-----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, HKv/dGf3K5RMw/HSf4yfCUmMo4MJnb8JkbglQNYqBmlWTh14D6HBcTQWXmFuUcLc P8io6lEbCUNzo+KBgZjFIQ== 0001193125-06-186996.txt : 20060907 0001193125-06-186996.hdr.sgml : 20060907 20060907171114 ACCESSION NUMBER: 0001193125-06-186996 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060907 DATE AS OF CHANGE: 20060907 EFFECTIVENESS DATE: 20060907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GARTMORE VARIABLE INSURANCE TRUST CENTRAL INDEX KEY: 0000353905 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03213 FILM NUMBER: 061079854 BUSINESS ADDRESS: STREET 1: RIVER PARK 2 STREET 2: 1200 RIVER ROAD CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 BUSINESS PHONE: 4845301300 MAIL ADDRESS: STREET 1: RIVER PARK 2 STREET 2: 1200 RIVER ROAD CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 FORMER COMPANY: FORMER CONFORMED NAME: NATIONWIDE SEPARATE ACCOUNT TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NATIONWIDE SEPARATE ACCOUNT MONEY MARKET TRUST DATE OF NAME CHANGE: 19860226 FORMER COMPANY: FORMER CONFORMED NAME: MFS SEPARATE ACCOUNT MONEY MARKET TRUST DATE OF NAME CHANGE: 19820926 0000353905 S000005399 GVIT International Value Fund C000014691 Class I C000014692 Class II C000014693 Class III C000014694 Class IV C000014695 Class VI 0000353905 S000005400 Gartmore GVIT Government Bond Fund C000014696 Class I C000014697 Class II C000014698 Class III C000014699 Class IV 0000353905 S000005401 Gartmore GVIT Growth Fund C000014700 Class I C000014701 Class IV 0000353905 S000005402 Gartmore GVIT International Growth Fund C000014702 Class I C000014703 Class III C000033125 Class II 0000353905 S000005403 Gartmore GVIT Investor Destinations Aggressive Fund C000014704 Class II C000014705 Class VI 0000353905 S000005404 Gartmore GVIT Investor Destinations Conservative Fund C000014706 Class II C000014707 Class VI 0000353905 S000005405 Gartmore GVIT Investor Destinations Moderate Fund C000014708 Class II C000014709 Class VI 0000353905 S000005406 Gartmore GVIT Investor Destinations Moderately Aggressive Fund C000014710 Class II C000014711 Class VI 0000353905 S000005407 Gartmore GVIT Investor Destinations Moderately Conservative Fund C000014712 Class II C000014713 Class VI 0000353905 S000005408 Gartmore GVIT Mid Cap Growth Fund C000014714 Class I C000014715 Class II C000014716 Class III C000014717 Class IV 0000353905 S000005409 Gartmore GVIT Money Market Fund C000014718 Class I C000014719 Class IV C000014720 Class V C000034092 Class ID 0000353905 S000005410 GVIT Mid Cap Index Fund C000014721 Class I C000014722 Class II C000033126 Class III C000034093 Class ID 0000353905 S000005411 Gartmore GVIT Money Market Fund II C000014723 Gartmore GVIT Money Market Fund II 0000353905 S000005412 Gartmore GVIT Nationwide Fund C000014724 Class I C000014725 Class II C000014726 Class III C000014727 Class IV 0000353905 S000005413 Gartmore GVIT Nationwide Leaders Fund C000014728 Class I C000014729 Class III C000033127 Class II 0000353905 S000005414 Gartmore GVIT U.S. Growth Leaders Fund C000014730 Class I C000014731 Class II C000014732 Class III 0000353905 S000005415 Gartmore GVIT Worldwide Leaders Fund C000014733 Class I C000014734 Class III C000033128 Class II 0000353905 S000005416 GVIT S&P 500 Index Fund C000014735 Class IV C000033129 Class I C000033130 Class II C000034094 Class ID 0000353905 S000005417 GVIT Small Cap Growth Fund C000014736 Class I C000014737 Class II C000014738 Class III 0000353905 S000005418 GVIT Small Cap Value Fund C000014739 Class I C000014740 Class II C000014741 Class III C000014742 Class IV 0000353905 S000005419 GVIT Small Company Fund C000014743 Class I C000014744 Class II C000014745 Class III C000014746 Class IV 0000353905 S000005420 J.P. Morgan GVIT Balanced Fund C000014747 Class I C000014748 Class IV 0000353905 S000005421 Federated GVIT High Income Bond Fund C000014749 Class I C000014750 Class III 0000353905 S000005422 Van Kampen GVIT Comstock Value Fund C000014751 Class I C000014752 Class II C000014753 Class IV 0000353905 S000005423 Van Kampen GVIT Multi Sector Bond Fund C000014754 Class I C000033131 Class III 0000353905 S000005424 Gartmore GVIT Developing Markets Fund C000014755 Class II C000033132 Class I 0000353905 S000005425 Gartmore GVIT Emerging Markets Fund C000014756 Class I C000014757 Class II C000014758 Class III C000014759 Class VI 0000353905 S000005426 Gartmore GVIT Global Financial Services Fund C000014760 Class I C000014761 Class II C000014762 Class III 0000353905 S000005427 Gartmore GVIT Global Health Sciences Fund C000014763 Class I C000014764 Class II C000014765 Class III C000014766 Class VI 0000353905 S000005428 Gartmore GVIT Global Technology and Communications Fund C000014767 Class I C000014768 Class II C000014769 Class III C000014770 Class VI 0000353905 S000005429 Gartmore GVIT Global Utilities Fund C000014771 Class I C000014772 Class II C000014773 Class III 0000353905 S000012213 American Funds GVIT Growth Fund C000033344 Class II C000033345 Class VII 0000353905 S000012214 American Funds GVIT Global Growth Fund C000033346 Class II C000033347 Class VII 0000353905 S000012215 American Funds GVIT Asset Allocation Fund C000033348 Class II C000033349 Class VII 0000353905 S000012216 American Funds GVIT Bond Fund C000033350 Class II C000033351 Class VII 0000353905 S000012313 GVIT International Index Fund C000033505 Class ID C000033506 Class II C000033507 Class VI C000033508 Class VII C000033509 Class VIII N-CSRS 1 dncsrs.htm GARTMORE VARIABLE INSURANCE TRUST FORM N-CSRS Gartmore Variable Insurance Trust Form N-CSRS
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 002-73024

 

GARTMORE VARIABLE INSURANCE TRUST

(Exact name of registrant as specified in charter)

 

1200 RIVER ROAD, SUITE 1000, CONSHOHOCKEN, PENNSYLVANIA 19428

(Address of principal executive offices)                                                          (Zip code)

Eric Miller

1200 River Road

Suite 1000

Conshohocken, PA 19428

(Name and address of agent for service)

Registrant’s telephone number, including area code: (484) 530-1300

Date of fiscal year end: December 31, 2006

Date of reporting period: June 30, 2006

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

Table of Contents

Item 1. Reports to Stockholders.

Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).

Table of Contents

 

Gartmore GVIT Nationwide Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
7    Statement of Assets and Liabilities
7    Statement of Operations
8    Statements of Changes in Net Assets
10    Financial Highlights
11    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GNAT (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Nationwide Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Nationwide Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,022.90      $ 4.11      0.82%
       Hypothetical1    $ 1,000.00      $ 1,020.73      $ 4.12      0.82%

Class II

      Actual    $ 1,000.00      $ 1,022.30      $ 5.32      1.06%
       Hypothetical1    $ 1,000.00      $ 1,019.54      $ 5.32      1.06%

Class III

      Actual    $ 1,000.00      $ 1,023.60      $ 4.16      0.83%
       Hypothetical1    $ 1,000.00      $ 1,020.68      $ 4.17      0.83%

Class IV

      Actual    $ 1,000.00      $ 1,022.90      $ 4.11      0.82%
       Hypothetical1    $ 1,000.00      $ 1,020.73      $ 4.12      0.82%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Nationwide Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      97.1%
Commercial Paper      2.4%
Other Investments*      5.3%
Liabilities in excess of other assets**      -4.8%
      
       100.0%
      

 

Top Holdings       
Microsoft Corp.      2.3%
Procter & Gamble Co. (The)      2.3%
Altria Group, Inc.      2.2%
Johnson & Johnson, Inc.      2.0%
UnitedHealth Group, Inc.      1.8%
Exxon Mobil Corp.      1.6%
Pfizer, Inc.      1.5%
Bank of America Corp.      1.5%
Phelps Dodge Corp.      1.5%
Home Depot, Inc. (The)      1.3%
Other Assets      82.0%
      
       100.0%
      
Top Industries       
Oil & Gas      8.6%
Financial Services      8.3%
Insurance      7.3%
Retail      6.2%
Banks      6.2%
Computer Software & Services      5.9%
Semiconductors      5.8%
Healthcare      5.3%
Telecommunications      5.0%
Transportation      4.8%
Other Assets      36.6%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (97.1%)       
Aerospace & Defense (2.6%)       
Boeing Co. (The)   175,090    $ 14,341,622
General Dynamics Corp.   51,242      3,354,301
Northrop Grumman Corp.   129,612      8,302,945
Raytheon Co.   157,220      7,007,295
United Technologies Corp.   180,500      11,447,310
        
           44,453,473
        
Agricultural Services (0.4%)           
Archer-Daniels-Midland Co.   155,522      6,419,948
        
Auto Parts & Equipment (0.7%)       
Autoliv, Inc. ADR — SE   87,000      4,921,590
Cummins, Inc. (c)   56,700      6,931,575
        
           11,853,165
        
Banks (4.9%)           
Bank of America Corp.   520,982      25,059,235
BB&T Corp.   40,000      1,663,600
Credit Suisse Group ADR — CH (c)   50,000      2,799,500
Mellon Financial Corp.   84,200      2,899,006
New York Community Bancorp, Inc. (c)   242,370      4,001,529
Northern Trust Corp.   75,350      4,166,855
PNC Bank Corp.   114,090      8,005,695
State Street Corp.   55,800      3,241,422
SunTrust Banks, Inc.   90,590      6,908,393
U.S. Bancorp   167,400      5,169,312
UBS AG ADR — CH   46,400      5,090,080
Wachovia Corp.   158,005      8,544,910
Zions Bancorp.   66,706      5,199,066
        
           82,748,603
        
Building & Construction (0.9%)       

Martin Marietta Materials

   93,900      8,558,985

Weyerhaeuser Co.

   92,050      5,730,113
        
           14,289,098
        
Business Services (0.0%)           
Pitney Bowes, Inc.   12,180      503,034
        
Capital Goods (1.6%)           
General Electric Co.   536,515      17,683,535
Sherwin-Williams Co. (c)   79,480      3,773,710
Timken Co. (c)   151,300      5,070,063
        
           26,527,308
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Chemicals (1.1%)           
Dow Chemical Co.   108,400    $ 4,230,852
Du Pont (E.I.) De Nemours   189,090      7,866,144
Rohm & Haas Co.   114,850      5,756,282
        
           17,853,278
        
Coal (0.0%)           
KFX, Inc. (b) (c)   17,660      269,845
        
Computer Equipment (1.7%)       
Apple Computer, Inc. (b)   67,650      3,864,168
Hewlett Packard Co.   503,600      15,954,048
International Business Machines Corp.   114,994      8,833,839
        
           28,652,055
        
Computer Software & Services (5.9%)       
Affiliated Computer Services, Class A (b)   100,365      5,179,838
Cisco Systems, Inc. (b)   1,116,507      21,805,382
Computer Sciences Corp. (b)   78,850      3,819,494
eBay, Inc. (b)   132,035      3,867,305
EMC Corp. (b)   323,992      3,554,192
Google, Inc., Class A (b)   24,910      10,445,510
Ingram Micro, Inc. (b) (c)   243,900      4,421,907
Microsoft Corp.   1,677,886      39,094,744
Symantec Corp. (b)   244,800      3,804,192
Yahoo!, Inc. (b)   109,510      3,613,830
        
           99,606,394
        
Consumer Products (2.3%)           
Procter & Gamble Co. (The)   688,430      38,276,708
        
Diversified (1.5%)           
3M Co.   205,851      16,626,585
Berkshire Hathaway Inc., Class B (b) (c)   2,595      7,896,585
        
           24,523,170
        
Electronics (0.9%)           
Arrow Electronics, Inc. (b)   170,200      5,480,440
KLA-Tencor Corp.   107,154      4,454,392
L-3 Communications Holdings, Inc.   57,650      4,347,963
        
           14,282,795
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Financial Services (8.3%)           
Affiliated Managers Group, Inc. (b) (c)   24,000    $ 2,085,360
Bear Stearns Cos., Inc.   51,228      7,176,018
Cit Group, Inc.   106,350      5,561,042
Citigroup, Inc.   197,813      9,542,499
Countrywide Financial Corp.   81,450      3,101,616
Federated Investors, Inc., Class B   92,749      2,921,594
Franklin Resources, Inc.   9,300      807,333
Goldman Sachs Group, Inc.   142,756      21,474,784
Hudson City Bancorp, Inc.   583,592      7,779,281
J.P. Morgan Chase & Co.   414,850      17,423,699
KKR Financial Corp.   251,100      5,225,391
Legg Mason, Inc.   56,328      5,605,763
Lehman Brothers Holding, Inc.   168,950      11,007,093
Marshall & Ilsley Corp.   34,400      1,573,456
Merrill Lynch & Co., Inc.   191,100      13,292,916
Moody’s Corp.   75,850      4,130,791
Morgan Stanley   177,461      11,217,310
Robert Half International, Inc.   18,200      764,400
T. Rowe Price Group, Inc.   24,600      930,126
TD Ameritrade Holding Corp.   251,054      3,718,110
Wells Fargo & Co.   63,100      4,232,748
        
           139,571,330
        
Food & Beverage (0.8%)           
Coca-Cola Enterprises, Inc.   516,900      10,529,253
Pepsi Bottling Group, Inc. (The)   96,100      3,089,615
        
           13,618,868
        
Healthcare (5.3%)           
Aetna, Inc.   238,642      9,528,975
Biogen Idec, Inc. (b)   77,600      3,595,208
Johnson & Johnson, Inc.   563,026      33,736,517
Triad Hospitals, Inc. (b) (c)   99,750      3,948,105
UnitedHealth Group, Inc.   667,673      29,898,397
Wellpoint, Inc. (b)   123,450      8,983,457
        
           89,690,659
        
Hotels & Motels (0.1%)           
MGM Grand, Inc. (b) (c)   55,600      2,268,480
        
Insurance (7.3%)           
American International Group, Inc.   303,454      17,918,959
Aspen Insurance Holdings Ltd. (c)   82,200      1,914,438
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Insurance (continued)           
Assurant, Inc.   125,567    $ 6,077,443
Chubb Corp.   228,500      11,402,150
Genworth Financial, Inc.   157,050      5,471,622
Hartford Financial Services Group, Inc.   160,000      13,536,000
Lincoln National Corp.   113,300      6,394,652
Manulife Financial Corp. ADR — CA   200,658      6,374,905
MetLife, Inc.   384,507      19,690,602
MGIC Investment Corp. (c)   50,600      3,289,000
PartnerRe Ltd.   34,400      2,203,320
Principal Financial Group, Inc.   139,050      7,738,133
Prudential Financial, Inc.   185,415      14,406,746
SAFECO Corp.   107,200      6,040,720
        
           122,458,690
        
Machinery & Equipment (1.3%)       
Black & Decker Corp.   54,240      4,581,110
Caterpillar, Inc.   170,810      12,721,929
Deere & Co.   54,190      4,524,323
        
           21,827,362
        
Manufacturing (3.9%)           
Danaher Corp.   82,478      5,304,985
Illinois Tool Works, Inc.   105,940      5,032,150
Joy Global, Inc.   99,500      5,182,955
Nucor Corp.   103,360      5,607,280
Parker Hannifin Corp.   69,450      5,389,320
Phelps Dodge Corp.   298,360      24,513,257
Rockwell Automation, Inc.   38,690      2,786,067
Siemens AG ADR — DE (c)   52,000      4,514,640
Textron, Inc.   74,700      6,885,846
        
           65,216,500
        
Medical (1.3%)           
Abbott Laboratories   248,942      10,856,361
Baxter International, Inc.   172,700      6,348,452
Fisher Scientific International, Inc. (b)   60,400      4,412,220
        
           21,617,033
        
Metals (2.3%)           
Alcan, Inc. ADR — CA   237,240      11,136,046
Alcoa, Inc.   379,340      12,275,442
Cleveland-Cliffs, Inc. (c)   106,421      8,438,121
Reliance Steel & Aluminum Co.   51,307      4,255,916

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Metals (continued)           
Teck Cominco Ltd., Class B (c)   39,000    $ 2,330,640
        
           38,436,165
        
Mining (0.9%)           
Compania De Minas Buenaventur ADR — PE (c)   90,660      2,473,205
Rio Tinto PLC ADR — GB (c)   20,790      4,359,871
Southern Copper Corp. (c)   95,242      8,488,919
        
           15,321,995
        
Multimedia (2.0%)           
CBS Corp., Class B   52,350      1,416,068
News Corp.   354,100      6,791,638
Time Warner, Inc.   750,466      12,983,061
Walt Disney Co. (The)   418,116      12,543,480
        
           33,734,247
        
Office Equipment & Services (0.3%)       
Xerox Corp. (b)   348,000      4,840,680
        
Oil & Gas (8.6%)           
ChevronTexaco Corp.   172,315      10,693,869
Conocophillips   234,414      15,361,149
Devon Energy Corp.   58,150      3,512,842
Duke Energy Corp.   264,600      7,771,302
ENSCO International, Inc.   40,000      1,840,800
Exxon Mobil Corp.   426,062      26,138,905
Halliburton Co.   195,200      14,485,792
Hanover Compressor Co. (b) (c)   93,400      1,754,052
Marathon Oil Corp.   63,018      5,249,399
Nabors Industries Ltd. (b)   240,980      8,142,714
National-OilWell, Inc. (b)   156,890      9,934,275
Occidental Petroleum Corp.   200,938      20,606,192
Pride International, Inc. (b)   55,000      1,717,650
Schlumberger Ltd. ADR — NL   57,866      3,767,655
Sempra Energy   94,624      4,303,500
Valero Energy   74,100      4,929,132
XTO Energy, Inc.   89,000      3,940,030
        
           144,149,258
        
Paper & Forest Products (0.2%)       
Louisiana-Pacific Corp.   176,650      3,868,635
        
Pharmaceuticals (2.9%)           
Amgen, Inc. (b)   143,927      9,388,358
Gilead Sciences, Inc. (b)   107,315      6,348,755
McKesson Corp.   120,920      5,717,098
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Pharmaceuticals (continued)       
Pfizer, Inc.   1,098,790    $ 25,788,601
Wyeth   42,924      1,906,255
        
           49,149,067
        
Restaurants (1.1%)           
McDonald’s Corp.   531,880      17,871,168
        
Retail (6.2%)           
Best Buy Co., Inc.   78,900      4,326,876
Circuit City Stores, Inc.   212,000      5,770,640
Coach, Inc. (b)   126,367      3,778,373
Costco Wholesale Corp.   111,000      6,341,430
CVS Corp.   221,350      6,795,445
Federated Department Stores, Inc.   336,880      12,329,808
Home Depot, Inc. (The)   628,515      22,494,551
J.C. Penney Co., Inc.   92,257      6,228,270
Kroger Co.   254,699      5,567,720
Lowe’s Cos., Inc.   84,000      5,096,280
Nordstrom, Inc.   121,800      4,445,700
Target Corp.   202,609      9,901,502
TJX Cos., Inc.   319,130      7,295,312
Wal-Mart Stores, Inc.   84,950      4,092,042
        
           104,463,949
        
Semiconductors (5.8%)           
Analog Devices, Inc.   230,530      7,409,234
ASML Holdings NV
ADR — NL (b)		   225,400      4,557,588
Avnet, Inc. (b)   90,040      1,802,601
Freescale Semiconductor, Inc. (b)   233,250      6,857,550
Intel Corp.   716,135      13,570,758
Linear Technology Corp.   95,630      3,202,649
Marvel Technology Group Ltd. (b)   314,087      13,923,477
Maxim Integrated Products, Inc.   255,280      8,197,041
National Semiconductor Corp.   410,250      9,784,463
STMicroelectronics N.V., ADR — NL (c)   95,848      1,540,277
Taiwan Semiconductor Manufacturing Co.
ADR — TW (c)		   723,259      6,639,517
Texas Instruments, Inc.   641,409      19,428,278
        
           96,913,433
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
Telecommunications (5.0%)       
AT&T, Inc.     498,939    $ 13,915,409
Corning, Inc. (b)     498,801      12,065,996
Embarq Corp. (b)     103,567      4,245,211
Motorola, Inc.     357,160      7,196,774
Nokia Corp. ADR — FI     316,000      6,402,160
QUALCOMM, Inc.     293,667      11,767,237
Qwest Communications International, Inc. (b) (c)     386,000      3,122,740
Sprint Corp.     632,352      12,640,716
Verizon Communications     223,246      7,476,509
Vodafone Group PLC
ADR — GB		     234,700      4,999,110
          
             83,831,862
          
Tobacco (3.5%)             
Altria Group, Inc.     496,511      36,458,802
Loews Corp. — Carolina Group     102,300      5,255,151
Reynolds American, Inc. (c)     144,122      16,617,267
          
             58,331,220
          
Transportation (4.8%)             
Burlington Northern Santa Fe Corp.     251,660      19,944,056
CSX Corp.     210,960      14,860,022
Fedex Corp.     37,500      4,382,250
Norfolk Southern Corp.     325,500      17,323,110
Omega Navigation Enterprises, Inc.,
Class A (b) ADR — GR		     296,360      4,273,511
Union Pacific Corp.     29,200      2,714,432
United Parcel Service, Inc., Class B     200,761      16,528,653
          
             80,026,034
          
Utilities (0.7%)             
Edison International     149,600      5,834,400
Exelon Corp.     61,070      3,470,608
Progress Energy, Inc. (c)     52,700      2,259,249
          
             11,564,257
          
Total Common Stocks            1,629,029,766
          
COMMERCIAL PAPER (2.4%)       
Banks (1.3%)             
KBC Financial Products International Ltd., 5.33%, 07/03/06   $ 21,251,000      21,244,708
          
Shares or
Principal Amount		    Value  
                
COMMERCIAL PAPER (continued)         
Finance Lessors (0.6%)               
PB Finance (Delaware), 5.17%, 07/13/06   $ 10,000,000    $ 9,982,833  
          
Newspapers (0.5%)               
E.W. Scripps Co. PP, 5.40%, 07/03/06 (d)     8,340,000      8,336,247  
          
Total Commercial Paper            39,563,788  
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (5.3%)   
Pool of short-term securities for Gartmore Variable Insurance Trust Funds — Note 2 (Securities Lending)     89,002,539      89,002,539  
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      89,002,539  
          
Total Investments
(Cost $1,729,232,976) (a) — 104.8%		      1,757,596,093  
Liabilities in excess of other assets — (4.8%)            (79,727,084 )
          
NET ASSETS — 100.0%          $ 1,677,869,009  
          

 

 

(a) See Notes to Financial Statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

(d) Represents a restricted security acquired and eligible for resale under Rule 144A, which limits the resale to certain qualified buyers.

 

ADR American Depositary Receipt

 

CA Canada

 

CH Switzerland

 

DE Germany

 

FI Finland

 

GB United Kingdom

 

GR Greece

 

NL Netherlands

 

PE Peru

 

SE Sweden

 

TW Taiwan

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $1,729,232,976)

    $ 1,757,596,093  
    

Cash

      594  

Interest and dividends receivable

      1,779,759  

Receivable for capital shares issued

      543,446  

Receivable for investments sold

      37,096,254  

Prepaid expenses and other assets

      20,584  
    

Total Assets

      1,797,036,730  
    

Liabilities:

         

Payable for investments purchased

      28,492,467  

Payable for capital shares redeemed

      486,505  

Payable for return of collateral received for securities on loan

      89,002,539  

Accrued expenses and other payables:

         

Investment advisory fees

      771,411  

Fund administration and transfer agent fees

      112,325  

Distribution fees

      15,199  

Administrative servicing fees

      127,099  

Other

      160,176  
    

Total Liabilities

      119,167,721  
    

Net Assets

    $ 1,677,869,009  
    

Represented by:

         

Capital

    $ 1,656,411,225  

Accumulated net investment income (loss)

      53,996  

Accumulated net realized gains (losses) from investment, futures, and foreign currency transactions

      (6,959,329 )

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      28,363,117  
    

Net Assets

    $ 1,677,869,009  
    

Net Assets:

         

Class I Shares

    $ 1,435,048,430  

Class II Shares

      82,700,203  

Class III Shares

      906,348  

Class IV Shares

      159,214,028  
    

Total

    $ 1,677,869,009  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      118,995,059  

Class II Shares

      6,875,855  

Class III Shares

      75,055  

Class IV Shares

      13,204,419  
    

Total

      139,150,388  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 12.06  

Class II Shares

    $ 12.03  

Class III Shares

    $ 12.08  

Class IV Shares

    $ 12.06  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 1,038,631  

Dividend income (net of foreign withholding tax of $4,198)

      14,405,495  

Income from securities lending

      179,409  
    

Total Income

      15,623,535  
    

Expenses:

         

Investment advisory fees

      4,819,727  

Fund administration and transfer agent fees

      588,992  

Distribution fees Class II Shares

      60,043  

Administrative servicing fees
Class I Shares

      1,167,921  

Administrative servicing fees
Class II Shares

      34,805  

Administrative servicing fees
Class III Shares

      1,215  

Administrative servicing fees
Class IV Shares

      127,873  

Custodian fees

      534,217  

Trustee fees

      30,360  

Other

      192,390  
    

Total expenses before earnings credit

      7,557,543  

Earnings credit (Note 6)

      (527,523 )
    

Total Expenses

      7,030,020  
    

Net Investment Income (Loss)

      8,593,515  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      107,088,578  

Net realized gains (losses) on futures transactions

      (111,781 )

Net realized gains (losses) on foreign currency transactions

      (1,175 )
    

Net realized gains (losses) on investment, futures, and foreign currency transactions

      106,975,622  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (75,991,951 )
    

Net realized/unrealized gains (losses) on investments, futures and foreign currencies

      30,983,671  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 39,577,186  
    

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 8,593,515      $ 13,519,630  

Net realized gains (losses) on investment, futures, and foreign currency transactions

        106,975,622        174,294,336  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (75,991,951 )      (74,179,353 )
      
  

Change in net assets resulting from operations

        39,577,186        113,634,613  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (7,433,454 )      (12,583,552 )

Distributions to Class II shareholders from:

                    

Net investment income

        (278,694 )      (121,563 )

Distributions to Class III shareholders from:

                    

Net investment income

        (6,448 )      (9,853 )

Distributions to Class IV shareholders from:

                    

Net investment income

        (820,923 )      (1,466,824 )
      
  

Change in net assets from shareholder distributions

        (8,539,519 )      (14,181,792 )
      
  

Change in net assets from capital transactions

        (48,218,364 )      13,735,109  
      
  

Change in net assets

        (17,180,697 )      113,187,930  

Net Assets:

                    

Beginning of period

        1,695,049,706        1,581,861,776  
      
  

End of period

      $ 1,677,869,009      $ 1,695,049,706  
      
  

Accumulated net investment income (loss)

      $ 53,996      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 4,286,195      $ 210,751,828  

Dividends reinvested

        7,433,454        12,583,552  

Cost of shares redeemed

        (111,195,290 )      (208,318,493 )
      
  
         (99,475,641 )      15,016,887  
      
  

Class II Shares

                    

Proceeds from shares issued

        58,243,591        13,823,413  

Dividends reinvested

        278,694        121,563  

Cost of shares redeemed

        (191,373 )      (1,487,343 )
      
  
         58,330,912        12,457,633  
      
  

Class III Shares

                    

Proceeds from shares issued

        250,652        1,089,919  

Dividends reinvested

        6,448        9,853  

Cost of shares redeemed

        (1,001,303 )      (388,545 )
      
  
         (744,203 )      711,227  
      
  

Class IV Shares

                    

Proceeds from shares issued

        1,867,218        4,785,250  

Dividends reinvested

        820,923        1,466,824  

Cost of shares redeemed

        (9,017,573 )      (20,702,712 )
      
  
         (6,329,432 )      (14,450,638 )
      
  

Change in net assets from capital transactions

      $ (48,218,364 )    $ 13,735,109  
      
  

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE FUND

 

Statements of Changes in Net Assets (continued)

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Shares

                

Issued

      351,918      18,473,713  

Reinvested

      616,376      1,099,304  

Redeemed

      (9,117,420 )    (18,424,897 )
      
  
       (8,149,126 )    1,148,120  
      
  

Class II Shares

                

Issued

      4,791,743      1,189,729  

Reinvested

      23,292      10,522  

Redeemed

      (15,552 )    (132,433 )
      
  
       4,799,483      1,067,818  
      
  

Class III Shares

                

Issued

      20,579      92,064  

Reinvested

      530      852  

Redeemed

      (80,447 )    (34,497 )
      
  
       (59,338 )    58,419  
      
  

Class IV Shares

                

Issued

      153,746      423,291  

Reinvested

      68,066      128,403  

Redeemed

      (739,490 )    (1,836,077 )
      
  
       (517,678 )    (1,284,383 )
      
  

 

See notes to financial statements.

