc.*     114,624  
2,304
  J.B. Hunt Transport Services, Inc.(a)     70,341  
2,301
  Knight Transportation, Inc.(a)     38,082  
3,719
  Landstar System, Inc.      133,549  
19,464
  Marten Transport Ltd.*     404,073  
3,234
  Ultrapetrol Bahamas Ltd.*     14,327  
7,243
  Universal Truckload Services, Inc.      113,353  
17,188
  UTi Worldwide, Inc.*     195,943  
9,822
  Werner Enterprises, Inc.(a)     177,975  
12,084
  YRC Worldwide, Inc.*     20,905  
             
          1,371,517  
 
 
Utilities – 1.1%
16,075
  Black Hills Corp.(a)     369,564  
4,544
  SJW Corp.      103,149  
7,975
  Southwest Gas Corp.      177,125  
9,473
  Unisource Energy Corp.      251,413  
10,111
  Westar Energy, Inc.      189,784  
             
          1,091,035  
 
 
TOTAL COMMON STOCKS
(Cost $93,356,050)
  $ 94,195,240  
 
 
             
             
Closed-End Fund – 0.0%
2,413
  Kayne Anderson Energy Development Co.      31,996  
(Cost $32,710)
       
 
 
    Rate      
 
Investment Company(c) – 2.7%
JPMorgan U.S. Government Money Market Fund – Capital Shares
2,602,113
  0.236%   $ 2,602,113  
(Cost $2,602,113)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES LENDING REINVESTMENT VEHICLE
(Cost $95,990,873)
  $ 96,829,349  
 
 
             
             
Securities Lending Reinvestment Vehicle(c)(d) – 22.1%
Boston Global Investment Trust – Enhanced Portfolio II
21,238,626
  0.282%   $ 21,174,910  
(Cost $20,996,964)
       
 
 
TOTAL INVESTMENTS – 122.8%
(Cost $116,987,837)
  $ 118,004,259  
 
 
LIABILITIES IN EXCESS OF OTHER
  ASSETS – (22.8)% 		    (21,912,172 )
 
 
NET ASSETS – 100.0%   $ 96,092,087  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
(c) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(d) Represents an affiliated issuer.
 
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Contracts Long     Month     Value     Loss  
   
Russell 2000 Mini Index
    34       September 2009     $ 1,724,480     $ (11,111 )
 
 
 
 
 10
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
Investments in securities of unaffiliated issuers, at value (identified cost $95,990,873)(a)
  $ 96,829,349  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $20,996,964)
    21,174,910  
Cash
    81,422  
Receivables:
       
Investment securities sold
    3,606,643  
Due from custodian
    89,707  
Dividends and interest
    84,450  
Securities lending income
    7,390  
Fund shares sold
    4,012  
Other assets
    698  
 
 
Total assets
    121,878,581  
 
 
 
Liabilities:
Payables:
       
Payable upon return of securities loaned
    21,467,755  
Investment securities purchased
    3,947,342  
Fund shares redeemed
    161,329  
Amounts owed to affiliates
    100,431  
Due to broker — variation margin
    2,222  
Accrued expenses
    107,415  
 
 
Total liabilities
    25,786,494  
 
 
 
Net Assets:
Paid-in capital
    160,909,021  
Accumulated undistributed net investment income
    897,575  
Accumulated net realized loss from investment and futures transactions
    (66,719,820 )
Net unrealized gain on investments and futures
    1,005,311  
 
 
NET ASSETS
  $ 96,092,087  
 
 
Net Assets:
       
Institutional
  $ 80,709,944  
Service
    15,382,143  
 
 
Total Net Assets
  $ 96,092,087  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    11,528,202  
Service
    2,206,406  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 7.00  
Service
    6.97  
 
 
 
(a) Includes loaned securities having a market value of $20,724,660.
 
 
The accompanying notes are an integral part of these financial statements.
11 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Dividends
  $ 735,836  
Securities lending income — affiliated issuer
    76,367  
 
 
Total investment income
    812,203  
 
 
 
Expenses:
Management fees
    322,163  
Professional fees
    45,279  
Custody and accounting fees
    38,690  
Printing fees
    12,999  
Distribution and Service fees — Service Shares
    12,531  
Transfer Agent fees(a)
    8,588  
Trustee fees
    8,460  
Other
    5,717  
 
 
Total expenses
    454,427  
 
 
Less — expense reductions
    (71,346 )
 
 
Net expenses
    383,081  
 
 
NET INVESTMENT INCOME
    429,122  
 
 
 
Realized and unrealized gain (loss) from investment and futures transactions:
Net realized gain (loss) from:
       
Investment transaction — unaffiliated issuers
    (19,701,485 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    12,672  
Futures transactions
    247,771  
Net change in unrealized gain (loss) on:
       
Investments — unaffiliated issuers
    19,579,176  
Securities lending reinvestment vehicle — affiliated issuer
    136,478  
Futures
    (186,107 )
 
 
Net realized and unrealized gain from investment and futures transactions
    88,505  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 517,627  
 
 
 
(a) Institutional and Service Shares had Transfer Agent fees of $7,586 and $1,002, respectively.
 
 
 12
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 429,122     $ 1,061,513  
Net realized loss from investment and futures transactions
    (19,441,042 )     (42,454,681 )
Net change in unrealized gain (loss) on investments and futures
    19,529,547       (7,454,796 )
 
 
Net increase (decrease) in net assets resulting from operations
    517,627       (48,847,964 )
 
 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (781,388 )
Service Shares
    —       (53,513 )
From net realized gains
               
Institutional Shares
    —       (197,173 )
Service Shares
    —       (14,073 )
 
 
Total distributions to shareholders
    —       (1,046,147 )
 
 
 
From share transactions:
Proceeds from sales of shares
    10,372,426       17,777,531  
Reinvestments of distributions
    —       1,046,147  
Cost of shares redeemed
    (7,514,617 )     (29,119,034 )
 
 
Net increase (decrease) in net assets resulting from share transactions
    2,857,809       (10,295,356 )
 
 
TOTAL INCREASE (DECREASE)
    3,375,436       (60,189,467 )
 
 
 
Net assets:
Beginning of period
    92,716,651       152,906,118  
 
 
End of period
  $ 96,092,087     $ 92,716,651  
 
 
Accumulated undistributed net investment income
  $ 897,575     $ 468,453  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                             
          Income (loss) from
 		    Distributions to
 		                                  Ratios assuming no
 		           
          investment operations     shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		    net investment
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
 		    expenses
 		    income
 		    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
 		    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		    to average
 		    turnover
 		     
Year - Share Class   of period     income     gain (loss)     operations     income     gains     distributions     period     return(a)     (in 000s)     net assets     net assets     net assets     net assets     rate      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                             
2009 - Institutional
  $ 6.98     $ 0.03(b )   $ (0.01 )   $ 0.02     $ —     $ —     $ —     $ 7.00       0.29 %   $ 80,710       0.86 %(c)     1.03 %(c)     1.01 %(c)     0.88 %(c)     102 %    
2009 - Service
    6.96       0.02(b )     (0.01 )     0.01       —       —       —       6.97       0.14       15,382       1.11 (c)     0.76 (c)     1.26 (c)     0.61 (c)     102      
                                                                                                                             
                                                                                                                             

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                             
2008 - Institutional
    10.71       0.09(d )     (3.74 )     (3.65 )     (0.06 )     (0.02 )     (0.08 )     6.98       (33.95 )     86,253       0.86       0.85 (d)     1.06       0.65 (d)     189      
2008 - Service
    10.71       0.06(d )     (3.73 )     (3.67 )     (0.06 )     (0.02 )     (0.08 )     6.96       (34.16 )     6,464       1.11       1.92 (d)     1.31       1.72 (d)     189      
 
 
2007 - Institutional
    14.44       0.07(b )(e)     (2.42 )     (2.35 )     (0.05 )     (1.33 )     (1.38 )     10.71       (16.48 )     152,896       0.90 (f)     0.49 (e)(f)     0.95 (f)     0.44 (e)(f)     163      
2007 - Service
(commenced August 31, 2007)
    12.81       0.02(b )     (0.74 )     (0.72 )     (0.05 )     (1.33 )     (1.38 )     10.71       (5.86 )     10       0.96 (c)     0.56 (c)     1.21 (c)     0.31 (c)     163      
 
 
2006 - Institutional
    13.93       0.07(b )     1.64       1.71       (0.10 )     (1.10 )     (1.20 )     14.44       12.27       202,929       0.87       0.49       0.99       0.37       133      
 
 
2005 - Institutional
    14.40       0.05(b )     0.86       0.91       (0.04 )     (1.34 )     (1.38 )     13.93       6.07       195,042       0.89       0.37       0.93       0.33       119      
 
 
2004 - Institutional
    12.99       0.02(b )     2.10       2.12       (0.03 )     (0.68 )     (0.71 )     14.40       16.33       191,821       0.90       0.14       0.97       0.07       146      
 
 
 
(a) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(b) Calculated based on the average shares outstanding methodology.
(c) Annualized.
(d) Reflects income recognized from a special dividend which amounted to $0.01 per share and 0.14% of average net assets.
(e) Reflects income recognized from a special dividend which amounted to $0.02 per share and 0.14% of average net assets.
(f) Includes non-recurring expense for a special shareholder meeting, which amounted to approximately 0.03% of average net assets.
 
The accompanying notes are an integral part of these financial statements.

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GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Structured Small Cap Equity Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable,
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
In addition, distributions received from the Fund’s investments in real estate investment trusts (“REITs”) often include a “return of capital” which is recorded by the Fund as a reduction of the cost basis of the securities held. The Internal Revenue Code of 1986, as amended (the “Code”) requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the Fund’s distributions is deemed a return of capital and is generally not taxable to shareholders.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Code applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Derivatives — The Fund may make investments in derivative instruments, including, but not limited to, options, futures, swaps and other derivatives relating to foreign currency transactions. On June 30, 2009, the Fund adopted Statement of Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”) which requires enhanced disclosures about the Fund’s derivatives and hedging activities. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts (often referred to as over the counter (“OTC”) derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments or commodities at specified terms on a specified date, or to exchange interest payment streams or currencies based on a notional or contractual amount. Derivative instruments may involve a high degree of financial risk. The use of derivatives also involves the risk of loss if the investment adviser is incorrect in its expectation of the timing or level of fluctuations in securities prices, interest rates or currency prices. Investments in derivative instruments also include the risk of default by the counterparty, the risk that the investment may not be liquid and the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument.
 
Futures Contracts — The Fund may purchase or sell futures contracts to hedge against changes in interest rates, securities prices, currency exchange rates, or to seek to increase total return. Futures contracts are valued at the last settlement price,
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
or in the absence of a sale, the last bid price, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund deposits cash or securities in an account on behalf of the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable with a corresponding offset in unrealized gains or losses. The Fund recognizes a realized gain or loss when a contract is closed or expires.
The use of futures contracts involves, to varying degrees, elements of market and counterparty risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day. Changes in the value of a futures contract may not directly correlate with changes in the value of the underlying securities. These risks may decrease the effectiveness of the Fund’s strategies and potentially result in a loss. The Fund must set aside liquid assets, or engage in other appropriate measures to cover its obligations under these contracts.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
For the six months ended June 30, 2009, contractual and net management fees with GSAM were at the following rates:
 
                                             
                              Effective Net
 		 
Contractual Management Rate     Management Rate
 		 
First $2 billion     Next $3 billion     Next $3 billion     Over $8 billion     Effective Rate     (after waiver)  
   
  0.75 %     0.68 %     0.65 %     0.64 %     0.75 %     0.73 %*
 
 
*  GSAM has voluntarily agreed to waive a portion of its Management fee equal to 0.02% of the Fund’s average daily net assets. For the six months ended June 30, 2009, GSAM waived approximately $8,600 of the Fund’s management fee.
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.114% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAM reimbursed approximately $62,200 to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $500.
As of June 30, 2009, amounts owed to affiliates were approximately $95,700, $3,100 and $1,600 for management, distribution and service and transfer agent fees, respectively.
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
3. AGREEMENTS (continued)
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
 
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2     Level 3  
   
Assets
                       
Common Stock and/or Other Equity Investments
  $ 93,949,254     $ 277,982     $ —  
Short-term Investments
    2,602,113       21,174,910       —  
 
 
Total
  $ 96,551,367     $ 21,452,892     $ —  
 
 
Liabilities
                       
Derivatives
  $ (11,111 )   $ —     $ —  
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
5. SECURITIES LENDING (continued)
 
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio II of Boston Global Investment Trust (“Enhanced Portfolio II”), a Delaware statutory trust. The Enhanced Portfolio II, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio II. The Enhanced Portfolio II invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio II is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $11,333, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $8,418 in fees as securities lending agent. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $6,989,013.
The following table provides information about the Fund’s investment in the Enhanced Portfolio II for the six months ended June 30, 2009 (in thousands).
 
                                 
Number of
 		                       
Shares Held
 		              Number of Shares
 		    Value at
 		 
Beginning of Period   Shares Bought     Shares Sold     Held End of Period     End of Period  
   
9,206
    40,643       (28,610 )     21,239     $ 21,175  
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $91,046,140 and $86,496,455, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $400 in brokerage commissions from portfolio transactions, including futures transactions executed with Goldman Sachs as the Futures Commission Merchant, on behalf of the Fund.
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforward and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2016
  $ (34,979,788 )
 
 
Timing differences (related to post-October losses, related to the recognition of certain REIT dividends for tax purposes)
  $ (10,609,808 )
 
 
(1) Expiration occurs on December 31 of the year indicated.
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 118,464,359  
 
 
Gross unrealized gain
    8,114,669  
Gross unrealized loss
    (8,574,769 )
 
 
Net unrealized security loss
  $ (460,100 )
 
 
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
7. TAX INFORMATION (continued)
 
The difference between book and tax-basis unrealized losses is attributable primarily to wash sales, mark to market gains (losses) on regulated futures, and differing tax treatments of partnership investments as of the most recent fiscal year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 14, 2009, the date that the financial statements were issued.
 
 
 20

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    368,778     $ 2,311,389       1,165,736     $ 10,502,596  
Reinvestment of distributions
    —       —       150,317       978,561  
Shares redeemed
    (1,204,460 )     (7,503,634 )     (3,224,897 )     (29,097,259 )
 
 
      (835,682 )     (5,192,245 )     (1,908,844 )     (17,616,102 )
 
 
Service Shares
                               
Shares sold
    1,278,947       8,061,037       920,266       7,274,935  
Reinvestment of distributions
    —       —       10,414       67,586  
Shares redeemed
    (1,766 )     (10,983 )     (2,362 )     (21,775 )
 
 
      1,277,181       8,050,054       928,318       7,320,746  
 
 
NET INCREASE (DECREASE)
    441,499     $ 2,857,809       (980,526 )   $ (10,295,356 )
 
 
 
 
21 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
 
The Goldman Sachs Structured Small Cap Equity Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
 
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
 
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertakings of the Investment Adviser to reimburse certain fees and expenses of the Fund that exceed specified levels and the estimated annualized savings realized by the Fund from those undertakings; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
 
 
 22

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
 
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
 
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
 
 
23 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
 
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
 
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
 
 24

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Investment Performance
 
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees considered whether the Fund had operated within its investment policies, and had complied with its investment limitations. The Trustees noted the unusual market conditions prevailing in 2007 and 2008. The Trustees also noted that, in response to market events of 2007 and 2008, the Investment Adviser had taken a number of steps intended to improve Fund performance, including making certain changes to the Quantitative Investment Strategies (“QIS”) team’s personnel and making adjustments to the QIS team’s investment process used to manage the Fund (which among other things included changes in trading strategies and enhancements to the models). The Trustees discussed these measures at length with senior management of the Investment Adviser and concluded that the changes implemented by the Investment Adviser, and the Fund’s recent performance, provided a basis for concluding that the Investment Adviser’s continued management likely would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
 
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
 
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a two-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
 
 
25 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertakings to limit the Fund’s “other expenses” ratio (excluding certain expenses) and the contractual management fee to certain specified levels. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
 
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
 
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
 
 26

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Economies of Scale
 
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
         
First $2 billion
    0.75 %
Next $3 billion
    0.68  
Next $3 billion
    0.65  
Over $8 billion
    0.64  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the Investment Adviser’s voluntary undertakings to limit management fees and “other expenses” to certain amounts. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
 
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
 
27 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Other Benefits to the Fund and Its Shareholders
 
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
Conclusion
 
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
 28

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED SMALL CAP EQUITY FUND

 
 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of the Institutional or Service Shares of the Fund, you incur ongoing costs, including management fees, distribution and service (12b-1) fees (with respect to Service Shares) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Institutional Shares and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses  — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses
 		 
                      Paid for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account value
 		      Account Value
 		      Ended
 		 
Share Class     1/01/09       6/30/09       6/30/09*  
Institutional
                             
Actual
    $ 1,000       $ 1,002.90       $ 4.27  
Hypothetical 5% return
      1,000         1,020.53 +       4.31  
 
Service
                             
Actual
      1,000         1,001.40         5.51  
Hypothetical 5% return
      1,000         1,019.29 +       5.56  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 0.86% and 1.11% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
29 

 

 
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
  James A. McNamara, President
John P. Coblentz, Jr.
  John M. Perlowski, Senior Vice
Diana M. Daniels
    President and Treasurer
Patrick T. Harker
  Peter V. Bonanno, Secretary
James A. McNamara
   
Jessica Palmer
   
Alan A. Shuch
   
Richard P. Strubel
   
     
     
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
     
     
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York, New York 10005
     
     
     
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
     
     
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-526-7384 (for Retail Shareholders) or 1-800-621-2550 (for Institutional Shareholders); and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio,which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Structured Small Cap Equity Fund.
     
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITSTRSCSAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
 Goldman Sachs
Structured U.S. Equity Fund
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of large-cap and blue chip equity investments representing all major sectors of the U.S. economy.
 
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Quantitative Investment Strategies Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Structured U.S. Equity Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
During the six-month period ended June 30, 2009, the Fund’s Institutional and Service Shares generated cumulative total returns of 0.63% and 0.50%, respectively. These returns compare to the 3.16% cumulative total return of the Fund’s benchmark, the Standard & Poor’s 500 Index (with dividends reinvested) (the “S&P 500 Index”) during the same time period.
 
What economic and market factors most influenced the equity markets as a whole during the semi-annual period?
 
The equity markets faced two distinct periods during the six months ended June 30, 2009. As the new year began, the global financial markets were still reeling from extraordinary conditions during the fourth quarter of 2008. Persistently elevated levels of credit spreads (i.e., the difference in yields between U.S. Treasury securities and other investment sectors) as well as both implied and realized volatilities and investor risk aversion had created an unprecedented period of market distress. Indeed, with global equity indices down over 40% on average in 2008, equity markets continued to struggle in early 2009, as signs of an economic recovery remained hard to find. At the beginning of the first quarter, major retailers and automakers worldwide warned of declines in sales and profits in upcoming months, causing their shares to decline dramatically. As speculation increased that governments globally might nationalize troubled financial institutions, shares of large banks also fell sharply through the beginning of March. Concurrently, unemployment rates continued to rise around the world, with U.S. unemployment reaching 8.5% by the end of March, its highest level in over 25 years.
 
Then, a slight improvement in the liquidity profile of the market, a stabilizing of commodity prices, including oil, and positive responses to certain large banks’ earnings reports and Treasury Secretary Tim Geithner’s plan to fix the banking system brought a glimmer of hope to the equity markets in March. Indeed, March was the best month since 2002 for the major U.S. equity market indices, trimming first quarter losses substantially. Driven by investor relief, as signs indicated that the global financial crisis could be calming and the economy may be stabilizing, we saw a continuation of the strong rebound in equity markets through most of the second quarter. During the second quarter, liquidity improved, the wave of new regulatory programs slowed, and consumer sentiment improved. The U.S. equity market rally stalled somewhat in the last weeks of June, given weak economic data around housing and unemployment that indicated the recovery may take longer and be less robust in terms of future growth than anticipated. Still, the second quarter overall saw the best quarterly gain for the Dow Jones Industrial Index since the second quarter of 2003 and the biggest gain for the Standard & Poor’s 500 Index since the fourth quarter of 1998. The equity market rally was broad based, with international equities rising sharply as well.
 
For the semi-annual period overall, the U.S. large-cap equity market, as measured by the S&P 500 Index, outpaced its small-cap counterparts, as measured by the S&P SmallCap 600 Index. This was due primarily to the large-cap equity index’s greater weighting in financials, which performed well. Within the U.S. large-cap equity market, growth stocks significantly outperformed value stocks during the six-month period. The S&P 500/Citigroup Growth Index returned 7.52% for the semi-annual period compared to the -1.41% return of the S&P 500/Citigroup Value Index. The growth-oriented index has a heavier weighting in the information technology sector, which performed strongly during the six months ended June 30, 2009.
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
As expected, and in keeping with our investment approach, our quantitative model and its six investment themes (Valuation, Profitability, Quality, Management, Momentum and Sentiment) had the greatest impact on relative performance. We use these themes to take a long-term view of market patterns and look for inefficiencies, selecting stocks for the Fund and overweighting or underweighting the ones chosen by the model. Over time and by design, the performance of any one of the model’s investment themes tends to have a low correlation with the model’s other themes, demonstrating the diversification benefit of the Fund’s theme-driven quantitative model. The variance in performance supports our research indicating that the diversification provided by the Fund’s different investment themes is a significant investment advantage over the long term, even though the Fund may experience underperformance in the short term.
 
Overall, the Fund underperformed during the six months, with the Fund’s Momentum theme detracting the most, followed by Sentiment and Quality. The Momentum theme seeks to predict drifts in stock prices caused by under-reaction to company-specific information. The Sentiment theme reflects selected investment views and decisions of individuals and financial intermediaries. The Quality theme evaluates whether the company’s earnings are coming from more persistent, cash-based sources, as opposed to accruals. Management, which assesses the characteristics, policies and strategic decisions of company management, also negatively impacted relative returns, though to a lesser extent.
 
Profitability and Valuation contributed positively to the Fund’s returns relative to the S&P 500 Index. Profitability assesses whether a company is earning more than its cost of capital. Valuation attempts to capture potential mispricings of securities, typically by comparing a measure of the company’s intrinsic value to its market value.
 
How did the Fund’s sector allocations affect relative performance?
 
In constructing the Fund’s portfolio, we focus on picking stocks rather than making industry or sector bets. We seek to outpace the S&P 500 Index by overweighting stocks that we expect to outperform and underweighting those that we think may lag. We also build positions based on our thematic views. For example, the Fund aims to hold a basket of stocks with more favorable Momentum characteristics than the benchmark index.
 
That said, stock selection in the telecommunication services, information technology and industrials sectors made the biggest positive contribution to the Fund’s results relative to the S&P 500 Index. Conversely, stock selection in the financials, consumer discretionary and energy sectors detracted most from the Fund’s results relative to its benchmark index.
 
Which individual stock positions contributed the most to the Fund’s relative returns during the first half of the fiscal year?
 
The Fund benefited most from overweight positions in telecommunications firm Sprint Nextel and tobacco company Lorillard. Having an underweight position in financials company Wells Fargo also helped. We chose to overweight Sprint Nextel because of our positive views on Valuation and Quality. The overweight in Lorillard was the result of our positive views on Quality and Profitability. The Fund was underweight Wells Fargo because of our negative views on Valuation and Management.
 
Which individual positions detracted from the Fund’s results during the reporting period?
 
Detracting most from the Fund’s results relative to its benchmark index were overweight positions in supplemental insurance company Aflac, oil refiner Valero Energy and energy producer Devon Energy. Our positive views on Profitability, Sentiment and Quality led us to overweight Aflac. The Fund had an overweighted position in Valero Energy because of our positive view on Profitability. We chose to overweight Devon Energy because of our favorable views on Quality and Momentum.
 
Did you make any enhancements to your quantitative models during the reporting period?
 
We continuously look for ways to improve our investment process. Accordingly, during the reporting period, we introduced a number of enhancements to the proprietary quantitative model we use in the Fund. During the first quarter of 2009, we added a new factor to our global models (excluding emerging markets), which extends the Fund’s Momentum theme by examining additional relationships across firms. This enhancement is part of our ongoing research effort in developing cross-company linkage signals. We believe that this new factor has predictive ability and should further add value to our process over time.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
During the second quarter of 2009, we introduced an enhanced risk model to our process. The key features are the dynamic adjustment of volatility decay rates based on the market environment as well as the decomposition of factor exposures into different lags and the inclusion of short interest as a control factor. The expected benefits of these rather complex features are the ability to react to changing markets in a more timely manner, avoiding stale exposures and better controlling active exposure to heavily shorted companies.
 
What is your strategy going forward for the Fund?
 
In the coming months, we believe that less expensive stocks should outpace more expensive stocks, and stocks with good momentum are likely to outperform those with poor momentum. Our focus will remain on companies with increasingly strong fundamentals, sustainable earnings, good profitability and a track record of using capital to enhance shareholder value. As such, we anticipate remaining fully invested with long-term performance likely to be the result of stock selection rather than sector or size allocations.
 
We stand behind our investment philosophy that sound economic investment principles, coupled with a disciplined quantitative approach, can provide strong, uncorrelated returns over the long run. Our research agenda is robust, and we continue to enhance our existing models, add new proprietary forecasting signals, and improve our trading execution as we seek to provide the most value to our shareholders.
 
 
CHANGES MADE TO THE TEAM’S MANAGEMENT
 
Mark Carhart and Ray Iwanowski, formerly co-heads of Quantitative Investment Strategies (QIS), have retired, each to pursue separate personal and professional objectives. Giorgio De Santis, co-head of QIS Research, also decided to retire.
 
Katinka Domotorffy, Head of Strategy for QIS, has assumed the role of Chief Investment Officer (CIO) and Head of QIS. Since joining Goldman Sachs in 1998, she has been a senior portfolio manager, researcher and strategist with the QIS team. Bob Jones will remain as co-CIO of the QIS equity team. Kent Daniel, senior portfolio manager and co-head of QIS Research, has joined Katinka and Bob as co-CIO of the equity business.
 
Bob Litterman will remain as the Chairman of QIS. The QIS team includes more than 115 professionals across all areas of the company, with 30 more in the information technology division.
 
Portfolio Composition
 
TOP TEN PORTFOLIO HOLDINGS AS OF 6/30/09*
 
                 
Holding   % of Net Assets     Line of Business    
 
Microsoft Corp. 
    4.1 %   Software & Services    
Exxon Mobil Corp. 
    3.6     Energy    
Lorillard, Inc. 
    2.9     Food, Beverage & Tobacco    
Devon Energy Corp. 
    2.1     Energy    
Eli Lilly & Co. 
    2.0     Pharmaceuticals, Biotechnology & Life Sciences    
Wal-Mart Stores, Inc. 
    2.0     Food & Staples Retailing    
Cisco Systems, Inc. 
    1.8     Technology Hardware & Equipment    
Amgen, Inc.
    1.8     Pharmaceuticals, Biotechnology & Life Sciences    
Pfizer, Inc.
    1.8     Pharmaceuticals, Biotechnology & Life Sciences    
Accenture Ltd. Class A
    1.7     Software & Services    
 
* Opinions expressed in this report represent our present opinion only. Reference to individual securities should not be construed as a commitment that such securities will be retained by the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of securities should not be relied upon in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Investment Portfolio
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The above graph categorizes investments using Global Industry Classification Standard (“GICS”), however, the sector classifications used by the portfolio management team may differ from GICS. The percentage shown for each investment category reflects the value of investments in that category as a percentage of the total value of investments (excluding investments in the securities lending reinvestment vehicle, if any). Securities lending reinvestment vehicle represents 13.4% of the Fund’s net assets at June 30, 2009. Short-term investments include investment companies.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – 97.9%
Automobiles & Components – 1.6%
5,877
  BorgWarner, Inc.(a)   $ 200,700  
13,938
  Federal Mogul Corp.*     131,714  
222,670
  Johnson Controls, Inc.     4,836,392  
107,681
  TRW Automotive Holdings Corp.*(a)     1,216,795  
             
          6,385,601  
 
 
Banks – 2.8%
61,660
  BB&T Corp.     1,355,287  
9,413
  Comerica, Inc.     199,085  
11,023
  Hudson City Bancorp, Inc.     146,496  
194,929
  U.S. Bancorp     3,493,128  
254,314
  Wells Fargo & Co.     6,169,657  
             
          11,363,653  
 
 
Capital Goods – 5.4%
27,814
  AGCO Corp.*(b)     808,553  
1,125
  Cummins, Inc.     39,611  
84,411
  Emerson Electric Co.     2,734,917  
325,420
  General Electric Co.     3,813,922  
43,836
  Lockheed Martin Corp.     3,535,373  
70,534
  Northrop Grumman Corp.     3,221,993  
3,788
  Raytheon Co.     168,301  
4,882
  Rockwell Collins, Inc.     203,726  
47,216
  Toro Co.(a)     1,411,759  
34,686
  Tyco International Ltd.     901,142  
104,016
  United Technologies Corp.     5,404,671  
5,105
  URS Corp.*     252,800  
             
          22,496,768  
 
 
Commercial & Professional Services – 0.5%
31,539
  Manpower, Inc.     1,335,361  
34,183
  Robert Half International, Inc.(a)     807,403  
             
          2,142,764  
 
 
Consumer Durables & Apparel – 0.6%
138,020
  Harman International Industries, Inc.(a)     2,594,776  
 
 
Consumer Services – 1.1%
104,200
  Carnival Corp.(a)     2,685,234  
52
  Choice Hotels International, Inc.     1,384  
90,246
  Marriott International, Inc. Class A(a)     1,991,734  
             