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Nationwide Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                      

Year Ended December 31, 2001(c)

   $ 11.64   0.08   (1.46 )   (1.38 )   (0.08 )   (0.29 )   (0.37 )   $ 9.89   (11.82% )   $ 1,677,316   0.78%     0.77%     0.82%     0.73%     58.36%

Year Ended December 31, 2002

   $ 9.89   0.08   (1.79 )   (1.71 )   (0.08 )   —     (0.08 )   $ 8.10   (17.35% )   $ 1,252,686   0.83%     0.84%     0.84%     0.83%     33.25%

Year Ended December 31, 2003

   $ 8.10   0.08   2.14     2.22     (0.05 )   —     (0.05 )   $ 10.27   27.51%     $ 1,459,917   0.83%     0.83%     (i )   (i )   129.01%

Year Ended December 31, 2004

   $ 10.27   0.12   0.88     1.00     (0.14 )   —     (0.14 )   $ 11.13   9.75%     $ 1,402,753   0.83%     1.07%     (i )   (i )   131.43%

Year Ended December 31, 2005

   $ 11.13   0.10   0.72     0.82     (0.10 )   —     (0.10 )   $ 11.85   7.44%     $ 1,506,358   0.83%     0.88%     (i )   (i )   179.84%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.85   0.06   0.21     0.27     (0.06 )   —     (0.06 )   $ 12.06   2.29% (g)   $ 1,435,048   0.82% (h)   1.02% (h)   (i )   (i )   115.43%

Class II Shares

                                                                                      

Period Ended December 31, 2002(d)

   $ 8.68   0.04   (0.57 )   (0.53 )   (0.05 )   —     (0.05 )   $ 8.10   (6.14% )(g)   $ 765   1.07% (h)   1.03% (h)   (i )   (i )   33.25%

Year Ended December 31, 2003

   $ 8.10   0.05   2.15     2.20     (0.04 )   —     (0.04 )   $ 10.26   27.23%     $ 5,570   1.08%     0.60%     (i )   (i )   129.01%

Year Ended December 31, 2004

   $ 10.26   0.08   0.89     0.97     (0.11 )   —     (0.11 )   $ 11.12   9.53%     $ 11,210   1.08%     0.95%     (i )   (i )   131.43%

Year Ended December 31, 2005

   $ 11.12   0.07   0.71     0.78     (0.08 )   —     (0.08 )   $ 11.82   7.04%     $ 24,550   1.08%     0.66%     (i )   (i )   179.84%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.82   0.04   0.22     0.26     (0.05 )   —     (0.05 )   $ 12.03   2.23% (g)   $ 82,700   1.06% (h)   0.82% (h)   (i )   (i )   115.43%

Class III Shares

                                                                                      

Period Ended December 31, 2002(e)

   $ 9.78   0.05   (1.65 )   (1.60 )   (0.07 )   —     (0.07 )   $ 8.11   (16.38% )(g)   $ 399   0.72% (h)   1.07% (h)   (i )   (i )   33.25%

Year Ended December 31, 2003

   $ 8.11   0.09   2.13     2.22     (0.05 )   —     (0.05 )   $ 10.28   27.48%     $ 870   0.83%     0.83%     (i )   (i )   129.01%

Year Ended December 31, 2004

   $ 10.28   0.11   0.89     1.00     (0.13 )   —     (0.13 )   $ 11.15   9.84%     $ 847   0.83%     1.05%     (i )   (i )   131.43%

Year Ended December 31, 2005

   $ 11.15   0.09   0.73     0.82     (0.11 )   —     (0.11 )   $ 11.86   7.35%     $ 1,595   0.83%     0.86%     (i )   (i )   179.84%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.86   0.07   0.21     0.28     (0.06 )   —     (0.06 )   $ 12.08   2.36% (g)   $ 906   0.83% (h)   0.96% (h)   (i )   (i )   115.43%

Class IV Shares

                                                                                      

Period Ended December 31, 2003(f)

   $ 8.30   0.05   1.95     2.00     (0.03 )   —     (0.03 )   $ 10.27   24.17% (g)   $ 169,690   0.83% (h)   0.85% (h)   (i )   (i )   129.01%

Year Ended December 31, 2004

   $ 10.27   0.12   0.88     1.00     (0.14 )   —     (0.14 )   $ 11.13   9.75%     $ 167,051   0.83%     1.06%     (i )   (i )   131.43%

Year Ended December 31, 2005

   $ 11.13   0.10   0.72     0.82     (0.10 )   —     (0.10 )   $ 11.85   7.44%     $ 162,547   0.83%     0.86%     (i )   (i )   179.84%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.85   0.06   0.21     0.27     (0.06 )   —     (0.06 )   $ 12.06   2.29% (g)   $ 159,214   0.82% (h)   1.02% (h)   (i )   (i )   115.43%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from July 11, 2002 (commencement of operations) through December 31, 2002.

 

(e) For the period from May 6, 2002 (commencement of operations) through December 31, 2002.

 

(f) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(g) Not annualized.

 

(h) Annualized.

 

(i) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Nationwide Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(e) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(f) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(g) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 10,900,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      8,959,158    5.29%    07/21/06
Funding Agreement — GIC    GE Life and Annuity      2,000,000    5.28%    07/14/06
Master Note — Floating    CDC Financial Product Inc.      25,000,000    5.41%    07/03/06
Master Note — Floating    Citigroup Global Markets Inc.      25,000,000    5.38%    07/03/06
Medium Term Note — Floating    Alliance and Leister PLC      2,500,000    5.13%    07/10/06
Medium Term Note — Floating    General Electric Capital Corp.      1,000,057    5.27%    09/08/06
Medium Term Note — Floating    Tango Finance Corp.      1,999,414    5.39%    07/03/06
Medium Term Note — Floating    West Corp Federal Credit Union      1,000,000    5.19%    07/14/06
Repurchase Agreement    Bank of America Securities LLC      10,643,910    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of
Collateral
        $87,184,228    $ 89,002,539

 

(h) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(i) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
       $ 1,748,758,674      $ 89,136,625      $ (80,299,206 )      $ 8,837,419

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(j) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule    Fees

Up to $250 million

    0.60%

On the next $750 million

    0.575%

On the next $1 billion

    0.55%

On the next $3 billion

    0.525%

On $5 billion or more

    0.50%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I, Class II, and Class III shares of the Fund and 0.20% on Class IV shares of the Fund.

 

As of June 30, 2006, Nationwide Financial Services received $1,272,046 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $626.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $1,924,889,318 and sales of $1,989,749,903.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that the Fund has outperformed its benchmark, the S&P 500 Index for the one-, three-, and five-year periods ended September 30, 2005, and ranked in the top quartile of the Lipper Large-Cap Core Funds category for these periods. Moreover, the Board noted that the Fund outperformed the median of its Lipper category by 376 basis points over the twelve month period ended September 30, 2005.

 

Next, the Board reviewed and considered the Fund’s contractual advisory fee and breakpoints, and noted that the contractual advisory fee placed the Fund in the third quintile of its Lipper-constructed Expense Group. The Board also considered the Fund’s total expenses and noted that the Fund placed in the second quintile of the Fund’s Expense Group. The Board also noted that the adviser manages institutional accounts in a similar manner to the Fund and determined that while the Fund’s management fee was higher, this was understandable given the more-extensive regulations and regulatory restrictions to which mutual funds are subject. Finally, the Board reviewed the adviser’s profitability and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

20

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

21

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

22

Table of Contents

 

Gartmore GVIT Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
6    Statement of Assets and Liabilities
6    Statement of Operations
7    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGR (8/06)

Table of Contents

 

Shareholder Expense Example

Gartmore GVIT Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Growth Fund                                       

Class I

      Actual    $ 1,000.00      $ 969.40      $ 4.20      0.86%
       Hypothetical1    $ 1,000.00      $ 1,020.54      $ 4.32      0.86%

Class IV

      Actual    $ 1,000.00      $ 969.40      $ 4.20      0.86%
       Hypothetical1    $ 1,000.00      $ 1,020.54      $ 4.32      0.86%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Growth Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      99.3%
Commercial Paper      1.9%
Other Investments*      10.3%
Liabilities in excess of other assets**      -11.5%
      
       100.0%
      

 

 

Top Holdings       
Johnson & Johnson      2.9%
Cisco Systems, Inc.      2.8%
PepsiCo, Inc.      2.1%
Google, Inc.      2.1%
Genentech, Inc.      2.0%
Emerson Electric Co.      2.0%
Target Corp.      2.0%
Boeing Co.      2.0%
KBC Financial Products International, 5.33%, 07/03/06      1.9%
Gilead Sciences, Inc.      1.9%
Other Assets      78.3%
      
       100.0%
      
Top Industries       
Computer Software & Services      16.0%
Retail      10.1%
Drugs      9.4%
Healthcare      9.0%
Financial Services      6.9%
Manufacturing      5.5%
Semiconductors      5.1%
Telecommunications      5.1%
Hotels & Casinos      5.1%
Electronics      5.0%
Other Assets      22.8%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares    Value
            
COMMON STOCKS (99.3%)           
Aerospace & Defense (2.0%)       
Boeing Co.   49,600    $ 4,062,736
        
Agriculture (1.3%)       
Archer-Daniels-Midland Co.   39,880      1,646,247
Monsanto Co.   12,980      1,092,786
        
           2,739,033
        
Chemicals (1.5%)       
Praxair, Inc.   58,940      3,182,760
        
Computer Software & Services (16.0%)       
Apple Computer, Inc. (b)   36,910      2,108,299
Bea Systems, Inc. (b)   138,650      1,814,929
Cisco Systems, Inc. (b)   298,410      5,827,946
Citrix Systems, Inc. (b)   50,350      2,021,049
Cognizant Technology Solutions Corp. (b)   24,450      1,647,197
EMC Corp. (b)   89,860      985,764
F5 Networks, Inc. (b) (c)   37,430      2,001,756
First Data Corp.   39,140      1,762,866
Google, Inc. (b)   10,520      4,411,351
Hyperion Solutions Corp. (b)   55,970      1,544,772
Informatica Corp. (b)   38,700      509,292
Microsoft Corp.   154,650      3,603,345
Oracle Corp. (b)   211,050      3,058,115
Red Hat, Inc. (b) (c)   90,380      2,114,892
        
           33,411,573
        
Construction Materials (1.0%)       
Vulcan Materials Co.   26,760      2,087,280
        
Consumer Products (1.8%)       
Colgate-Palmolive Co.   61,600      3,689,840
        
Drugs (9.4%)       
Adams Respiratory Therapeutics, Inc. (b) (c)   33,900      1,512,618
Genentech, Inc. (b)   51,900      4,245,420
Genzyme Corp. (b)   23,400      1,428,570
Gilead Sciences, Inc. (b)   65,630      3,882,671
PDL Biopharma, Inc. (b)   40,300      741,923
Pharmaceutical Product Development, Inc. (c)   35,920      1,261,510
Schering-Plough Corp.   109,160      2,077,315
Shire Pharmaceuticals Group PLC ADR — UK (c)   32,200      1,424,206
Wyeth   69,730      3,096,709
        
           19,670,942
        
    Shares    Value
            
COMMON STOCKS (continued)       
Electronics (5.0%)       
Emerson Electric Co.   49,400    $ 4,140,214
Harman International Industries, Inc.   12,600      1,075,662
Mettler Toledo International, Inc. (b)   25,700      1,556,649
Rockwell Collins, Inc.   63,600      3,553,332
        
           10,325,857
        
Environmental Services (0.9%)       
Republic Services, Inc.   44,230      1,784,238
        
Financial Services (6.9%)       
AmeriCredit Corp. (b)   64,400      1,798,048
Capital One Financial Corp.   23,870      2,039,692
Chicago Mercantile Exchange   3,470      1,704,291
GFI Group, Inc. (b)   24,760      1,335,802
Goldman Sachs Group, Inc.   16,310      2,453,513
Hewitt Associates, Inc. (b)   1      22
SLM Corp.   29,750      1,574,370
State Street Corp.   31,660      1,839,129
T. Rowe Price Group, Inc.   40,360      1,526,012
        
           14,270,879
        
Food & Beverage (2.1%)       
PepsiCo, Inc.   74,060      4,446,562
        
Healthcare (9.0%)       
Amgen, Inc. (b)   34,390      2,243,260
Baxter International, Inc.   54,800      2,014,448
Covance, Inc. (b) (c)   33,910      2,075,970
Johnson & Johnson   100,990      6,051,321
Manor Care, Inc. (c)   31,440      1,475,165
Medcohealth Solutions, Inc. (b)   32,890      1,883,939
UnitedHealth Group, Inc.   63,910      2,861,890
        
           18,605,993
        
Hotels & Casinos (5.1%)       
Hilton Hotels Corp.   66,300      1,874,964
Penn National Gaming, Inc. (b)   64,400      2,497,432
Starwood Hotels & Resorts Worldwide   45,150      2,724,351
Station Casinos, Inc. (c)   30,020      2,043,762
WMS Industries, Inc. (b)   49,200      1,347,588
        
           10,488,097
        
Insurance (0.5%)       
Progressive Corp.   39,150      1,006,547
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares    Value
            
COMMON STOCKS (continued)       
Manufacturing (5.5%)       
Caterpillar, Inc.   12,240    $ 911,635
Danaher Corp.   21,670      1,393,814
General Electric Co.   109,090      3,595,606
Textron, Inc.   9,570      882,163
Thermo Electron Corp. (b)   40,970      1,484,753
WESCO International, Inc. (b) (c)   28,800      1,987,200
Williams Scotsman International Inc. (b)   48,490      1,059,022
        
           11,314,193
        
Medical Products (1.3%)       
Invitrogen Corp. (b) (c)   19,920      1,316,114
Medtronic, Inc.   30,700      1,440,444
        
           2,756,558
        
Multimedia (2.8%)       
Activision, Inc. (b) (c)   89,950      1,023,631
Satyam Computer Services Ltd. ADR - IN (c)   47,150      1,562,551
THQ, Inc. (b)   47,550      1,027,080
Yahoo!, Inc. (b)   65,000      2,145,000
        
           5,758,262
        
Oil & Gas (4.5%)       
Denbury Resources, Inc. (b) (c)   64,960      2,057,283
Exxon Mobil Corp.   23,250      1,426,388
Halliburton Co.   28,840      2,140,216
Tesoro Petroleum Corp.   14,350      1,067,066
Transocean, Inc. (b)   17,360      1,394,355
Weatherford International Ltd. (b)   24,150      1,198,323
        
           9,283,631
        
Railroads (0.5%)       
Norfolk Southern Corp.   19,850      1,056,417
        
Retail (10.1%)       
Abercrombie & Fitch Co.   37,040      2,053,127
Best Buy Co., Inc.   25,030      1,372,645
Coach, Inc. (b)   101,270      3,027,973
CVS Corp.   103,410      3,174,687
eBay, Inc. (b)   98,150      2,874,814
Kohl’s Corp. (b)   27,210      1,608,655
Lowe’s Cos., Inc.   48,700      2,954,629
Target Corp.   83,600      4,085,532
        
           21,152,062
        
    Shares    Value
              
COMMON STOCKS (continued)       
Semiconductors (5.1%)       
Cymer, Inc. (b) (c)     33,240    $ 1,544,330
Freescale Semiconductor, Inc. (b)     55,760      1,639,344
Marvel Technology Group Ltd. (b)     45,450      2,014,799
National Semiconductor Corp.     67,110      1,600,574
Sirf Technology Holdings, Inc. (b) (c)     50,860      1,638,709
Texas Instruments, Inc.     67,990      2,059,417
          
             10,497,173
          
Telecommunications (5.1%)       
Amdocs Ltd. ADR — GG (b)     42,740      1,564,284
Comverse Technology, Inc. (b)     102,850      2,033,345
Corning, Inc. (b)     92,740      2,243,380
NeuStar, Inc., Class A (b) (c)     48,590      1,639,913
Qualcomm, Inc.     49,460      1,981,862
Tellabs, Inc. (b)     77,320      1,029,129
          
             10,491,913
          
Transportation Services (1.9%)       
C.H. Robinson Worldwide, Inc.     29,250      1,559,025
United Parcel Service, Inc.     28,000      2,305,240
          
             3,864,265
          
Total Common Stocks            205,946,811
          
COMMERCIAL PAPER (1.9%)       
Financial Services (1.9%)       

KBC Financial Products International,

5.33%, 07/03/06

   $ 4,032,000      4,030,806
          
Total Commercial Paper            4,030,806
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (10.3%)
Pool of short-term securities for Gartmore Variable Insurance Trust Funds — Note 2 (Securities Lending)     21,373,696      21,373,696
Total Short-Term Securities Held
as Collateral for Securities on Loan		      21,373,696
          

 

4

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

         Value  
Total Investments
(Cost $230,477,223) (a) — 111.5%		      231,351,313  
Liabilities in excess of
other assets — (11.5%)		          (23,762,555 )
        
NET ASSETS — 100.0%        $ 207,588,758  
        

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

ADR American Depositary Receipt

 

GG Guernsey

 

IN  India

 

UK  United Kingdom

 

See notes to financial statements.

 

5

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $230,477,223)

    $ 231,351,313  

Cash

      232  

Interest and dividends receivable

      104,164  

Receivable for capital shares issued

      101,249  

Receivable for investments sold

      10,802,356  

Prepaid expenses and other assets

      2,728  
    

Total Assets

      242,362,042  
    

Liabilities:

         

Payable for investments purchased

      13,135,456  

Payable for capital shares redeemed

      110,284  

Payable for return of collateral received for securities on loan

      21,373,696  

Accrued expenses and other payables:

         

Investment advisory fees

      102,075  

Fund administration and transfer agent fees

      14,213  

Administrative servicing fees

      19,386  

Other

      18,174  
    

Total Liabilities

      34,773,284  
    

Net Assets

    $ 207,588,758  
    

Represented by:

         

Capital

    $ 507,566,629  

Accumulated net investment income (loss)

      (59,706 )

Accumulated net realized gains (losses) from investment transactions

      (300,792,255 )

Net unrealized appreciation (depreciation) on investments

      874,090  
    

Net Assets

    $ 207,588,758  
    

Net Assets:

         

Class I Shares

    $ 174,841,676  

Class IV Shares

      32,747,082  
    

Total

    $ 207,588,758  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      15,753,323  

Class IV Shares

      2,951,095  
    

Total

      18,704,418  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 11.10  

Class IV Shares

    $ 11.10  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 20,119  

Dividend income

      842,298  

Income from securities lending

      41,862  
    

Total Income

      904,279  
    

Expenses:

         

Investment advisory fees

      673,607  

Fund administration and transfer agent fees

      79,495  

Administrative servicing fees
Class I Shares

      150,689  

Administrative servicing fees
Class IV Shares

      27,640  

Trustee fees

      3,984  

Other

      29,719  
    

Total expenses before earnings credit

      965,134  

Earnings credit (Note 5)

      (1,149 )
    

Total Expenses

      963,985  
    

Net Investment Income (Loss)

      (59,706 )
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses)

      3,655,686  

Net change in unrealized appreciation/depreciation on investments

      (9,784,523 )
    

Net realized/unrealized gains (losses) on investments

      (6,128,837 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (6,188,543 )
    

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GROWTH FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

From Investment Activities:

                 

Operations:

                 

Net investment income (loss)

    $ (59,706 )   $ 131,009  

Net realized gains (losses) on investment transactions

      3,655,686       24,988,046  

Net change in unrealized appreciation/depreciation on investments

      (9,784,523 )     (10,295,991 )
    
 

Change in net assets resulting from operations

      (6,188,543 )     14,823,064  
    
 

Distributions to Class I shareholders from:

                 

Net investment income

      —       (169,795 )

Distributions to Class IV shareholders from:

                 

Net investment income

      —       (30,322 )
    
 

Change in net assets from shareholder distributions

      —       (200,117 )
    
 

Change in net assets from capital transactions

      (21,877,282 )     (41,336,100 )
    
 

Change in net assets

      (28,065,825 )     (26,713,153 )

Net Assets:

                 

Beginning of period

      235,654,583       262,367,736  
    
 

End of period

    $ 207,588,758     $ 235,654,583  
    
 

Accumulated net investment income (loss)

    $ (59,706 )   $ —  
    
 

CAPITAL TRANSACTIONS:

                 

Class I Shares

                 

Proceeds from shares issued

    $ 1,679,967     $ 6,011,991  

Dividends reinvested

      —       169,795  

Cost of shares redeemed

      (21,084,459 )     (43,429,477 )
    
 
       (19,404,492 )     (37,247,691 )
    
 

Class IV Shares

                 

Proceeds from shares issued

      990,164       2,705,314  

Dividends reinvested

      —       30,322  

Cost of shares redeemed

      (3,462,954 )     (6,824,045 )
    
 
       (2,472,790 )     (4,088,409 )
    
 

Change in net assets from capital transactions

    $ (21,877,282 )   $ (41,336,100 )
    
 

SHARE TRANSACTIONS:

                 

Class I Shares

                 

Issued

      144,446       559,238  

Reinvested

      —       15,946  

Redeemed

      (1,811,069 )     (3,995,849 )
    
 
       (1,666,623 )     (3,420,665 )
    
 

Class IV Shares

                 

Issued

      86,050       249,161  

Reinvested

      —       2,847  

Redeemed

      (298,075 )     (626,407 )
    
 
       (212,025 )     (374,399 )
    
 

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Growth Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		    

Net
Realized
and

Unrealized
Gains
(Losses) on
Investments

     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		    

Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average

Net Assets(a)

     Portfolio
Turnover(b)

Class I Shares

                                                                                  

Year Ended December 31, 2001(c)

   $ 14.68   (0.01 )   (4.12 )   (4.13 )   —     —     $ 10.55   (28.13% )   $ 352,147   0.80%     (0.10% )   0.85%     (0.15% )   227.28%

Year Ended December 31, 2002

   $ 10.55   —     (3.03 )   (3.03 )   —     —     $ 7.52   (28.72% )   $ 201,689   0.85%     (0.03% )   0.85%     (0.03% )   231.69%

Year Ended December 31, 2003

   $ 7.52   0.01     2.45     2.46       (e)   —     $ 9.98   32.74%     $ 244,671   0.84%     0.09%     (h )   (h )   293.58%

Year Ended December 31, 2004

   $ 9.98   0.02     0.79     0.81     (0.03 )   (0.03 )   $ 10.76   8.16%     $ 224,301   0.85%     0.26%     (h )   (h )   282.41%

Year Ended December 31, 2005

   $ 10.76   0.01     0.69     0.70     (0.01 )   (0.01 )   $ 11.45   6.50%     $ 199,446   0.87%     0.05%     (h )   (h )   275.31%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.45   —     (0.35 )   (0.35 )   —     —     $ 11.10   (3.06% )(f)   $ 174,842   0.86% (g)   (0.05% )(g)   (h )   (h )   130.58%

Class IV Shares

                                                                                  

Period Ended December 31, 2003(d)

   $ 7.90   —     2.08     2.08       (e)   —     $ 9.98   26.37% (f)   $ 34,090   0.84% (g)   0.10% (g)   (h )   (h )   293.58%

Year Ended December 31, 2004

   $ 9.98   0.02     0.79     0.81     (0.03 )   (0.03 )   $ 10.76   8.16%     $ 38,067   0.85%     0.27%     (h )   (h )   282.41%

Year Ended December 31, 2005

   $ 10.76   0.01     0.69     0.70     (0.01 )   (0.01 )   $ 11.45   6.50%     $ 36,209   0.87%     0.05%     (h )   (h )   275.31%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.45   —     (0.35 )   (0.35 )   —     —     $ 11.10   (3.06% )(f)   $ 32,747   0.86% (g)   (0.05% )(g)   (h )   (h )   130.58%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(e) The amount is less than $0.005 per share.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Growth Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

“Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(e) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(f) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(g) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Commercial Paper    Aegis Finance LLC    $ 995,462    5.29%    07/21/06
Master Note — Floating    CDC Financial Product Inc.      6,500,000    5.41%    07/03/06
Master Note — Floating    Citigroup Global Markets Inc.      2,000,000    5.38%    07/03/06
Medium Term Note — Floating    General Electric Capital Corp.      1,000,057    5.27%    09/08/06
Medium Term Note — Floating    Tango Finance Corp.      999,707    5.39%    07/03/06
Repurchase Agreement    Bank of America Securities LLC      9,878,470    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value of loan:

 

Value of Loaned Securities

    Value of Collateral

        $21,237,608

    $ 21,373,696

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
  
       $ 233,752,228      $ 9,447,009      $ (11,847,924 )      $ (2,400,915 )

 

* The difference between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

12

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule

    Fees

Up to $250 million

    0.600%

Next $750 million

    0.575%

Next $1 billion

    0.550%

Next $3 billion

    0.525%

$5 billion or more

    0.500%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I shares of the Fund and 0.20% on Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $168,253 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $293,204,899 and sales of $314,748,517.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that, for the one- and three-year periods, the Fund outperformed its benchmark, the Russell 1000 Growth Index, by 275 and 130 basis points, respectively, and ranked in the second quartile of the Fund’s Lipper Large-Cap Growth Funds category for both periods. The Board also considered, however, that for the five-year period, the Fund under-performed its benchmark by 213 basis points and ranked in the fourth quartile of the Fund’s Lipper category. The Board then discussed the distribution of the Fund. Management discussed the challenges it has faced in marketing the Fund, given the five-year performance record, and the fact that growth style investing was not in favor over the last few years.