          4,678,352  
 
 
Diversified Financials – 7.4%
2,886
  Affiliated Managers Group, Inc.*     167,936  
30,719
  Allied Capital Corp.(a)     106,902  
39,742
  American Express Co.     923,604  
410,158
  Bank of America Corp.     5,414,086  
8,860
  BlackRock, Inc.(a)     1,554,221  
1,035,381
  Citigroup, Inc.(a)     3,075,082  
84,668
  Eaton Vance Corp.(a)     2,264,869  
71,544
  Federated Investors, Inc. Class B(a)     1,723,495  
31,696
  Franklin Resources, Inc.     2,282,429  
117,021
  JPMorgan Chase & Co.     3,991,586  
21,377
  MF Global Ltd.*(a)     126,766  
 
 
27,900
  Moody’s Corp.(a)     735,165  
99,677
  SEI Investments Co.     1,798,173  
112,980
  T. Rowe Price Group, Inc.(a)     4,707,877  
40,711
  The Bank of New York Mellon Corp.     1,193,239  
13,671
  Waddell & Reed Financial, Inc. Class A     360,504  
             
          30,425,934  
 
 
Energy – 12.2%
84,437
  Alpha Natural Resources, Inc.*     2,218,160  
73,617
  Chevron Corp.     4,877,126  
44,260
  Cimarex Energy Co.     1,254,328  
142,920
  ConocoPhillips     6,011,215  
159,436
  Devon Energy Corp.     8,689,262  
88,353
  Exterran Holdings, Inc.*(a)     1,417,182  
214,908
  Exxon Mobil Corp.     15,024,218  
49,126
  Frontier Oil Corp.     644,042  
3,622
  Mariner Energy, Inc.*     42,559  
157,703
  Patterson-UTI Energy, Inc.(a)     2,028,061  
51,412
  Schlumberger Ltd.     2,781,903  
22,040
  St. Mary Land & Exploration Co.(a)     459,975  
41,837
  Tesoro Corp.(a)     532,585  
685
  Unit Corp.*     18,886  
272,634
  Valero Energy Corp.     4,604,788  
710
  W&T Offshore, Inc.     6,916  
             
          50,611,206  
 
 
Food & Staples Retailing – 2.0%
174,452
  Wal-Mart Stores, Inc.     8,450,455  
 
 
Food, Beverage & Tobacco – 8.1%
149,241
  Archer-Daniels-Midland Co.     3,995,182  
32,004
  Bunge Ltd.(a)     1,928,241  
48,280
  Coca-Cola Enterprises, Inc.     803,862  
118,127
  Hansen Natural Corp.*(a)     3,640,674  
29,874
  Hormel Foods Corp.     1,031,848  
174,592
  Lorillard, Inc.     11,832,100  
53,346
  PepsiCo, Inc.     2,931,896  
127,436
  Philip Morris International, Inc.     5,558,758  
26,408
  Smithfield Foods, Inc.*(a)     368,920  
108,702
  Tyson Foods, Inc. Class A     1,370,732  
             
          33,462,213  
 
 
Health Care Equipment & Services – 1.9%
47,785
  Boston Scientific Corp.*     484,540  
166,154
  Coventry Health Care, Inc.*(a)     3,108,741  
35,336
  Hologic, Inc.*     502,831  
52,952
  Humana, Inc.*(a)     1,708,232  
2,947
  Idexx Laboratories, Inc.*     136,151  
38,582
  Stryker Corp.     1,533,249  
9,892
  WellCare Health Plans, Inc.*     182,903  
4,700
  Zimmer Holdings, Inc.*     200,220  
             
          7,856,867  
 
 
 
 
The accompanying notes are an integral part of these financial statements.
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Schedule of Investments (continued)
June 30, 2009 (Unaudited)
 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Household & Personal Products – 1.9%
68,436
  Colgate-Palmolive Co.   $ 4,841,162  
58,777
  The Procter & Gamble Co.     3,003,505  
             
          7,844,667  
 
 
Insurance – 1.5%
16,970
  Aflac, Inc.     527,597  
3,395
  Lincoln National Corp.     58,428  
47,896
  MetLife, Inc.     1,437,359  
41,633
  Prudential Financial, Inc.     1,549,580  
23,111
  The Travelers Companies, Inc.     948,476  
103,543
  Unum Group     1,642,192  
             
          6,163,632  
 
 
Materials – 2.8%
22,662
  Allegheny Technologies, Inc.(a)     791,584  
41,764
  Ball Corp.     1,886,062  
2,788
  Cabot Corp.     35,073  
14,151
  Commercial Metals Co.     226,840  
33,679
  Eastman Chemical Co.     1,276,434  
46,756
  Huntsman Corp.(a)     235,183  
13,821
  Monsanto Co.     1,027,453  
85,994
  Reliance Steel & Aluminum Co.     3,301,310  
36,994
  Schnitzer Steel Industries, Inc. Class A(a)     1,955,503  
60,918
  The Dow Chemical Co.     983,216  
             
          11,718,658  
 
 
Media – 2.5%
5,654
  Clear Channel Outdoor Holdings, Inc. Class A*     29,966  
174,637
  Comcast Corp. Class A     2,530,490  
35,500
  Comcast Corp. Special Class A     500,550  
28,788
  News Corp. Class A     262,259  
9,000
  News Corp. Class B     95,130  
25,887
  Scripps Networks Interactive, Inc. Class A     720,435  
53,558
  The Walt Disney Co.     1,249,508  
189,687
  Time Warner, Inc.     4,778,216  
             
          10,166,554  
 
 
Pharmaceuticals, Biotechnology & Life Sciences – 11.8%
140,385
  Amgen, Inc.*     7,431,982  
84,613
  Biogen Idec, Inc.*     3,820,277  
29,054
  Bristol-Myers Squibb Co.     590,087  
244,130
  Eli Lilly & Co.     8,456,663  
58,409
  Forest Laboratories, Inc.*     1,466,650  
30,595
  Genzyme Corp.*     1,703,224  
141,845
  Gilead Sciences, Inc.*     6,644,020  
113,678
  Johnson & Johnson     6,456,910  
131,166
  Merck & Co., Inc.(a)     3,667,401  
495,438
  Pfizer, Inc.(a)     7,431,570  
23,485
  Thermo Fisher Scientific, Inc.*     957,483  
276
  Wyeth     12,528  
             
          48,638,795  
 
 
Real Estate Investment Trust – 1.9%
31,118
  Federal Realty Investment Trust(a)     1,603,199  
19,951
  Liberty Property Trust(a)     459,671  
 
 
44,181
  Plum Creek Timber Co., Inc.(a)     1,315,710  
53,372
  Rayonier, Inc.(a)     1,940,072  
49,957
  Simon Property Group, Inc.(a)     2,569,289  
             
          7,887,941  
 
 
Retailing – 4.3%
3,981
  Aeropostale, Inc.*     136,429  
15,788
  Amazon.com, Inc.*     1,320,824  
15,661
  Big Lots, Inc.*     329,351  
49,442
  Dollar Tree, Inc.*     2,081,508  
144,233
  Family Dollar Stores, Inc.     4,081,794  
13,486
  HSN, Inc.*     142,547  
87,452
  Liberty Media Corp. – Interactive*     438,135  
129,864
  PetSmart, Inc.     2,786,881  
82,472
  Ross Stores, Inc.(a)     3,183,419  
103,005
  The TJX Companies, Inc.     3,240,537  
             
          17,741,425  
 
 
Semiconductors & Semiconductor Equipment – 2.6%
90,667
  Broadcom Corp. Class A*(a)     2,247,635  
1,202
  Cypress Semiconductor Corp.*     11,058  
7,066
  Fairchild Semiconductor International, Inc.*     49,391  
13,319
  Integrated Device Technology, Inc.*     80,447  
298,841
  Intel Corp.     4,945,819  
83,977
  LSI Corp.*     382,935  
145,084
  Texas Instruments, Inc.     3,090,289  
             
          10,807,574  
 
 
Software & Services – 7.9%
204,756
  Accenture Ltd. Class A     6,851,136  
21,209
  Adobe Systems, Inc.*     600,215  
81,504
  eBay, Inc.*(a)     1,396,163  
13,063
  Google, Inc. Class A*     5,507,230  
713,351
  Microsoft Corp.     16,956,353  
24,653
  Symantec Corp.*     383,601  
59,113
  VeriSign, Inc.*     1,092,408  
             
          32,787,106  
 
 
Technology Hardware & Equipment – 8.3%
19,649
  ADC Telecommunications, Inc.*     156,406  
15,804
  Apple, Inc.*     2,250,964  
39,871
  Arrow Electronics, Inc.*     846,860  
42,862
  Avnet, Inc.*     901,388  
408,593
  Cisco Systems, Inc.*     7,616,173  
339,305
  Dell, Inc.*     4,658,658  
1,350
  EchoStar Corp. Class A*     21,519  
319,079
  EMC Corp.*     4,179,935  
134,164
  Ingram Micro, Inc. Class A*     2,347,870  
40,177
  International Business Machines Corp.     4,195,282  
140,630
  NetApp, Inc.*(a)     2,773,224  
7,468
  QUALCOMM, Inc.     337,554  
159,410
  Seagate Technology     1,667,429  
42,459
  Sun Microsystems, Inc.*     391,472  
 
 
 
 
 6
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 


 
 
             
Shares   Description   Value  
 
Common Stocks – (continued)
Technology Hardware & Equipment – (continued)
126,046
  Tellabs, Inc.*   $ 722,243  
49,463
  Western Digital Corp.*     1,310,769  
             
          34,377,746  
 
 
Telecommunication Services – 3.7%
257,727
  AT&T, Inc.(b)     6,401,939  
105,361
  Embarq Corp.     4,431,484  
64,001
  NII Holdings, Inc.*     1,220,499  
568,231
  Sprint Nextel Corp.*     2,733,191  
13,893
  Telephone & Data Systems, Inc.     393,172  
             
          15,180,285  
 
 
Transportation – 2.5%
7,196
  C.H. Robinson Worldwide, Inc.     375,271  
48,173
  Expeditors International of Washington, Inc.     1,606,088  
57,956
  FedEx Corp.     3,223,513  
102,412
  United Parcel Service, Inc. Class B     5,119,576  
             
          10,324,448  
 
 
Utilities – 2.6%
259,042
  Duke Energy Corp.     3,779,423  
471,615
  Dynegy, Inc. Class A*     1,070,566  
95,839
  Exelon Corp.(a)     4,907,915  
61,970
  Mirant Corp.*     975,408  
             
          10,733,312  
 
 
TOTAL COMMON STOCKS
(Cost $412,956,895)
  $ 404,840,732  
 
 
             
Shares   Rate   Value  
 
Investment Company(c) – 2.4%
JPMorgan U.S. Government Money Market Fund – Capital Shares
9,752,180
  0.236%   $ 9,752,180  
(Cost $9,752,180)
       
 
 
TOTAL INVESTMENTS BEFORE SECURITIES LENDING REINVESTMENT VEHICLE
(Cost $422,709,075)
  $ 414,592,912  
 
 
             
Securities Lending Reinvestment Vehicle(c)(d) – 13.4%
Boston Global Investment Trust – Enhanced Portfolio II
55,661,512
  0.282%   $ 55,494,527  
(Cost $55,037,670)
       
 
 
TOTAL INVESTMENTS – 113.7%
(Cost $477,746,745)
  $ 470,087,439  
 
 
LIABILITIES IN EXCESS OF OTHER ASSETS – (13.7)%
    (56,535,268 )
 
 
NET ASSETS – 100.0%
  $ 413,552,171  
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
* Non-income producing security.
 
(a) All or a portion of security is on loan.
 
(b) All or a portion of security is segregated as collateral for initial margin requirements on futures transactions.
 
(c) Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(d) Represents an affiliated issuer.
 
ADDITIONAL INVESTMENT INFORMATION
 
 
FUTURES CONTRACTS — At June 30, 2009, the following futures contracts were open:
 
                                 
    Number of
 		    Settlement
 		    Notional
 		    Unrealized
 		 
Type   Contracts Long     Month     Value     Loss  
   
S&P 500 E-mini
    188       September 2009     $ 8,605,700     $ (37,036 )
 
 
 
 
The accompanying notes are an integral part of these financial statements.
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
         
Investments in securities of unaffiliated issuers, at value (identified cost $422,709,075)(a)
  $ 414,592,912  
Investments in affiliated securities lending reinvestment vehicle, at value (identified cost $55,037,670)
    55,494,527  
Receivables:
       
Fund shares sold
    761,260  
Dividends and interest
    337,417  
Securities lending income
    166,938  
Reimbursement from adviser
    14,320  
Other assets
    1,888  
 
 
Total assets
    471,369,262  
 
 
 
Liabilities:
         
Payables:
       
Payable upon return of securities loaned
    56,259,239  
Fund shares redeemed
    572,186  
Amounts owed to affiliates
    248,481  
Due to broker — variation margin
    53,580  
Accrued expenses and other liabilities
    683,605  
 
 
Total liabilities
    57,817,091  
 
 
 
Net Assets:
         
Paid-in capital
    721,283,156  
Accumulated undistributed net investment income
    5,337,874  
Accumulated net realized loss from investment and futures transactions
    (305,372,517 )
Net unrealized loss on investments and futures
    (7,696,342 )
 
 
NET ASSETS
  $ 413,552,171  
 
 
Net Assets:
       
Institutional
  $ 314,596,276  
Service
    98,955,895  
 
 
Total Net Assets
  $ 413,552,171  
 
 
Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized):
       
Institutional
    39,134,563  
Service
    12,304,985  
 
 
Net asset value, offering and redemption price per share:
       
Institutional
  $ 8.04  
Service
    8.04  
 
 
 
(a) Includes loaned securities having a market value of $54,318,001.
 
 
 8
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Dividends
  $ 5,044,251  
Securities lending income — affiliated issuer
    481,472  
 
 
Total investment income
    5,525,723  
 
 
 
Expenses:
Management fees
    1,297,039  
Distribution and Service fees — Service Shares
    118,562  
Printing fees
    45,464  
Professional fees
    44,296  
Transfer Agent fees(a)
    39,906  
Custody and accounting fees
    29,334  
Trustee fees
    8,460  
Other
    18,458  
 
 
Total expenses
    1,601,519  
 
 
Less — expense reductions
    (80,385 )
 
 
Net expenses
    1,521,134  
 
 
NET INVESTMENT INCOME
    4,004,589  
 
 
 
Realized and unrealized gain (loss) from investment and futures transactions:
Net realized gain (loss) from:
       
Investment transactions — unaffiliated issuers
    (98,188,401 )
Securities lending reinvestment vehicle transactions — affiliated issuer
    42,917  
Futures transactions
    139,528  
Net change in unrealized gain (loss) on:
       
Investments — unaffiliated issuers
    92,981,837  
Securities lending reinvestment vehicle — affiliated issuer
    347,686  
Futures
    (251,789 )
 
 
Net realized and unrealized loss from investment and futures transactions
    (4,928,222 )
 
 
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ (923,633 )
 
 
 
(a) Institutional and Service Shares had Transfer Agent fees of $30,422 and $9,484, respectively.
 