 

The Board next considered the contractual advisory fee and breakpoints for the Fund and noted that the contractual advisory fee placed the Fund in the second quintile of the Fund’s Lipper-constructed Expense Group and noted that the Fund’s total expense ratio placed the Fund below the median for the Fund’s Expense Group. The Board then reviewed the adviser’s profitability for the twelve month period ended September 30, 2005 and concluded that the adviser’s profitability during the period was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

   Trustee since December 2004   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1950

   Trustee since December 2004   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

   Trustee since December 2004   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

20

Table of Contents

 

Gartmore GVIT Government Bond Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGB (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Government Bond Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Government Bond Fund                                       

Class I

      Actual    $ 1,000.00      $ 993.70      $ 3.61      0.73%
       Hypothetical1    $ 1,000.00      $ 1,021.18      $ 3.66      0.73%

Class II

      Actual    $ 1,000.00      $ 992.50      $ 4.84      0.98%
       Hypothetical1    $ 1,000.00      $ 1,019.94      $ 4.92      0.98%

Class III

      Actual    $ 1,000.00      $ 993.80      $ 3.56      0.72%
       Hypothetical1    $ 1,000.00      $ 1,021.23      $ 3.61      0.72%

Class IV

      Actual    $ 1,000.00      $ 993.70      $ 3.61      0.73%
       Hypothetical1    $ 1,000.00      $ 1,021.18      $ 3.66      0.73%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Government Bond Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
U.S. Government Sponsored & Agency Obligations      44.2%
Mortgage-Backed Securities      35.0%
U.S. Treasury Obligations      12.5%
Cash Equivalents      7.6%
Other Investments*      6.1%
Liabilities in excess of other assets**      -5.4%
      
       100.0%
      

 

 

Top Holdings***       
U.S. Treasury Bonds, 8.13%, 08/15/19      4.6%
Federal Home Loan Mortgage Corp., 5.75%, 05/23/11      4.5%
U.S. Treasury Bonds, 8.50%, 02/15/20      4.5%
Federal Home Loan Bank, 4.00%, 01/23/07      4.5%
AID - Israel, 5.50%, 12/04/23      3.6%
Federal Home Loan Mortgage Corp., 5.50%, 05/15/25      3.4%
Federal National Mortgage Association, 4.91%, 07/01/35      3.1%
Federal Home Loan Mortgage Corp., 5.16%, 06/01/35      2.9%
Federal National Mortgage Association, 3.55%, 01/12/07      2.8%
Federal Home Loan Mortgage Corp., 5.50%, 11/10/08      2.3%
Other Assets      63.8%
      
       100.0%
      
Top Industries       
Federal National Mortgage Association      30.0%
Federal Home Loan Mortgage Corp.      26.8%
U.S. Treasury Obligations      12.5%
Agency For International Development      7.4%
Federal Home Loan Bank      6.7%
Overseas Private Investment Corp.      3.2%
Federal Farm Credit Bank      3.2%
Veterans Administration      1.0%
Housing and Urban Development      0.8%
Government National Mortgage Association      0.1%
Other Assets      8.3%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GOVERNMENT BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares or
Principal Amount		    Value
              
U.S. GOVERNMENT SPONSORED & AGENCY OBLIGATIONS (44.2%)
Agency For International Development (7.4%)
AID–Israel,
5.50%, 09/18/23		   $ 3,000,000    $ 2,977,008
AID–Israel,
5.50%, 12/04/23		     40,500,000      40,188,798
AID–Israel,
5.50%, 04/26/24		     20,000,000      19,843,600
AID–Israel,
5.13%, 11/01/24		     6,000,000      5,696,034
Government Backed Trust T–1,
5.41%, 05/15/07		     10,000,000      9,549,650
Government Loan Trust, 5.57%, 04/01/15     6,072,000      3,778,958
          
             82,034,048
          
Federal Farm Credit Bank (3.2%)       
5.00%, 03/03/14     12,146,000      11,778,778
4.55%, 03/04/15     25,475,000      23,782,874
          
             35,561,652
          
Federal Home Loan Bank (6.7%)       
4.00%, 01/23/07 (b)     50,000,000      49,574,999
2.63%, 02/16/07     17,460,000      17,151,168
5.91%, 04/07/09     6,860,000      6,951,554
          
             73,677,721
          
Federal Home Loan Mortgage Corporation (12.9%)
6.70%, 01/09/07     5,000,000      5,028,415
5.50%, 04/01/07     679,274      678,221
4.26%, 07/19/07     20,000,000      19,745,900
5.50%, 11/10/08     25,000,000      24,942,750
5.75%, 05/23/11     50,000,000      49,820,199
4.80%, 12/18/13     8,350,000      7,984,654
5.16%, 06/01/35 (c)     32,460,254      32,480,501
          
             140,680,640
          
Federal National Mortgage Association (10.0%)
3.25%, 12/01/06     18,465,000      18,301,345
3.55%, 01/12/07     30,970,000      30,650,328
3.25%, 03/29/07     17,975,000      17,678,628
4.50%, 04/01/10     13,291,818      12,947,627
8.20%, 03/10/16     10,000,000      11,976,420
6.68%, 05/01/16     3,871,231      3,973,788
5.26%, 12/29/17     15,000,000      14,172,765
          
             109,700,901
          
Housing & Urban Development (0.8%)
7.08%, 08/01/16     9,000,000      9,080,793
          
    Shares or
Principal Amount		    Value
              
U.S. GOVERNMENT SPONSORED & AGENCY OBLIGATIONS (continued)
Overseas Private Investment Corp. (3.2%)
4.09%, 12/16/06   $ 34,112,991    $ 35,639,890
          
Total U.S. Government Sponsored & Agency Obligations      486,375,645
          
MORTGAGE-BACKED SECURITIES (35.0%)
Federal Home Loan Mortgage Corporation (13.9%)
8.00%, 11/01/08     5,656      5,690
5.50%, 09/15/10     4,401,191      4,382,080
5.25%, 11/10/10     25,000,000      24,699,175
5.50%, 08/15/13     6,488,277      6,442,287
8.00%, 03/01/17     1,726      1,806
5.50%, 10/15/17     15,000,000      14,887,086
5.50%, 10/15/17     18,750,000      18,479,666
5.50%, 01/15/20     8,000,000      7,897,137
7.50%, 03/01/21     128,684      133,576
6.00%, 09/15/21     490,878      489,953
5.00%, 07/15/24     7,500,000      6,901,394
4.50%, 12/15/24     18,605,000      16,583,130
5.50%, 05/15/25     38,770,000      37,229,439
6.50%, 03/15/31     1,232,260      1,249,822
6.50%, 05/01/31     47,119      47,578
6.50%, 06/01/31     10,708      10,812
6.50%, 11/01/31     43,752      44,178
5.50%, 05/15/34     13,838,045      13,663,004
          
             153,147,813
          
Federal National Mortgage Association (20.0%)
7.28%, 09/01/07     1,354,824      1,358,421
6.28%, 05/01/08     13,308,051      13,346,426
6.50%, 07/25/08     1,408,130      1,411,584
6.00%, 08/01/08     379,048      378,508
5.70%, 01/01/09     4,522,526      4,502,115
6.00%, 03/25/09     984,683      984,321
5.00%, 09/01/09     1,642,046      1,607,448
7.41%, 04/01/10     14,172,193      15,044,822
5.50%, 09/25/11     6,215,000      6,190,315
6.62%, 06/01/16     10,823,975      11,421,274
6.00%, 09/01/17     226,406      227,271
10.50%, 11/01/17     36,550      37,852
5.50%, 12/01/17     1,924,784      1,892,928
8.00%, 03/01/22     31,710      33,434
8.00%, 06/01/23     56,415      59,532
5.00%, 07/25/23     6,000,000      5,499,092
7.00%, 08/25/23     5,723,240      5,885,110
5.00%, 02/25/24     2,083,293      2,065,148

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GOVERNMENT BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value
              
MORTGAGE-BACKED SECURITIES (continued)
Federal National Mortgage Association (continued)
5.50%, 04/25/24   $ 12,486,462    $ 12,104,333
7.50%, 03/01/26     24,790      25,885
8.50%, 04/01/28     114,571      122,590
7.00%, 09/01/28     130,923      134,261
7.00%, 12/01/28     16,863      17,382
7.00%, 02/01/30     50,351      51,621
6.43%, 02/17/30     1,079,065      1,083,769
7.00%, 02/01/31     47,520      48,714
7.00%, 08/01/31     129,749      132,942
6.50%, 07/01/32     75,238      75,902
7.00%, 07/01/32     69,524      71,224
3.50%, 11/25/32     3,087,560      2,789,846
5.02%, 09/01/34 (c)     19,440,705      18,992,182
4.71%, 04/01/35     9,679,038      9,287,846
4.74%, 04/01/35 (c)     17,989,307      17,358,840
4.84%, 05/01/35     16,791,872      16,257,745
4.90%, 05/01/35     19,762,638      19,143,202
5.27%, 05/01/35     16,681,572      16,307,588
4.91%, 07/01/35 (c)     35,696,355      34,593,895
          
             220,545,368
          
Government National Mortgage Association (0.1%)
7.00%, 04/15/09     28,967      29,441
7.50%, 06/15/23     100,867      105,465
7.50%, 09/15/23     100,897      105,497
7.50%, 11/15/30     10,707      11,193
7.00%, 07/15/31     32,663      33,700
7.00%, 03/15/32     61,416      63,356
7.00%, 04/15/32     96,042      99,075
7.00%, 02/15/33     131,806      135,996
          
             583,723
          
Veterans Administration (1.0%)       
Vendee Mortgage Trust, Series 1996-2,
6.75%, 06/15/26		     11,165,293      11,385,149
          
Total Mortgage-Backed Securities      385,662,053
          
    Shares or
Principal Amount		    Value  
                
MORTGAGE-BACKED SECURITIES (continued)  
U.S. TREASURY OBLIGATIONS (12.5%)  
1.88%, 07/15/15 (b)   $ 20,000,000    $ 19,659,386  
8.88%, 02/15/19 (b)     10,000,000      13,287,500  
8.13%, 08/15/19 (b)     40,000,000      50,640,639  
8.50%, 02/15/20 (b)     38,000,000      49,696,856  
3.88%, 04/15/29 (b)     2,830,000      4,292,084  
          
Total U.S. Treasury Obligations      137,576,465  
          
CASH EQUIVALENTS (7.6%)         
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $84,057,228)     84,021,525      84,021,525  
          
Total Cash Equivalents      84,021,525  
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (6.1%)   
Pool of short-term securities for Gartmore Variable Insurance Mutual Funds — note 2 (Securities Lending)     67,379,081      67,379,081  
Total Short-Term Securities Held as Collateral for Securities on Loan      67,379,081  
          
Total Investments
(Cost $1,178,704,453) (a) — 105.4%		      1,161,014,769  
Liabilities in excess of
other assets — (5.4%)		      (59,325,294 )
    
NET ASSETS — 100.0%    $ 1,101,689,475  
    

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) All or part of security was on loan as of June 30, 2006.

 

(c) Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on June 30, 2006. The maturity date represents the actual maturity date.

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GOVERNMENT BOND FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $1,094,682,928)

    $ 1,076,993,244  

Repurchase agreements, at cost and value

      84,021,525  
    

Total Investments

      1,161,014,769  
    

Interest and dividends receivable

      9,762,729  

Receivable for capital shares issued

      653,681  

Prepaid expenses and other assets

      13,510  
    

Total Assets

      1,171,444,689  
    

Liabilities:

         

Payable to custodian

      606,627  

Payable for capital shares redeemed

      1,038,838  

Payable for return of collateral received for securities on loan

      67,379,081  

Accrued expenses and other payables:

         

Investment advisory fees

      435,200  

Fund administration and transfer agent fees

      79,015  

Distribution fees

      3,051  

Administrative servicing fees

      97,390  

Other

      116,012  
    

Total Liabilities

      69,755,214  
    

Net Assets

    $ 1,101,689,475  
    

Represented by:

         

Capital

    $ 1,129,382,069  

Accumulated net investment income (loss)

      1,087,931  

Accumulated net realized gains (losses) from investment transactions

      (11,090,841 )

Net unrealized appreciation (depreciation) on investments

      (17,689,684 )
    

Net Assets

    $ 1,101,689,475  
    

Net Assets:

         

Class I Shares

    $ 1,039,110,169  

Class II Shares

      14,746,228  

Class III Shares

      11,581,676  

Class IV Shares

      36,251,402  
    

Total

    $ 1,101,689,475  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      93,141,855  

Class II Shares

      1,325,447  

Class III Shares

      1,037,972  

Class IV Shares

      3,249,960  
    

Total

      98,755,234  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 11.16  

Class II Shares

    $ 11.13  

Class III Shares

    $ 11.16  

Class IV Shares

    $ 11.15  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 26,132,570  

Income from securities lending

      35,825  
    

Total Income

      26,168,395  
    

Expenses:

         

Investment advisory fees

      2,677,486  

Fund administration and transfer agent fees

      395,340  

Distribution fees Class II Shares

      18,842  

Administrative servicing fees Class I Shares

      834,647  

Administrative servicing fees
Class II Shares

      11,891  

Administrative servicing fees
Class III Shares

      8,356  

Administrative servicing fees
Class IV Shares

      29,609  

Trustee fees

      19,546  

Other

      153,808  
    

Total expenses before earnings credit

      4,149,525  

Earnings credit (Note 6)

      (23,628 )
    

Total Expenses

      4,125,897  
    

Net Investment Income (Loss)

      22,042,498  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses)

      (8,742,644 )

Net change in unrealized appreciation/depreciation on investments

      (20,657,637 )
    

Net realized/unrealized gains (losses) on investments

      (29,400,281 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (7,357,783 )
    

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GOVERNMENT BOND FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

From Investment Activities:

                 

Operations:

                 

Net investment income (loss)

    $ 22,042,498     $ 44,678,951  

Net realized gains (losses) on investment transactions

      (8,742,644 )     7,045,144  

Net change in unrealized appreciation/depreciation on investments

      (20,657,637 )     (13,152,094 )
    
 

Change in net assets resulting from operations

      (7,357,783 )     38,572,001  
    
 

Distributions to Class I shareholders from:

                 

Net investment income

      (20,080,904 )     (42,605,415 )

Net realized gains on investments

      (8,191,701 )     (2,077,780 )

Distributions to Class II shareholders from:

                 

Net investment income

      (267,495 )     (567,945 )

Net realized gains on investments

      (116,493 )     (30,292 )

Distributions to Class III shareholders from:

                 

Net investment income

      (221,944 )     (383,605 )

Net realized gains on investments

      (91,621 )     (17,636 )

Distributions to Class IV shareholders from:

                 

Net investment income

      (706,616 )     (1,484,028 )

Net realized gains on investments

      (286,189 )     (73,151 )
    
 

Change in net assets from shareholder distributions

      (29,962,963 )     (47,239,852 )
    
 

Change in net assets from capital transactions

      (44,135,248 )     (96,317,789 )
    
 

Change in net assets

      (81,455,994 )     (104,985,640 )

Net Assets:

                 

Beginning of period

      1,183,145,469       1,288,131,109  
    
 

End of period

    $ 1,101,689,475     $ 1,183,145,469  
    
 

Accumulated net investment income (loss)

    $ 1,087,931     $ 322,392  
    
 

CAPITAL TRANSACTIONS:

                 

Class I Shares

                 

Proceeds from shares issued

    $ 61,273,641     $ 100,837,878  

Dividends reinvested

      28,272,478       44,683,195  

Cost of shares redeemed

      (132,757,056 )     (242,466,598 )
    
 
       (43,210,937 )     (96,945,525 )
    
 

Class II Shares

                 

Proceeds from shares issued

      292,346       557,535  

Dividends reinvested

      383,986       598,237  

Cost of shares redeemed

      (1,195,085 )     (2,927,125 )
    
 
       (518,753 )     (1,771,353 )
    
 

Class III Shares

                 

Proceeds from shares issued

      3,697,337       10,805,193  

Dividends reinvested

      313,563       401,240  

Cost of shares redeemed

      (2,642,244 )     (7,331,746 )
    
 
       1,368,656       3,874,687  
    
 

Class IV Shares

                 

Proceeds from shares issued

      1,773,195       3,788,415  

Dividends reinvested

      992,801       1,557,179  

Cost of shares redeemed

      (4,540,210 )     (6,821,192 )
    
 
       (1,774,214 )     (1,475,598 )
    
 

Change in net assets from capital transactions

    $ (44,135,248 )   $ (96,317,789 )
    
 

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GOVERNMENT BOND FUND

 

Statements of Changes in Net Assets (continued)

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

SHARE TRANSACTIONS:

             

Class I Shares

             

Issued

    5,373,210     8,647,290  

Reinvested

    2,523,339     3,849,635  

Redeemed

    (11,620,862 )   (20,823,734 )
    
 
     (3,724,313 )   (8,326,809 )
    
 

Class II Shares

             

Issued

    25,729     48,179  

Reinvested

    34,369     51,678  

Redeemed

    (104,745 )   (251,626 )
    
 
     (44,647 )   (151,769 )
    
 

Class III Shares

             

Issued

    322,585     925,545  

Reinvested

    27,973     34,552  

Redeemed

    (231,597 )   (630,519 )
    
 
     118,961     329,578  
    
 

Class IV Shares

             

Issued

    154,947     325,126  

Reinvested

    88,625     134,177  

Redeemed

    (397,554 )   (585,120 )
    
 
     (153,982 )   (125,817 )
    
 

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Government Bond Fund

 

        Investment Activities
     Distributions:
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		    

Ratio of
Expenses

(Prior to
Reimbursements)
to Average

Net Assets(a)

    

Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average

Net Assets(a)

     Portfolio
Turnover(b)

Class I Shares

                                                                                      

Year Ended December 31, 2001(c)

   $ 11.44   0.58   0.24     0.82     (0.58 )   (0.02 )   (0.60 )   $ 11.66   7.25%     $ 1,301,828   0.66%     5.21%     0.73%     5.14%     55.80%

Year Ended December 31, 2002

   $ 11.66   0.53   0.72     1.25     (0.53 )   (0.10 )   (0.63 )   $ 12.28   10.98%     $ 1,982,676   0.73%     4.53%     0.73%     4.53%     49.00%

Year Ended December 31, 2003(d)

   $ 12.28   0.50   (0.25 )   0.25     (0.38 )   (0.02 )   (0.40 )   $ 12.13   2.00%     $ 1,488,089   0.73%     4.12%     (j )   (j )   40.46%

Year Ended December 31, 2004

   $ 12.13   0.47   (0.08 )   0.39     (0.66 )   (0.24 )   (0.90 )   $ 11.62   3.26%     $ 1,222,615   0.73%     3.75%     (j )   (j )   69.37%

Year Ended December 31, 2005

   $ 11.62   0.43   (0.06 )   0.37     (0.43 )   (0.02 )   (0.45 )   $ 11.54   3.26%     $ 1,117,512   0.73%     3.65%     (j )   (j )   87.79%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.54   0.23   (0.30 )   (0.07 )   (0.22 )   (0.09 )   (0.31 )   $ 11.16   (0.63% )(h)   $ 1,039,110   0.73% (i)   3.94% (i)   (j )   (j )   53.33%

Class II Shares

                                                                                      

Period Ended December 31, 2002(e)

   $ 11.88   0.18   0.55     0.73     (0.26 )   (0.09 )   (0.35 )   $ 12.26   6.16% (h)   $ 10,111   0.97% (i)   3.93% (i)   (j )   (j )   49.00%

Year Ended December 31, 2003(d)

   $ 12.26   0.47   (0.25 )   0.22     (0.36 )   (0.02 )   (0.38 )   $ 12.10   1.77%     $ 20,998   0.98%     3.85%     (j )   (j )   40.46%

Year Ended December 31, 2004

   $ 12.10   0.44   (0.08 )   0.36     (0.63 )   (0.24 )   (0.87 )   $ 11.59   3.01%     $ 17,643   0.98%     3.50%     (j )   (j )   69.37%

Year Ended December 31, 2005

   $ 11.59   0.40   (0.06 )   0.34     (0.40 )   (0.02 )   (0.42 )   $ 11.51   3.01%     $ 15,765   0.98%     3.40%     (j )   (j )   87.79%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.51   0.21   (0.30 )   (0.09 )   (0.20 )   (0.09 )   (0.29 )   $ 11.13   (0.75% )(h)   $ 14,746   0.98% (i)   3.69% (i)   (j )   (j )   53.33%

Class III Shares

                                                                                      

Period Ended December 31, 2002(f)

   $ 11.75   0.36   0.67     1.03     (0.41 )   (0.10 )   (0.51 )   $ 12.27   8.84% (h)   $ 7,625   0.73% (i)   4.12% (i)   (j )   (j )   49.00%

Year Ended December 31, 2003(d)

   $ 12.27   0.50   (0.24 )   0.26     (0.37 )   (0.02 )   (0.39 )   $ 12.14   2.11%     $ 4,369   0.73%     4.10%     (j )   (j )   40.46%

Year Ended December 31, 2004(d)

   $ 12.14   0.46   (0.07 )   0.39     (0.66 )   (0.24 )   (0.90 )   $ 11.63   3.27%     $ 6,854   0.73%     3.72%     (j )   (j )   69.37%

Year Ended December 31, 2005

   $ 11.63   0.40   (0.04 )   0.36     (0.43 )   (0.02 )   (0.45 )   $ 11.54   3.18%     $ 10,604   0.73%     3.66%     (j )   (j )   87.79%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.54   0.22   (0.29 )   (0.07 )   (0.22 )   (0.09 )   (0.31 )   $ 11.16   (0.62% )(h)   $ 11,582   0.72% (i)   3.95% (i)   (j )   (j )   53.33%

Class IV Shares

                                                                                      

Period Ended December 31, 2003(g)

   $ 12.29   0.34   (0.24 )   0.10     (0.26 )   —     (0.26 )   $ 12.13   0.84% (h)   $ 43,244   0.70% (i)   4.07% (i)   (j )   (j )   40.46%

Year Ended December 31, 2004

   $ 12.13   0.46   (0.07 )   0.39     (0.66 )   (0.24 )   (0.90 )   $ 11.62   3.27%     $ 41,019   0.73%     3.74%     (j )   (j )   69.37%

Year Ended December 31, 2005

   $ 11.62   0.43   (0.07 )   0.36     (0.43 )   (0.02 )   (0.45 )   $ 11.53   3.17%     $ 39,264   0.73%     3.65%     (j )   (j )   87.79%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.53   0.23   (0.30 )   (0.07 )   (0.22 )   (0.09 )   (0.31 )   $ 11.15   (0.63% )(h)   $ 36,251   0.73% (i)   3.94% (i)   (j )   (j )   53.33%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) Net investment income (loss) is calculated based on average shares outstanding during the period.

 

(e) For the period from July 8, 2002 (commencement of operations) through December 31, 2002.

 

(f) For the period from May 20, 2002 (commencement of operations) through December 31, 2002.

 

(g) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(h) Not annualized.

 

(i) Annualized.

 

(j) There were no fee reductions during the period.

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Government Bond Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(e) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.

 

(f) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
     Maturity Date
Bank Note — Floating Rate    Bank of America    $ 2,000,000    5.31 %   07/03/06
Bank Note — Floating Rate    Wachovia Bank N.A      10,000,000    5.30 %   07/03/06
Commercial Paper    Aegis Finance LLC      7,963,696    5.29 %   07/21/06
Master Note — Floating    CDC Financial Product Inc.      25,000,000    5.41 %   07/03/06
Medium Term Note — Floating    Macquarie Bank Ltd.      4,999,541    5.30 %   07/21/06
Repurchase Agreement    Bank of America Securities LLC      17,415,844    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of
Collateral

        $65,094,162

    $ 67,379,081

 

(g) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. Dividends and distributions that exceed net investment income and net realized gains for financial reporting purposes, but not for tax purposes, are reported as distributions in excess of net investment income or net realized gains. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(h) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
  
       $ 1,178,840,488      $ 3,233,498      $ (21,059,217 )      $ (17,825,719 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(i) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following fee schedule:

 

Fee Schedule

    Fees

Up to $250 million

    0.50%

Next $750 million

    0.475%

Next $1 billion

    0.45%

Next $3 billion

    0.425%

$5 billion or more

    0.40%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all Funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I, Class II, and Class III shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $840,395 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $9,780.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $577,256,720 and sales of $561,583,994.

 

For the six months ended June 30, 2006, the Fund had purchases of $577,239,922 and sales of $448,487,159 of U.S. Government securities, which are included in the total purchases and sales in the sentence above.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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SUPPLEMENTAL INFORMATION

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that the Fund outperformed its benchmark, the Merrill Lynch Government Master Index by 68 basis points for the one-year period and 4 basis points for the three-year period, but slightly underperformed its benchmark by 4 basis points for the five-year period. In each of these periods, the Fund ranked in the second quartile of the Lipper General U.S. Government Funds category. The Board then considered the Fund’s contractual advisory fee and breakpoints. The Board noted that the contractual advisory fee placed the Fund in the third quintile of the Expense Group constructed by Lipper; however, the Fund’s total expenses were below the median of the Fund’s Expense Group. Finally, the Board considered the level of profitability reported by the adviser and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in the
Gartmore Fund
Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3 and GSA3.   N/A   N/A

 

19

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in the
Gartmore Fund
Complex
Overseen by
Trustee		   Other Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3, and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

20

Table of Contents

 

GVIT Small Company Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
23    Statement of Assets and Liabilities
23    Statement of Operations
24    Statements of Changes in Net Assets
26    Financial Highlights
27    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GSCO (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT Small Company Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

     Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
GVIT Small Company Fund                                

Class I

      Actual    $ 1,000.00      $ 1,048.00      $ 5.99      1.18%
       Hypothetical1    $ 1,000.00      $ 1,018.95      $ 5.92      1.18%

Class II

      Actual    $ 1,000.00      $ 1,046.70      $ 7.31      1.44%
       Hypothetical1    $ 1,000.00      $ 1,017.66      $ 7.23      1.44%

Class III

      Actual    $ 1,000.00      $ 1,047.50      $ 6.04      1.19%
       Hypothetical1    $ 1,000.00      $ 1,018.90      $ 5.97      1.19%

Class IV

      Actual    $ 1,000.00      $ 1,048.00      $ 5.94      1.17%
       Hypothetical1    $ 1,000.00      $ 1,019.00      $ 5.87      1.17%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT Small Company Fund

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Common Stocks      97.8%
Cash Equivalents      1.6%
Commercial Paper      0.3%
Mutual Fund      0.1%
Warrant      0.0%
Right      0.0%
Other assets in excess of liabilities      0.2%
      
       100.0%
      

 

 

Top Holdings*       
Costar Group, Inc.      0.8%
St. Mary Land & Exploration Co.      0.7%
ITT Educational Services, Inc.      0.6%
Factset Research Systems, Inc.      0.6%
Gaylord Entertainment      0.6%
Blabkbaud, Inc.      0.6%
Landstar System, Inc.      0.6%
IDEXX Laboratories, Inc.      0.5%
Oceaneering International, Inc.      0.5%
Helix Energy Solutions Group, Inc.      0.5%
Other Assets      94.0%
      
       100.0%
      
Top Industries       
Retail      6.1%
Oil & Gas      6.0%
Healthcare      4.4%
Machinery      3.2%
Building & Construction      3.1%
Transportation      3.0%
Financial      3.0%
Real Estate Investment Trust      2.9%
Auto & Auto Parts      2.7%
Computer Software      2.6%
Other Assets      63.0%
      
       100.0%
      

 

Top Countries       
United States      81.8%
Japan      5.6%
United Kingdom      2.6%
Sweden      1.0%
Australia      0.9%
China      0.8%
France      0.8%
Norway      0.7%
Mexico      0.7%
Netherlands      0.6%
Other Assets      4.5%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (97.8%)       
AUSTRALIA (0.9%)           
Banks (0.0%)           
Adelaide Bank Ltd. (c)   22,353    $ 215,369
        
Clothing (0.1%)           
Ansell Ltd. (c)   92,687      665,954
        
Engineering (0.4%)           
Downer Edi Ltd. (c)   329,864      1,822,006
WorleyParsons Ltd. (c)   113,146      1,691,426
        
           3,513,432
        
Finance (0.1%)           
Australian Stock Exchange Ltd. (c)   45,661      1,105,441
        
Multimedia (0.0%)           
APN News & Media Ltd. (c)   43,604      164,288
        
Oil & Gas (0.0%)           
Australian Pipeline Trust (c)   53,385      169,294
        
Pharmaceuticals (0.1%)           
Symbion Health Ltd. (c)   434,842      987,465
        
Real Estate Investment Trust (0.0%)       
ING Industrial Fund (c)   175,122      289,343
        
Retail (0.2%)           
Colorado Group Ltd. (c)   121,235      390,749
David Jones Ltd. (c)   290,036      639,902
Just Group Ltd. (c)   167,590      425,859
        
           1,456,510
        
           8,567,096
        
AUSTRIA (0.2%)           
Machinery (0.2%)           
Andritz AG (c)   6,902      1,139,241
        
Oil & Gas Equipment & Services (0.0%)       
Schoeller-Blackman Oilfield Equipment AG (c)   7,466      282,140
        
           1,421,381
        
BELGIUM (0.2%)           
Broadcasting (0.0%)           
Evs Broadcast Equipment S.A. (c)   6,171      304,726
        
Metals (0.1%)           
Cumerio (c)   42,054      839,708
        
Telecommunication Equipment (0.0%)       
Option NV (b) (c)   14,752      353,345
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
BELGIUM (continued)           
Ventures Business Trust (0.1%)       
GIMV NV (b) (c)   9,630    $ 559,563
        
           2,057,342
        
BERMUDA (0.2%)           
Commercial Services (0.2%)           
Steiner Leisure Ltd. (b) (c)   40,400      1,597,012
        
CANADA (0.1%)           
Mining (0.0%)           
Pan American Silver Corp. (b) (c)   18,400      331,016
        
Pharmaceuticals (0.1%)           
Biovail Corp. International ADR (c)   23,700      554,817
        
           885,833
        
CHINA (0.6%)           
Advertising (0.2%)           
Focus Media Holding Ltd. ADR (b) (c)   24,400      1,589,904
        
E-Commerce (0.2%)           
CTRIP.COM International ADR (c)   33,200      1,694,860
        
Power Conversion/Supply Equipment (0.1%)
Harbin Power Equipment Co. Ltd. (c)   554,000      660,799
        
Real Estate (0.0%)           
Beijing North Star Co. Ltd. (c)   922,000      206,968
        
Semiconductors (0.1%)           
ASM Pacific Technology Ltd. (c)   137,000      668,975
        
Telephone Communications (0.0%)       
SmarTone Telecommunications Holdings Ltd. (c)   364,500      362,472
        
Transportation (0.0%)           
Orient Overseas International (c)   42,900      155,520
        
           5,339,498
        
DENMARK (0.5%)           
Banking (0.0%)           
Roskilde Bank (c)   1,330      259,770
        
Brewery (0.0%)           
Royal Unibrew AS (c)   2,617      290,579
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
DENMARK (continued)           
Building & Construction (0.2%)       
Sjaelso Gruppen AS (c)   4,383    $ 1,465,504
        
Financial Services (0.1%)           
Simcorp AS (c)   5,675      926,786
        
Medical Products (0.1%)           
ALK-ABELLO AS (b) (c)   5,530      755,095
        
Transportation & Services (0.1%)       
Torm D/S (c)   15,719      748,099
        
           4,445,833
        
FINLAND (0.2%)           
Machinery & Equipment (0.0%)       
Ramirent Oyj (c)   4,308      170,346
        
Steel (0.1%)           
Rautaruukki Oyj (c)   46,734      1,406,973
        
Telecommunication Equipment (0.1%)       
Elcoteq Network Corp. (c)   30,054      604,528
        
           2,181,847
        
FRANCE (0.8%)           
Agricultural Operations (0.0%)       
Ffr Provimi (c)   4,786      158,353
        
Building—Residential/Commercial (0.1%)
Kaufman & Broad S.A. (c)   13,754      747,796
        
Computer Services (0.1%)           
GFI Informatique (c)   19,125      147,969
Groupe Steria SCA (c)   10,338      544,456
        
           692,425
        
Electrical Equipment (0.1%)           
Nexans SA (c)   9,710      689,938
        
Leisure (0.0%)           
Trigano SA (c)   6,240      330,983
        
Metals (0.1%)           
CFF Recycling (c)   23,431      853,794
        
Pharmaceuticals (0.1%)           
Flamel Technologies SA ADR (b) (c)   34,480      636,846
        
Publishing (0.0%)           
Spir Communication (c)   1,114      182,457
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
FRANCE (continued)           
Real Estate (0.2%)           
Nexity (c)   19,771    $ 1,146,743
Pierre & Vacances (c)   4,178      457,687
        
           1,604,430
        
Software (0.1%)           
Cie Generale de Geophysique SA (b) (c)   9,726      1,668,528
        
           7,565,550
        
GERMANY (0.6%)           
Metal Processors & Fabrication (0.3%)       
Norddeutsche Affinerie AG (c)   65,136      1,578,270
        
Metals (0.1%)           
Salzgitter AG (c)   12,865      1,079,845
        
Software (0.0%)           
Software AG (c)   5,231      272,760
        
Telecommunications (0.0%)           
Telegate AG (c)   16,691      312,473
        
Television (0.1%)           
ProsiebenSAT.1 Media AG (c)   53,087      1,324,911
        
Travel & Entertainment (0.0%)           
Viad Corp. (c)   3,800      118,940
        
Wire & Cable Products (0.1%)       
Encore Wire Corp. (b)   17,400      625,356
        
           5,312,555
        
GREECE (0.2%)           
Entertainment (0.2%)           
Intralot SA (c)   57,623      1,537,055
        
HONG KONG (0.6%)           
Banking (0.0%)           
HKR International (c)   544,000      270,274
        
Diversified Operations (0.0%)       
Tianjin Development Holdings Ltd. (c)   656,000      404,257
        
Electronics (0.2%)           
VTech Holdings Ltd. (c)   331,000      1,724,595
        
Financial Services (0.0%)           
Guoco Group Ltd. (c)   14,000      165,319
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
HONG KONG (continued)           
Hotels, Restaurants & Leisure (0.0%)       
Hong Kong & Shanghai
Hotels (c)		   323,500    $ 358,414
        
Oil & Gas Exploration & Production (0.1%)
Cnpc Hong Kong Ltd. (c)   1,560,000      883,583
        
Public Thoroughfares (0.0%)       
Anhui Expressway Co. Ltd. (c)   524,000      391,905
        
Real Estate (0.3%)           
Chinese Estates Ltd. (c)   680,000      734,866
Hang Lung Group Ltd. (c)   317,000      686,200
Wheelock & Co. Ltd. (c)   125,000      209,985
        
           1,631,051
        
           5,829,398
        
IRELAND (0.4%)           
Beverages (0.2%)           
C&C Group PLC (c)   202,447      1,758,051
        
Building & Construction (0.1%)       
McInerney Holdings PLC (c)   53,622      764,124
        
Medical Products (0.1%)           
Icon PLC ADR (b) (c)   15,300      846,090
        
           3,368,265
        
ITALY (0.4%)           
Building Materials (0.0%)           
Cementir (c)   35,349      260,368
        
Clothing (0.2%)           
Benetton Group Spa (c)   111,006      1,660,044
        
Electric Products (0.0%)           
Saes Getters (c)   9,007      254,854
        
Electric Products-Miscellaneous (0.0%)       
SAES Getters SPA (c)   11,606      263,060
        
Food & Beverage (0.1%)           
Cremonini SPA (c)   248,509      666,089
        
Machinery (0.1%)           
Biesse SPA (c)   45,955      657,762
        
Software (0.0%)           
Esprinet SPA (c)   9,203      170,600
        
           3,932,777
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (5.6%)           
Auto & Auto Parts (0.5%)           
Keihin Corp. (c)   51,900    $ 1,114,661
Nissan Diesel Motor Co. Ltd. (c)   386,000      1,965,307
Nissin Kogyo Co. Ltd. (c)   95,600      1,763,160
        
           4,843,128
        
Banks (0.1%)           
Keiyo Bank Ltd. (c)   67,000      378,582
Shinki Co. Ltd. (c)   71,900      442,100
        
           820,682
        
Beverages (0.1%)           
Oenon Holdings, Inc. (c)   208,000      810,087
        
Building & Construction (0.1%)       
Bunka Shutter Co. Ltd. (c)   26,000      176,216
Sumitomo Osaka Cement Co. Ltd. (c)   98,000      301,822
        
           478,038
        
Business Services (0.0%)           
Secom Techno Service Co. Ltd. (c)   3,500      161,671
        
Chemicals (0.2%)           
Mec Co. Ltd. (c)   6,900      100,145
Nippon Synthetic Chemical Industry Co. (c)   246,000      984,946
Tohcello Co. Ltd. (c)   38,000      462,725
        
           1,547,816
        
Cosmetics (0.0%)           
ADERANS Co. Ltd. (c)   10,900      294,125
        
Electrical & Electronic (0.9%)           
Japan Electronic Materials
Corp. (c)		   20,200      543,919
Kenwood Corp. (c)   596,000      1,115,226
KOA Corp. (c)   77,100      1,061,253
Micronics Japan Co., Ltd (c)   16,400      426,807
Nippon Signal (c)   91,000      871,391
Osaki Electric Co. Ltd. (c)   35,000      365,021
Shibaura Mechatronics Corp. (c)   16,000      135,445
SHINKAWA Ltd. (c)   12,500      326,452
Shinko Electric Industries Co. Ltd. (c)   32,100      931,345
Star Micronics (c)   92,000      1,863,966
UNIDEN Corp. (c)   51,000      566,276
        
           8,207,101
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Engineering (0.2%)           
Kandenko Co. Ltd (c)   113,000    $ 840,159
Shinko Plantech Ltd. (c)   155,000      1,227,102
        
           2,067,261
        
Entertainment Software (0.1%)           
Capcom Co. Ltd. (c)   78,500      941,800
        
Financial Investments (0.0%)           
UFJ Central Leasing (c)   700      35,288
        
Food (0.0%)           
Toyo Suisan Kaisha Ltd. (c)   17,000      266,358
        
Food Products (0.0%)           
Royal Co. (c)   16,000      248,152
        
Gambling (0.0%)           
Mars Engineering Corp. (c)   10,800      344,687
        
Internet (0.0%)           
eAccess Ltd. (c)   351      230,048
        
Machinery (0.4%)           
CKD Corp. (c)   116,800      1,815,210
Nippon Thompson Co. Ltd. (c)   35,000      411,162
Toshiba Machine Co. Ltd. (c)   145,000      1,643,535
        
           3,869,907
        
Machinery & Equipment (0.1%)       
Daihen (Metals) (c)   103,000      518,981
        
Manufacturing (0.1%)           
Fuji Heavy Industries Ltd. (c)   28,000      163,996
Gunze Ltd. (c)   177,000      1,055,119
        
           1,219,115
        
Medical Instruments (0.3%)           
Nihon Kohden Corp. (c)   85,000      1,395,248
Nipro Corp. (c)   70,000      1,256,524
        
           2,651,772
        
Metal Fabricate/Hardware (0.1%)       
Godo Steel (Metals) (c)   117,000      700,436
        
Metal Processors & Fabrication (0.1%)       
Kitz Corp. (c)   79,000      599,816
        
Metals (0.5%)           
Chuo Denki Kogyo Co. Ltd. (c)   21,000      72,804
Osaka Steel Co. Ltd. (c)   68,000      1,243,976
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Metals (continued)           
Pacific Metals Co. Ltd. (c)   193,000    $ 1,288,540
Yamato Kogyo (c)   82,900      1,854,787
        
           4,460,107
        
Motion Pictures & Services (0.0%)       
Toei Animation Co. Ltd. (c)   3,700      220,165
        
Pharmaceuticals (0.4%)           
Eiken Chemical Co. Ltd. (c)   84,000      981,426
Kaken Pharmaceutical (c)   45,000      337,816
Rohto Pharmaceutical Co. Ltd. (c)   78,000      819,071
Santen Pharmaceutical Co. Ltd. (c)   55,200      1,312,647
        
           3,450,960
        
Radio Broadcasting (0.1%)           
Jsat Corp. (c)   191      553,021
        
Real Estate (0.2%)           
Creed Corp. (c)   122      483,221
Tokyu Livable, Inc. (c)   19,700      1,261,490
        
           1,744,711
        
Real Estate Management & Development (0.1%)
Daibiru Corp. (c)   65,900      731,882
        
Retail (0.3%)
Hankyu Department Stores, Inc. (c)   174,000      1,350,161
Kojima Co. Ltd. (c)   23,800      322,374
Okuwa Co. Ltd. (c)   47,000      603,695
Parco Co. Ltd. (c)   75,300      770,103
        
           3,046,333
        
Software (0.2%)
Cac Corp. (c)   32,800      371,914
Daiwabo Information System Co. Ltd. (c)   18,000      289,542
DTS Corp. (c)   8,700      321,992
Nippon System Development Co. Ltd. (c)   20,000      695,302
Simplex Technology, Inc. (c)   380      239,025
        
           1,917,775
        
Technology (0.0%)
Yen Tarmon Co. Ltd. (c)   26,300      439,706
        

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Telecommunications (0.2%)
Hitachi Kokusai Electric Co. Ltd. (c)   130,000    $ 1,485,414
New Japan Radio Co. Ltd. (c)   71,000      491,463
        
           1,976,877
        
Transportation (0.1%)
Yusen Air & Sea Service Co. (c)   22,200      524,097
        
Utilities (0.1%)
Okinawa Electric Power (c)   9,600      573,601
        
Wire & Cable Products (0.1%)           
Fujikura Ltd. (c)   114,000      1,258,662
        
           51,754,166
        
MEXICO (0.7%)
Airports Development (0.3%)           
Grupo Aeroportuario Del Pacifico SA de CV ADR (c)   90,832      2,892,999
        
Construction (0.4%)
Desarrolladora Homex SA de CV ADR (b) (c)   96,700      3,172,727
        
           6,065,726
        
NETHERLANDS (0.7%)
Business Services (0.2%)
USG People NV (c)   26,906      2,058,402
        
Computer Software (0.0%)
Unit 4 Agresso NV (b) (c)   9,005      181,405
        
Engineering Services (0.1%)
Arcadis NV (c)   12,382      585,706
        
Insurance (0.2%)
Ing Groep NV (c)   46,261      1,815,886
        
Packaging (0.0%)
Buhrmann NV (c)   25,003      362,456
        
Pharmaceuticals (0.0%)
OPG Groep NV (c)   3,764      327,534
        
Real Estate Investment Trust (0.1%)
Vastned Retail   6,352      515,848
        
Transportation (0.1%)
Smit Internationale NV (c)   6,770      473,963
        
           6,321,200
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
NEW ZEALAND (0.0%)           
Building Materials (0.0%)           
Fletcher Building Ltd. (c)   64,550    $ 359,708
        
NORWAY (0.7%)           
Banking & Finance (0.2%)           
Abg Sundal Collier ASA (c)   237,970      361,704
Aktiv Kapital ASA (c)   8,900      155,800
Sparebanken Nord-Norge (c)   17,640      391,255
Sparebanken Rogaland (c)   15,342      443,787
        
           1,352,546
        
Computer Systems (0.0%)           
Visma ASA (c)   8,909      193,294
        
Construction (0.3%)           
Aker Yards ASA (c)   24,740      1,739,461
Veidekke ASA (c)   12,800      425,385
        
           2,164,846
        
Finance (0.1%)           
Acta Holding ASA (c)   410,020      1,299,148
        
Fisheries (0.1%)           
Leroy Seafood Group ASA (c)   29,965      568,452
        
Oil—Field Services (0.0%)           
Tgs Nopec Geophysical Company ASA (b) (c)   12,612      223,594
        
Retail (0.0%)           
Expert ASA (c)   19,200      262,488
        
Transportation (0.0%)           
Jinhui Shipping & Transportation Ltd. (c)   83,073      244,330
        
           6,308,698
        
PORTUGAL (0.0%)           
Building & Construction (0.0%)           
SEMPA-Sociedade de Investimento e Gestao, SGPS (c)   23,915      252,326
        
Food Distributors (0.0%)           
Jeronimo Martins SA (c)   9,631      164,503
        
           416,829
        
SINGAPORE (0.3%)           
Computer Hardware Manufacturing (0.0%)
MFS Technology Ltd. (c)   270,000      194,661
        

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SINGAPORE (continued)           
Diversified Products (0.0%)           
First Engineering Ltd. (c)   173,000    $ 94,198
        
Food Distributors (0.0%)           
Pacific Andes Holdings Ltd. (c)   968,000      449,612
        
Machinery (0.2%)           
MMI Holding Ltd. (c)   1,506,000      680,923
        
Oil & Gas (0.0%)           
Singapore Petroleum Co. Ltd. (c)   104,000      332,590
        
Real Estate (0.1%)           
Keppel Land Ltd. (c)   130,000      333,074
Sgd the Ascott Group Ltd. (c)   311,000      203,069
        
           536,143
        
Research & Development (0.0%)       
Sembcorp Industries Ltd. (c)   84,340      172,929
        
Services (0.0%)           
Singapore Airport Terminal Services Ltd. (c)   172,000      231,983
        
Transportation (0.0%)           
Ezra Holdings Ltd. (c)   259,200      362,864
        
           3,055,903
        
SOUTH KOREA (0.1%)           
RETAIL (0.1%)           
Gmarket, Inc. ADR (b) (c)   66,802      1,026,747
        
SPAIN (0.0%)           
Airlines (0.0%)           
Iberia Lineas Aereas de Espana SA (c)   63,688      164,290
        
SWEDEN (1.0%)           
Building & Construction (0.2%)       
NCC (c)   76,236      1,843,327
        
Building-Heavy Construction (0.2%)       
JM AB (c)   115,876      1,839,757
        
Electronic Equipment (0.0%)           
Gunnebo AB (c)   23,200      257,632
        
Finance Services (0.2%)           
D. Carnegie & Co. AB (c)   85,193      1,559,652
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SWEDEN (continued)           
Home Furnishing (0.2%)           
Nobia AB (c)   44,289    $ 1,439,015
        
Real Estate (0.2%)           
Kungsleden AB (c)   162,396      1,903,820
        
Steel (0.0%)           
SSAB Svenskt Stal AB (c)   13,074      260,286
        
           9,103,489
        
SWITZERLAND (0.5%)           
Appliances (0.1%)           
AFG Arbonia-Forster Holding AG (c)   1,841      583,879
        
Banking (0.0%)           
Banque Cantonale Vaudois (c)   1,110      379,791
        
Building & Construction (0.0%)           
Sika Finanz AG (b) (c)   407      451,870
        
Foreign Banking (0.1%)           
Vontobel Holding AG (c)   21,070      737,775
        
Manufacturing (0.1%)           
Georg Fischer AG (b) (c)   2,384      1,021,360
        
Retail (0.2%)           
Charles Voegele Holding
AG (b) (c)		   19,267      1,393,219
        
           4,567,894
        
UNITED KINGDOM (2.8%)           
Auto & Auto Parts (0.1%)           
European Motor Holdings PLC (c)   53,558      445,282
Pendragon PLC (c)   33,731      372,254
        
           817,536
        
Automotive (0.0%)           
Lookers PLC (c)   24,619      359,159
        
Banking & Finance (0.2%)           
Paragon Group (c)   147,384      1,780,975
        
Building & Construction (0.5%)       
Babcock International Group PLC (c)   150,600      918,258
Kier Group PLC (c)   48,568      1,351,438
SIG PLC (c)   74,229      1,206,122
        
           3,475,818
        

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED KINGDOM (continued)       
Chemicals (0.0%)           
Croda International PLC (c)   47,999    $ 384,956
        
Commercial Services (0.1%)           
Aggreko PLC (c)   122,715      650,849
        
Construction (0.0%)           
Morgan Sindall PLC (c)   16,584      349,868
        
Consulting Services (0.1%)           
Atkins (WS) PLC (c)   16,625      255,806
Savills PLC (c)   49,866      536,509
        
           792,315
        
Consumer Products (0.1%)           
Body Shop International PLC (c)   51,265      283,895
Mcbride PLC (c)   233,482      766,301
        
           1,050,196
        
Electrical & Electronic (0.0%)           
TT Electronics PLC (c)   62,771      214,719
        
Food Diversified (0.2%)           
Dairy Crest Group PLC (c)   200,398      1,862,429
Devro PLC (c)   173,394      374,950
        
           2,237,379
        
Insurance (0.3%)           
Amlin PLC (c)   337,639      1,471,615
Brit Insurance Holdings PLC (c)   252,658      1,228,716
Hiscox PLC (c)   73,074      281,657
        
           2,981,988
        
Machinery (0.0%)           
Spirax-Sarco Engineering PLC (c)   18,331      308,376
        
Medical—Information Systems (0.0%)       
Isoft Group (c)   96,284      137,137
        
Metals (0.2%)           
Aquarius Platinum Ltd. (c)   114,871      1,709,774
        
Pipelines (0.1%)           
BPS Hunting Ord (c)   83,026      596,295
        
Printing (0.2%)           
DE LA Rue PLC (c)   179,704      1,812,696
        
Real Estate (0.0%)           
BPS Dtz Holdings PLC (c)   35,542      446,215
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED KINGDOM (continued)       
Retail (0.5%)           
House of Fraser PLC (c)   150,899    $ 371,088
N Brown Group PLC (c)   81,903      323,526
Restaurant Group plc (c)   82,023      307,206
Wetherspoon PLC (c)   177,919      1,410,922
Woolworths Group PLC (c)   2,204,305      1,283,138
        
           3,695,880
        
Storage (0.1%)           
Wincanton PLC (c)   132,601      762,904
        
Travel Services (0.0%)           
First Choice Holidays PLC (c)   96,412      407,144
        
Wire & Cable Products (0.1%)       
Dem Leoni AG (c)   18,008      678,200
        
           25,650,379
        
UNITED STATES (79.5%)           
Advertising (0.6%)           
Arbitron, Inc.   37,380      1,432,775
Getty Images, Inc. (b)   44,200      2,807,142
Harte-Hanks, Inc.   43,800      1,123,032
        
           5,362,949
        
Aerospace & Defense (1.3%)           
AAR Corp. (b)   60,200      1,338,246
Alliant Techsystems, Inc. (b)   5,629      429,774
Argon St., Inc. (b)   34,300      913,409
Armor Holdings, Inc. (b)   5,145      282,100
Curtiss-Wright Corp.   34,200      1,056,096
DRS Technologies, Inc.   45,884      2,236,846
Hexcel Corp. (b)   49,100      771,361
Kaman Corp.   32,000      582,400
Mantech International Corp., Class A (b)   39,900      1,231,314
Moog, Inc., Class A (b)   44,060      1,507,733
MTC Technologies, Inc. (b)   40,000      945,200
Teledyne Technologies, Inc. (b)   3,000      98,280
Triumph Group, Inc. (b)   9,300      446,400
United Industrial Corp.   10,124      458,111
        
           12,297,270
        
Agriculture (0.2%)           
The Andersons, Inc.   23,800      990,318
UAP Holding Corp.   28,200      615,042
        
           1,605,360
        

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Airline Services (0.0%)           
Frontier Airlines Holdings, Inc. (b)   10,624    $ 76,599
        
Airlines (0.1%)           
Alaska Air Group, Inc. (b)   9,690      381,980
Mesa Air Group (b)   30,189      297,362
Republic Airways Holdings, Inc. (b)   25,500      434,009
        
           1,113,351
        
Aluminum (0.1%)           
Century Aluminum Co. (b)   38,600      1,377,634
        
Apparel (0.3%)           
Guess?, Inc. (b)   15,201      634,642
Perry Ellis International (b)   21,518      544,621
Phillips-Van Heusen Corp.   46,800      1,785,887
Steven Madden Ltd.   5,100      151,062
        
           3,116,212
        
Auction House (0.6%)           
Ritchie Brothers Auctioneers, Inc.   79,400      4,222,492
Sotheby’s Holdings, Inc. (b)   51,700      1,357,125
        
           5,579,617
        
Auto & Auto Parts (2.1%)           
A.S.V., Inc. (b)   118,900      2,739,456
Accuride Corp. (b)   29,242      364,648
ArvinMeritor, Inc.   106,138      1,824,512
Asbury Automotive Group (b)   8,900      186,366
Clarcor, Inc.   105,200      3,133,908
Directed Electronics, Inc. (b)   83,980      1,101,818
Gentex Corp.   83,000      1,162,000
Group 1 Automotive, Inc.   41,622      2,344,983
LKQ Corp. (b)   125,556      2,385,564
O’Reilly Automotive, Inc. (b)   102,880      3,208,827
Oshkosh Truck Corp.   10,800      513,216
Rush Enterprises Inc., Class A (b)   19,400      352,498
Sonic Automotive, Inc.   17,100      379,278
        
           19,697,074
        
Banking (2.1%)           
Accredited Home Lenders (b)   1,100      52,591
Alabama National Bankcorp   10,400      708,760
Amcore Financial, Inc.   20,500      600,855
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Banking (continued)           
BancFirst Corp.   5,398    $ 241,561
BOK Financial Corp.   16,500      819,555
Boston Private Financial Holdings, Inc.   13,000      362,700
Capital Crossing Bank (b)   957      23,542
Center Financial Corp.   8,245      194,912
Chittenden Corp.   11,000      284,350
Citizens Banking Corp.   3,600      87,876
City Bank Lynnwood   1,000      46,660
City Holding Co.   7,096      256,449
Columbia Banking System, Inc.   1,000      37,380
Community Bancorp (b)   1,600      49,728
Community Trust Bancorp, Inc.   715      24,975
Corus Bankshares, Inc.   83,982      2,198,648
Dime Community Bancshares   63,350      859,660
First Citizens BancShares, Inc.   4,550      912,275
First Commonwealth Financial Corp.   23,200      294,640
First Community Bancorp   1,400      82,712
First Indiana Corp.   474      12,338
First Niagara Financial Group, Inc.   13,000      182,260
First Regional Bancorp (b)   1,438      126,544
Firstbank Corp.   14,900      138,570
FirstFed Financial Corp. (b)   23,637      1,363,145
Franklin Bank Corp. (b)   31,900      644,061
Fremont General Corp.   41,800      775,808
Hancock Holding Co.   1,682      94,192
Hanmi Financial Corp.   46,250      899,100
Independent Bank Corp.   2,730      71,799
Intervest Bancshares Corp. (b)   5,944      240,732
ITLA Capital Corp.   1,883      99,008
MAF Bancorp, Inc.   11,200      479,808
Mainsource Financial Group, Inc.   3,700      64,491
Nara Bankcorp, Inc.   1,810      33,938
National Penn Bancshares, Inc.   45,005      893,799
New Century Financial Corp.   8,650      395,738
Old Second Bancorp, Inc.   3,863      119,753
Pacific Capital Bancorp   12,327      383,616
Preferred Bank   652      34,954
Provident Bankshares Corp.   19,900      724,161
Republic Bancorp, Inc.   13,800      170,982
Sterling Financial Corp.   19,000      416,100
Suffolk Bancorp   1,800      58,950

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Banking (continued)       
Taylor Cap Group, Inc.   1,739    $ 70,969
Texas Capital Bancshares, Inc. (b)   9,000      209,700
TrustCo Bank Corp.   25,400      279,908
UMB Financial   22,400      746,816
Union Bankshares Corp.   14,179      611,682
W Holding Co., Inc.   10,100      67,165
Wilmington Trust Corp.   24,329      1,026,197
        
           19,576,113
        
Broadcasting (0.2%)           
CKX, Inc. (b)   99,600      1,351,572
Sinclair Broadcast Group, Inc., Class A   61,292      524,660
World Wrestling Federation Entertainment, Inc.   14,500      244,905
        
           2,121,137
        
Building & Construction (2.1%)           
Aaon, Inc.   2,100      53,886
Apogee Enterprises   5,000      73,500
Brookfield Homes Corp.   43,035      1,418,003
Champion Enterprises (b)   7,100      78,384
Chicago Bridge & Iron Co.   116,800      2,820,719
Granite Construction, Inc.   23,600      1,068,372
Lennox International, Inc.   38,252      1,012,913
Louisiana-Pacific Corp.   68,457      1,499,208
LSI Industries, Inc.   13,200      224,268
Martin Marietta Materials   3,400      309,910
Meritage Homes Corp. (b)   29,100      1,374,975
NCI Building Systems, Inc. (b)   14,400      765,648
NVR, Inc. (b)   2,752      1,351,920
Orleans Homebuilders   6,100      99,125
Simpson Manufacturing Co., Inc.   64,900      2,339,645
U.S. Concrete Inc. (b)   104,032      1,149,554
Universal Forest Products, Inc.   21,934      1,375,920
USG Corp. (b)   34,946      2,548,612
Williams Scotsman International, Inc. (b)   20,340      444,226
        
           20,008,788
        
Building Products (0.2%)           
Eagle Materials, Inc.   30,517      1,449,558
PGT, Inc. (b)   36,600      578,280
        
           2,027,838
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Business Services (0.1%)           
FTD Group, Inc. (b)   4,072    $ 54,972
Herman Miller, Inc.   13,600      350,472
ICT Group (b)   1,385      33,974
KFORCE.COM, Inc. (b)   10,067      155,938
Modis Professional Services, Inc. (b)   8,200      123,492
Rewards Network, Inc. (b)   11,196      91,471
Standard Parking Corp (b)   2,302      62,338
        
           872,657
        
Chemicals (0.7%)           
A. Schulman, Inc.   19,600      448,644
Balchem Corp.   1,950      43,875
Celanese Corp.   35,612      727,197
FMC Corp.   26,005      1,674,462
H. B. Fuller Co.   2,800      121,996
Hercules, Inc. (b)   9,854      150,372
Olin Corp.   52,223      936,358
Pioneer Cos., Inc. (b)   24,530      669,178
Sensient Technologies Corp.   26,009      543,848
Spartech Corp.   13,901      314,163
Westlake Chemical Corp.   38,641      1,151,502
        
           6,781,595
        
Coal (0.2%)           
Foundation Coal Holdings, Inc.   8,100      380,133
James River Coal Co. (b)   28,100      744,369
Massey Energy Co.   17,559      632,124
        
           1,756,626
        
Commercial Services (1.4%)           
Cbiz, Inc. (b)   36,200      268,242
Coinstar, Inc. (b)   46,000      1,101,240
Costar Group, Inc. (b)   117,550      7,033,016
Deluxe Corp.   20,500      358,340
DynCorp International, Inc. (b)   30,100      312,438
Macquarie Infrastructure Co. Trust   50,029      1,380,300
Plexus Corp. (b)   70,850      2,423,779
        
           12,877,355
        
Communications (0.2%)           
CenturyTel, Inc.   19,954      741,292
R.H. Donnelley Corp.   12,306      665,385
        
           1,406,677
        

 

11

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Computer Service (1.9%)           
Acxiom Corp.   69,279    $ 1,731,975
Agilysys, Inc.   59,697      1,074,546
Cerner Corp. (b)   72,600      2,694,186
Corel Corp. (b)   106,630      1,285,958
IHS, Inc. (b)   115,014      3,407,864
Lasercard Corp. (b)   24,276      317,773
Micros Systems, Inc. (b)   43,320      1,892,218
MTS Systems   30,376      1,200,156
NCI, Inc. (b)   49,800      652,380
SI International, Inc. (b)   21,500      659,190
Silicon Storage Technology, Inc. (b)   86,800      352,408
SRA Internatinal, Inc.,
Class A (b)		   23,100      615,153
Sykes Enterprises, Inc. (b)   67,649      1,093,208
Trident Microsystems, Inc. (b)   20,800      394,784
        
           17,371,799
        
Computer Software (2.6%)           
Actuate Corp. (b)   17,766      71,775
American Reprographics Co. (b)   2,476      89,755
Aspen Technologies, Inc. (b)   89,500      1,174,240
Avid Technology, Inc. (b)   35,400      1,179,882
Blabkbaud, Inc.   231,400      5,252,779
Docucorp International, Inc. (b)   4,978      37,186
EPIQ Systems, Inc. (b)   73,620      1,225,037
Lawson Software, Inc. (b)   43,400      290,780
MapInfo Corp. (b)   10,800      140,940
MicroStrategy, Inc. (b)   34,421      3,356,736
Neoware Systems, Inc. (b)   24,400      299,876
NETGEAR, Inc. (b)   29,500      638,675
Quest Software, Inc. (b)   95,600      1,342,224
Scientific Games Corp. (b)   105,700      3,765,034
SPSS Inc. (b)   8,975      288,457
Sybase, Inc. (b)   46,985      911,509
Tradestation Group, Inc. (b)   55,130      698,497
Vignette Corp. (b)   41,300      602,154
Visicu, Inc. (b)   144,006      2,541,706
Wind River Systems, Inc. (b)   61,500      547,350
        
           24,454,592
        
Computer Systems (0.0%)           
Brocade Communications Systems, Inc. (b)   5,401      33,162
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Construction & Housing (0.1%)           
Emcor Group, Inc. (b)   18,160    $ 883,847
        
Consulting Services (0.7%)           
Cra International, Inc. (b)   2,000      90,280
LECG Corp. (b)   68,700      1,268,889
Sourcecorp, Inc. (b)   5,100      126,429
The Advisory Board Co. (b)   87,900      4,227,111
Watson Wyatt Worldwide, Inc.   11,400      400,596
        
           6,113,305
        
Consumer Goods & Services (1.3%)       
AptarGroup, Inc.   72,000      3,571,920
Church & Dwight Co., Inc.   111,700      4,068,113
Jarden Corp. (b)   19,750      601,388
Kellwood Co.   39,069      1,143,550
Matthews International Corp., Class A   65,900      2,271,573
        