 
The accompanying notes are an integral part of these financial statements.
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the Fiscal
 		 
    June 30, 2009
 		    Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 4,004,589     $ 10,381,685  
Net realized loss from investment and futures transactions
    (98,005,956 )     (164,162,633 )
Net change in unrealized gain (loss) on investments and futures
    93,077,734       (147,574,697 )
 
 
Net decrease in net assets resulting from operations
    (923,633 )     (301,355,645 )
 
 
                 
 
Distributions to shareholders:
From net investment income
               
Institutional Shares
    —       (7,626,004 )
Service Shares
    —       (2,046,496 )
From net realized gains
               
Institutional Shares
    —       (4,278,205 )
Service Shares
    —       (1,333,264 )
 
 
Total distributions to shareholders
    —       (15,283,969 )
 
 
                 
 
From share transactions:
Proceeds from sales of shares
    6,685,213       12,580,702  
Reinvestments of distributions
    —       15,283,969  
Cost of shares redeemed
    (42,939,372 )     (218,640,245 )
 
 
Net decrease in net assets resulting from share transactions
    (36,254,159 )     (190,775,574 )
 
 
TOTAL DECREASE
    (37,177,792 )     (507,415,188 )
 
 
                 
 
Net assets:
Beginning of period
    450,729,963       958,145,151  
 
 
End of period
  $ 413,552,171     $ 450,729,963  
 
 
Accumulated undistributed net investment income
  $ 5,337,874     $ 1,333,285  
 
 
 
 
 10
The accompanying notes are an integral part of these financial statements.

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                                                             
          Income (loss) from
 		                                        Ratios assuming no
 		           
          investment operations     Distributions to shareholders                                   expense reductions            
                Net
 		                                                    Ratio of
 		    Ratio of
 		    Ratio of
 		           
    Net asset
 		          realized
 		                From
 		          Net asset
 		          Net assets,
 		    Ratio of
 		    net investment
 		    total
 		    net investment
 		           
    value,
 		    Net
 		    and
 		    Total from
 		    From net
 		    net
 		          value,
 		          end of
 		    net expenses
 		    income
    expenses
 		    income
    Portfolio
 		     
    beginning
 		    investment
 		    unrealized
 		    investment
    investment
 		    realized
 		    Total
 		    end of
 		    Total
 		    period
 		    to average
 		    to average
    to average
 		    to average
    turnover
 		     
Year - Share Class   of period     income(a)     gain (loss)     operations     income     gains     distributions     period     return(b)     (in 000s)     net assets     net assets     net assets     net assets     rate      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                                                             
2009 - Institutional
  $ 7.99     $ 0.08     $ (0.03 )   $ 0.05     $ —     $ —     $ —     $ 8.04       0.63 %   $ 314,596       0.71 %(c)     2.06 %(c)     0.74 %(c)     2.03 %(c)     81 %    
2009 - Service
    8.00       0.07       (0.03 )     0.04       —       —       —       8.04       0.50       98,956       0.92 (c)     1.84 (c)     0.99 (c)     1.77 (c)     81      
 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                                                             
2008 - Institutional
    13.16       0.17       (5.06 )     (4.89 )     (0.18 )     (0.10 )     (0.28 )     7.99       (36.92 )     344,144       0.71       1.53       0.72       1.52       110      
2008 - Service
    13.16       0.14       (5.04 )     (4.90 )     (0.16 )     (0.10 )     (0.26 )     8.00       (37.05 )     106,586       0.92       1.34       0.97       1.29       110      
 
 
2007 - Institutional
    14.67       0.15       (0.37 )     (0.22 )     (0.16 )     (1.13 )     (1.29 )     13.16       (1.63 )     752,148       0.71 (d)     1.02 (d)     0.72 (d)     1.01 (d)     125      
2007 - Service
    14.67       0.14       (0.37 )     (0.23 )     (0.15 )     (1.13 )     (1.28 )     13.16       (1.72 )     205,997       0.79 (d)     0.94 (d)     0.97 (d)     0.76 (d)     125      
 
 
2006 - Institutional
    13.13       0.14       1.55       1.69       (0.15 )     —       (0.15 )     14.67       12.89       910,345       0.72       1.01       0.72       1.01       99      
2006 - Service (commenced January 9, 2006)
    13.54       0.13       1.14       1.27       (0.14 )     —       (0.14 )     14.67       9.38       261,814       0.80 (c)     0.92 (c)     0.97 (c)     0.75 (c)     99      
 
 
2005 - Institutional
    12.42       0.13       0.68       0.81       (0.10 )     —       (0.10 )     13.13       6.51       820,394       0.74       1.00       0.76       0.99       109      
 
 
2004 - Institutional
    10.92       0.14       1.49       1.63       (0.13 )     —       (0.13 )     12.42       14.94       521,137       0.75       1.26       0.78       1.23       128      
 
 
 
(a) Calculated based on the average shares outstanding methodology.
(b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized.
(c) Annualized.
(d) Includes non-recurring expense for a special shareholder meeting which amounted to approximately 0.02% of average net assets.
 
The accompanying notes are an integral part of these financial statements.

11

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Structured U.S. Equity Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering two classes of shares — Institutional and Service.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — The investment valuation policy of the Fund is to value investments at market value. Investments in equity securities and investment companies traded on a United States (“U.S.”) securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, such securities and investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Debt securities for which market quotations are readily available are valued on the basis of quotations furnished by an independent pricing service approved by the trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider either (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from bond dealers, to determine current value. If accurate quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund’s investments may be determined based on yield equivalents, a pricing matrix or other sources, under valuation procedures established by the board of trustees. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. In the absence of market quotations, broker quotes will be utilized or the security will be fair valued. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share (“NAV”) on the valuation date. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates market value.
GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the previous closing prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining the Fund’s NAV. Significant events that could affect a large number of securities in a particular market may include, but are not limited to: situations relating to one or more single issuers in a market sector; significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions or market closings; equipment failures; natural or man-made disasters or acts of God; armed conflicts; government actions or other developments; as well as the same or similar events which may affect specific issuers or the securities markets even though not tied directly to the securities markets. Other significant events that could relate to a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; corporate announcements, including those relating to earnings, products and regulatory news; significant litigation; low trading volume; and trading limits or suspensions.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Dividend income is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for foreign capital gains taxes, if applicable,
 
 
 12

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
on certain foreign securities held by the Fund, which are subject to such taxes. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is realized.
Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
In addition, distributions received from the Fund’s investments in real estate investment trusts (“REITs”) often include a “return of capital” which is recorded by the Fund as a reduction of the cost basis of the securities held. The Internal Revenue Code of 1986, as amended (the “Code”) requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the Fund’s distributions is deemed a return of capital and is generally not taxable to shareholders.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Code applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Derivatives — The Fund may make investments in derivative instruments, including, but not limited to, options, futures, swaps and other derivatives relating to foreign currency transactions. On June 30, 2009, the Fund adopted Statement of Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”) which requires enhanced disclosures about the Fund’s derivatives and hedging activities. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts (often referred to as over the counter (“OTC”) derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments or commodities at specified terms on a specified date, or to exchange interest payment streams or currencies based on a notional or contractual amount. Derivative instruments may involve a high degree of financial risk. The use of derivatives also involves the risk of loss if the investment adviser is incorrect in its expectation of the timing or level of fluctuations in securities prices, interest rates or currency prices. Investments in derivative instruments also include the risk of default by the counterparty, the risk that the investment may not be liquid and the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument.
 
Futures Contracts — The Fund may purchase or sell futures contracts to hedge against changes in interest rates, securities prices, currency exchange rates, or to seek to increase total return. Futures contracts are valued at the last settlement price,
 
 
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
or in the absence of a sale, the last bid price, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund deposits cash or securities in an account on behalf of the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable with a corresponding offset in unrealized gains or losses. The Fund recognizes a realized gain or loss when a contract is closed or expires.
The use of futures contracts involves, to varying degrees, elements of market and counterparty risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day. Changes in the value of a futures contract may not directly correlate with changes in the value of the underlying securities. These risks may decrease the effectiveness of the Fund’s strategies and potentially result in a loss. The Fund must set aside liquid assets, or engage in other appropriate measures to cover its obligations under these contracts.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee computed daily and payable monthly, equal to an annual percentage rate of the Fund’s average daily net assets.
For the six months ended June 30, 2009, contractual management fees with GSAM were at the following rates:
 
                                             
Contractual Management Rate  
First $1 billion     Next $1 billion     Next $3 billion     Next $3 billion     Over $8 billion     Effective Rate  
   
  0.65 %     0.59 %     0.56 %     0.55 %     0.54 %     0.65 %
 
 
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares. Goldman Sachs has voluntarily agreed to waive distribution and service fees so as not to exceed an annual rate of 0.21% of the Fund’s average daily net assets attributable to Service Shares. This waiver may be modified or terminated at any time at the option of Goldman Sachs. For the six months ended June 30, 2009, Goldman Sachs waived approximately $19,000 in distribution and service fees for the Fund’s Service Shares.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate of 0.02% of the average daily net assets of the Institutional and Service Shares.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent such expenses exceed, on an annual basis, 0.044% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior period expense reimbursements, if any. For the six months ended June 30, 2009, GSAM reimbursed approximately $58,300 to the Fund. In addition, the Fund has entered into certain offset arrangements with the transfer agent resulting in a reduction in the Fund’s expenses. For the six months ended June 30, 2009, transfer agent fees were reduced by approximately $3,100.
 
 
 14

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
 
3. AGREEMENTS (continued)
 
As of June 30, 2009, amounts owed to affiliates were approximately $224,300, $17,300 and $6,900 for management, distribution and service and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or its affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total of up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
 
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                             
    Level 1     Level 2     Level 3      
 
Assets
                           
Common Stock and/or Other Equity Investments
  $ 404,840,732     $ —     $ —      
Short-term Investments
    9,752,180       55,494,527       —      
 
 
Total
  $ 414,592,912     $ 55,494,527     $ —      
 
 
Liabilities
                           
Derivatives
  $ (37,036 )   $ —     $ —      
 
 
 
5. SECURITIES LENDING
 
Pursuant to exemptive relief granted by the SEC and the terms and conditions contained therein, the Fund may lend its securities through a securities lending agent, Goldman Sachs Agency Lending (“GSAL”), a wholly-owned subsidiary of Goldman Sachs, to certain qualified borrowers including Goldman Sachs and affiliates. In accordance with the Fund’s securities lending procedures, the Fund receives cash collateral at least equal to the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund, at their last sale price or official closing price on the principal exchange or system on which they are traded, and any additional required collateral is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience delay in the
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
5. SECURITIES LENDING (continued)
 
recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent and the collateral not be sufficient to cover the cost of repurchasing securities on loan.
The Fund invests the cash collateral received in connection with securities lending transactions in the Enhanced Portfolio II of Boston Global Investment Trust (“Enhanced Portfolio II”), a Delaware statutory trust. The Enhanced Portfolio II, deemed an affiliate of the Trust, is exempt from registration under Section 3(c)(7) of the Act and is managed by GSAM, for which GSAM may receive an investment advisory fee of up to 0.10% on an annualized basis of the average daily net assets of the Enhanced Portfolio II. The Enhanced Portfolio II invests primarily in short-term investments, but is not a “money market fund” subject to the requirements of Rule 2a-7 of the Act. The Fund’s investment of cash collateral in the Enhanced Portfolio II is subject to a net asset value that may fall or rise due to market and credit conditions.
Both the Fund and GSAL receive compensation relating to the lending of the Fund’s securities. The amount earned by the Fund for the six months ended June 30, 2009, is reported under Investment Income on the Statement of Operations. A portion of this amount, $36,054, represents compensation earned by the Fund from lending its securities to Goldman Sachs. For the six months ended June 30, 2009, GSAL earned $54,047 in fees as securities lending agent. The amount payable to Goldman Sachs upon return of securities loaned as of June 30, 2009 was $17,419,255.
The following table provides information about the Fund’s investment in the Enhanced Portfolio II for the six months ended June 30, 2009 (in thousands).
 
                 
Number of
 		               
Shares Held
 		          Number of Shares
 		  Value at
Beginning of Period   Shares Bought   Shares Sold   Held End of Period   End of Period
 
24,237
  174,094   (142,669)   55,662   $55,495
 
 
 
6. PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds from sales and maturities of long-term securities for the six months ended June 30, 2009 were $319,329,270 and $350,538,542, respectively. For the six-months ended June 30, 2009, Goldman Sachs earned approximately $2,600 in brokerage commissions from portfolio transactions, including futures transactions executed with Goldman Sachs as the Futures Commission Merchant, on behalf of the Fund.
 
7. TAX INFORMATION
 
As of the Fund’s most recent fiscal year end, December 31, 2008, the Fund’s capital loss carryforwards and certain timing differences on a tax basis were as follows:
 
         
Capital loss carryforward:(1)
       
Expiring 2009
  $ (6,902,391 )
Expiring 2010
    (31,739,316 )
Expiring 2016
    (100,032,013 )
 
 
Total capital loss carryforward
  $ (138,673,720 )
 
 
Timing differences (post-October losses)
  $ (57,379,511 )
 
 
(1)  Expiration occurs on December 31 of the year indicated. Due to fund mergers, utilization of these losses may be substantially limited under the Code.
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
 
7. TAX INFORMATION (continued)
 
At June 30, 2009, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes were as follows:
 
         
Tax cost
  $ 488,775,963  
 
 
Gross unrealized gain
    23,312,474  
Gross unrealized loss
    (42,000,998 )
 
 
Net unrealized security loss
  $ (18,688,524 )
 
 
The difference between book-basis and tax-basis unrealized losses is attributable primarily to wash sales recognized for tax purposes, mark to market gains on regulated futures contracts and differences related to tax treatment of partnership investments as of the most recent fiscal year end.
 
8. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and NAV. These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
9. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
New Accounting Pronouncement — In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 14, 2009, the date that the financial statements were issued.
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
10. SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
                                 
    For the Six Months Ended
 		       
    June 30, 2009
 		    For the Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
    Shares     Dollars     Shares     Dollars  
   
Institutional Shares
                               
Shares sold
    652,852     $ 4,874,218       1,036,638     $ 10,604,402  
Reinvestment of distributions
    —       —       1,564,285       11,904,209  
Shares redeemed
    (4,612,654 )     (33,634,444 )     (16,656,572 )     (186,803,202 )
 
 
      (3,959,802 )     (28,760,226 )     (14,055,649 )     (164,294,591 )
 
 
Service Shares
                               
Shares sold
    244,086       1,810,995       203,939       1,976,300  
Reinvestment of distributions
    —       —       442,956       3,379,760  
Shares redeemed
    (1,266,771 )     (9,304,928 )     (2,969,078 )     (31,837,043 )
 
 
      (1,022,685 )     (7,493,933 )     (2,322,183 )     (26,480,983 )
 
 
NET DECREASE
    (4,982,487 )   $ (36,254,159 )     (16,377,832 )   $ (190,775,574 )
 
 
 
11. SUBSEQUENT EVENT
 
Effective July 1, 2009, GSAM contractually reduced its management fees for the Fund to achieve the following annual rates:
 
                                     
Contractual Management Rate  
Up to $1 billion     Next $1 billion     Next $3 billion     Next $3 billion     Over $8 billion  
   
  0.62 %     0.59 %     0.56 %     0.55 %     0.54 %
 
 
In addition, effective July 1, 2009, GSAM will reduce the “Other Expenses” limitation from 0.044% to 0.004% of average daily net assets of the Fund.
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
The Goldman Sachs Structured U.S. Equity Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertakings of the Investment Adviser and the Fund’s affiliated distributor to reimburse certain fees and expenses and distribution and service fees of the Fund that exceed specified levels and the estimated annualized savings realized by the Fund from those undertakings; (e) potential economies of scale and the levels of breakpoints in the fees payable by the Fund under the Management Agreement; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) capacity issues relating to the securities in which the Fund invests; (k) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (l) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (m) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (n) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, securities lending, portfolio brokerage, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) an update on the Investment Adviser’s soft dollars practices and other portfolio trading related issues; (k) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (l) the Investment Adviser’s approach to risk management; (m) an overview of the Fund’s distribution plan; and (n) an annual review of the effectiveness of the Fund’s compliance program. At the Annual Contract
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s investment performance, fees and expenses, including the Fund’s expense trends over time and any breakpoints in the fee rate payable by the Fund under the Management Agreement.
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, the commission rates paid by the Fund on brokerage transactions, the Investment Adviser’s receipt of research services in connection with certain of those transactions, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares; the manner in which portfolio manager compensation is determined, the alignment of the interests of the Fund and of the portfolio managers and related potential conflicts of interest; the number and types of accounts managed by the portfolio managers; and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds and its benchmark performance index; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. The Independent Trustees also reviewed the Fund’s investment performance relative to its performance benchmark. This information on the Fund’s investment performance was provided for the one-, three-, five- and ten-year periods ended December 31, 2008. The Independent Trustees also compared the performance of the Fund to that of the Investment Adviser’s institutional composite of the performance of other accounts having similar investment objectives and policies. In addition, they considered the investment performance trends of the Fund over time, and reviewed the investment performance of the Fund in light of its investment objective and policies, market conditions, and illiquidity in certain market sectors, as well as in light of periodic analyses of its quality and risk profile. The Independent Trustees
 
 
 20

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
considered whether the Fund had operated within its investment policies, and had complied with its investment limitations. The Trustees noted the unusual market conditions prevailing in 2007 and 2008. The Trustees also noted that, in response to market events of 2007 and 2008, the Investment Adviser had taken a number of steps intended to improve Fund performance, including making certain changes to the Quantitative Investment Strategies (“QIS”) team’s personnel and making adjustments to the QIS team’s investment process used to manage the Fund (which among other things included changes in trading strategies and enhancements to the models). The Trustees discussed these measures at length with senior management of the Investment Adviser and concluded that the changes implemented by the Investment Adviser, and the Fund’s recent performance, provided a basis for concluding that the Investment Adviser’s continued management likely would benefit the Fund and its shareholders.
 
Costs of Services Provided and Competitive Information
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees and breakpoints to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a three-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level and Goldman Sachs’ (the Fund’s distributor) voluntary undertaking to waive a portion of the distribution and service fees paid by the Fund’s Service Shares. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
 
21 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Economies of Scale
The Independent Trustees also considered the breakpoints in the fee rate payable under the Management Agreement for the Fund at the following annual percentage rates of the average daily net assets of the Fund:
 
         
First $1 billion
    0.65 %
Next $1 billion
    0.59  
Next $3 billion
    0.56  
Next $3 billion
    0.55  
Over $8 billion
    0.54  
 
The Trustees noted that the breakpoints at the $5 and $8 billion asset levels had been proposed by the Investment Adviser and approved by the Trustees in 2008 to further share potential economies of scale, if any, with the Fund and its shareholders as assets under management reach those asset levels. In approving these fee breakpoints, the Independent Trustees considered the Investment Adviser’s potential economies of scale in managing the Fund, and whether the Fund and its shareholders would participate in the benefits of those economies. In this regard, the Independent Trustees considered the amount of assets in the Fund; the Fund’s recent share purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; information comparing the fee rate charged by the Investment Adviser with fee rates charged to other funds in the peer group; and the voluntary undertakings of the Investment Adviser and Goldman Sachs to limit “other expenses” and distribution and service fees to certain amounts. Upon reviewing these matters at the Annual Contract Meeting, the Independent Trustees concluded that the fee breakpoints represented a means of ensuring that benefits of scalability would be passed along to shareholders at the specified asset levels.
 
Other Benefits to the Investment Adviser and Its Affiliates
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) brokerage and futures commissions earned by Goldman Sachs for executing securities and futures transactions on behalf of the Fund; (c) soft dollar benefits received by the Investment Adviser from broker-dealers in exchange for executing certain transactions on behalf of the Fund; (d) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (e) fees earned by Goldman Sachs Agency Lending, an affiliate of the Investment Adviser, as securities lending agent (and fees earned by the Investment Adviser for managing the portfolio in which the Fund’s cash collateral is invested); (f) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (g) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (h) Goldman Sachs’ retention of certain fees as Fund Distributor; (i) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (j) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the Investment Adviser’s ability to negotiate favorably with derivatives counterparties as a result of the size and reputation of the Goldman Sachs organization; (e) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (f) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (g) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (h) the Fund’s access to certain affiliated distribution channels.
 
 
 22

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)
 
Conclusion
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
23 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST STRUCTURED U.S. EQUITY FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of the Institutional or Service Shares of a Fund, you incur two types of costs, including management fees, distribution and service (12b-1) fees (with respect to Service Shares) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in Institutional Shares and Service Shares of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account value
 		      Account Value
 		      Ended
 		 
Share Class     1/1/09       6/30/09       6/30/09*  
Institutional
                             
Actual
    $ 1,000       $ 1,006.30       $ 3.53  
Hypothetical 5% return
      1,000         1,021.27 +       3.56  
 
Service
                             
Actual
      1,000         1,005.00         4.57  
Hypothetical 5% return
      1,000         1,020.23 +       4.61  
 
 
* Expenses for each share class are calculated using the Fund’s annualized net expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period were 0.71% and 0.92% for Institutional and Service Shares, respectively.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
 24

 

 
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
John P. Coblentz, Jr.
Diana M. Daniels
Patrick T. Harker
James A. McNamara
Jessica Palmer
Alan A. Shuch
Richard P. Strubel 		  James A. McNamara, President
John M. Perlowski, Senior Vice
  President and Treasurer
Peter V. Bonanno, Secretary
     
     
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
     
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York, New York 10005
     
     
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
     
     
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-526-7384 (for Retail Shareholders) or 1-800-621-2550 (for Institutional Shareholders); and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
     
     
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
     
     
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Goldman Sachs. Neither MSCI, S&P nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
     
     
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
     
     
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
     
     
     
    Toll Free (in U.S.): 800-292-4726
     
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Structured U.S. Equity Fund.
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITSTRUSSAR/25773.MF.TMPL/08-09    

 

 
Goldman
Sachs Variable Insurance Trust
 
 
 
 
 
 
Goldman Sachs
Money Market Fund
 
 
 
 
Semi-Annual Report
June 30, 2009
LOGO

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
 
INVESTMENT OBJECTIVE
 
The Fund seeks to maximize current income to the extent consistent with the preservation of capital and the maintenance of liquidity by investing exclusively in high quality money market instruments.
 
Portfolio Management Discussion and Analysis
Below, the Goldman Sachs Money Market Portfolio Management Team discusses the Fund’s performance and positioning for the six months ended June 30, 2009.
 
How did the Goldman Sachs Variable Insurance Trust — Goldman Sachs Money Market Fund (the “Fund”) perform during the semi-annual period ended June 30, 2009?
 
The Fund’s standardized 7-day current yield was −0.01% and its standardized 7-day effective yield was −0.01% as of June 30, 2009. The Fund’s one-month simple average yield was +0.01% as of June 30, 2009. The Fund’s 7-day distribution yield as of June 30, 2009 was +0.01%.
 
In order to understand why the Fund’s standardized 7-day current and effective yields as of June 30, 2009 were negative, we believe it is important to understand how the standardized yield is derived. To ensure that no money market fund manager was misrepresenting a fund’s yield and to provide a common basis for comparing the yields of different fund managers, the Securities and Exchange Commission (SEC) created specific guidelines for the standardized yield calculation methodology and mandated all money market funds to quote this yield to investors. This calculation does not fully reflect the actual distribution income generated by the Fund. The standardized yield calculation methodology does not allow for the inclusion of capital gains and/or losses that are realized in the course of our active trading strategy. However, the 7-day distribution yield does include capital gains and/or losses, thereby providing the investor with a more accurate representation of the Fund’s actual distribution income, inclusive of both income and short-term capital gains. Looking at both standardized yields and distribution yields together should help investors understand the magnitude and composition of the Fund’s distributions.
 
An investment in the Money Market Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency (except if the Fund is participating in the Treasury Guaranty Program). Although the Fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the Fund.
 
The yields represent past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance quoted above.
 
Yields will fluctuate as market conditions change. The yield quotations more closely reflect the current earnings of the Fund than total return quotations.
 
The standardized 7-day current yield and standardized 7-day effective yield of a fund are calculated in accordance with securities industry regulations and do not include capital gains. Standardized 7-day current yield may differ slightly from the actual distribution rate of a given fund because of the exclusion of distributed capital gains, which are non-recurring. The standardized 7-day effective yield assumes reinvestment of dividends for one year. The 7-day distribution yield is the average return over the previous seven days. It is the Fund’s total income net of expenses, divided by the total number of outstanding shares. The 7-day distribution yield includes capital gains and/or losses distribution.
 
What economic and market factors most influenced the money markets as a whole during the semi-annual period?
 
The semi-annual period ended June 30, 2009 was one wherein dramatic action by the Federal Reserve Board (the Fed), increasing weakness and subsequent “green shoots” in economic growth, the global financial crisis and the resulting liquidity freeze had great effect on the money markets.
 
Just weeks before the semi-annual period began, the Fed lowered the targeted federal funds rate to a target range of 0% to 0.25% for the first time in the modern era of the Fed. Then, the end of January 2009 saw the first significant maturity from
 
 
1 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

the Commercial Paper Fund Facility (CPFF) that the Fed had announced in early October as just one initiative it took to help alleviate stress on the financial markets broadly and on the money markets in particular. The CPFF was established to provide liquidity to U.S. issuers of both unsecured commercial paper and asset-backed commercial paper through what is known as a special purpose vehicle. Over $240 billion matured out of the CPFF and net commercial paper held in the CPFF fell by $102.7 billion to $247.6 billion. This coincided with a $98.8 billion decline in total commercial paper outstanding as of the end of January. Total commercial paper outstanding continued to decline through the end of the semi-annual period.
 
Overall, money market yields moved lower during the reporting period, as we saw LIBOR rates compress and set lower in early April, a trend that continued through the end of June 2009. LIBOR, or London interbank offered rates, are floating interest rates that are widely used as reference rates in bank, corporate and government lending agreements. The spread, or differential, between the effective federal funds rate and both the one-month and three-month LIBOR rates had been more than 3.00% in October 2008. By the end of June 2009, that same differential was between 0.24% and 0.26%. Even as the LIBOR curve shifted significantly lower, floating rate notes were still attractive and provided one of the few alternatives available to add yield to the Fund. Issuers were able to place longer-term debt in this low yield environment, often with the assistance of the Temporary Liquidity Guarantee Program (TLGP), which was established by the Federal Deposit Insurance Corporation (FDIC), and chose to do so. With asset-backed commercial paper outstanding falling, investors turned to Treasuries and agency securities not only for relative safety given weakening credit and economic conditions, but also due to the lack of higher yielding alternatives.
 
Interestingly, the move toward lower LIBOR settings was driven by the Fed meeting in March, when the Fed announced its program to purchase U.S. Treasury and agency securities. Many of the securities the Fed would be removing from the market are often used as collateral for repurchase agreements, also known as repos. A repurchase agreement is an agreement between a seller and a buyer, usually of U.S. government securities, whereby the seller agrees to repurchase the securities at an agreed price and, usually, at a stated time.
 
This buyback program of the Fed affects money market funds because many money market funds use repo collateral, especially over quarter-ends. Against this backdrop, money market funds began extending duration and buying term, or fixed rate, securities during the second quarter. Improved liquidity in the term market helped to fuel lower LIBOR rates.
 
The combination of all of these factors led the taxable money market yield curve, or spectrum of maturities, to flatten over the reporting period as a whole, meaning the difference between yields at the short-term end of the money market yield curve and the longer-term end narrowed.
 
What key factors were responsible for the Fund’s performance during the six-month reporting period?
 
Fund yields moved lower over the course of the reporting period due primarily to the market factors discussed above. We also sacrificed some yield by emphasizing overnight liquidity and steering away from higher-yielding asset-backed commercial paper in favor of lower-yielding conservative investments, such as U.S. Treasury and agency securities.
 
How did you manage the Fund’s weighted average maturity during the reporting period?
 
At the start of the reporting period, the Fund’s weighted average maturity was 38 days. As market conditions shifted, especially regarding liquidity in the short-term markets, we adjusted the Fund’s weighted average maturity to between 30 days and 55 days. The Fund’s weighted average maturity was 49 days on June 30, 2009. The weighted average maturity of a money market fund is a measure of its price sensitivity to changes in interest rates.
 
How was the Fund invested during the six-month period?
 
The Fund had investments in commercial paper, asset-backed commercial paper, Treasury securities, government agency securities, repurchase agreements, government guaranteed paper and certificates of deposit during the six-month period. Our focus was on securities with one- to three-month maturities, although we did make purchases with longer maturities when we saw backups, or falling prices, as we sought to lock in the higher yields then available.
 
Did you make any changes in the Fund’s portfolio during the reporting period?
 
In addition to making adjustments in the Fund’s weighted average maturity as market conditions shifted, we did end the reporting period with a higher Fund concentration in overnight securities than we had at the start of 2009.
 
 
 2

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
What is the Fund’s tactical view and strategy for the months ahead?
 
We expect the Fed to maintain its near-zero targeted federal funds rate for the remainder of 2009 and most of 2010 as well. At the same time, through the numerous credit and liquidity facilities it has created over the last year or so, we expect the Fed to continue its policy of quantitative easing. Quantitative easing is essentially when the Fed actively purchases bonds in the open market. Recessionary conditions are expected to continue throughout the rest of the year, with domestic economic growth hampered by the worldwide slowdown. Credit shock and ongoing deleveraging continue to tighten lending conditions. The unemployment rate appears to be heading close to 10%. To help jumpstart economic growth, tremendous fiscal expenditure and mortgage assistance programs have been put in place, and banking and shadow-banking sectors are under reconstruction. The long-term inflation outlook will be influenced, among other factors, by the current massive government credit creation and the U.S. Treasury Department’s borrowing needs.
 
Against this backdrop, we will continue to carefully watch market conditions and how they affect the performance of asset-backed commercial paper assets, especially the performance of underlying collateral, credit enhancement and liquidity agreements, and program ratings. We also intend to maintain a healthy liquidity position in the Fund for the near term and to seek opportunities to lengthen the Fund’s weighted average maturity when we see yields improve. Of course, we will continue to closely monitor economic data, Fed policy and any shifts in the money market yield curve, as we strive to strategically navigate the interest rate environment.
 