           11,656,544
        
Consumer Products (0.1%)           
Central Garden & Pet Co. (b)   30,400      1,308,720
        
Containers (0.0%)           
Silgan Holdings, Inc.   12,149      449,634
        
Cosmetics (0.4%)           
Alberto-Culver Co., Class B   50,400      2,455,488
Elizabeth Arden, Inc. (b)   46,500      831,420
Parlux Fragrances, Inc. (b)   43,600      422,484
        
           3,709,392
        
Data Processing & Reproduction (0.8%)
Dun & Bradstreet Corp. (b)   1,454      101,315
Fair, Issac and Co., Inc.   27,875      1,012,141
Global Payment, Inc.   59,682      2,897,561
infoUSA, Inc.   3,236      33,363
Komag, Inc. (b)   71,597      3,306,350
TheStreet.com, Inc.   6,459      82,804
        
           7,433,534
        
Diagnostic Equipment (0.2%)           
Biosite Diagnostics, Inc. (b)   28,949      1,321,811
Orasure Technologies, Inc. (b)   39,300      374,136
        
           1,695,947
        
Distribution (0.7%)           
Bell Microproducts, Inc. (b)   42,400      229,808
BlueLinx Holdings, Inc.   41,301      538,152

 

12

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Distribution (continued)           
Building Materials Holding Corp.   73,359    $ 2,044,515
Pool Corp.   75,200      3,280,976
        
           6,093,451
        
Diversified Manufacturing Operations (0.4%)
A.O. Smith Corp.   23,294      1,079,910
Barnes Group, Inc.   48,100      959,595
Teleflex, Inc.   28,343      1,531,089
Trinity Industries   6,200      250,480
        
           3,821,074
        
Education (1.4%)           
Blackboard, Inc. (b)   166,900      4,833,424
ITT Educational Services,
Inc. (b)		   86,500      5,692,565
Skillsoft PLC (b)   407,600      2,494,512
        
           13,020,501
        
Electronic Components (0.5%)           
Ampex Corp. (b)   1,959      22,842
Amphenol Corp., Class A   6,300      352,548
Ansoft Corp. (b)   13,274      271,852
Arrow Electronics, Inc. (b)   59,593      1,918,894
Avnet, Inc. (b)   20,400      408,408
AVX Corp.   33,045      521,781
Greatbatch, Inc. (b)   12,100      285,560
Methode Electronics   11,500      120,865
Zoran Corp. (b)   19,344      470,833
        
           4,373,583
        
Electronics (1.1%)           
American Science & Engineering, Inc. (b)   4,117      238,457
Analogic Corp.   1,300      60,593
Bel Fuse, Inc.   10,300      337,943
Brady Corp., Class A   68,400      2,519,856
CH Energy Group, Inc.   1,700      81,600
Conexant Systems, Inc. (b)   193,100      482,750
Cree Research, Inc. (b)   51,300      1,218,888
EMS Technologies (b)   2,900      52,113
Kulicke & Soffa Industries, Inc. (b)   22,297      165,221
Lxys Corp. (b)   13,700      131,520
Mettler Toledo International, Inc. (b)   16,620      1,006,673
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Electronics (continued)           
MKS Instruments, Inc. (b)   41,597    $ 836,932
Molecular Devices Corp. (b)   15,754      481,442
Planar Systems, Inc. (b)   31,480      379,019
Rogers Corp. (b)   3,500      197,190
Silicon Laboratories (b)   14,700      516,705
Teradyne, Inc. (b)   27,540      383,632
Triquint Semiconductor, Inc. (b)   87,800      391,588
WESCO International, Inc. (b)   13,303      917,907
Zygo Corp. (b)   18,721      306,837
        
           10,706,866
        
Energy (0.3%)           
Covanta Holding Corp. (b)   13,000      229,450
Headwaters, Inc. (b)   19,000      485,640
KFx, Inc. (b)   39,920      609,978
Sierra Pacific Resources (b)   64,000      895,999
Vectren Corp.   6,087      165,871
        
           2,386,938
        
Engineering Services (0.3%)           
McDermott International, Inc. (b)   42,750      1,943,843
Michael Baker Corp. (b)   30,600      664,020
        
           2,607,863
        
Entertainment (0.5%)           
LodgeNet Entertainment Corp. (b)   14,919      278,239
Marvel Entertainment, Inc. (b)   83,700      1,674,000
Multimedia Games, Inc. (b)   51,677      523,488
New Frontier Media, Inc. (b)   4,250      30,473
Speedway Motorsports, Inc.   23,700      894,438
Take-Two Interactive Software, Inc. (b)   158,810      1,692,914
        
           5,093,552
        
Environmental Services (0.4%)           
Stericycle, Inc. (b)   63,937      4,162,299
        
Financial (3.0%)           
Affiliated Managers Group, Inc. (b)   18,610      1,617,023
AmeriCredit Corp. (b)   62,130      1,734,670
Central Pacific Financial Corp.   22,400      866,880
Colonial Bancgroup, Inc.   48,700      1,250,616
Commerce Bancshares, Inc.   13,514      676,376
East-West Bancorp, Inc.   73,210      2,775,391

 

13

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Financial (continued)           
Financial Federal Corp.   147,750    $ 4,108,928
First Midwest Bancorp, Inc.   10,900      404,172
First State Bancorp   3,100      73,718
Greater Bay Bancorp   3,824      109,940
Greenhill & Co., Inc.   73,774      4,482,507
Investment Technology Group, Inc. (b)   9,400      478,084
Morningstar, Inc. (b)   91,800      3,807,864
OceanFirst Financial Corp.   3,500      77,770
Prosperity Bancshares, Inc.   40,000      1,315,600
Texas Regional Bancshares, Inc., Class A   31,430      1,191,826
TierOne, Corp.   1,800      60,786
UCBH Holdings, Inc.   30,800      509,432
United PanAm Financial Corp. (b)   22,630      687,952
Westamerica Bankcorp.   32,000      1,567,040
        
           27,796,575
        
Financial Services (2.5%)           
ASTA Funding, Inc.   8,200      307,090
Aventine Renewable Energy Holdings, Inc. (b)   33,660      1,309,374
Bank of Hawaii Corp.   36,471      1,808,962
Bankrate, Inc. (b)   31,370      1,184,531
Cadence Financial Corp.   48,300      1,075,641
City National Corp.   14,689      956,107
CompuCredit Corp. (b)   9,300      357,492
Corporate Executive Board Co.   32,500      3,256,499
Cullen/Frost Bankers, Inc.   7,409      424,536
Downey Financial Corp.   31,035      2,105,725
Euronet Worldwide, Inc. (b)   24,500      940,065
Factset Research Systems, Inc.   118,250      5,593,224
Federal Agricultural Mortgage Corp.   2,900      80,330
Ocwen Financial Corp. (b)   15,332      194,870
Protective Life Corp.   32,080      1,495,570
SWS Group, Inc.   19,661      474,223
Thomas Weisel Partners Group, Inc. (b)   57,570      1,094,406
Whitney Holding Corp.   2,445      86,480
World Acceptance (b)   4,381      155,613
WSFS Financial Corp.   800      49,160
        
           22,949,898
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Food & Beverage (1.1%)           
AFC Enterprises, Inc. (b)   138,350    $ 1,763,963
Chiquita Brands International, Inc.   33,454      460,996
Del Monte Foods Co.   157,257      1,765,996
Domino’s Pizza, Inc.   68,185      1,686,897
Hansen Natural Corp. (b)   677      128,880
J & J Snack Foods Corp.   1,097      36,278
Krispy Kreme Doughnuts, Inc. (b)   85,047      692,283
M & F Worldwide Corp. (b)   15,771      253,913
Mueller Water Products, Inc., Class A (b)   72,728      1,266,194
Peet’s Coffee & Tea, Inc. (b)   60,500      1,826,495
        
           9,881,895
        
Food Distributors, Supermarkets & Wholesalers (0.5%)
Seaboard Corp.   875      1,120,000
Spartan Stores, Inc.   13,332      195,047
Tootsie Roll Industries   34,642      1,009,121
United Natural Foods, Inc. (b)   47,600      1,571,753
Weis Markets, Inc.   10,300      424,360
Wild Oats Markets, Inc. (b)   15,779      309,268
        
           4,629,549
        
Forest Products (0.1%)           
Deltic Timber Corp.   22,000      1,240,140
        
Gaming (0.2%)           
Dover Downs Gaming and Entertainment   5,700      111,948
Monarch Casino & Resort (b)   2,685      75,502
Shuffle Master, Inc. (b)   52,000      1,704,560
        
           1,892,010
        
Healthcare (4.4%)           
American Retirement Corp. (b)   5,300      173,681
Amsurg Corp. (b)   185,316      4,215,939
Apria Healthcare Group, Inc. (b)   5,700      107,730
Charles River Laboratories International, Inc. (b)   26,000      956,800
Dendrite International, Inc. (b)   109,400      1,010,856
Haemonetics Corp. (b)   30,693      1,427,531
Healthways, Inc. (b)   84,800      4,463,871
Henry Schein, Inc. (b)   28,827      1,347,086
IDEXX Laboratories, Inc. (b)   68,222      5,125,518
Immucor, Inc. (b)   43,400      834,582

 

14

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Healthcare (continued)           
K-V Pharmaceutical Co. (b)   158,050    $ 2,949,213
Magellan Health Services, Inc. (b)   44,896      2,034,238
Mentor Corp.   78,900      3,432,150
Odyssey Healthcare, Inc. (b)   8,584      150,821
Pediatrix Medical Group, Inc. (b)   1,222      55,357
Respironics, Inc. (b)   70,048      2,397,043
Sierra Health Services, Inc. (b)   74,455      3,352,709
Sunrise Assisted Living, Inc. (b)   1,500      41,475
Techne Corp. (b)   68,805      3,503,551
Vertrue, Inc. (b)   41,893      1,802,656
WellCare Health Plans Inc. (b)   36,054      1,768,449
        
           41,151,256
        
Home Furnishings (0.5%)           
American Woodmark Corp.   5,400      189,216
Bassett Furniture Industries, Inc.   33,894      627,378
Select Comfort Corp. (b)   151,500      3,479,955
        
           4,296,549
        
Hospitals (0.1%)           
Kinetic Concept (b)   19,132      844,678
        
Hotels, Restaurants & Leisure (0.4%)       
Great Wolf Resorts, Inc. (b)   156,270      1,876,803
Interstate Hotels & Resorts, Inc. (b)   22,107      205,374
Isle of Capris Casino (b)   2,500      64,125
LaSalle Hotel Properties   25,200      1,166,760
Marcus Corp.   17,746      370,536
Six Flags, Inc. (b)   42,800      240,536
        
           3,924,134
        
Human Resources (0.2%)           
Hudson Highland Group, Inc. (b)   12,200      131,638
Labor Ready, Inc. (b)   8,534      193,295
Resources Connection, Inc. (b)   16,000      400,320
Spherion Corp. (b)   75,056      684,511
        
           1,409,764
        
Industrial Equipment (0.1%)           
Nordson Corp.   26,400      1,298,352
        
Information Technology (0.1%)           
Symbol Technologies, Inc.   46,000      496,340
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Insurance (1.6%)           
21st Century Insurance Group   6,000    $ 86,400
American Financial Group, Inc.   25,050      1,074,645
American Physicians Capital, Inc. (b)   5,600      294,504
Argonaut Group, Inc. (b)   7,300      219,292
Aspen Insurance Holdings Ltd.   91,260      2,125,445
Brown & Brown, Inc.   51,600      1,507,752
Conseco, Inc. (b)   5,355      123,701
EMC Insurance Group   3,984      114,580
Endurance Specialty
Holdings Ltd.		   20,000      640,000
FPIC Insurance Group, Inc. (b)   2,288      88,660
HCC Insurance Holdings, Inc.   30,150      887,616
Hilb, Rogal & Hamilton Co.   26,300      980,201
LandAmerica Financial
Group, Inc.		   42,014      2,714,104
Ohio Casualty Corp.   18,900      561,897
Safety Insurance Group, Inc.   24,516      1,165,736
Selective Insurance Group, Inc.   2,912      162,693
United Fire & Casualty Co.   17,200      518,236
Zenith National Insurance Corp.   43,637      1,731,080
        
           14,996,542
        
Internet Content (0.8%)           
Checkfree Corp. (b)   93,585      4,638,073
CNET Networks, Inc. (b)   172,849      1,379,335
Infospace, Inc. (b)   8,600      194,962
Internet Capital Group, Inc. (b)   11,000      99,000
Websense, Inc. (b)   74,900      1,538,446
        
           7,849,816
        
Internet Services (0.8%)           
ECOLLEGE.COM, Inc. (b)   5,700      120,498
Equinix, Inc. (b)   64,528      3,540,005
Interwoven, Inc. (b)   62,600      537,108
Online Resources & Commmunications Corp. (b)   9,200      95,128
RealNetworks, Inc. (b) (c) (b)   115,548      1,236,364
Tibco Software, Inc. (b)   85,140      600,237
Trizetto Group, Inc. (b)   51,302      758,757
United Online, Inc.   74,392      892,704
        
           7,780,801
        

 

15

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Investment Company (0.1%)           
Calamos Asset
Management, Inc.		   7,819    $ 226,673
Labranche & Co., Inc. (b)   46,200      559,482
        
           786,155
        
Leisure (1.1%)           
Gaylord Entertainment (b)   126,200      5,507,368
Steinway Musical Instruments, Inc. (b)   8,909      218,449
Sunterra Corp. (b)   16,784      171,868
Vail Resorts, Inc. (b)   74,840      2,776,564
WMS Industries, Inc. (b)   56,700      1,553,013
        
           10,227,262
        
Machinery (2.5%)           
Applied Industrial Technology, Inc.   71,533      1,738,967
Astec Industries, Inc. (b)   19,400      661,928
Bucyrus Internaional Inc., Class A   53,850      2,719,424
Cognex Corp.   39,900      1,038,597
Columbus McKinnon Corp. (b)   1,853      40,284
Commercial Metals Co.   34,100      876,370
Cummins Engine, Inc.   21,170      2,588,033
Dionex Corp. (b)   38,600      2,109,876
Flow International Corp. (b)   18,941      266,500
Intevac (b)   20,300      440,104
JLG Industries, Inc.   47,700      1,073,250
Joy Global, Inc.   51,950      2,706,076
Kennametal, Inc.   12,300      765,675
Middleby Corp. (b)   16,400      1,419,584
Mitcham Industries, Inc. (b)   13,096      167,236
Regal-Beloit Corp.   9,100      401,765
Roper Industries, Inc.   42,800      2,000,900
Wabtec Corp.   15,900      594,660
Zebra Technologies Corp. (b)   38,247      1,306,518
        
           22,915,747
        
Manufacturing (0.3%)           
Actuant Corp.   14,300      714,285
Acuity Brands, Inc.   13,296      517,347
Belden CDT, Inc.   23,200      766,760
Lone Star Technologies, Inc. (b)   20,195      1,090,934
        
           3,089,326
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Materials (0.3%)           
Ceradyne Inc. (b)   22,300    $ 1,103,627
Crane Co.   26,436      1,099,738
Mueller Industries, Inc.   15,610      515,598
        
           2,718,963
        
Medical Equipment & Supplies (1.1%)       
Alliance Imaging, Inc. (b)   19,474      124,634
Allscripts Healthcare Solutions, Inc. (b)   161,400      2,832,570
American Medical Systems Holdings, Inc. (b)   42,900      714,285
Candela Corp. (b)   44,901      712,130
Kyphon, Inc. (b)   68,300      2,619,988
STERIS Corp.   7,376      168,615
Wright Medical Group, Inc. (b)   40,100      839,293
Young Innovations, Inc.   60,500      2,131,415
        
           10,142,930
        
Medical Products (2.0%)           
Arrow International, Inc.   34,013      1,118,007
Bio-Rad Laboratories, Inc., Class A (b)   9,700      629,918
Cantel Medical Corp. (b)   1,937      27,583
Dade Behring Holdings, Inc.   39,509      1,645,155
Gen-Probe, Inc. (b)   43,270      2,335,715
Healthtronics, Inc. (b)   11,203      85,703
Hologic, Inc. (b)   22,800      1,125,408
ICU Medical, Inc. (b)   73,600      3,108,863
Impax Laboratories, Inc. (b)   23,600      147,500
Integra LifeSciences Holdings (b)   10,200      395,862
IntraLase Corp (b)   114,600      1,918,404
Nutraceutical International Corp. (b)   15,085      231,253
Owens & Minor, Inc.   25,700      735,020
Pain Therapeutics. Inc. (b)   29,196      243,787
PSS World Medical, Inc. (b)   149,426      2,637,369
Surmodics, Inc. (b)   10,638      384,138
Telik, Inc. (b)   22,800      376,200
Vital Signs, Inc.   2,743      135,861
West Pharmaceutical Services, Inc.   15,625      566,875
Zoll Medical Corp. (b)   11,886      389,385
        
           18,238,006
        

 

16

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Medical Systems (0.0%)           
Computer Programs & Systems, Inc.   7,600    $ 303,696
Tripath Imaging, Inc. (b)   15,000      99,300
        
           402,996
        
Metals (0.5%)           
Cleveland Cliffs, Inc.   25,900      2,053,611
Coeur d’Alene Mines Corp. (b)   118,800      571,428
Dynamic Materials, Corp.   36,300      1,224,399
Quanex Corp.   29,200      1,257,644
        
           5,107,082
        
Minerals (0.1%)           
AMCOL International   28,150      741,753
        
Mining (0.4%)           
Apex Silver Mines Ltd. (b)   34,800      523,740
Compass Minerals International, Inc.   84,000      2,095,800
Novagold Resources Inc. (b)   54,200      694,844
Royal Gold   28,200      784,524
        
           4,098,908
        
Motion Pictures & Services (0.0%)       
Dreamworks Animation SKG, Inc. (b)   7,830      179,307
        
Multimedia (0.0%)           
Media General, Inc.   5,600      234,584
        
Networking Products (0.2%)           
3Com Corp. (b)   383,600      1,964,032
        
Office Equipment & Supplies (0.6%)       
Acco Brands Corp. (b)   60,100      1,316,190
CompX International, Inc. (b)   2,866      51,301
Global Imaging Systems, Inc. (b) (b)   3,771      155,667
John H. Harland, Co.   45,099      1,961,807
Knoll, Inc.   22,220      407,959
Standard Register Co.   4,200      49,770
United Stationers, Inc. (b)   38,316      1,889,745
        
           5,832,439
        
Oil & Gas (5.8%)           
Aurora Oil and Gas Corp. (b)   11,641      46,564
Bill Barrett Corp. (b)   58,500      1,732,185
Carbo Ceramics, Inc.   53,350      2,621,086
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Oil & Gas (continued)           
Cimarex Energy Co.   42,748    $ 1,838,164
Encore Acquisition Co. (b)   120,450      3,231,674
Energen Corp.   64,090      2,461,697
Frontier Oil Corp.   100,420      3,253,608
Giant Industries, Inc. (b)   1,321      87,913
Grey Wolf, Inc. (b)   199,792      1,538,398
Helix Energy Solutions Group, Inc. (b)   120,400      4,859,343
Hydril Co. (b)   18,800      1,476,176
Maverick Tube Corp. (b)   10,100      638,219
National-Oilwell, Inc. (b)   46,452      2,941,341
New Jersey Resources Corp.   13,794      645,283
Newfield Exploration Co. (b)   68,100      3,332,814
Oceaneering International, Inc. (b)   108,200      4,960,969
Oil States International, Inc. (b)   26,800      918,704
Parker Drilling Co. (b)   19,800      142,164
Pioneer Drilling Co. (b)   23,700      365,928
Range Resources Corp.   81,250      2,209,188
Seacor Holdings, Inc. (b)   6,289      516,327
St. Mary Land & Exploration Co.   169,957      6,840,768
Swift Energy Co. (b)   40,387      1,733,814
Tesoro Petroleum Corp.   12,920      960,731
UGI Corp.   61,901      1,524,003
Unit Corp. (b)   59,800      3,402,022
W-H Energy Services, Inc. (b)   15,100      767,533
        
           55,046,616
        
Oil & Gas Exploration Services (1.5%)       
Bronco Drilling Co., Inc. (b)   17,790      371,633
Carrizo Oil & Gas, Inc. (b)   26,400      826,584
Comstock Resources, Inc. (b)   28,600      853,996
EXCO Resources, Inc. (b)   144,400      1,646,160
Gmx Resources, Inc. (b)   34,800      1,076,016
Harvest Natural Resources, Inc. (b)   81,997      1,110,239
KCS Energy, Inc. (b)   26,600      790,020
Penn Virginia Corp.   615      42,976
Petrohawk Energy Corp. (b)   63,800      803,880
Pogo Producing Co.   38,603      1,779,598
Quicksilver Resources, Inc. (b)   34,290      1,262,215
RPC, Inc.   14,400      349,632
Seitel Inc. (b)   183,523      653,342

 

17

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Oil & Gas Exploration Services (continued)
Superior Well Services, Inc. (b)   25,000    $ 622,500
Trico Marine Services, Inc. (b)   2,800      95,200
W&T Offshore, Inc.   21,884      851,069
World Fuel Services Corp.   6,211      283,781
        
           13,418,841
        
Packaging (0.2%)           
STAMPS.COM, Inc. (b)   53,400      1,485,588
        
Paper & Related Products (0.0%)       
Glatfelter Co.   18,300      290,421
        
Patient Monitoring Equipment (0.0%)       
Aspect Medical Systems, Inc. (b)   10,500      183,120
        
Pharmaceuticals (1.6%)           
Adams Respiratory Therapeutics, Inc. (b)   36,216      1,615,958
Alkermes, Inc. (b)   128,269      2,426,849
Alpharma, Inc., Class A   116,634      2,803,881
Biomarin Pharmaceutical, Inc. (b)   29,500      423,915
Enzon Pharmaceuticals, Inc. (b)   36,386      274,350
ICOS Corp. (b)   2,800      61,572
ImClone Systems, Inc. (b)   19,873      767,893
King Pharmaceuticals, Inc. (b)   96,860      1,646,620
Mannatech, Inc.   4,100      51,701
Medarex, Inc. (b)   6,600      63,426
Medicis Pharmaceutical Corp., Class A   127,600      3,062,401
Noven Pharmaceuticals, Inc. (b)   49,500      886,050
United Therapeutics Corp. (b)   10,600      612,362
        
           14,696,978
        
Photographic Products (0.0%)           
CPI Corp.   1,058      32,481
        
Power Conversion/Supply Equipment (0.0%)
Vicor Corp.   21,400      354,598
        
Printing (0.3%)           
Consolidated Graphics, Inc. (b)   17,300      900,638
Vistaprint Ltd. (b)   71,500      1,911,910
        
           2,812,548
        
Printing & Publishing (0.0%)           
Bowne & Co., Inc.   4,100      58,630
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Publishing (0.1%)           
John Wiley & Sons, Inc.   9,649    $ 320,347
Journal Register Co.   23,900      214,144
        
           534,491
        
Real Estate Investment Trust (2.7%)       
Affordable Residential Communities   13,300      142,975
American Financial Realty Trust   54,400      526,592
American Home Mortgage Investment Corp.   15,100      556,586
Arbor Realty Trust, Inc.   4,800      120,240
Ashford Hospitality Trust, Inc.   85,950      1,084,689
Biomed Realty Trust, Inc.   22,850      684,129
CBL & Associates Properties, Inc.   44,055      1,715,061
Cedarshopping Centers, Inc.   38,000      559,360
Centracore Properties Trust   2,400      59,400
Deerfield Triarc Capital Corp.   60,900      790,482
Education Realty Trust, Inc.   8,800      146,520
Entertainment Properties Trust   22,100      951,405
Equity Inns, Inc.   77,700      1,286,712
Felcor Lodging Trust, Inc.   38,471      836,360
First Industrial Realty Trust, Inc.   21,700      823,298
Getty Realty Corp.   5,900      167,796
Glimcher Realty Trust   23,400      580,554
GMH Communities Trust   4,500      59,310
Healthcare Realty Trust, Inc.   12,700      404,495
Hersha Hospitality Trust   73,900      686,531
Highwood Properties, Inc.   9,300      336,474
HomeBanc Corp.   17,800      141,332
Hospitality Properties Trust   16,300      715,896
Housevalues, Inc. (b)   93,500      647,955
Inland Real Estate Corp.   45,200      672,576
InnKeepers USA Trust   7,585      131,069
Investors Real Estate Trust   7,900      71,337
JER Investors Trust, Inc.   21,400      332,770
Jones Lang LaSalle, Inc.   28,900      2,530,195
KKR Financial Corp.   28,400      591,004
Lexington Corporate Properties Trust   18,100      390,960
LTC Properties, Inc.   10,700      239,145
Mission West Properties, Inc.   16,772      185,834
Nationwide Health Properties,
Inc.		   45,700      1,028,707

 

18

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Real Estate Investment Trust (continued)
Northstar Realty Finance Corp.   61,118    $ 734,027
OMEGA Healthcare Investors, Inc.   82,480      1,090,386
Post Properties   13,000      589,420
Republic Property Trust   65,500      647,140
Saul Centers, Inc.   2,976      121,361
Taubman Centers, Inc.   59,986      2,453,427
Winston Hotels, Inc.   12,900      158,025
        
           25,991,535
        
Real Estate Management & Development (0.1%)
Avatar Holdings (b)   2,500      142,425
Loopnet, Inc. (b)   9,800      182,378
Realty Income   14,400      315,360
Tarragon Realty Investors, Inc.   3,600      49,860
        
           690,023
        
Recreation (0.0%)           
Main Street & Main (b)   19,755      126,037
        
Recreational Vehicles (0.0%)           
Thor Industries, Inc.   2,500      121,125
        
Recycling (0.1%)           
Aleris International, Inc. (b)   13,800      632,730
        
Research & Development (0.0%)       
Albany Molecular Research (b)   20,100      214,668
Kendle International (b)   3,775      138,656
        
           353,324
        
Restaurants (1.2%)           
Bob Evans Farms, Inc.   11,900      357,119
IHOP Corp.   23,700      1,139,496
Lone Star Steakhouse & Saloon, Inc.   75,880      1,990,332
Luby’s Cafeteria, Inc. (b)   29,065      303,148
Panera Bread Co. (b)   35,000      2,353,400
Papa John’s International, Inc. (b)   56,829      1,886,723
PF Chang’s China Bistro, Inc. (b)   72,100      2,741,242
Ryan’s Restaurant Group, Inc. (b)   42,600      507,366
        
           11,278,826
        
Retail (5.0%)           
Barnes & Noble, Inc.   43,245      1,578,443
Big 5 Sporting Goods Corp.   66,000      1,287,000
BJ’s Restaurants, Inc. (b)   90,535      2,022,552
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Retail (continued)           
Blair Corp.   953    $ 28,352
Blue Nile, Inc. (b)   102,400      3,293,183
Bon-Ton Stores, Inc.   33,287      728,320
Brown Shoe Company, Inc.   56,850      1,937,448
Build-A-Bear Workshop, Inc. (b)   78,300      1,684,233
Carter’s, Inc. (b)   59,800      1,580,514
CBRL Group, Inc.   3,100      105,152
Charlotte Russe Holding, Inc. (b)   55,500      1,328,670
Chipotle Mexican Grill, Inc. (b)   40,504      2,468,719
Citi Trends, Inc. (b)   50,265      2,145,813
Conn’s, Inc. (b)   17,200      456,660
Dollar Tree Stores, Inc. (b)   33,537      888,731
EZCorp, Inc. (b)   6,330      238,578
Genesco, Inc. (b)   12,400      419,988
Gymboree (b)   35,246      1,225,151
J Crew Group, Inc. (b)   91,612      2,514,749
Loews Corp.   65,860      3,383,227
Longs Drug Stores Corp.   3,072      140,145
New York & Company, Inc. (b)   55,200      539,304
Officemax, Inc.   786      32,030
Pacific Sunwear of California, Inc. (b)   23,000      412,390
Pantry, Inc. (b)   58,170      3,347,101
Rare Hospitality International, Inc. (b)   5,800      166,808
Rent-A-Center, Inc. (b)   1,392      34,605
Rex Stores Corp. (b)   28,270      405,675
School Specialty, Inc. (b)   22,800      726,180
Shoe Carnival (b)   9,500      226,670
Spectrum Brands, Inc. (b)   102,400      1,323,008
Stage Store, Inc.   35,405      1,168,365
Talbots, Inc.   31,600      583,020
The Dress Barn, Inc. (b)   107,367      2,721,753
The Finish Line, Inc.   22,800      269,724
Tractor Supply Co. (b)   56,189      3,105,566
Tuesday Morning Corp.   30,400      399,760
Zumiez, Inc. (b)   41,000      1,540,370
        
           46,457,957
        
Retirement & Aged Care (0.1%)       
Five Star Quality Care, Inc. (b)   89,000      985,230
        
Schools (0.5%)           
Strayer Education, Inc.   48,491      4,709,446
        

 

19

Table of Contents

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GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Semiconductor Equipment (0.7%)       
Axcelis Technologies, Inc. (b)   124,600    $ 735,140
Entegris, Inc. (b)   38,800      369,764
Integrated Device Technology, Inc. (b)   41,500      588,470
Micrel, Inc. (b)   36,200      362,362
ON Semiconductor Corp. (b)   254,529      1,496,631
Power Integrations, Inc. (b)   32,100      561,108
Silicon Image, Inc. (b)   15,600      168,168
Tessera Technologies, Inc. (b)   83,300      2,290,750
        
           6,572,393
        
Services (0.1%)           
Rollins, Inc.   36,400      714,896
        
Software (0.0%)           
Convera Corp., Class A (b)   68,000      456,960
        
Steel (1.2%)           
Chaparral Steel (b)   8,084      582,210
Novamerican Steel, Inc. (b)   2,835      114,732
Olympic Steel, Inc.   21,704      768,105
Oregon Steel Mills, Inc. (b)   14,900      754,834
Reliance Steel & Aluminum Co.   8,114      673,056
Ryerson Tull, Inc.   43,601      1,177,227
Shaw Group, Inc. (b)   33,310      926,018
Shiloh Industries, Inc. (b)   8,178      122,997
Steel Dynamics, Inc.   56,064      3,685,647
Texas Industries, Inc.   41,100      2,182,410
        
           10,987,236
        
Storage (0.1%)           
Mobile Mini, Inc. (b)   44,300      1,296,218
        
Technology (0.5%)           
Atheros Communications (b)   26,600      504,336
C&D Technologies, Inc.   30,800      231,616
CACI International, Inc., Class A (b)   23,100      1,347,423
Coherent, Inc. (b)   7,000      236,110
Electronics For Imaging, Inc. (b)   40,000      835,200
Intergraph Corp. (b)   33,942      1,068,834
Tessco Technologies, Inc. (b)   9,830      196,993
Watts Industries, Inc., Class A   11,500      385,825
        
           4,806,337
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Telecommunication Equipment (0.1%)       
Anaren Microwave, Inc. (b)   4,400    $ 90,156
Polycom, Inc. (b)   25,400      556,768
        
           646,924
        
Telecommunication Services (1.0%)       
Alaska Communications Systems Group, Inc.   40,085      507,075
Arbinet Holdings, Inc. (b)   7,815      43,842
Broadwing Corp. (b)   29,200      302,220
Ciena Corp. (b)   94,900      456,469
CommScope, Inc. (b)   13,100      411,602
CT Communications, Inc.   13,532      309,477
Fairpoint Communications, Inc.   26,500      381,600
First Avenue Networks, Inc. (b)   75,804      824,748
Golden Telecom, Inc.   6,400      162,240
IDT Corp. (b)   78,905      1,088,100
Level 3 Communications, Inc. (b)   138,900      616,716
Oplink Communications, Inc. (b)   7,200      131,832
RCN Corp. (b)   5,300      132,129
SBA Communications Corp. (b)   158,112      4,133,048
Talk America Holdings, Inc. (b)   12,700      78,613
Valor Communications Group   4,807      55,040
        
           9,634,751
        
Textiles (0.1%)           
DHB Industries, Inc. (b)(c)   69,348      52,011
Greif, Inc.   2,684      201,193
Myers Industries, Inc.   18,800      323,172
        
           576,376
        
Toys (0.3%)           
Hasbro, Inc.   65,157      1,179,993
Jakks Pacific, Inc. (b)   85,514      1,717,977
        
           2,897,970
        
Transportation (2.8%)           
Air Methods Corp (b)   15,191      397,700
Arkansas Best Corp.   7,495      376,324
Bristow Group, Inc. (b)   6,993      251,748
Continental Airlines, Inc., Class B (b)   15,500      461,900
EGL, Inc. (b)   14,544      730,109
Forward Air Corp.   9,728      396,221

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Transportation (continued)           
Genesee & Wyoming, Inc. (b)   17,800    $ 631,366
Greenbrier Cos., Inc.   67,640      2,214,534
Heartland Express, Inc.   43,759      782,849
J.B. Hunt Transport Services, Inc.   137,800      3,432,598
Kansas City Southern Industries, Inc. (b)   170,092      4,711,548
Kirby Corp. (b)   42,404      1,674,958
Knight Transportation, Inc.   20,216      408,363
Landstar System, Inc.   109,913      5,191,191
Old Dominion Freight Line, Inc. (b)   8,793      330,529
Omega Navigation Enterprises, Inc., Class A (b)   125,320      1,807,114
Pacer International, Inc.   24,400      794,952
SkyWest, Inc.   17,231      427,329
Werner Enterprises, Inc.   51,000      1,033,770
        
           26,055,103
        
Travel Services (0.3%)           
Ambassadors Group, Inc.   97,360      2,811,757
        
Utilities (0.7%)           
Cleco Corp.   10,100      234,825
Gasco Energy, Inc. (b)   272,300      1,211,735
IDACORP, Inc.   15,100      517,779
Northwestern Corp.   36,607      1,257,450
Pepco Holdings, Inc.   8,457      199,416
Pico Holdings, Inc. (b)   5,880      189,630
PNM Resources, Inc.   29,600      738,816
UniSource Energy Corp.   34,626      1,078,600
Westar Energy, Inc.   33,805      743,710
        
           6,171,961
        
Waste Disposal (0.1%)           
Metal Management, Inc.   23,552      721,162
        
Wholesale Distribution (0.2%)       
Beacon Roofing Supply, Inc. (b)   80,250      1,766,302
Brightpoint, Inc. (b)   1,320      17,860
        
           1,784,162
        
Wireless Equipment (0.3%)           
CalAmp Corp. (b)   18,409      163,656
Glenayre Technologies, Inc. (b)   27,714      73,165
Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Wireless Equipment (continued)       
Powerwave Technologies,
Inc. (b)		     101,800    $ 928,416
RF Micro Devices, Inc. (b)     248,000      1,480,560
          
             2,645,797
          
             743,189,792
          
Total Common Stocks            912,026,263
          
MUTUAL FUND (0.1%)             
Infinity BIO-ENERGY Ltd.     94,500      496,125
          
Total Mutual Fund            496,125
          
RIGHT (0.0%)             
Tianjin Development
Holdings Ltd. (b)		     41,981      0
          
Total Right            0
          
WARRANT (0.0%)             
Infinity BIO-ENERGY Ltd. Warrant (b)     189,000      90,720
          
Total Warrant            90,720
          
COMMERCIAL PAPER (0.3%)       
KBC Financial Products International, 5.33%, 07/03/06   $ 2,880,000    $ 2,879,147
          
Total Commercial Paper            2,879,147
          
CASH EQUIVALENTS (1.6%)       
AIM Liquid Assets Portfolio     15,230,769      15,230,769
          
Total Cash Equivalents            15,230,769
          
Total Investments (Cost $785,033,423) (a) — 99.8%      930,723,024
Other assets in excess of liabilities — 0.2%      1,682,097
          
NET ASSETS — 100.0%    $ 932,405,121
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security

 

(c) Fair Valued Security

 

ADR American Depositary Receipt

 

GDR Global Depositary Receipt

 

21

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

22

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation
(Depreciation)		  
Short Contracts:                                    

Euro

      07/05/06      $ (1,234,731 )    $ (1,242,772 )    $ (8,041 )

British Sterling Pound

      07/05/06        (1,227,284 )      (1,237,942 )      (10,658 )

Japanese Yen

      07/05/06        (848,034 )      (850,257 )      (2,223 )
Total Short Contracts:             $ (3,310,049 )    $ (3,330,971 )    $ (20,922 )

 

See notes to financial statements.

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $769,802,654)

    $ 915,492,255

Repurchase agreements, at cost and value

      15,230,769
    

Total Investments

      930,723,024
    

Cash

      854

Foreign currencies, at value (cost $235,154)

      235,198

Interest and dividends receivable

      622,846

Receivable for capital shares issued

      502,189

Receivable for investments sold

      13,000,988

Reclaims receivable

      99,279

Prepaid expenses and other assets

      11,974
    

Total Assets

      945,196,352
    

Liabilities:

       

Payable for investments purchased

      11,189,586

Payable for capital shares redeemed

      658,936

Unrealized depreciation on forward foreign currency contracts

      20,922

Accrued expenses and other payables:

       

Investment advisory fees

      693,540

Fund administration and transfer agent fees

      57,568

Distribution fees

      16,424

Administrative servicing fees

      83,317

Other

      70,938
    

Total Liabilities

      12,791,231
    

Net Assets

    $ 932,405,121
    

Represented by:

       

Capital

    $ 717,350,321

Accumulated net investment income (loss)

      544,045

Accumulated net realized gains (losses) from investment and foreign currency transactions

      68,811,650

Net unrealized appreciation (depreciation) on investment sand translation of assets and liabilities denominated in foreign currencies

      145,699,105
    

Net Assets

    $ 932,405,121
    

Net Assets:

       

Class I Shares

    $ 800,925,276

Class II Shares

      86,155,042

Class III Shares

      3,327,875

Class IV Shares

      41,996,928
    

Total

    $ 932,405,121
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      34,232,425

Class II Shares

      3,728,579

Class III Shares

      142,126

Class IV Shares

      1,794,954
    

Total

      39,898,084
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 23.40

Class II Shares

    $ 23.11

Class III Shares

    $ 23.41

Class IV Shares

    $ 23.40

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 449,060  

Dividend income (net of foreign withholding tax of $301,994)

      5,968,933  
    

Total Income

      6,417,993  
    

Expenses:

         

Investment advisory fees

      4,528,207  

Fund administration and transfer agent fees

      364,422  

Distribution fees Class II Shares

      104,573  

Administrative servicing fees Class I Shares

      617,387  

Administrative servicing fees
Class II Shares

      62,701  

Administrative servicing fees
Class III Shares

      2,300  

Administrative servicing fees
Class IV Shares

      29,797  

Custodian fees

      2,802,772  

Trustee fees

      17,235  

Other

      115,673  
    

Total expenses before earnings credit

      8,645,067  

Earnings credit (Note 6)

      (2,775,069 )
    

Total Expenses

      5,869,998  
    

Net Investment Income (Loss)

      547,995  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      80,050,904  

Net realized gains (losses) on foreign currency transactions

      (15,367 )
    

Net realized gains (losses) on investment and foreign currency transactions

      80,035,537  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (33,930,956 )
    

Net realized/unrealized gains (losses) on investments, futures and foreign currencies

      46,104,581  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 46,652,576  
    

 

See notes to financial statements.

 

23

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 547,995      $ (1,301,141 )

Net realized gains (losses) on investment and foreign currency transactions

        80,035,537        121,452,717  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (33,930,956 )      (14,764,220 )
      
  

Change in net assets resulting from operations

        46,652,576        105,387,356  
      
  

Distributions to Class I shareholders from:

                    

Net realized gains on investments

        (15,390,122 )      (98,327,246 )

Distributions to Class II shareholders from:

                    

Net realized gains on investments

        (1,643,475 )      (8,568,979 )

Distributions to Class III shareholders from:

                    

Net realized gains on investments

        (63,680 )      (286,066 )

Distributions to Class IV shareholders from:

                    

Net realized gains on investments

        (804,451 )      (5,128,514 )
      
  

Change in net assets from shareholder distributions

        (17,901,728 )      (112,310,805 )
      
  

Change in net assets from capital transactions

        (48,042,906 )      49,630,032  
      
  

Change in net assets

        (19,292,058 )      42,706,583  

Net Assets:

                    

Beginning of period

        951,697,179        908,990,596  
      
  

End of period

      $ 932,405,121      $ 951,697,179  
      
  

Accumulated net investment income (loss)

      $ 544,045      $ (3,950 )
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 46,149,039      $ 67,059,444  

Dividends reinvested

        15,393,461        98,327,163  

Cost of shares redeemed

        (117,965,434 )      (144,232,974 )
      
  
         (56,422,934 )      21,153,633  
      
  

Class II Shares

                    

Proceeds from shares issued

        18,645,351        27,932,996  

Dividends reinvested

        1,643,469        8,568,973  

Cost of shares redeemed

        (10,164,372 )      (7,594,280 )
      
  
         10,124,448        28,907,689  
      
  

Class III Shares

                    

Proceeds from shares issued

        2,166,683        1,343,097  

Dividends reinvested

        63,680        286,066  

Cost of shares redeemed

        (1,444,941 )      (629,517 )
      
  
         785,422        999,646  
      
  

Class IV Shares

                    

Proceeds from shares issued

        1,103,482        2,139,926  

Dividends reinvested

        804,448        5,128,510  

Cost of shares redeemed

        (4,437,772 )      (8,699,372 )
      
  
         (2,529,842 )      (1,430,936 )
      
  

Change in net assets from capital transactions

      $ (48,042,906 )    $ 49,630,032  
      
  

 

24

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL COMPANY FUND

 

Statements of Changes in Net Assets (continued)

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

SHARE TRANSACTIONS:

             

Class I Shares

             

Issued

    1,885,853     2,859,443  

Reinvested

    679,921     4,289,345  

Redeemed

    (4,850,195 )   (6,147,433 )
    
 
     (2,284,421 )   1,001,355  
    
 

Class II Shares

             

Issued

    788,803     1,185,745  

Reinvested

    73,500     377,859  

Redeemed

    (425,595 )   (329,150 )
    
 
     436,708     1,234,454  
    
 

Class III Shares

             

Issued

    87,622     53,774  

Reinvested

    2,810     12,469  

Redeemed

    (60,074 )   (27,606 )
    
 
     30,358     38,637  
    
 

Class IV Shares

             

Issued

    46,085     90,850  

Reinvested

    35,532     223,721  

Redeemed

    (183,500 )   (369,438 )
    
 
     (101,883 )   (54,867 )
    
 

 

 

See notes to financial statements.

 

25

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT Small Company Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Portfolio
Turnover(a)

Class I Shares

                                                                            

Year Ended December 31, 2001(b)

   $ 20.00   —     (1.34 )   (1.34 )   (0.02 )   —     (0.02 )   $ 18.64   (6.70% )   $ 743,468   1.20%     0.02%     135.90%

Year Ended December 31, 2002

   $ 18.64   (0.07 )   (3.16 )   (3.23 )   —     —     —     $ 15.41   (17.33% )   $ 561,836   1.18%     (0.33% )   92.59%

Year Ended December 31, 2003

   $ 15.41   (0.07 )   6.39     6.32     —     —     —     $ 21.73   41.01%     $ 760,078   1.17%     (0.37% )   93.72%

Year Ended December 31, 2004

   $ 21.73   (0.04 )   4.17     4.13     —     (2.90 )   (2.90 )   $ 22.96   19.02%     $ 815,585   1.19%     (0.17% )   131.75%

Year Ended December 31, 2005

   $ 22.96   (0.03 )   2.84     2.81     —     (2.99 )   (2.99 )   $ 22.78   12.32%     $ 831,778   1.20%     (0.12% )   128.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 22.78   0.02     1.06     1.08     —     (0.46 )   (0.46 )   $ 23.40   4.80% (f)   $ 800,925   1.18% (g)   0.13% (g)   59.99%

Class II Shares

                                                                            

Period Ended December 31, 2002(c)

   $ 18.70   (0.03 )   (3.28 )   (3.31 )   —     —     —     $ 15.39   (17.70% )(f)   $ 2,325   1.44% (g)   (0.54% )(g)   92.59%

Year Ended December 31, 2003

   $ 15.39   (0.12 )   6.37     6.25     —     —     —     $ 21.64   40.61%     $ 18,345   1.42%     (0.63% )   93.72%

Year Ended December 31, 2004

   $ 21.64   (0.07 )   4.13     4.06     —     (2.90 )   (2.90 )   $ 22.80   18.78%     $ 46,906   1.44%     (0.42% )   131.75%

Year Ended December 31, 2005

   $ 22.80   (0.07 )   2.79     2.72     —     (2.99 )   (2.99 )   $ 22.53   12.01%     $ 74,165   1.45%     (0.37% )   128.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 22.53   (0.01 )   1.05     1.04     —     (0.46 )   (0.46 )   $ 23.11   4.67% (f)   $ 86,155   1.44% (g)   (0.10% )(g)   59.99%

Class III Shares

                                                                            

Period Ended December 31, 2002(d)

   $ 17.48   (0.01 )   (2.05 )   (2.06 )   —     —     —     $ 15.42   (11.78% )(f)   $ 51   1.15% (g)   (0.25% )(g)   92.59%

Year Ended December 31, 2003

   $ 15.42   (0.08 )   6.40     6.32     —     —     —     $ 21.74   40.99%     $ 1,199   1.17%     (0.39% )   93.72%

Year Ended December 31, 2004

   $ 21.74   (0.03 )   4.17     4.14     —     (2.90 )   (2.90 )   $ 22.98   19.06%     $ 1,681   1.19%     (0.15% )   131.75%

Year Ended December 31, 2005

   $ 22.98   (0.02 )   2.83     2.81     —     (2.99 )   (2.99 )   $ 22.80   12.31%     $ 2,548   1.22%     (0.14% )   128.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 22.80   0.01     1.06     1.07     —     (0.46 )   (0.46 )   $ 23.41   4.75% (f)   $ 3,328   1.19% (g)   0.12% (g)   59.99%

Class IV Shares

                                                                            

Period Ended December 31, 2003(e)

   $ 15.61   (0.05 )   6.17     6.12     —     —     —     $ 21.73   39.21% (f)   $ 48,252   1.16% (g)   (0.36% )(g)   93.72%

Year Ended December 31, 2004

   $ 21.73   (0.04 )   4.17     4.13     —     (2.90 )   (2.90 )   $ 22.96   19.02%     $ 44,819   1.19%     (0.18% )   131.75%

Year Ended December 31, 2005

   $ 22.96   (0.03 )   2.84     2.81     —     (2.99 )   (2.99 )   $ 22.78   12.32%     $ 43,206   1.20%     (0.12% )   128.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 22.78   0.02     1.06     1.08     —     (0.46 )   (0.46 )   $ 23.40   4.80% (f)   $ 41,997   1.17% (g)   0.15% (g)   59.99%

 

(a) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(b) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(c) For the period from March 5, 2002 (commencement of operations) through December 31, 2002.

 

(d) For the period from July 1, 2002 (commencement of operations) through December 31, 2002.

 

(e) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(f) Not annualized.

 

(g) Annualized.

 

See notes to financial statements.

 

26

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT Small Company Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a

 

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June 30, 2006 (Unaudited)

 

“Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward

 

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June 30, 2006 (Unaudited)

 

foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(l) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(m) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
       $ 791,868,739      $ 183,701,188      $ (44,846,903 )      $ 138,854,285

 

* The difference between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(n) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadvisers, for the Fund. The subadvisers listed below manage all or a portion of the Fund’s investments and have the responsibility for making all investment decisions for that portion of the Fund unless otherwise indicated. Below is a list of the subadvisers to the Fund:

 

     Subadvisers***
    

- The Dreyfus Corporation (until April 30, 2006)

    

- Franklin Portfolio Associates, LLC (Effective May 1, 2006)

    

- Neuberger Berman Management, Inc.

    

- Gartmore Global Partners**

    

- American Century Investment Management, Inc.

    

- Morgan Stanley Investment Management, Inc.

    

- Waddell & Reed Investment Management Company

 

** GMF, as investment adviser, directly manages a portion of the Fund.

 

*** Affiliate of GMF and GGAMT.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.93% based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, GMF pays fees of 0.60% to the subadvisers.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I, Class II, and Class III shares of the Fund and 0.20% of Class IV shares of the Fund.

 

As of June 30, 2006, Nationwide Financial Services received $730,190 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III and Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III or Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III or Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III or Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $2,675.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $573,632,272 and sales of $638,716,890.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that the Fund outperformed its benchmark, the Russell 2000 Index for the one- and five-year periods, while underperforming the benchmark for the three-year period ended September 30, 2005. During these periods, the Fund ranked in the top quartile of the Lipper Small-Cap Growth Funds category. In particular, the Board noted that over the one-year period, the Fund outperformed the median of its Lipper category by 391 points. Moreover, the Board considered that this Fund has undergone changes in portfolio managers on the Gartmore-managed sleeve and the Dreyfus subadvised sleeve over the past one-year period.

 

The Board also reviewed and considered the Fund’s contractual advisory fee, which placed the Fund in the fifth quintile of its Lipper-constructed Expense Group, but within the range of the advisory fees charged by peer funds in the Lipper Expense Group. The Board also considered that the Fund’s total expense ratio was slightly higher than the median of its Lipper Expense Group. The Board discussed with management the absence of breakpoints on the Fund’s advisory fee and determined that management’s decision not to provide breakpoints on this capacity-constrained fund was reasonable. The Board determined that although the contractual advisory fee was higher than the median of the Lipper Expense Group, the

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Fund had consistently delivered good relative performance. The Board considered the adviser’s profitability, in light of the absence of breakpoints, and concluded it was not excessive.

 

Finally, the Board discussed with the Fund’s chief compliance officer and management, the “dual employee” arrangement Dreyfus had implemented whereby the portfolio managers who provide daily portfolio management services to the Fund on behalf of Dreyfus, do so as dual employees of another Dreyfus-affiliate, Franklin Portfolio Associates, LLC (“FPA)” The Board considered that although Dreyfus and FPA are affiliated companies, under certain circumstances their management structures, supervisory chains of command and internal resources may be distinct. Therefore, the Board concluded that it would be in the best interests of the Fund and its shareholders to terminate the subadvisory agreement with Dreyfus and to hire FPA directly as the Fund’s subadviser effective on May 1, 2006, as permitted under the Fund’s exemptive order (which permits the Fund’s investment adviser to hire and fire unaffiliated subadvisers with Board but not shareholder approval). The Board was satisfied that this will not result in any change to the Fund’s portfolio managers, investment objective or policies.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Board approve a new Subadvisory agreement with newly-unaffiliated GGP, in reliance upon the Manager of Managers Exemptive order the Funds have obtained from the SEC to take effect immediately upon the closing of the U.K. Sale to ensure continued provision of Subadvisory services by GGP to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale: (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of affiliated GGP at this time; (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies used by affiliated GGP now; and (3) the Subadvisory fees paid to unaffiliated GGP will be the same as those currently paid to affiliated GGP. At the time the Board selected and approved the adviser to the Fund, Board considered, among other factors, the advisory fee compared to a peer group of funds, the extent to which economies of scale would be realized as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of Fund shareholders. Since the adviser will pay the sub-adviser from the fees paid by the Fund to the adviser, and since the fees and expenses for the Fund will not change as a result of the change to the sub-adviser, the Board did not further consider these factors. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the continuation of affiliated GGP’s subadvisory agreement with new unaffiliated GGP, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

36

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

37

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

38

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

39

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

40

Table of Contents

 

Gartmore GVIT Money Market Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
7    Statement of Assets and Liabilities
7    Statement of Operations
8    Statements of Changes in Net Assets
10    Financial Highlights
11    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GMM (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Money Market Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
    Annualized
Expense Ratio*
Gartmore GVIT Money Market Fund                                     

Class I

      Actual    $ 1,000.00      $ 1,020.70      $ 3.26    0.65%
       Hypothetical1    $ 1,000.00      $ 1,021.58      $ 3.26    0.65%

Class IV

      Actual    $ 1,000.00      $ 1,021.40      $ 2.51    0.50%
       Hypothetical1    $ 1,000.00      $ 1,022.32      $ 2.51    0.50%

Class V

      Actual    $ 1,000.00      $ 1,021.10      $ 2.81    0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81    0.56%

Class ID

      Actual    $ 1,000.00      $ 1,007.60      $ 0.81a    0.48%a
       Hypothetical1    $ 1,000.00      $ 1,022.42      $ 2.41b    0.48%b

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

a Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

b Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Money Market Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Asset Backed Commercial Paper      38.4%
Commercial Paper      25.4%
Floating Rate Notes      22.4%
U.S. Government Agencies      5.7%
Corporate Bonds      5.6%
Municipal Bonds      2.1%
Certificates of Deposit      1.0%
Liabilities in excess of other assets      -0.6%
      
       100.0%
      

 

 

Top Holdings       
Northern Rock PLC, 5.30%, 07/26/06      2.5%
Kitty Hawk Funding Corp., 5.28%, 07/20/06      2.1%
Lockhart Funding LLC, 5.18%, 07/10/06      2.0%
Greyhawk Funding LLC, 5.27%, 07/17/06      2.0%
Georgetown Funding Co., 5.31%, 07/26/06      2.0%
Falcon Asset Securitization Corp., 5.32%, 07/28/06      2.0%
Giro Funding Corp., 5.14%, 07/10/06      1.8%
Federal National Mortgage Association,
4.00%, 08/08/06		      1.8%
Dresdner U.S. Finance, Inc., 5.09%, 07/07/06      1.8%
Ormond Quay Funding LLC, 5.35%, 07/31/06      1.7%
Other Assets      80.3%
      
       100.0%
      
Top Industries       
Asset Backed — Yankee      16.2%
Banks — Foreign      9.8%
Asset Backed Trade & Term Receivables      9.6%
Asset Backed — Domestic      6.4%
Asset Backed — Mortgages      6.4%
Security Brokers & Dealers      5.7%
Asset Backed — Residential Mortgages      5.5%
Banks — Mortgages      3.6%
Asset Backed CDO — Trust Preferred      3.6%
Finance Lessors      3.4%
Other Assets      29.8%
      
       100.0%
      

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Principal
Amount		    Value
              
ASSET BACKED COMMERCIAL PAPER (38.4%)
Asset Backed CDO—Trust Preferred (3.6%)
Lockhart Funding LLC (b) (3.6%)
5.32%, 07/03/06   $ 25,000,000    $ 24,992,611
5.18%, 07/10/06     40,000,000      39,948,950
5.13%, 08/01/06     5,000,000      4,978,171
          
             69,919,732
          
Asset Backed—Domestic (3.0%)
CC USA, Inc. (b) (0.9%)
5.28%, 07/17/06     3,173,000      3,165,582
5.16%, 08/14/06     15,000,000      14,906,500
          
             18,072,082
          
Harrier Financial Funding US LLC (b) (2.1%)
5.31%, 07/07/06     10,589,000      10,579,706
5.15%, 07/25/06     11,100,000      11,061,740
5.26%, 08/02/06     10,000,000      9,953,600
5.41%, 08/21/06     10,000,000      9,923,925
          
             41,518,971
          
             59,591,053
          
Asset Backed—Mortgages (6.4%)
Georgetown Funding Co. (b) (3.6%)
5.31%, 07/26/06     40,000,000      39,853,333
5.37%, 07/27/06     30,000,000      29,884,300
          
             69,737,633
          
Thornburg Mortgage Capital (b) (2.8%)
5.14%, 07/06/06     14,000,000      13,990,044
5.22%, 07/11/06     15,400,000      15,377,611
5.27%, 07/17/06     20,000,000      19,953,334
5.39%, 07/21/06     5,507,000      5,490,571
          
             54,811,560
          
             124,549,193
          
Asset Backed—Repurchase Agreement (1.6%)
Liquid Funding (b) (1.6%)
5.34%, 07/03/06     20,000,000      19,994,066
5.14%, 08/09/06     12,011,000      11,945,030
          
             31,939,096
          
Asset Backed—Residential Mortgages (5.5%)
Klio II Funding Corp. (b) (2.2%)
5.30%, 07/20/06     15,000,000      14,958,200
5.34%, 07/25/06     11,096,000      11,056,646
5.14%, 08/07/06     16,367,000      16,281,714
          
             42,296,560
          
    Principal
Amount		    Value
              
ASSET BACKED COMMERCIAL PAPER (continued)
Asset Backed—Residential Mortgages (continued)
Ormond Quay Funding LLC (b) (3.3%)
5.34%, 07/05/06   $ 1,739,000    $ 1,737,970
5.24%, 07/11/06     30,000,000      29,956,444
5.35%, 07/31/06     33,000,000      32,853,701
          
             64,548,115
          
             106,844,675
          
Asset Backed—Trade & Term Receivables (9.6%)
Falcon Asset Securitization Corp. (b) (2.7%)
5.09%, 07/05/06     12,000,000      11,993,253
5.32%, 07/28/06     40,000,000      39,841,000
          
             51,834,253
          
Golden Funding Corp. (b) (2.4%)
5.09%, 07/05/06     15,000,000      14,991,567
5.12%, 07/07/06     7,000,000      6,994,050
5.32%, 07/20/06     25,000,000      24,930,069
          
             46,915,686
          
Kitty Hawk Funding Corp. (b) (3.1%)
5.28%, 07/20/06     40,252,000      40,139,728
5.32%, 07/26/06     16,766,000      16,704,408
5.33%, 07/27/06     4,016,000      4,000,599
          
             60,844,735
          
Old Line Funding Corp. (b) (1.4%)
5.09%, 07/06/06     20,000,000      19,985,944
5.30%, 07/07/06     8,000,000      7,992,947
          
             27,978,891
          
             187,573,565
          
Asset Backed—Yankee (8.7%)
Giro Funding Corp. (b) (3.5%)
5.12%, 07/06/06     18,583,000      18,569,810
5.14%, 07/10/06     36,000,000      35,953,919
5.15%, 08/14/06     14,063,000      13,975,513
          