 
3 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
 
SECTOR ALLOCATION AS OF 6/30/09†
 
Percentage of Net Assets
 
(GRAPH)
 
† The Fund is actively managed and, as such, its composition may differ over time. The percentage shown for each investment category reflects the value (based on amortized cost) of investments in that category as a percentage of net assets. Figures in the above chart may not sum to 100% due to the exclusion of other assets and liabilities.
 
 
 4

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Schedule of Investments
 
June 30, 2009 (Unaudited)
 
                             
Principal
 		    Interest
 		    Maturity
 		    Amortized
 		 
Amount     Rate     Date     Cost  
 
Commercial Paper and Corporate Obligations – 37.1%
Amsterdam Funding Corp.
$ 1,000,000       0.300 %     07/10/09     $ 999,925  
Aspen Funding Corp.
  5,000,000       0.330       07/13/09       4,999,450  
Atlantic Asset Securitization Corp.
  6,000,000       0.630       07/01/09       6,000,000  
Atlantis One Funding Corp.
  4,000,000       0.400       09/18/09       3,996,489  
Cafco LLC
  4,000,000       0.650       08/13/09       3,996,894  
Chariot Funding LLC
  1,000,000       0.230       07/08/09       999,955  
Charta LLC
  3,000,000       0.650       08/12/09       2,997,725  
Ciesco LLC
  4,000,000       0.650       08/13/09       3,996,894  
CRC Funding LLC
  1,000,000       0.620       08/14/09       999,242  
  4,000,000       0.400       09/02/09       3,997,200  
Falcon Asset Securitization Corp.
  1,000,000       0.230       07/07/09       999,962  
Govco LLC
  3,000,000       0.400       09/03/09       2,997,867  
Jupiter Securitization Corp.
  3,030,000       0.280       07/21/09       3,029,529  
LMA Americas LLC
  1,000,000       0.520       07/10/09       999,870  
  1,000,000       0.500       07/27/09       999,639  
Park Avenue Receivable Co. LLC
  4,000,000       0.280       07/27/09       3,999,191  
Regency Markets No. 1 LLC
  4,000,000       0.500       08/17/09       3,997,389  
Straight-A Funding LLC
  2,000,000       0.370       09/01/09       1,998,726  
Thames Asset Global Securitization, Inc.
  5,000,000       0.570       08/03/09       4,997,387  
Tulip Funding Corp.
  5,000,000       0.310       07/06/09       4,999,785  
 
 
TOTAL COMMERCIAL PAPER AND CORPORATE OBLIGATIONS   $ 62,003,119  
 
 
                             
                             
Eurodollar Certificates of Deposit – 5.4%
HSBC Bank PLC
$ 5,000,000       1.505 %     09/10/09     $ 5,000,049  
National Australia Bank Ltd.
  3,000,000       0.610       07/14/09       3,000,011  
  1,000,000       1.210       09/23/09       1,000,023  
 
 
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT   $ 9,000,083  
 
 
                             
                             
U.S. Government Guarantee Commercial Paper(a) – 2.1%
General Electric Capital Corp.
  1,000,000       0.850       07/23/09       999,481  
  1,000,000       0.850       07/27/09       999,386  
Swedbank AB
  500,000       0.700       11/10/09       498,717  
  500,000       0.700       11/12/09       498,697  
  500,000       0.700       11/13/09       498,687  
 
 
TOTAL U.S. GOVERNMENT GUARANTEE COMMERCIAL PAPER   $ 3,494,968  
 
 
                             
                             
U.S. Government Guarantee Variable Rate Obligations(a)(b) – 2.4%
Bank of America N.A.
$ 1,000,000       1.104 %     07/29/09     $ 1,000,000  
Royal Bank of Scotland Group PLC
  3,000,000       1.056       08/10/09       3,000,000  
 
 
TOTAL U.S. GOVERNMENT GUARANTEE VARIABLE RATE OBLIGATIONS   $ 4,000,000  
 
 
                             
                             
U.S. Government Agency Obligations – 21.0%
Federal Home Loan Bank
$ 1,000,000       0.869 %(b)     07/09/09     $ 999,923  
  1,000,000       0.859 (b)     07/13/09       999,961  
  2,000,000       0.528 (b)     09/01/09       1,999,488  
  2,000,000       0.449 (b)     09/08/09       1,999,717  
  2,000,000       0.650 (b)     09/10/09       2,000,000  
  2,000,000       2.720       09/18/09       2,000,000  
  2,000,000       0.950       04/05/10       1,998,885  
  700,000       0.600       06/21/10       699,355  
Federal Home Loan Mortgage Corp.
  5,740,000       1.211 (b)     07/07/09       5,741,758  
  1,000,000       1.039 (b)     07/13/09       1,000,000  
  800,000       0.200       07/14/09       799,942  
  700,000       0.200       07/21/09       699,922  
  200,000       0.630 (b)     09/03/09       199,926  
  3,000,000       0.670       11/20/09       2,992,072  
  2,500,000       0.420       02/08/10       2,493,525  
  3,000,000       0.660       05/04/10       2,983,115  
Federal National Mortgage Association
  2,000,000       0.410 (b)     07/01/09       1,999,965  
  1,000,000       1.029 (b)     07/13/09       999,689  
  2,500,000       0.420       02/08/10       2,493,525  
 
 
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS   $ 35,100,768  
 
 
                             
                             
                             
 
 
 
The accompanying notes are an integral part of these financial statements. 
 
5 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Schedule of Investments (continued)
 
June 30, 2009 (Unaudited)
 
 
                             
Principal
 		    Interest
 		    Maturity
 		    Amortized
 		 
Amount     Rate     Date     Cost  
 
Variable Rate Obligations(b) – 8.1%
ANZ National Bank Limited
$ 3,000,000       0.890 %     09/10/09     $ 3,000,000  
Rabobank Nederland
  2,000,000       0.561       07/07/09       2,000,000  
  1,000,000       0.646       09/04/09       1,000,000  
Royal Bank of Canada
  2,000,000       1.203       08/17/09       2,000,000  
Wachovia Bank N.A.
  4,000,000       1.586       07/06/09       4,000,303  
Westpac Banking Corp.
  1,500,000       0.652       09/09/09       1,500,000  
 
 
TOTAL VARIABLE RATE OBLIGATIONS   $ 13,500,303  
 
 
                             
                             
Yankee Certificates of Deposit – 3.0%
Rabobank Nederland
$ 1,000,000       1.000 %     09/04/09     $ 1,000,000  
Svenska Handelsbanken AB
  4,000,000       0.490       08/07/09       4,000,041  
 
 
TOTAL YANKEE CERTIFICATES OF DEPOSIT   $ 5,000,041  
 
 
                             
                             
U.S. Treasury Obligation – 0.6%
United States Treasury Bill
$ 1,000,000       0.600 %     06/03/10     $ 994,383  
 
 
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT   $ 133,093,665  
 
 
                             
                             
Repurchase Agreement(c) – 20.4%
Joint Repurchase Agreement Account II
$ 34,100,000       0.073 %     07/01/09     $ 34,100,000  
Maturity Value: $34,100,069
 
TOTAL INVESTMENTS – 100.1%   $ 167,193,665  
 
 
LIABILITIES IN EXCESS OF OTHER
  ASSETS – (0.1)%
    (87,870 )
 
 
NET ASSETS – 100.0%   $ 167,105,795  
 
 
 
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.
 
(a) This debt is guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program and is backed by the full faith and credit of the United States. The expiration date of the FDIC’s guarantee is the earlier of the maturity date of the debt or June 30, 2012. Total market value of these securities amounts to $7,494,968, which represents approximately 4.5% of net assets as of June 30, 2009.
 
(b) Variable or floating rate security is based on either the U.S. Treasury Bill Rate, London Interbank Offering Rate, Prime Lending Rate, or Federal Funds Rate. Interest rate disclosed is that which is in effect at June 30, 2009.
 
(c) Joint repurchase agreement was entered into on June 30, 2009. Additional information appears on page 7.
 
Interest rates represent either the stated coupon rate, annualized yield on date of purchase for discounted securities, or, for floating rate securities, the current reset rate, which is based upon current interest rate indices.
 
Maturity dates represent either the stated date on the security or the next interest reset date for floating rate securities.
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 6

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
 
 
 
 
 
 
ADDITIONAL INVESTMENT INFORMATION
 
JOINT REPURCHASE AGREEMENT ACCOUNT II — At June 30, 2009, the Fund had an undivided interest in the Joint Repurchase Agreement Account II which equaled $34,100,000 in principal amount.
 
REPURCHASE AGREEMENTS
 
                                 
    Principal
 		    Interest
 		    Maturity
 		    Maturity
 		 
Counterparty   Amount     Rate     Date     Value  
   
Banc of America Securities LLC
  $ 1,500,000,000       0.02 %     07/01/09     $ 1,500,000,833  
 
 
Banc of America Securities LLC
    2,000,000,000       0.10       07/01/09       2,000,005,556  
 
 
Barclays Capital, Inc. 
    1,650,000,000       0.01       07/01/09       1,650,000,458  
 
 
Barclays Capital, Inc. 
    1,650,000,000       0.10       07/01/09       1,650,004,583  
 
 
Citigroup Global Markets, Inc. 
    2,500,000,000       0.10       07/01/09       2,500,006,945  
 
 
Credit Suisse Securities (USA) LLC
    2,000,000,000       0.02       07/01/09       2,000,001,111  
 
 
Credit Suisse Securities (USA) LLC
    1,950,000,000       0.11       07/01/09       1,950,005,958  
 
 
Deutsche Bank Securities, Inc. 
    1,250,000,000       0.09       07/01/09       1,250,003,125  
 
 
JPMorgan Securities
    1,762,300,000       0.01       07/01/09       1,762,300,490  
 
 
JPMorgan Securities
    2,950,000,000       0.09       07/01/09       2,950,007,375  
 
 
Merrill Lynch & Co., Inc.
    1,000,000,000       0.07       07/01/09       1,000,001,944  
 
 
Morgan Stanley & Co.
    1,350,000,000       0.07       07/01/09       1,350,002,625  
 
 
RBS Securities, Inc.
    500,000,000       0.12       07/01/09       500,001,667  
 
 
UBS Securities LLC
    1,125,000,000       0.11       07/01/09       1,125,003,438  
 
 
Wachovia Capital Markets
    550,000,000       0.12       07/01/09       550,001,833  
 
 
TOTAL
                          $ 23,737,347,941  
 
 
At June 30, 2009, the Joint Repurchase Agreement Account II was fully collateralized by Federal Farm Credit Bank, 3.875% to 5.770%, due 10/07/13 to 08/03/37; Federal Home Loan Bank, 5.250% to 7.125%, due 02/12/16 to 02/15/30; Federal Home Loan Mortgage Corp., 4.000% to 9.000%, due 05/01/10 to 07/01/39; Federal National Mortgage Association, 3.500% to 16.000%, due 07/01/09 to 06/01/49; Federal National Mortgage Association Interest-Only Stripped Security, 0.000%, due 05/15/20; Government National Mortgage Association, 3.500% to 7.000%, due 04/15/27 to 05/15/49; U.S. Treasury Bills, 0.000%, due 10/08/09; U.S. Treasury Inflation Protected Securities, 1.250% to 4.250%, due 01/15/10 to 04/15/29; U.S. Treasury Interest-Only Stripped Securities, 0.000%, due 07/15/09 to 04/15/29, U.S. Treasury Notes, 0.875% to 7.250%, due 09/30/09 to 02/15/19 and U.S. Treasury Principal-Only Stripped Securities, 0.000%, due 08/15/09 to 04/15/29. The aggregate market value of the collateral, including accrued interest, was $24,304,574,925.
 
 
 
The accompanying notes are an integral part of these financial statements. 
 
7 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Statement of Assets and Liabilities
 
June 30, 2009 (Unaudited)
 
 
         
Assets:
Investments in securities, at value based on amortized cost
  $ 133,093,665  
Repurchase agreement, at value based on amortized cost
    34,100,000  
Cash
    11,709  
Receivables:
       
Interest
    116,026  
Fund shares sold
    76,946  
Reimbursement from adviser
    46,764  
Other assets
    22,263  
 
 
Total assets
    167,467,373  
 
 
 
Liabilities:
Payables:
       
Fund shares redeemed
    228,773  
Amounts owed to affiliates
    82,269  
Accrued expenses
    50,536  
 
 
Total liabilities
    361,578  
 
 
 
Net Assets:
Paid-in capital
    167,093,152  
Accumulated undistributed net investment income
    4,656  
Accumulated net realized gain from investment transactions
    7,987  
 
 
NET ASSETS
  $ 167,105,795  
 
 
Total Service Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized)
    167,091,295  
Net asset value, offering and redemption price per share
  $ 1.00  
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 8

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Statement of Operations
 
For the Six Months Ended June 30, 2009 (Unaudited)
 
 
         
Investment income:
Interest
  $ 867,816  
 
 
 
Expenses:
Management fees
    315,054  
Distribution and Service fees
    225,040  
Professional fees
    54,153  
Custody and accounting fees
    22,715  
Printing fees
    18,336  
Transfer Agent fees
    18,003  
Trustee fees
    8,460  
Other
    49,287  
 
 
Total expenses
    711,048  
 
 
Less — expense reductions
    (112,298 )
 
 
Net expenses
    598,750  
 
 
NET INVESTMENT INCOME
    269,066  
 
 
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS
    18,289  
 
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
  $ 287,355  
 
 
 
 
 
The accompanying notes are an integral part of these financial statements. 
 
9 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Statements of Changes in Net Assets
 
                 
    For the
 		       
    Six Months Ended
 		    For the
 		 
    June 30, 2009
 		    Fiscal Year Ended
 		 
    (Unaudited)     December 31, 2008  
 
From operations:
Net investment income
  $ 269,066     $ 4,529,922  
Net realized gain (loss) from investment transactions
    18,289       (8,445 )
 
 
Net increase in net assets resulting from operations
    287,355       4,521,477  
 
 
 
Distributions to shareholders:
From net investment income
    (272,855 )     (4,521,477 )
 
 
 
From share transactions:
Proceeds from sales of shares
    22,876,500       66,759,739  
Reinvestment of distributions
    273,034       4,521,524  
Cost of shares redeemed
    (50,929,358 )     (81,928,114 )
 
 
Net decrease in net assets resulting from share transactions
    (27,779,824 )     (10,646,851 )
 
 
TOTAL DECREASE
    (27,765,324 )     (10,646,851 )
 
 
 
Net assets:
Beginning of period
    194,871,119       205,517,970  
 
 
End of period
  $ 167,105,795     $ 194,871,119  
 
 
Accumulated undistributed net investment income
  $ 4,656     $ 8,445  
 
 
 
Summary of share transactions:
Shares sold
    22,876,500       66,759,739  
Shares issued on reinvestment of distributions
    273,034       4,521,524  
Shares redeemed
    (50,929,358 )     (81,928,114 )
 
 
NET DECREASE
    (27,779,824 )     (10,646,851 )
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 10

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Financial Highlights
 
Selected Data for a Share Outstanding Throughout Each Period
 
 
                                                                                 
                                                    Ratios assuming no
 		     
                                              Ratio of
 		    expense reduction      
    Net asset
 		          Distributions
 		                Net assets,
 		    Ratio of
 		    net investment
 		    Ratio of
 		     
    value,
 		    Net
 		    from net
 		    Net asset
 		          end of
 		    net expenses
 		    income
 		    total expenses
 		     
    beginning
 		    investment
 		    investment
 		    value, end
 		    Total
 		    period
 		    to average
 		    to average
 		    to average
 		     
    of period     income     income     of period     return(a)     (in 000s)     net assets     net assets     net assets      
 

FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
                                                                                 
2009
  $ 1.00     $   .001(b)     $ ( .001)     $ 1.00       0.15 %   $ 167,106       0.63 %(c)     0.30 %(c)(d)     0.76 %(c)    
                                                                                 

FOR THE FISCAL YEARS ENDED DECEMBER 31,
                                                                                 
2008
    1.00       0 .02(b)       (0 .02)       1.00       2.25       194,871       0.63       2.27 (d)     0.71      
 
 
2007
    1.00       0 .05(b)       (0 .05)       1.00       4.98       205,518       0.48       4.87 (d)     0.71      
 
 
2006(e)
    1.00       0 .05(b)       (0 .05)       1.00       4.65       199,439       0.49       4.59 (d)     0.71      
 
 
2005(e)
    1.00       0 .03       (0 .03)(f)       1.00       2.75       222,194       0.55       2.65       0.55      
 
 
2004(e)
    1.00       0 .01       (0 .01)       1.00       0.91       264,679       0.52       0.88       0.52      
 
 
 
(a) Assumes reinvestment of all distributions. The Goldman Sachs Money Market Fund first began operations as the Allmerica Money Market Fund (the “Predecessor AIT Fund”) of the Allmerica Investment Trust. On January 9, 2006, the Predecessor AIT Fund was reorganized as a new portfolio of the Goldman Sachs Variable Insurance Trust. Performance prior to January 9, 2006, is that of the Predecessor AIT Fund. The Predecessor AIT Fund was considered the accounting survivor of the reorganization and as such, the historical total return information of the Predecessor AIT Fund is provided.
(b) Calculated based on the average shares outstanding methodology.
(c) Annualized.
(d) Ratio of net investment income assuming no expense reductions is 4.37% for the year ended December 31, 2006, 4.64% for the year ended December 31, 2007, 2.19% for the year ended December 31, 2008 and 0.17% for the six months ended June 30, 2009.
(e) The Predecessor AIT Fund was the accounting survivor of the reorganization and as such, the prior years financial highlights reflect the financial information of the Predecessor AIT Fund through January 8, 2006. In connection with such reorganization, the Goldman Sachs Money Market Fund issued Service Shares to the former shareholders of the Predecessor AIT Fund.
(f) Distribution from net realized gain on investments and return of capital amounted to less than $0.0005.
 
The accompanying notes are an integral part of these financial statements.

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GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Notes to Financial Statements
June 30, 2009 (Unaudited)
 
 
1. ORGANIZATION
 
Goldman Sachs Variable Insurance Trust (the “Trust” or “VIT”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes the Goldman Sachs Money Market Fund (the “Fund”). The Fund is a diversified portfolio under the Act offering one class of shares — Service Shares.
Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as investment adviser pursuant to a Management Agreement (the “Agreement”) with the Trust on behalf of the Fund.
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that may affect the amounts and disclosures on the financial statements. Actual results could differ from those estimates and assumptions.
 
A. Investment Valuation — It is the Fund’s policy to use the amortized-cost method, as permitted by Rule 2a-7 under the Act, for valuing portfolio securities, which approximates market value. Under this method, all investments purchased at a discount or premium are valued by accreting or amortizing the difference between the original purchase price and maturity value of the issue over the period to maturity or reset date. To ensure the amortized-cost method approximates market value, GSAM will compare the net asset value per share (“NAV”) based upon amortized cost of the Fund and the NAV based upon available market quotations (or permitted substitutes) at least once a week or more frequently, if deemed necessary or appropriate.
 
B. Security Transactions and Investment Income — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
 
C. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Fund on a straight-line and/or “pro-rata” basis depending upon the nature of the expense.
 
D. Federal Taxes and Distributions to Shareholders — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal income tax provisions are required. Distributions to shareholders are declared and recorded daily and paid monthly by the Fund. Long-term capital gains distributions, if any, are declared and paid annually.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with U.S. federal income tax rules, which may differ from GAAP. The source of the Fund’s distributions may be shown in accompanying financial statements as either from net investment income, net realized gain or capital. Financial statements are adjusted for permanent book/tax differences to reflect the appropriate tax character, and are not adjusted for temporary differences.
As of December 31, 2008, the Fund had a capital loss carryforward for U.S. federal income tax purposes of $1,857 and $8,445 expiring December 31, 2014 and December 31, 2016, respectively. The capital loss carryforward amounts are available to be carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carry forwards will reduce the requirement of future capital gains distributions.
The amortized cost for the Fund stated in the accompanying Statement of Assets and Liabilities also represents aggregate cost for U.S. federal income tax purposes.
GSAM has reviewed the Fund’s tax positions for all open tax years (the current and prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements. Such open tax years remain subject to examination by tax authorities.
 
E. Repurchase Agreements — The Fund may enter into repurchase agreements. Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase the securities at a mutually agreed upon date and price. During the term
 
 
 12

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
 
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest is required to exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Fund may be delayed or limited and there may be a decline in the value of the collateral during the period while the Fund seeks to assert its rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under tri-party repurchase agreements.
Pursuant to exemptive relief granted by the Securities and Exchange Commission (the “SEC”) and terms and conditions contained therein, the Fund, together with other registered investment companies having management agreements with GSAM, or its affiliates, may transfer uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements. Under these joint accounts, the Fund’s credit exposure is allocated to the underlying repurchase counterparties on a pro-rata basis. With the exception of certain transaction fees, the Fund is not subject to any expenses in relation to these investments.
 
3. AGREEMENTS
 
A. Management Agreement — Under the Agreement, GSAM manages the Fund, subject to the general supervision of the trustees.
As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, GSAM is entitled to a management fee, computed daily and payable monthly, equal to an annual percentage rate of 0.35% of the Fund’s average daily net assets.
 
B. Distribution Agreement and Service Plan — The Trust, on behalf of the Service Shares of the Fund, has adopted a Distribution and Service Plan (the “Plan”). Under the Plan, Goldman Sachs and/or authorized dealers are entitled to a fee accrued daily and paid monthly for distribution services equal to, on an annual basis, 0.25% of the Fund’s average daily net assets attributable to Service Shares. Goldman Sachs has voluntarily agreed to waive a portion of the service fees attributable to the Service Shares. For the six months ended June 30, 2009, Goldman Sachs waived $5,413 in service fees. For the six months ended June 30, 2009, the effective Service fee, net of waivers, was 0.24%. As of June 30, 2009, the Service fee, net of waivers, was 0.16%.
 
C. Transfer Agency Agreement — Goldman Sachs also serves as the transfer agent for the Fund for a fee pursuant to a Transfer Agency Agreement. The fees charged for such transfer agency services are calculated daily and payable monthly equal to an annual rate of 0.02% of the average daily net assets of the Fund.
 
D. Other Agreements — GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding management fees, distribution and service fees, transfer agent fees and expenses, taxes, interest, brokerage fees and litigation, indemnification, shareholder meetings and other extraordinary expenses, exclusive of any custody and transfer agent fee credit reductions) to the extent that such expenses exceed, on an annual basis, 0.004% of the average daily net assets of the Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior fiscal year expense reimbursements, if any. For the six months ended June 30, 2009, GSAM voluntarily reimbursed $106,885 to the Fund.
For the six months ended June 30, 2009, the amounts owed to affiliates were $49,146, $30,315 and $2,808 for management, distribution and service, and transfer agent fees, respectively.
 
E. Line of Credit Facility — The Fund participates in a $660,000,000 committed, unsecured revolving line of credit facility (the “facility”) together with other funds of the Trust and registered investment companies having management agreements with GSAM or affiliates. Pursuant to the terms of the facility, the Fund and other borrowers may increase the credit amount by an additional $340,000,000, for a total up to $1 billion. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The facility also requires a fee to be paid by the Fund based on the
 
 
13 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Notes to Financial Statements (continued)
June 30, 2009 (Unaudited)
 
3. AGREEMENTS (continued)
 
amount of the commitment that has not been utilized. For the six months ended June 30, 2009, the Fund did not have any borrowings under the facility. Prior to May 12, 2009, the amount available through the facility was $700,000,000.
 
4. FAIR VALUE OF INVESTMENTS
 
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements do not include transaction costs. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
 
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
The following is a summary of the Fund’s investments categorized in the fair value hierarchy:
 
                         
    Level 1     Level 2(a)     Level 3  
   
Assets
                       
Short-Term Investments
                       
U.S. Treasury and Other U.S. Government Obligations and Agencies
  $ 994,383     $ 42,595,736     $ —  
Corporate Obligations
    —       123,603,546       —  
 
 
Total
  $ 994,383     $ 166,199,282     $ —  
 
 
 
(a) The Fund utilizes amortized cost which approximates fair value in order to value money market investments. This results in primarily a Level 2 classification as amortized cost is considered a model-based price.
 
5. OTHER RISKS
 
Market and Credit Risks — In the normal course of business, the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk). Additionally, the Fund may also be exposed to credit risk in the event that an issuer fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
 
Risks of Large Shareholder Redemptions — Certain participating insurance companies, accounts, or Goldman Sachs affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Fund’s shares. Redemptions by these participating insurance companies or accounts in the Fund may impact the Fund’s liquidity and Net Assets Value per share (“NAV”). These redemptions may also force the Fund to sell securities, which may increase the Fund’s brokerage costs.
 
6. OTHER MATTERS
 
Indemnifications — Under the Trust’s organizational documents, its trustees, officers, employees and agents are indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund believes the risk of loss under these arrangements to be remote.
 
 
 14

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
 
6. OTHER MATTERS (continued)
 
Temporary Guarantee Program — On October 3, 2008, the Board of Trustees of the Fund approved participation in the U.S. Treasury Department’s (the “Treasury”) Temporary Guarantee Program (the “Program”) for the Fund and other Goldman Sachs registered money market funds. Each of these Funds paid the Treasury a fee based on the number of shares outstanding as of September 19, 2008 to participate in the Program for the initial 3-month term that expired on December 18, 2008. On December 3, 2008, the Board of Trustees approved participation in the extension of the program through April 30, 2009, for which the Fund paid the Treasury an additional fee also based on the number of shares outstanding as of September 19, 2008. Subsequently, on April 9, 2009, the Board of Trustees approved further participation in the Program through September 18, 2009 for the Fund. With each extension of the Program, the participating Funds paid the Treasury an additional fee based on the number of shares outstanding as of September 19, 2008.
Under the Program, if the Fund’s market-based net asset value per share drops below $0.995 on any day while the Program is in effect, shareholders of record on that date who also held shares in the Fund on September 19, 2008 may be eligible to receive a payment from the Treasury upon liquidation of the Fund. The fees are being amortized over the length of the participation in the Program. The expense is borne by the Fund without regard to any expense limitation in effect for the Fund. Such amounts are included in other expenses on the Statements of Operations.
 
New Accounting Pronouncement — In May 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). This standard requires disclosure in the financial statements to reflect the effects of subsequent events that provide additional information on conditions about the financial statements as of the balance sheet date (recognized subsequent events) and disclosure of subsequent events that provide additional information about conditions after the balance sheet date if the financial statements would otherwise be misleading (unrecognized subsequent events). FAS 165 is effective for interim and annual financial statements issued for fiscal years ending after June 15, 2009. For purposes of inclusion in the financial statements, GSAM has concluded that subsequent events after the balance sheet date have been evaluated through August 14, 2009, the date that the financial statements were issued.
 
 
15 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited)
 
Background
 
The Goldman Sachs Money Market Fund (the “Fund”) is an investment portfolio of Goldman Sachs Variable Insurance Trust (the “Trust”). The Board of Trustees oversees the management of the Trust and reviews the investment performance and expenses of the Fund at regularly scheduled meetings held during the year. In addition, the Board of Trustees determines annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) on behalf of the Fund.
 
The Management Agreement was most recently approved for continuation until June 30, 2010 by the Board of Trustees, including those Trustees who are not parties to the Management Agreement or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), at a meeting held on June 17, 2009 (the “Annual Contract Meeting”).
 
To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to reports on the Fund’s investment performance, expenses and other matters discussed at regularly scheduled Board meetings during the year, the Trustees have established a Contract Review Committee (the “Committee”), comprised of the Independent Trustees. The Committee held meetings on December 17, 2008, February 11, 2009 and May 20, 2009. At those Committee meetings, the Independent Trustees considered matters relating to the Management Agreement including: (a) the nature and quality of the advisory, administrative and other services provided to the Fund by the Investment Adviser and its affiliates; (b) the Fund’s investment performance; (c) the Fund’s management fee arrangements; (d) the voluntary undertaking of the Investment Adviser to reimburse certain expenses of the Fund that exceed a specified level and the estimated annualized savings realized by the Fund from that undertaking; (e) potential economies of scale; (f) the relative expense level of the Fund as compared to those of comparable funds managed by the Investment Adviser, as well as those managed by other advisers; (g) information relating to the profitability of the Management Agreements and the transfer agency arrangements of the Fund and the Trust as a whole to the Investment Adviser and its affiliates; (h) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (i) a summary of fee concessions made by the Investment Adviser and its affiliates over the past several years with respect to the Fund; (j) to the extent the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative information on the advisory fees charged and services provided to those accounts by the Investment Adviser; (k) information on the processes followed by a third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Fund; (l) the current pricing of services provided by, and the profitability of, the Fund’s transfer agent, Goldman, Sachs & Co. (“Goldman Sachs”); and (m) the nature and quality of the services provided to the Fund by its unaffiliated service providers and reports on due diligence conducted by the Investment Adviser with respect to those service providers.
 
At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters, including: (a) the quality of the Investment Adviser’s services; (b) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (c) the groups or teams within the Investment Adviser that support the portfolio management teams, including legal, compliance, internal audit, the credit department, fund controllers, tax, product services, valuation oversight, market risk analysis, finance and strategy, operations, shareholder services, risk management and advisory, training and technology; (d) whether certain reductions in headcount were likely to affect the quality of the services provided to the Fund; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Fund for transfer agency, distribution and other services; (h) the terms of the Management Agreement and agreements with other service providers entered into by the Trust on behalf of the Fund; (i) the administrative services provided under the Management Agreement, including the nature and extent of the Investment Adviser’s oversight of the Fund’s other service providers, including the custodian and fund accounting agent; (j) the Investment Adviser’s processes and policies addressing various types of potential conflicts of interest; (k) the Investment Adviser’s approach to risk management; (l) an overview of the Fund’s distribution plan; and (m) an annual review of the effectiveness of the Fund’s compliance program. At the Annual
 
 
 16

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Contract Meeting, the Trustees also considered further the Investment Adviser’s profitability with respect to the Fund, and the Fund’s investment performance, fees and expenses, including the Fund’s expense trends over time.
 