             68,499,242
          
Greyhawk Funding LLC (b) (3.1%)
5.27%, 07/17/06     40,000,000      39,906,667
5.31%, 07/20/06     20,000,000      19,944,161
          
             59,850,828
          
K(2) USA LLC (b) (1.0%)
5.35%, 08/21/06     5,300,000      5,260,206
5.03%, 09/28/06     15,000,000      14,818,292
          
             20,078,498
          

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
ASSET BACKED COMMERCIAL PAPER (continued)
Asset Backed—Yankee (continued)
Stanfield Victoria Funding LLC (b) (1.1%)
5.34%, 07/05/06   $ 11,812,000    $ 11,805,069
5.12%, 09/29/06     10,000,000      9,875,250
          
             21,680,319
          
             170,108,887
          
Total Asset Backed Commercial Paper            750,526,201
          
COMMERCIAL PAPER (25.4%)       
Banks—Foreign (8.8%)             
Alliance & Leicester PLC (b) (1.3%)       
4.63%, 07/10/06     25,000,000      24,971,737
5.11%, 09/06/06     1,000,000      990,676
          
             25,962,413
          
ANZ National Int’l Ltd. (b) (0.1%)       
5.12%, 07/12/06     1,600,000      1,597,521
          
Barclays U.S. Funding Corp. (2.4%)       
5.31%, 07/05/06     4,800,000      4,797,168
5.13%, 07/25/06     5,000,000      4,983,033
5.17%, 08/22/06     25,000,000      24,815,653
5.18%, 08/24/06     12,000,000      11,908,020
          
             46,503,874
          
Dresdner U.S. Finance, Inc. (3.1%)       
5.09%, 07/07/06     35,000,000      34,970,541
5.27%, 07/21/06     25,000,000      24,927,083
          
             59,897,624
          
Societe Generale North American (0.1%)
5.15%, 08/24/06     2,500,000      2,480,988
          
Svenska Handelsbank, Inc. (0.2%)       
5.08%, 07/06/06     4,200,000      4,197,054
          
UBS Finance (DE) LLC (1.6%)       
5.08%, 07/05/06     8,400,000      8,395,277
5.32%, 08/08/06     22,800,000      22,672,688
          
             31,067,965
          
             171,707,439
          
Banks—Mortgage (3.0%)       
Northern Rock PLC (b) (3.0%)       
5.30%, 07/26/06     48,300,000      48,122,900
5.31%, 07/31/06     10,000,000      9,955,917
          
             58,078,817
          
    Principal
Amount		    Value
              
COMMERCIAL PAPER (continued)       
Book Publishing (3.8%)       
McGraw—Hill Cos., Inc. (1.0%)       
5.28%, 07/27/06   $ 19,102,000    $ 19,029,434
          
Danaher Corp. (b) (2.8%)             
5.30%, 07/14/06     25,000,000      24,952,243
5.32%, 07/18/06     30,000,000      29,924,775
          
             54,877,018
          
Finance Lessors (3.4%)       
PB Finance (Delaware) (3.4%)       
5.10%, 07/05/06     12,195,000      12,188,117
5.16%, 07/10/06     25,000,000      24,967,874
5.32%, 07/11/06     8,000,000      7,988,200
5.32%, 07/12/06     3,000,000      2,995,133
5.11%, 07/14/06     15,000,000      14,972,538
5.27%, 07/17/06     3,783,000      3,774,173
          
             66,886,035
          
Financial Services (1.8%)       
ING U.S. Funding (1.3%)             
5.10%, 07/06/06     25,000,000      24,982,362
          
Private Export Funding Corp. (b) (0.5%)
5.31%, 07/17/06     10,000,000      9,976,444
          
             34,958,806
          
Personal Credit Institutions (0.5%)       
General Electric Capital Corp. (0.5%)       
5.14%, 10/10/06     10,000,000      9,859,442
          
Security Brokers & Dealers (1.3%)       
Bear Stearns Cos., Inc. (0.8%)       
5.11%, 07/05/06     15,000,000      14,991,516
          
Morgan Stanley Dean Witter & Co. (0.5%)
5.28%, 07/14/06     9,857,000      9,838,242
          
             24,829,758
          
Subdividers & Developers (2.8%)       
Yorkshire Building Society (2.8%)       
5.34%, 07/03/06     21,600,000      21,593,592
5.10%, 07/28/06     10,000,000      9,962,200
5.11%, 08/04/06     10,000,000      9,952,400
5.14%, 10/02/06     14,091,000      13,906,713
          
             55,414,905
          
Total Commercial Paper            495,641,654
          

 

4

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GARTMORE GVIT MONEY MARKET FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
FLOATING RATE NOTES (c) (22.4%)       
Asset Backed—CDO (3.3%)             
Commodore CDO I Ltd. (b) (1.2%)       
5.38%, 09/12/06   $ 25,000,000    $ 25,000,000
          
Newcastle CDO Ltd. (b) (0.8%)       
5.35%, 09/25/06     15,000,000      15,000,000
          
NorthLake CDO (b) (1.3%)       
5.33%, 09/06/06     25,000,000      25,000,000
          
             65,000,000
          
Asset Backed—Domestic (2.3%)       
CC USA, Inc. (b) (1.0%)             
5.06%, 05/23/07     20,000,000      19,998,214
          
Harrier Financial Funding US LLC (b) (1.3%)
5.16%, 09/15/06     25,000,000      24,999,130
          
             44,997,344
          
Asset Backed—Yankee (6.8%)       
K(2) USA LLC (b) (1.3%)             
5.15%, 10/17/06     25,000,000      24,998,542
          
Premier Asset Collateralized Entity LLC (b) (3.1%)
5.16%, 09/15/06     30,000,000      29,998,751
5.43%, 06/25/07     30,000,000      29,997,717
          
             59,996,468
          
Sigma Finance, Inc. (b) (0.8%)
5.16%, 09/12/06     15,000,000      14,999,673
          
Stanfield Victoria Funding LLC (b) (1.6%)
5.15%, 08/09/06     17,000,000      16,999,725
5.30%, 06/25/07     15,000,000      14,998,623
          
             31,998,348
          
             131,993,031
          
Banks—Domestic (2.0%)       
HBOS Treasury Services PLC (1.1%)
5.26%, 06/20/07     22,000,000      22,000,000
          
Wells Fargo & Co. (b) (0.9%)       
5.16%, 07/02/07     17,000,000      17,000,000
          
             39,000,000
          
Banks—Mortgage (0.6%)       
Northern Rock PLC (b) (0.6%)
5.35%, 07/09/07     12,500,000      12,500,000
          
    Principal
Amount		    Value
              
FLOATING RATE NOTES (c) (continued)
Insurance (1.4%)       
Allstate Global Life Funding (b) (1.4%)
5.35%, 06/27/07   $ 12,500,000    $ 12,500,000
5.19%, 07/06/07     15,000,000      15,000,000
          
             27,500,000
          
Personal Credit Institutions (1.5%)       
General Electric Capital Corp. (b) (1.5%)
5.35%, 03/16/07     8,000,000      8,000,000
5.25%, 07/09/07     21,000,000      21,000,000
          
             29,000,000
          
Security Brokers & Dealers (4.5%)       
Bear Stearns Cos., Inc. (1.0%)
5.27%, 01/12/07     20,000,000      20,000,000
          
Goldman Sachs Group, Inc. (2.0%)       
5.19%, 05/15/07     12,000,000      12,000,000
5.42%, 05/17/07     25,000,000      25,000,000
          
             37,000,000
          
Morgan Stanley Dean Witter & Co. (b) (1.5%)
5.15%, 07/03/07     30,000,000      30,000,000
          
             87,000,000
          
Total Floating Rate Notes (c)      436,990,375
          
U.S. GOVERNMENT AGENCIES (5.7%)       
Federal Home Loan Bank (1.7%)       
4.50%, 11/03/06     23,000,000      23,000,000
4.75%, 12/21/06     10,000,000      10,000,000
          
             33,000,000
          
Federal Home Loan Mortgage Corp. (2.2%)
4.75%, 12/29/06     17,620,000      17,620,000
5.30%, 05/11/07     10,000,000      10,000,000
5.38%, 06/04/07     16,500,000      16,500,000
          
             44,120,000
          
Federal National Mortgage Association (1.8%)
4.00%, 08/08/06     35,000,000      35,000,000
          
Total U.S. Government Agencies      112,120,000
          

 

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GARTMORE GVIT MONEY MARKET FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (5.6%)       
Asset Backed—Domestic (1.0%)       
CC USA, Inc. (b) (1.0%)             
5.26%, 04/30/07   $ 20,000,000    $ 20,000,000
          
Asset Backed—Yankee (4.6%)       
K(2) USA LLC (b) (0.8%)       
5.43%, 05/29/07     15,000,000      15,000,000
          
Sigma Finance, Inc. (b) (2.8%)       
4.76%, 11/08/06     20,000,000      20,000,000
4.80%, 01/24/07     10,000,000      10,000,000
5.25%, 04/30/07     15,000,000      15,000,000
5.50%, 06/05/07     10,000,000      10,000,000
          
             55,000,000
          
Stanfield Victoria Funding LLC (1.0%)
5.72%, 06/25/07     20,000,000      20,000,000
          
             90,000,000
          
Total Corporate Bonds            110,000,000
          
MUNICIPAL BONDS (2.1%)       
South Carolina Public Service Authority (0.4%)
5.09%, 07/05/06     7,300,000      7,295,912
          
Sunshine State Governmental Financing Commission (1.7%)
5.09%, 07/07/06     9,761,000      9,752,752
5.22%, 07/11/06     2,055,000      2,052,032
5.19%, 07/12/06     1,320,000      1,317,915
5.34%, 08/07/06     21,630,000      21,512,176
          
             34,634,875
          
Total Municipal Bonds            41,930,787
          
    Principal
Amount		    Value  
                
CERTIFICATES OF DEPOSIT (1.0%)         
Banks—Foreign (1.0%)               
HBOS Treasury Services PLC (1.0%)         
5.25%, 04/11/07   $ 20,000,000    $ 20,000,000  
          
Total Certificates of Deposit      20,000,000  
          
Total Investments
(Cost $1,967,209,017) (a) — 100.6%		      1,967,209,017  
Liabilities in excess of
other assets — (0.6%)		      (11,149,231 )
          
NET ASSETS — 100.0%    $ 1,956,059,786  
          

 

 

(a) See Notes to Financial Statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Restricted securities issued pursuant to Section 4(2) of the Securities Act of 1933. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees.

 

(c) Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on June 30, 2006. The maturity date represents the actual maturity date.

 

CDO Collateralized Debt Obligation

 

See notes financial statements.

 

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GARTMORE GVIT MONEY MARKET FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $1,967,209,017)

    $ 1,967,209,017  

Interest and dividends receivable

      4,087,836  

Receivable for capital shares issued

      471,145  

Receivable from adviser

      5,485  

Prepaid expenses and other assets

      19,034  
    

Total Assets

      1,971,792,517  
    

Liabilities:

         

Payable to custodian

      400  

Payable for capital shares redeemed

      14,643,155  

Accrued expenses and other payables:

         

Investment advisory fees

      617,146  

Fund administration and transfer agent fees

      120,021  

Administrative servicing fees

      224,632  

Other

      127,377  
    

Total Liabilities

      15,732,731  
    

Net Assets

    $ 1,956,059,786  
    

Represented by:

         

Capital

    $ 1,956,093,358  

Accumulated net investment income (loss)

      6  

Accumulated net realized gains (losses) from investment transactions

      (33,578 )
    

Net Assets

    $ 1,956,059,786  
    

Net Assets:

         

Class I Shares

    $ 1,501,939,158  

Class IV Shares

      85,602,514  

Class V Shares

      353,043,773  

Class ID Shares

      15,474,341  
    

Total

    $ 1,956,059,786  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      1,501,964,072  

Class IV Shares

      85,604,564  

Class V Shares

      353,054,028  

Class ID Shares

      15,474,341  
    

Total

      1,956,097,005  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 1.00  

Class IV Shares

    $ 1.00  

Class V Shares

    $ 1.00  

Class ID Shares

    $ 1.00  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 39,356,513  

Dividend income

      1,043  
    

Total Income

      39,357,556  
    

Expenses:

         

Investment advisory fees

      3,210,758  

Fund administration and transfer agent fees

      563,916  

Administrative servicing fees Class I Shares

      972,309  

Administrative servicing fees Class IV Shares

      59,407  

Administrative servicing fees Class V Shares

      119,106  

Trustee fees

      26,275  

Other

      202,310  
    

Total expenses before waived or reimbursed expenses and earnings credit

      5,154,081  

Expenses waived or reimbursed

      (53,221 )

Earnings credit (Note 5)

      (9,542 )
    

Total Expenses

      5,091,318  
    

Net Investment Income (Loss)

      34,266,238  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      15  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 34,266,253  
    

 

See notes to financial statements.

 

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Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
       (Unaudited)        

From Investment Activities:

                   

Operations:

                   

Net investment income

      $ 34,266,238     $ 47,830,923  

Net realized gains (losses) on investment transactions

        15       725  
      
 

Change in net assets resulting from operations

        34,266,253       47,831,648  
      
 

Distributions to Class I shareholders from:

                   

Net investment income

        (25,434,409 )     (33,261,965 )

Distributions to Class IV shareholders from:

                   

Net investment income

        (1,721,537 )     (2,223,527 )

Distributions to Class V shareholders from:

                   

Net investment income

        (6,989,552 )     (12,345,425 )

Distributions to Class ID shareholders from:

                   

From net investment income

        (120,740 )(a)     —  
      
 

Change in net assets from shareholder distributions

        (34,266,238 )     (47,830,917 )
      
 

Change in net assets from capital transactions

        389,670,697       (221,263,202 )
      
 

Change in net assets

        389,670,712       (221,262,471 )

Net Assets:

                   

Beginning of period

        1,566,389,074       1,787,651,545  
      
 

End of period

      $ 1,956,059,786     $ 1,566,389,074  
      
 

Accumulated net investment income (loss)

      $ 6     $ 6  
      
 

CAPITAL TRANSACTIONS:

                   

Class I Shares

                   

Proceeds from shares issued

      $ 587,821,836     $ 855,265,030  

Dividends reinvested

        25,434,395       34,952,440  

Cost of shares redeemed

        (284,618,009 )     (940,447,391 )
      
 
         328,638,222       (50,229,921 )
      
 

Class IV Shares

                   

Proceeds from shares issued

        26,827,170       35,014,549  

Dividends reinvested

        1,721,439       2,344,782  

Cost of shares redeemed

        (17,061,371 )     (47,659,286 )
      
 
         11,487,238       (10,299,955 )
      
 

Class V Shares

                   

Proceeds from shares issued

        217,431,129       419,876,240  

Dividends reinvested

        6,989,553       12,960,742  

Cost of shares redeemed

        (190,349,786 )     (593,570,308 )
      
 
         34,070,896       (160,733,326 )
      
 

Class ID Shares

                   

Proceeds from shares issued

        16,920,882 (a)     —  

Dividends reinvested

        120,735 (a)     —  

Cost of shares redeemed

        (1,567,276 )(a)     —  
      
 
         15,474,341       —  
      
 

Change in net assets from capital transactions

      $ 389,670,697     $ (221,263,202 )
      
 

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

8

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GARTMORE GVIT MONEY MARKET FUND

 

Statements of Changes in Net Assets (continued)

 

       Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
       (Unaudited)        

SHARE TRANSACTIONS:

               

Class I Shares

               

Issued

           587,821,835          855,265,031  

Reinvested

      25,434,395     34,952,440  

Redeemed

      (284,618,009 )   (940,447,392 )
      
 
       328,638,221     (50,229,921 )
      
 

Class IV Shares

               

Issued

      26,827,170     35,014,549  

Reinvested

      1,721,439     2,344,782  

Redeemed

      (17,061,371 )   (47,659,286 )
      
 
       11,487,238     (10,299,955 )
      
 

Class V Shares

               

Issued

      217,431,129     419,876,240  

Reinvested

      6,989,553     12,960,742  

Redeemed

      (190,349,786 )   (593,570,308 )
      
 
       34,070,896     (160,733,326 )
      
 

Class ID Shares

               

Issued

      16,982,289 (a)   —  

Reinvested

      59,328 (a)   —  

Redeemed

      (1,567,276 )(a)   —  
      
 
       15,474,341     —  
      
 

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Money Market Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
  
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		  

Class I Shares

                                                                        

Year Ended December 31, 2001(b)

   $ 1.00   0.04     0.04     (0.04 )   (0.04 )   $ 1.00   3.60%     $ 2,869,354   0.55%     3.41%     0.61%     3.35%  

Year Ended December 31, 2002

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   1.21%     $ 2,436,783   0.62%     1.21%     0.62%     1.21%  

Year Ended December 31, 2003

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.63%     $ 1,573,895   0.63%     0.63%      (h )    (h )

Year Ended December 31, 2004

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.81%     $ 1,223,530   0.62%     0.79%      (h )    (h )

Year Ended December 31, 2005

   $ 1.00   0.03     0.03     (0.03 )   (0.03 )   $ 1.00   2.67%     $ 1,173,301   0.65%     2.63%      (h )    (h )

Six Months Ended June 30, 2006 (Unaudited)

   $ 1.00   0.02     0.02     (0.02 )   (0.02 )   $ 1.00   2.07% (f)   $ 1,501,939   0.65% (g)   4.16% (g)    (h )    (h )

Class IV Shares

                                                                        

Period Ended December 31, 2003(c)

   $ 1.00    (e )    (e )    (e )    (e )   $ 1.00   0.46% (f)   $ 103,515   0.50% (g)   0.67% (g)   0.63% (g)   0.55% (g)

Year Ended December 31, 2004

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.94%     $ 84,415   0.50%     0.91%     0.62%     0.79%  

Year Ended December 31, 2005

   $ 1.00   0.03     0.03     (0.03 )   (0.03 )   $ 1.00   2.82%     $ 74,115   0.50%     2.76%     0.65%     2.62%  

Six Months Ended June 30, 2006 (Unaudited)

   $ 1.00   0.02     0.02     (0.02 )   (0.02 )   $ 1.00   2.14% (f)   $ 85,603   0.50% (g)   4.30% (g)   0.64% (g)   4.16% (g)

Class V Shares

                                                                        

Period Ended December 31, 2002(d)

   $ 1.00    (e )    (e )    (e )    (e )   $ 1.00   0.22% (f)   $ 324,950   0.56% (g)   1.11% (g)    (h )    (h )

Year Ended December 31, 2003

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.71%     $ 365,299   0.55%     0.70%      (h )    (h )

Year Ended December 31, 2004

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.89%     $ 479,706   0.55%     0.92%      (h )    (h )

Year Ended December 31, 2005

   $ 1.00   0.03     0.03     (0.03 )   (0.03 )   $ 1.00   2.75%     $ 318,973   0.57%     2.69%      (h )    (h )

Six Months Ended June 30, 2006 (Unaudited)

   $ 1.00   0.02     0.02     (0.02 )   (0.02 )   $ 1.00   2.11% (f)   $ 353,044   0.56% (g)   4.24% (g)    (h )    (h )

Class ID Shares

                                                                        

Period Ended June 30, 2006 (Unaudited)(i)

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.76% (f)   $ 15,474   0.48% (g)   4.61% (g)    (h )    (h )

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(c) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(d) For the period from October 21, 2002 (commencement of operations) through December 31, 2002.

 

(e) The amount is less than $0.005.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

(i) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Money Market Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Investments of the Fund are valued at amortized cost, which approximates market value. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issues from developing countries.

 

(d) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.

 

(e) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared daily and paid monthly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(f) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of

Securities

  

Unrealized
Appreciation

  

Unrealized
Depreciation

  

Net Unrealized
Appreciation
(Depreciation)*

$1,967,209,017

   $—   $—   $—

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(g) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of settled shares outstanding. Under this method, earnings are allocated based on the fair value of settled shares. Expenses specific to a class (such as administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Schedule    Fees

Up to $1 billion

    0.40%

Next $1 billion

    0.38%

Next $3 billion

    0.36%

$5 billion or more

    0.34%

 

Effective May 1, 2006, GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) limiting operating expenses from exceeding 0.50% for Class IV shares until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the Fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

For the six months ended June 30, 2006, the cumulative potential reimbursements for the Class IV shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF would be:

 

Amount
Fiscal Year
2003

  

Amount
Fiscal Year
2004

  

Amount
Fiscal Year
2005

  

Six Months
Ended
June 30,
2006

$103,443

   $116,217   $119,939   $53,221

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25%, 0.20% and 0.10% of the average daily net assets of Class I, Class IV, and Class V shares, respectively, of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $1,094,415 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, the Fund had purchases of $26,500,000 of U.S. Government securities.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that, for the one-, three-, and five years periods, the Fund underperformed the Fund’s benchmark, the iMoney Net First Tier Index, by 63, 62 and 67 basis points, respectively and ranked in the third quartile of the Fund’s Lipper Money Market Funds category for all periods. However, the Board considered that performance of the Fund placed the Fund in the second quintile of the Performance Group constructed by Lipper over the one-, two-, three-, and four-year periods presented in the Lipper report, and in the third quintile over the five-year period presented in the Lipper report. Lipper uses several factors in selecting the comparative peer groups, and one such factor is asset size comparability. Lipper attempts to select some funds whose total average net assets are larger and some funds whose total average net assets are smaller, within a reasonable size range. The Board next reviewed and considered the contractual advisory fee and breakpoints for the Fund and noted that the contractual advisory fee placed the Fund in the third quintile of the Fund’s Lipper-constructed Expense Group and the Fund’s total expense ratio placed the Fund below the median of the Fund’s Expense Group. Finally, the Board received and considered the adviser’s profitability and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other

Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A  

N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other

Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

20

Table of Contents

 

Gartmore GVIT Money Market Fund II

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
7    Financial Highlights
8    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GMM2

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Money Market Fund II

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Money Market II Fund                                       

Class Ia

      Actual    $ 1,000.00      $ 1,018.70      $ 5.11      1.02%
       Hypothetical1    $ 1,000.00      $ 1,019.84      $ 5.12      1.02%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

a The Money Market Fund II shares have no class designation.

 

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Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Money Market Fund II

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Commercial Paper      87.7%
Asset Backed Commercial Paper      9.2%
Government Bond      3.1%
Other assets in excess of liabilities      0.0%
      
       100.0%
      

 

 

Top Holdings       
Anheuser-Busch Cos., Inc. 5.20%, 07/03/06      3.7%
UBS Finance Delaware LLC, 5.27%, 07/03/06      3.4%
Falcon Asset Securitization Corp., 5.28%, 07/03/06      3.4%
ING (US) Funding LLC, 5.30%, 07/03/06      3.1%
Calyon North American, 5.25%, 07/05/06      3.1%
Old Line Funding Corp., 5.06%, 07/05/06      3.1%
National Australia Funding (DE), 5.21%, 07/11/06      3.1%
Federal Home Loan Bank, 5.12%, 07/12/06      3.1%
Abbey National N America LLC, 5.25%, 07/12/06      3.1%
HSBC USA, Inc., 5.25%, 07/13/06      3.1%
Other Assets      67.8%
      
       100.0%
      
Top Industries       
Banks - Foreign      15.9%
Personal Credit Institutions      9.1%
Asset Backed Trade & Term Receivables      8.6%
Financial Services      8.2%
Miscellaneous Manufacturing      6.2%
Variety Stores      5.7%
Bank Holdings Companies      4.2%
Asset Backed Securities - Yankee      4.1%
Brewery      3.7%
Agricultural Services      3.7%
Other Assets      30.6%
      
       100.0%
      

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND II

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Principal
Amount		    Value
              
COMMERCIAL PAPER (87.7%)       
Agricultural Services (3.7%)       
Cargill, Inc., 5.25%, 07/03/06 (b)   $ 3,000,000    $ 2,999,125
Cargill, Inc., 5.28%, 07/12/06 (b)     10,000,000      9,983,867
          
             12,982,992
          
Asset Backed Securities—Yankee (1.3%)
Greyhawk Funding LLC, 5.30%, 07/10/06 (b)     4,600,000      4,593,905
          
Asset Backed Trade & Term Receivables (8.6%)
Falcon Asset Securitization Corp.,
5.28%, 07/03/06 (b)		     12,000,000      11,996,480
Kitty Hawk Funding Corp., 5.25%, 07/05/06     7,550,000      7,545,596
Old Line Funding Corp., 5.06%, 07/05/06 (b)     11,000,000      10,993,547
          
             30,535,623
          
Bank Holdings Companies (4.2%)       
KBC Financial Products International,
5.33%, 07/03/06		     4,818,000      4,816,573
State Street Corp., 5.22%, 07/10/06     10,000,000      9,986,950
          
             14,803,523
          
Banks—Domestic (3.1%)             
HSBC USA, Inc., 5.25%, 07/13/06     11,000,000      10,980,750
          
Banks—Foreign (15.9%)             
Abbey National N America LLC,
5.25%, 07/12/06		     11,000,000      10,982,354
Calyon North American, 5.25%, 07/05/06     11,000,000      10,993,588
National Australia Funding (DE),
5.21%, 07/11/06		     11,000,000      10,984,081
Societe Generale, 5.24%, 07/14/06     11,000,000      10,979,186
UBS Finance Delaware LLC, 5.27%, 07/03/06     12,000,000      11,996,486
          
             55,935,695
          
    Principal
Amount		    Value
              
COMMERCIAL PAPER (continued)       
Brewery (3.7%)             
Anheuser-Busch Cos., Inc., 5.20%, 07/03/06 (b)   $ 13,000,000    $ 12,996,244
          
Consumer Durables (3.1%)             
Colgate-Palmolive Co., 5.21%, 07/14/06 (b)     11,000,000      10,979,305
          
Finance—Consumer Sales (1.7%)       
Harley-Davidson Funding Corp.,
5.11%, 07/07/06 (b)		     6,100,000      6,094,805
          
Finance Lessors (2.8%)             
PB Finance (Delaware), 5.30%, 07/10/06     10,000,000      9,986,750
          
Financial Services (8.2%)             
Private Export Funding Corp., 5.26%, 07/05/06 (b)     3,000,000      2,998,247
Prudential Funding LLC, 5.22%, 07/07/06     3,000,000      2,997,390
Prudential Funding LLC, 5.23%, 07/11/06     10,000,000      9,985,472
Rabobank USA Finance Corp.,
5.26%, 07/05/06		     3,000,000      2,998,247
Rabobank USA Finance Corp.,
5.24%, 07/13/06		     10,000,000      9,982,533
          
             28,961,889
          
Insurance Carriers (3.1%)             
ING (US) Funding LLC, 5.30%, 07/03/06     11,000,000      10,996,761
          
Miscellaneous Manufacturing (6.2%)       
Danaher Corp., 5.28%, 07/07/06 (b)     4,000,000      3,996,480
Danaher Corp., 5.17%, 07/11/06 (b)     8,000,000      7,988,289
Honeywell International, 5.24%, 07/05/06 (b)     10,000,000      9,994,178
          
             21,978,947
          
Mortgage Bankers (1.4%)       
Northern Rock PLC, 5.27%, 07/11/06     5,000,000      4,992,688
          
Newspapers (2.8%)             
Gannett Co., 5.13%, 07/05/06 (b)     10,000,000      9,994,300
          

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND II

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
COMMERCIAL PAPER (continued)       
Personal Credit Institutions (9.1%)       
American General Finance Corp.,
5.18%, 07/07/06		   $ 5,000,000    $ 4,995,683
American General Finance Corp.,
5.25%, 07/12/06		     5,000,000      4,991,979
General Electric Capital Corp., 5.14%, 07/05/06     6,000,000      5,996,573
General Electric Capital Corp., 5.22%, 07/07/06     6,000,000      5,994,780
Toyota Motor Credit Corp., 5.50%, 07/07/06     10,000,000      9,991,334
          
             31,970,349
          
Short-Term Business Credit (3.1%)       
American Express Credit Corp.,
5.23%, 07/14/06		     11,000,000      10,979,225
          
Variety Stores (5.7%)             
Target Corp.,
5.22%, 07/10/06		     10,000,000      9,986,950
Wal-Mart Stores, 5.18%, 07/06/06     10,000,000      9,992,806
          
             19,979,756
          
Total Commercial Paper            309,743,507
          
ASSET—BACKED COMMERCIAL PAPER (9.2%)
Asset Backed—Residential Mortgages (2.8%)
Ormond Quay Funding LLC, 5.33%, 07/05/06     10,000,000      9,994,078
          
Asset Backed CDO—Trust Preferred (3.6%)
Lockhart Funding LLC, 5.32%, 07/03/06 (b)     9,498,000      9,495,193
Lockhart Funding LLC, 5.25%, 07/06/06 (b)     3,191,000      3,188,673
          
             12,683,866
          
Asset Backed Securities—Yankee (2.8%)
Stanfield Victoria Funding LLC,
5.18%, 07/05/06		     10,000,000      9,994,244
          
Total Asset-Backed Commercial Paper            32,672,188
          
    Principal
Amount		    Value
              
GOVERNMENT BONDS (3.1%)       
U.S. Government Agencies (FHLB) (3.1%)
Federal Home Loan Bank, 5.12%, 07/12/06   $ 11,000,000    $ 10,982,791
          
Total Government Bonds            10,982,791
          
Total Investments (Cost $353,398,486) (a) — 100.0%      353,398,486
          
Other assets in excess of liabilities — 0.0%      28,102
          
NET ASSETS — 100.0%          $ 353,426,588
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Restricted Securities issued pursuant to Section 4(2) of the Securities Act of 1933. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees.