In connection with the Committee meetings and the Annual Contract Meeting, the Trustees attended sessions at which they reviewed information regarding the Fund’s assets, share purchase and redemption activity, and the payment of Rule 12b-1 distribution and service fees by the Fund’s Service Shares. Also, in conjunction with these meetings, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law.
 
Information was also provided to the Trustees relating to revenue sharing payments made by and services provided by the Investment Adviser and its affiliates to intermediaries that promote the sale, distribution and/or servicing of Fund shares, and other matters. During the course of their deliberations, the Independent Trustees met in executive session with their independent legal counsel, without representatives of the Investment Adviser or its affiliates present.
 
The presentations made at the Committee meetings and at the Annual Contract Meeting encompassed the Fund and other mutual fund portfolios for which the Board of Trustees has responsibility. While the management agreements for the Fund and the other mutual fund portfolios for which the Trustees have responsibility were considered at the same Annual Contract Meeting, the Trustees separately considered the Management Agreement as it applied to the Fund.
 
In evaluating the Management Agreement at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its affiliates, their services and the Fund. At those meetings the Trustees regularly received materials relating to the Investment Adviser’s investment management and other services provided under the Management Agreement, including: (a) information on the investment performance of the Fund in comparison to the performance of similar mutual funds; (b) general investment outlooks in the markets in which the Fund invests; (c) compliance reports; and (d) expenses borne by the Fund. In addition, the Trustees were provided with copies of disclosure materials regarding the Fund and its expenses, as well as information on the Fund’s competitive universe. The Trustees also discussed the broad range of other investment choices that are available to Fund investors, including the availability of comparable funds managed by other advisers.
 
Nature, Extent and Quality of the Services Provided Under the Management Agreement
 
As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Fund by the Investment Adviser and its affiliates. The Trustees concluded that, during the recent financial crisis, the Investment Adviser had demonstrated a willingness and an ability to commit substantial financial and other resources to the operations of the Fund and had represented that it will continue to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, valuation oversight, vendor oversight and risk management. The Independent Trustees also observed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Fund and the Investment Adviser, including the implementation and enhancement of compliance systems and education and training initiatives.
 
Investment Performance
 
The Independent Trustees also considered the investment performance of the Fund and the Investment Adviser. In this regard, they compared the investment performance of the Fund to the performance rankings and ratings compiled by the Outside Data Provider. This information on the Fund’s investment performance was provided for the one-year period ended December 31, 2008. The Trustees considered the Fund’s investment performance in light of its investment objective, credit parameters and market conditions. They also considered the investor constituencies the Fund serves, and the Fund’s compliance with regulations of the SEC applicable to money market mutual funds and the stability of net asset values. In light of these considerations, the Trustees concluded that the Fund had provided investment performance within a competitive range for investors, and that the Investment Adviser’s continued management would benefit the Fund and its shareholders.
 
 
17 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Costs of Services Provided and Competitive Information
 
The Independent Trustees considered the contractual fee rate payable by the Fund under the Management Agreement. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Fund, which included both advisory and administrative services that were directed to the needs and operations of the Fund as a registered mutual fund.
 
In particular, the Trustees reviewed analyses prepared by the Outside Data Provider regarding the expense rankings of the Fund. The analyses provided a comparison of the Fund’s management fees to those of a relevant peer group and category universe; an expense analysis which compared the Fund’s expenses to a peer group and a category universe; and a three-year history comparing the Fund’s expenses to the peer and category averages. The analyses also compared the Fund’s transfer agency fees, custody and accounting fees, distribution fees, other expenses and fee waivers/reimbursements to those of other funds in the peer group and peer group median. The Independent Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees and total expenses paid by the Fund.
 
In addition, the Independent Trustees considered the Investment Adviser’s voluntary undertaking to limit the Fund’s “other expenses” ratio (excluding certain expenses) to a specified level. They also considered, to the extent that the Investment Adviser manages institutional accounts or collective investment vehicles having investment objectives and policies similar to those of the Fund, comparative fee information for services provided by the Investment Adviser to those accounts, and information that indicated that services provided to the Fund differed in various significant respects from the services provided to institutional accounts, which operated under less stringent legal and regulatory structures, were in some instances subject to different investment guidelines, required fewer services from the Investment Adviser to a smaller number of client contact points, were less time-intensive and paid lower fees.
 
The Independent Trustees noted the competitive nature of the mutual fund marketplace, and that many of the Fund’s shareholders invested in the Fund in part because of the Fund’s relationship with the Investment Adviser and have a general expectation that the relationship will continue. They also noted that shareholders are able to redeem their Fund shares if they believe that the Fund fees and expenses are too high or if they are dissatisfied with the performance of the Fund.
 
Profitability
 
The Independent Trustees reviewed the Investment Adviser’s revenues and pre-tax profit margins with respect to the Trust and the Fund. In this regard the Independent Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules by Fund and by function (i.e., investment management, transfer agency and distribution and service) and the Investment Adviser’s expense allocation methodology. The Trustees also reviewed the report of the internal audit group within the Goldman Sachs organization, which included an assessment of the reasonableness and consistency of the Investment Adviser’s expense allocation methodology and an evaluation of the accuracy of the Investment Adviser’s profitability analysis calculations. Profitability data for the Trust and the Fund were provided for 2008 and 2007, and the Independent Trustees considered this information in relation to the Investment Adviser’s overall profitability. The Independent Trustees considered the Investment Adviser’s revenues and pre-tax profit margins both in absolute terms and in comparison to information on the reported pre-tax profit margins earned by certain other asset management firms.
 
 
 18

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

Statement Regarding Basis for Approval of Management Agreement (Unaudited) (continued)
 
Economies of Scale
 
The Independent Trustees reviewed information regarding potential economies of scale, and whether the Fund and its shareholders were participating in the benefits of such economies. In this regard, they considered the amount of assets in the Fund; the Fund’s recent purchase and redemption activity; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and their realized profits; and information comparing the contractual fee rate charged by the Investment Adviser (which does not include fee breakpoints) with fee rates charged to other money market funds in the peer group. The Trustees considered a report prepared by the Outside Data Provider, which surveyed money market funds’ management fee arrangements and use of breakpoints. The Trustees noted that the fees actually paid by the Fund were reduced by the Investment Adviser’s voluntary undertaking to limit certain other expenses to a certain amount. The Independent Trustees also considered the competitive nature of the money market fund business and the competitiveness of the fee charged to the Fund by the Investment Adviser.
 
Other Benefits to the Investment Adviser and Its Affiliates
 
The Independent Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from their relationship with the Fund as stated above, including: (a) transfer agency fees received by Goldman Sachs; (b) trading efficiencies resulting from aggregation of orders of the Fund with those for other funds or accounts managed by the Investment Adviser; (c) the Investment Adviser’s ability to leverage the infrastructure designed to service the Fund on behalf of its other clients; (d) the Investment Adviser’s ability to cross-market other products and services to Fund shareholders; (e) Goldman Sachs’ retention of certain fees as Fund Distributor; (f) Goldman Sachs’ ability to engage in principal transactions with the Fund under the SEC exemptive orders permitting such trades; (g) the Investment Adviser’s ability to negotiate better pricing with custodians on behalf of its other clients, as a result of the relationship with the Fund; and (h) the Investment Adviser’s ability to leverage relationships with the Fund’s third party service providers to attract more firmwide business.
 
Other Benefits to the Fund and Its Shareholders
 
The Independent Trustees also noted that the Fund receives certain potential benefits as a result of its relationship with the Investment Adviser, including: (a) trading efficiencies resulting from aggregation of orders of the Fund with those of other funds or accounts managed by the Investment Adviser; (b) improved servicing and pricing from vendors because of the volume of business generated by the Investment Adviser and its affiliates; (c) improved servicing from broker-dealers because of the volume of business generated by the Investment Adviser and its affiliates; (d) the advantages received from the Investment Adviser’s knowledge and experience gained from managing other accounts and products; (e) the Investment Adviser’s ability to hire and retain qualified personnel to provide services to the Fund because of the reputation of the Goldman Sachs organization; (f) the Fund’s access, through the Investment Adviser, to certain firmwide resources (e.g., proprietary databases); and (g) the Fund’s access to certain affiliated distribution channels.
 
Conclusion
 
In connection with their consideration of the Management Agreement, the Independent Trustees gave weight to each of the factors described above, but did not identify any particular factor as controlling their decision. After deliberation and consideration of all of the information provided, including the factors described above, the Independent Trustees concluded, in the exercise of their business judgment, that the management fees paid by the Fund were reasonable in light of the services provided to it by the Investment Adviser, the Investment Adviser’s costs and the Fund’s current and reasonably foreseeable asset levels, and that the Management Agreement should be approved and continued with respect to the Fund until June 30, 2010.
 
 
19 

 

GOLDMAN SACHS VARIABLE INSURANCE TRUST MONEY MARKET FUND

 
Fund Expenses — Six Month Period Ended June 30, 2009 (Unaudited)
 
As a shareholder of the Service Shares of the Fund, you incur ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2009 through June 30, 2009.
 
Actual Expenses — The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes — The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual net expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
 
                               
                      Expenses Paid
 		 
                      for the
 		 
      Beginning
 		      Ending
 		      6 Months
 		 
      Account Value
 		      Account Value
 		      Ended
 		 
      1/01/09       6/30/09       6/30/09*  
Actual
    $ 1,000.00       $ 1,001.50       $ 3.13  
Hypothetical 5% return
      1,000.00         1,021.67 +       3.16  
 
 
* Expenses are calculated using the Fund’s annualized net expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2009. Expenses are calculated by multiplying the annualized net expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized net expense ratios for the period was 0.63%.
+ Hypothetical expenses are based on the Fund’s actual annualized net expense ratios and an assumed rate of return of 5% per year before expenses.
 
 
 20

 

 
     
TRUSTEES
  OFFICERS
Ashok N. Bakhru, Chairman
  James A. McNamara, President
John P. Coblentz, Jr.
  John M. Perlowski, Senior Vice
Diana M. Daniels
    President and Treasurer
Patrick T. Harker
  Peter V. Bonanno, Secretary
James A. McNamara
   
Jessica Palmer
   
Alan A. Shuch
   
Richard P. Strubel
   
     
     
     
     
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent 		   
     
     
     
 
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
Investment Adviser
32 Old Slip, New York, New York 10005
     
 
Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.
     
     
     
 
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request by calling 1-800-621-2550; and (ii) on the Securities and Exchange Commission (“SEC”) Web site at http://www.sec.gov.
 
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov within 60 days after the Fund’s first and third fiscal quarters. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may also be obtained by calling 1-800-SEC-0330. Forms N-Q may be obtained upon request and without charge by calling 1-800-621-2550.
 
Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Fund’s entire investment portfolio,which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.
 
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund.
     
    Toll Free (in U.S.): 800-292-4726
     
 
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust Funds: Money Market Fund.
     
     
 
Copyright 2009 Goldman, Sachs & Co. All rights reserved.
     
VITMMSAR/25773.MF.TMPL/08-09    

 

     
ITEM 2.   CODE OF ETHICS.
     
    Not applicable to the Semi-Annual Reports for the period ended June 30, 2009.
     
ITEM 3.   AUDIT COMMITTEE FINANCIAL EXPERT.
     
    Not applicable to the Semi-Annual Reports for the period ended June 30, 2009.

     
ITEM 4.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.
     
    Not applicable to the Semi-Annual Reports for the period ended June 30, 2009.

     

     
ITEM 5.   AUDIT COMMITTEE OF LISTED REGISTRANTS.

    Not applicable.

     
ITEM 6.   SCHEDULE OF INVESTMENTS

    Schedules of Investments are included as part of the Semi-Annual Reports to Shareholders filed under Item 1.

     
ITEM 7.   DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

    Not applicable.

     
ITEM 8.   PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

    Not applicable.

     
ITEM 9.   PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

    Not applicable.

     
ITEM 10.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

     
ITEM 11.   CONTROLS AND PROCEDURES.

  (a)   The registrant’s principal executive and principal financial officers or persons performing similar functions have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934, as amended.
 
  (b)   There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting.

     
ITEM 12.   EXHIBITS.
         
  (a)(1)
 
 
 
   Not applicable to the Semi-Annual Report for the period ended June 30, 2009.
         
  (a)(2)
 
 		 Exhibit 99.CERT
 
 
Exhibit 99.906CERT
   Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are filed herewith.
 
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith.

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     
Goldman Sachs Variable Insurance Trust
   
 
    
 
    
/s/ James A. McNamara
    
   
By: James A. McNamara
    
Chief Executive Officer of
    
Goldman Sachs Variable Insurance Trust
    
 
    
Date: August 24, 2009
    
 
    
 
    
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
    
 
    
/s/ James A. McNamara
   
By: James A. McNamara
    
Chief Executive Officer of
    
Goldman Sachs Variable Insurance Trust
    
 
    
Date: August 24, 2009
    
 
    
 
    
/s/ John M. Perlowski
   
By: John M. Perlowski
    
Chief Financial Officer of
    
Goldman Sachs Variable Insurance Trust
    
 
    
Date: August 24, 2009
    

EX-99.CERT 2 e78324exv99wcert.htm EX-99.CERT exv99wcert

CERTIFICATIONS
(Section 302)

     I, James A. McNamara, certify that:

     1. I have reviewed this report on Form N-CSR of Goldman Sachs Variable Insurance Trust;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

     a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

     d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

     a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 24, 2009

     
 
  /s/ James A. McNamara
 
 
  James A. McNamara
  Principal Executive Officer

 

 

CERTIFICATIONS
(Section 302)

     I, John M. Perlowski, certify that:

     1. I have reviewed this report on Form N-CSR of Goldman Sachs Variable Insurance Trust;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

     a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

     d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

     a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

     b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 24, 2009

     
 
  /s/ John M. Perlowski
 
 
  John M. Perlowski
  Principal Financial Officer

 

EX-99.906CERT 3 e78324exv99w906cert.htm EX-99.906CERT exv99w906cert

EX-99.906CERT

Certification Under Section 906
of the Sarbanes-Oxley Act of 2002

               James A. McNamara, Chief Executive Officer, and John M. Perlowski, Chief Financial Officer of Goldman Sachs Variable Insurance Trust (the “Registrant”), each certify to the best of their knowledge that:

1.   The Registrant’s periodic report on Form N-CSR for the period ended June 30, 2009 (the “Form N-CSR”) fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, as amended; and
 
2.   The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

     
Chief Executive Officer
   Chief Financial Officer
 
    
Goldman Sachs Variable Insurance Trust
   Goldman Sachs Variable Insurance Trust
 
 
    
/s/ James A. McNamara
   /s/ John M. Perlowski
 
  
 
James A. McNamara
   John M. Perlowski
 
    
Date: August 24, 2009
   Date: August 24, 2009

This certification is being furnished to the Securities and Exchange Commission pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.

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