 

CDO Collateralized Debt Obligation

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND II

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $353,398,486)

    $ 353,398,486
    

Cash

      674

Interest and dividends receivable

      1,765

Receivable for capital shares issued

      2,162,746
    

Total Assets

      355,563,671
    

Liabilities:

       

Payable for capital shares redeemed

      1,835,275

Accrued expenses and other payables:

       

Investment advisory fees

      152,445

Fund administration and transfer agent fees

      20,972

Distribution fees

      76,223

Administrative servicing fees

      31,450

Other

      20,718
    

Total Liabilities

      2,137,083
    

Net Assets

    $ 353,426,588
    

Represented by:

       

Capital

    $ 353,424,300

Accumulated net realized gains (losses) from investment transactions

      2,288
    

Net Assets

    $ 353,426,588
    

Net Assets:

       

Class I Shares*

    $ 353,426,588
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares*

      353,424,300
    

Net asset value and offering price per share:**

       

Class I Shares*

    $ 1.00

 

 

* Shares have no class designation.

 

** Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 7,010,334  

Dividend income

      127,469  
    

Total Income

      7,137,803  
    

Expenses:

         

Investment advisory fees

      748,220  

Fund administration and transfer agent fees

      101,496  

Distribution fees

      374,110  

Administrative servicing fees Class I Shares*

      221,348  

Trustee fees

      10,633  

Other

      72,506  
    

Total expenses before earnings credit

      1,528,313  

Earnings credit (Note 5)

      (32,284 )
    

Total Expenses

      1,496,029  
    

Net Investment Income (Loss)

      5,641,774  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (42 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 5,641,732  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MONEY MARKET FUND II

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income

      $ 5,641,774      $ 6,675,341  

Net realized gains (losses) on investment transactions

        (42 )      2,366  
      
  

Change in net assets resulting from operations

        5,641,732        6,677,707  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (5,641,774 )      (6,675,341 )
      
  

Change in net assets from capital transactions

        92,870,083        67,734,090  
      
  

Change in net assets

        92,870,041        67,736,456  

Net Assets:

                    

Beginning of period

        260,556,547        192,820,091  
      
  

End of period

      $ 353,426,588      $ 260,556,547  
      
  

Accumulated net investment income (loss)

      $ —      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Proceeds from shares issued

      $ 822,463,601      $ 1,564,322,849  

Dividends reinvested

        5,641,767        6,902,929  

Cost of shares redeemed

        (735,235,285 )      (1,503,491,688 )
      
  
       $ 92,870,083      $ 67,734,090  
      
  

SHARE TRANSACTIONS:

                    

Issued

        822,463,601        1,564,322,850  

Reinvested

        5,641,767        6,902,929  

Redeemed

        (735,235,285 )      (1,503,491,688 )
      
  
         92,870,083        67,734,091  
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Money Market Fund II

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
  
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		  

Period Ended December 31, 2001(b)

   $ 1.00     (c)     (c)     (c)     (c)   $ 1.00   0.24% (d)   $ 37,411   1.30% (e)   0.93% (e)   1.45% (e)   0.78% (e)

Year Ended December 31, 2002

   $ 1.00   0.01     0.01     (0.01 )   (0.01 )   $ 1.00   0.70%     $ 110,041   0.99%     0.66%     0.99%     0.66%  

Year Ended December 31, 2003

   $ 1.00     (c)     (c)     (c)     (c)   $ 1.00   0.18%     $ 147,736   0.95%     0.17%     0.99%     0.13%  

Year Ended December 31, 2004

   $ 1.00     (c)     (c)     (c)     (c)   $ 1.00   0.41%     $ 192,820   0.96%     0.43%     0.99%     0.40%  

Year Ended December 31, 2005

   $ 1.00   0.02     0.02     (0.02 )   (0.02 )   $ 1.00   2.26%     $ 260,557   1.01%     2.24%       (f)   (f )

Six Months Ended June 30, 2006 (Unaudited)

   $ 1.00   0.02     0.02     (0.02 )   (0.02 )   $ 1.00   1.87% (d)   $ 353,427   1.02% (e)   3.75% (e)     (f)   (f )

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) For the period from October 2, 2001 (commencement of operations) through December 31, 2001.

 

(c) The amount is less than $0.005.

 

(d) Not annualized.

 

(e) Annualized.

 

(f) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Money Market Fund II (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Investments of the Funds are valued at amortized cost, which approximates market value. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issues from developing countries.

 

(d) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.

 

(e) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared daily and paid monthly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(f) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
     

Unrealized

Appreciation

      Unrealized
Depreciation
      Net Unrealized
Appreciation
(Depreciation)*
       $ 353,398,486      $ —      $ —      $ —

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(g) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocation is based on the fair value of settled shares outstanding. Under this method, earnings are allocated based on the fair value of settled shares.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule

    Fees    

Up to $1 billion

    0.50%

Next $1 billion

    0.48%

Next $3 billion

    0.46%

$5 billion or more

    0.44%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $227,244 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, the Fund had purchases of $228,785,552 of U.S. Government securities.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following such review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that, for the one- and three-year periods, the Fund underperformed its benchmark, the iMoney Net First Tier Index, by 104 and 106 basis points, respectively, and ranked in the fourth quartile of the Lipper Money Market Funds category for both periods. The Board also considered that performance of the Fund placed it in the fifth quintile of the Performance Group constructed by Lipper over the one-, two-, and three-year period presented in the Report. The Board discussed the Fund’s performance with Gartmore who reminded the Board that the Fund was designed for high inflows and outflows as part of a tactical market allocation product, to accommodate short-term trading. Therefore, the Fund must be managed with a much shorter duration, and the Fund has higher expenses (as discussed below), each of which adversely affects relative performance.

 

The Board then reviewed and considered the contractual advisory fee and breakpoints for the Fund and noted that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Expense Group constructed by Lipper. The Trustees considered that total expenses for the Fund placed the Fund above the median of the Fund’s Expense Group. The Board also reviewed and considered the Adviser’s profitability and concluded it was not excessive.

 

The Board concluded that the Fund has performed as expected, given the need to manage to a shorter duration, and the higher expenses incurred by the Fund. The Board also concluded that while the Fund’s advisory fee when compared to the advisory fees of the Lipper Expense Group is slightly higher than the median of the advisory fees of the Lipper Expense Group, it is

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

within the range of the advisory fees charged by the funds in the Lipper Expense Group. Also, while the Fund’s total expenses are higher than the median of the total expenses of the funds in the Lipper Expense Group, this too is understandable given the higher distribution expenses, and the requirements of the Fund to accommodate short-term trading.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A  

N/A

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

Table of Contents

 

J.P. Morgan GVIT Balanced Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
24    Statement of Assets and Liabilities
24    Statement of Operations
25    Statements of Changes in Net Assets
26    Financial Highlights
27    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-JPGB (8/06)

Table of Contents

 

Shareholder

Expense Example

J.P. Morgan GVIT Balanced Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
J.P. Morgan GVIT Balanced Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,022.50      $ 5.06      1.01%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.07      1.01%

Class IV

      Actual    $ 1,000.00      $ 1,023.00      $ 4.61      0.92%
       Hypothetical1    $ 1,000.00      $ 1,020.24      $ 4.62      0.92%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

J.P. Morgan GVIT Balanced Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Common Stocks      61.2%
Mortgage-Backed Securities      21.9%
Commercial Paper      10.7%
Corporate Bonds      9.3%
U.S. Government Long-Term Obligations      5.3%
Cash Equivalents      2.1%
Liabilities in excess of other assets      -10.5%
      
       100.0%
      

 

 

Top Holdings*       
Federal National Mortgage Association, TBA, 6.50%, 08/01/32      2.3%
Federal Home Loan Mortgage Corporation, TBA, 5.50%, 08/15/36      2.2%
Federal Home Loan Mortgage Corporation, TBA, 6.00%, 08/15/36      1.9%
Exxon Mobil Corp.      1.6%
General Electric Co.      1.3%
Citigroup, Inc.      1.3%
Bank of America Corp.      1.1%
Federal National Mortgage Association, TBA, 5.50%, 08/01/19      0.9%
Altria Group, Inc.      0.9%
U.S. Treasury Note, 4.88%, 05/31/11      0.9%
Other Assets      85.6%
      
       100.0%
      

 

Top Industries       
Financial Services      21.5%
Federal National Mortgage Association      7.2%
Federal Home Loan Mortgage Corporation      6.4%
Oil & Gas      6.3%
Financial      4.0%
Insurance      3.7%
U.S. Treasury Notes      3.6%
Financial/Banks      3.5%
Drugs      3.1%
Retail      2.9%
Other Assets      37.8%
      
       100.0%
      

 

Top Countries       
United States      82.8%
United Kingdom      3.5%
Japan      3.0%
France      1.5%
Switzerland      0.7%
Netherlands      0.7%
Bermuda      0.6%
Germany      0.6%
Spain      0.6%
Italy      0.6%
Other Assets      5.4%
      
       100.0%
      

 

* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (61.2%)           
AUSTRALIA (0.3%)           
Banking (0.1%)           
Australia & New Zealand Banking Group Ltd. (f)   12,585    $ 248,751
Westpac Banking Corp. (f)   4,229      72,869
        
           321,620
        
Financial Services (0.2%)           
Macquarie Bank Ltd. (f)   2,865      146,616
Macquarie Infrastructure Group (f)   96,301      240,203
        
           386,819
        
           708,439
        
AUSTRIA (0.1%)           
Building & Construction (0.1%)           
Wienerberger AG (f)   2,802      132,959
        
Machinery (0.0%)           
Andritz AG (f)   374      61,732
        
           194,691
        
BELGIUM (0.1%)           
Banking (0.0%)           
KBC Groep NV (f)   896      96,153
        
Chemicals (0.1%)           
Solvay SA (f)   901      103,514
        
           199,667
        
BRAZIL (0.0%)           
Telecommunications (0.0%)           
Telekom Austria AG (f)   2,195      48,864
        
DENMARK (0.3%)           
Automotive (0.1%)           
Volkswagen AG (f)   3,618      181,117
        
Financial Services (0.2%)           
Deutsche Bank AG (f)   2,529      284,056
        
Insurance (0.0%)           
Allianz AG (f)   429      67,502
        
Pharmaceuticals (0.0%)           
Novo Nordisk A/S (f)   655      41,650
        
Transportation Services (0.0%)           
A P Moller — Maersk A/S (f)   7      54,615
        
           628,940
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FINLAND (0.2%)           
Computer Software & Services (0.0%)       
TietoEnator Oyj (f)   966    $ 27,873
        
Machinery (0.1%)           
Metso Corp. (f)   4,105      148,636
        
Paper & Related Products (0.1%)       
Stora Enso (f)   9,953      138,919
        
Wireless Equipment (0.0%)           
Nokia Oyj (f)   3,068      62,190
        
           377,618
        
FRANCE (1.2%)           
Banking (0.3%)           
Banque Nationale de Paris (f)   3,873      370,310
Societe Generale (f)   1,801      264,404
        
           634,714
        
Building & Construction (0.0%)           
Bouygues SA (f)   979      50,265
        
Building Products (0.0%)           
Lafarge SA (f)   425      53,265
        
Chemicals—Diversified (0.1%)           
Arkema (b)   2,917      113,812
        
Chemicals—Specialty (0.1%)           
Rhodia SA (b) (f)   55,338      109,977
        
Electric Utilities (0.1%)           
Suez SA (f)   3,793      157,498
        
Financial Services (0.1%)           
Credit Agricole SA (f)   4,100      155,577
        
Insurance (0.1%)           
Axa (f)   7,266      235,142
        
Manufacturing (0.1%)           
Compagnie de Saint-Gobain (f)   3,015      215,120
        
Oil & Gas (0.2%)           
Total SA (f)   5,952      390,952
        
Pharmaceuticals (0.1%)           
Sanofi-Aventis (f)   2,581      251,439
        
Telecommunications (0.0%)           
France Telecom SA (f)   4,093      87,322
        

 

3

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FRANCE (continued)           
Television (0.0%)           
Societe Television Francaise 1 (f)   1,364    $ 44,435
        
           2,499,518
        
GERMANY (0.4%)           
Auto Manufacturers (0.1%)           
Bayerische Motoren Werke AG (f)   1,741      86,813
Porsche AG (f)   111      107,366
        
           194,179
        
Auto Parts & Equipment (0.1%)           
Continental AG (f)   1,615      164,986
        
Chemicals (0.2%)           
Bayer AG (f)   5,245      241,007
Lanxess (b) (f)   3,318      130,388
        
           371,395
        
           730,560
        
GREECE (0.2%)           
Building Materials (0.0%)           
Titan Cement Co. (f)   2,065      96,946
        
Gambling (0.2%)           
OPAP SA (f)   5,876      213,521
        
           310,467
        
HONG KONG (0.2%)           
Diversified Operations (0.2%)           
Swire Pacific Ltd., Class A (f)   24,000      247,718
        
Real Estate (0.0%)           
Henderson Land Development Co. (f)   14,000      72,804
        
           320,522
        
IRELAND (0.0%)           
Building Products (0.0%)           
C.R.H. PLC (f)   1,681      54,718
        
ITALY (0.5%)           
Building Products (0.1%)           
Buzzi Unicem SPA (f)   5,264      120,626
        
Commercial Banks (0.1%)           
Banche Popolari Unite Scpa (f)   5,940      153,794
Banco Popolare di Verona e Novara Scrl (f)   1,804      48,326
        
           202,120
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
ITALY (continued)           
Insurance (0.1%)           
Assicurazioni Generali SPA (f)   4,454    $ 161,949
        
Oil & Gas (0.2%)           
Eni SPA (f)   16,525      485,332
        
           970,027
        
JAPAN (3.0%)           
Automotive (0.2%)           
Honda Motor Co. Ltd. (f)   8,400      266,865
Toyota Motor Corp. (f)   1,900      99,320
        
           366,185
        
Banking (0.1%)           
Sumitomo Mitsui Financial Group, Inc. (f)   11      116,508
Sumitomo Trust & Banking Co. Ltd. (The) (f)   4,000      43,800
        
           160,308
        
Building & Construction (0.1%)           
Obayashi Corp. (f)   21,000      144,442
        
Building—Residential/Commercial (0.0%)
Daiwa House Industry Co. Ltd. (f)   3,000      47,983
        
Chemicals (0.3%)           
Asahi Kasei Corp. (f)   18,000      117,734
Dainippon Ink & Chemical,
Inc. (f)		   20,000      75,207
Mitsubishi Chemical Holdings Corp. (f)   25,500      159,456
Mitsui Chemicals, Inc. (f)   19,000      124,193
Showa Denko KK (f)   30,000      133,559
        
           610,149
        
Computer Software & Services (0.2%)       
Capcom Co. Ltd. (f)   2,000      23,995
CSK Corp. (f)   2,100      95,887
Elpida Memory, Inc. (b) (f)   2,600      97,846
Fujitsu Ltd. (f)   26,000      201,541
Hitachi Information Systems Ltd. (f)   3,900      93,263
        
           512,532
        
Consumer Products (0.1%)           
Shiseido Co. Ltd. (f)   8,000      156,990
        
Education (0.0%)           
Benesse Corp. (f)   800      27,615
        

 

4

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Electric Utilities (0.4%)           
Chubu Electric Power Co., Inc. (f)   8,200    $ 221,524
Kyushu Electric Power Co., Inc. (f)   3,800      88,379
Matsushita Electric Industrial Co. Ltd. (f)   8,000      168,934
Tokyo Electric Power Co. (The) (f)   14,600      403,465
        
           882,302
        
Electrical & Electronic (0.0%)           
Toshiba Corp. (f)   13,000      84,898
        
Electrical Equipment (0.1%)           
Mitsubishi Electric Corp. (f)   20,000      160,350
        
Electronic Components (0.0%)           
NEC Corp. (f)   14,000      74,682
        
Financial Services (0.3%)           
Daiwa Securities Group, Inc. (f)   13,000      154,932
Mitsubishi UFJ Financial Group, Inc. (f)   17      238,347
Mizuho Financial Group, Inc. (f)   14      118,753
ORIX Corp. (f)   470      114,706
        
           626,738
        
Food Products (0.2%)           
Yakult Honsha Co. Ltd. (f)   11,600      315,064
        
Import/Export (0.1%)           
Itochu Corp. (f)   13,000      114,432
Sumitomo Corp. (f)   8,000      105,781
        
           220,213
        
Office Equipment & Supplies (0.2%)       
Canon, Inc. (f)   7,050      345,576
Ricoh Co. Ltd. (f)   6,000      117,722
        
           463,298
        
Oil & Gas (0.1%)           
Tokyo Gas Co. Ltd. (f)   42,000      197,971
        
Pharmaceuticals (0.3%)           
Chugai Pharmaceutical Ltd. (f)   10,200      208,310
Daiichi Sankyo Co. Ltd. (f)   11,500      316,553
Suzuken Co. Ltd. (f)   700      27,776
        
           552,639
        
Photographic Products (0.1%)           
Konica Minolta Holdings, Inc. (f)   14,500      183,503
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Real Estate (0.1%)           
Cheung Kong Holdings Ltd. (f)   16,000    $ 173,593
Daito Trust Construction Co. (f)   300      16,645
        
           190,238
        
Tobacco (0.1%)           
Japan Tobacco, Inc. (f)   45      164,368
        
Toys (0.0%)           
Nintendo Co. Ltd. (f)   200      33,610
        
           6,176,078
        
NETHERLANDS (0.7%)           
Banking (0.1%)           
ABN AMRO Holding NV (f)   5,243      143,568
        
Building & Construction (0.0%)           
Koninklijke BAM Groep NV (f)   2,545      50,491
        
Distribution (0.1%)           
Hagemeyer NV (b) (f)   32,196      148,301
        
Financial Services (0.3%)           
ING Groep NV (f)   12,865      504,990
        
Human Resources (0.1%)           
USG People NV (f)   1,878      143,674
Vedior NV (f)   1,953      40,984
        
           184,658
        
Insurance (0.0%)           
Aegon NV (f)   2,476      42,264
        
Oil & Gas (0.0%)           
Royal Dutch Shell PLC (f)   2,663      89,495
        
Printing & Publishing (0.1%)           
Wolters Kluwer NV (f)   4,978      117,500
        
Publishing (0.0%)           
Wegener NV (f)   4,448      66,192
        
           1,347,459
        
NORWAY (0.0%)           
Food & Beverage (0.0%)           
Orkla ASA (f)   1,001      46,354
        
Transportation & Shipping (0.0%)       
Bergesen Worldwide Gas ASA (f)   3,668      53,883
        
           100,237
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SINGAPORE (0.1%)           
Electronic Components (0.0%)           
Venture Corporation Ltd. (f)   11,000    $ 73,782
        
Semiconductors (0.0%)           
Chartered Semiconductor Manufacturing Ltd. (b) (f)   47,000      40,757
        
Telecommunications (0.1%)           
Singapore Telecommunications Ltd. (f)   103,000      165,483
        
           280,022
        
SPAIN (0.6%)           
Banking (0.2%)           
Banco Bilbao Vizcaya Argentaria SA (f)   18,779      386,376
        
Building & Construction (0.0%)           
Actividades de Construcciony Servicios SA (f)   2,438      101,583
        
Oil & Gas (0.1%)           
Repsol YPF SA   8,372      239,729
        
Retail (0.1%)           
Industria de Diseno Textil SA (f)   4,251      179,194
        
Telecommunications (0.2%)           
Telefonica SA (f)   25,231      419,358
        
           1,326,240
        
SWEDEN (0.2%)           
Banking (0.0%)           
Svenska Handelsbanked AB, A Shares (f)   834      21,492
        
Machinery (0.0%)           
Atlas Copco AB (f)   2,936      76,429
        
Manufacturing (0.2%)           
AB SKF (f)   15,489      244,356
        
Retail (0.0%)           
Hennes & Mauritz AB, B Shares (f)   1,900      73,595
        
Wireless Equipment (0.0%)           
Telefonakitiebolaget LM Ericsson, B Shares (f)   13,222      43,650
        
           459,522
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWITZERLAND (0.7%)           
Building Products (0.1%)           
Holcim Ltd. (f)   2,003    $ 153,595
        
Chemicals-Specialty (0.1%)           
Clariant AG (f)   8,891      125,917
        
Financial Services (0.2%)           
Credit Suisse Group (f)   1,297      72,383
UBS AG (f)   2,989      327,285
        
           399,668
        
Food & Beverage (0.0%)           
Barry Callebaut AG (b) (f)   139      58,677
        
Medical-Drugs (0.1%)           
Serono SA (f)   162      111,536
        
Pharmaceuticals (0.1%)           
Roche Holding AG (f)   2,185      360,655
        
Retail (0.1%)           
Compagnie Finaciere Richemont AG (f)   5,386      246,163
        
           1,456,211
        
UNITED KINGDOM (3.5%)           
Auto Parts & Equipment (0.1%)           
Renault SA (f)   1,499      160,835
        
Banking (0.1%)           
UniCredito Italiano SPA (f)   36,664      286,719
        
Brewery (0.0%)           
Scottish & Newcastle PLC (f)   3,695      34,787
        
Building—Residential/Commercial (0.1%)
Taylor Woodrow PLC (f)   21,236      130,946
        
Business Services (0.1%)           
Michael Page International PLC (f)   17,586      113,864
        
Chemicals (0.1%)           
Yule Catto & Co. PLC (f)   25,993      109,093
        
Consumer Durables (0.1%)           
Reckitt Benckiser PLC (f)   7,639      285,005
        
Distribution (0.1%)           
Wolseley PLC (f)   7,294      160,555
        
Diversified Minerals (0.0%)           
Anglo American PLC (f)   1,596      65,106
        

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Diversified Operations (0.1%)           
LVMH Moet Hennessy Louis Vuitton SA (f)   2,455    $ 243,303
        
Electric Utilities (0.1%)           
E.ON AG (f)   574      65,960
International Power PLC (f)   24,389      128,081
Scottish & Southern Energy PLC (f)   1,206      25,646
        
           219,687
        
Financial Services (0.7%)           
3i Group PLC (f)   7,791      129,695
Barclays PLC (f)   23,386      265,082
HBOS PLC (f)   5,063      87,854
HSBC Holdings PLC (f)   38,317      674,122
Legal & General Group PLC (f)   41,107      97,289
Royal Bank of Scotland Group PLC (f)   8,608      282,527
        
           1,536,569
        
Food & Beverage (0.2%)           
Cadbury Schweppes PLC (f)   5,650      54,402
Premier Foods PLC (f)   34,032      191,950
Tate & Lyle PLC (f)   10,902      121,953
        
           368,305
        
Gambling (0.0%)           
Sportingbet PLC (f)   13,639      99,155
        
Human Resources (0.0%)           
Hays PLC (f)   29,005      72,306
        
Insurance (0.2%)           
Aviva PLC (f)   16,613      235,095
Prudential PLC (f)   12,339      139,513
        
           374,608
        
Metals (0.0%)           
Rio Tinto PLC (f)   1,154      60,758
        
Mining (0.0%)           
BHP Billiton PLC (f)   2,704      52,602
        
Multimedia (0.1%)           
Vivendi Universal SA (f)   4,126      144,116
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Oil & Gas (0.4%)           
BG Group PLC (f)   19,738    $ 263,429
BP PLC (f)   47,528      551,016
        
           814,445
        
Pharmaceuticals (0.2%)           
AstraZeneca PLC (f)   3,321      199,674
GlaxoSmithKline PLC (f)   10,961      305,857
        
           505,531
        
Printing & Publishing (0.1%)           
EMAP PLC (f)   4,110      64,594
Trinity Mirror PLC (f)   8,023      72,311
        
           136,905
        
Retail (0.2%)           
Next PLC (f)   3,829      115,380
Tesco PLC (f)   43,685      269,639
        
           385,019
        
Technology (0.1%)           
Cookson Group PLC (f)   10,682      103,582
        
Telecommunications (0.3%)           
BT Group PLC (f)   11,860      52,392
Vodafone Group PLC (f)   217,627      463,136
        
           515,528
        
Tobacco (0.1%)           
Imperial Tobacco Group PLC (f)   3,417      105,377
        
Transportation (0.0%)           
British Airways PLC (b) (f)   15,456      97,903
        
Water (0.0%)           
Northumbrian Water Group PLC (f)   15,827      71,661
        
           7,254,270
        
UNITED STATES (48.8%)           
Advertising (0.1%)           
Omnicom Group, Inc.   2,850      253,907
        
Aerospace & Defense (1.1%)           
Armor Holdings, Inc. (b)   1,300      71,279
Boeing Co. (The)   5,150      421,836
General Dynamics Corp.   1,750      114,555

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Aerospace & Defense (continued)       
Goodrich Corp.   1,400    $ 56,406
Lockheed Martin Corp.   5,275      378,429
Northrop Grumman Corp.   11,225      719,073
Orbital Sciences Corp. (b)   2,900      46,806
Raytheon Co.   9,250      412,273
        
           2,220,657
        
Agricultural Operations (0.2%)           
Archer-Daniels-Midland Co.   7,100      293,088
Seaboard Corp.   35      44,800
        
           337,888
        
Apparel (0.3%)           
Coach, Inc. (b)   8,400      251,160
Nike, Inc., Class B   2,700      218,700
Skechers U.S.A., Inc. (b)   825      19,891
Steven Madden Ltd.   250      7,405
Talbots, Inc. (The)   1,600      29,520
        
           526,676
        
Auto Parts & Equipment (0.1%)           
Arvinmeritor, Inc.   1,525      26,215
Autoliv, Inc.   1,300      73,541
AutoNation, Inc. (b)   3,450      73,967
CSK Auto Corp. (b)   5,750      68,828
TRW Automotive Holdings Corp. (b)   1,725      47,058
        
           289,609
        
Broadcast Media/Cable Television (1.2%)
CBS Corp., Class B   19,300      522,065
Cumulus Media, Inc. (b)   1,300      13,871
E.W. Scripps Co., Class A   8,000      345,120
News Corp., Class A   47,850      917,763
Sinclair Broadcast Group, Inc., Class A   5,575      47,722
Time Warner, Inc.   1,600      27,680
Viacom, Inc., Class B (b)   16,500      591,360
        
           2,465,581
        
Building—Residential & Commercial (0.1%)
D.R. Horton, Inc.   1,200      28,584
Lennar Corp., Class A   1,300      57,681
NVR, Inc. (b)   100      49,125
Toll Brothers, Inc. (b)   4,900      125,293
        
           260,683
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Business Services (0.7%)           
Acxiom Corp.   2,500    $ 62,500
BEA Systems, Inc. (b)   5,500      71,995
Catalina Marketing Corp.   2,750      78,265
Ceridian Corp. (b)   2,600      63,544
Convergys Corp. (b)   3,850      75,075
CSG Systems International, Inc. (b)   500      12,370
eBay, Inc. (b)   16,300      477,426
Fair Issac Corp.   100      3,631
FedEx Corp.   2,200      257,092
Global Payment, Inc.   1,250      60,688
Services Acquisition Corp. International (b)   1,525      15,098
Spherion Corp. (b)   9,025      82,308
Sykes Enterprises, Inc. (b)   5,475      88,476
TeleTech Holdings, Inc. (b)   1,725      21,839
        
           1,370,307
        
Capital Goods (0.1%)           
PerkinElmer, Inc.   2,425      50,683
Stanley Works (The)   1,550      73,191
        
           123,874
        
Chemicals/Diversified (0.6%)           
Air Products & Chemicals, Inc.   3,300      210,936
Dow Chemical Co.   6,600      257,598
Innospec, Inc.   800      20,336
Praxair, Inc.   8,600      464,400
Rohm & Haas Co.   3,800      190,456
Spartech Corp.   1,000      22,600
        
           1,166,326
        
Communication Equipment (1.2%)
CommScope, Inc. (b)   600      18,852
Corning, Inc. (b)   29,900      723,281
InterDigital Communications Corp. (b)   1,425      49,747
Motorola, Inc.   38,675      779,301
Qualcomm, Inc.   19,200      769,344
Tellabs, Inc. (b)   8,400      111,804
        
           2,452,329
        
Computer Equipment (1.7%)           
Advanced Digital Information Corp. (b)   400      4,708
Apple Computer, Inc. (b)   1,700      97,104
Arrow Electronics, Inc. (b)   2,250      72,450

 

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J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Computer Equipment (continued)       
Avnet, Inc. (b)   2,750    $ 55,055
Avocent Corp (b)   800      21,000
Cirrus Logic, Inc. (b)   4,025      32,764
EMC Corp. (b)   8,500      93,245
Hewlett-Packard Co.   32,925      1,043,064
International Business Machines Corp.   19,700      1,513,353
Juniper Networks, Inc. (b)   8,700      139,113
Palm, Inc. (b)   3,150      50,715
Sun Microsystems, Inc. (b)   47,700      197,955
Western Digital Corp. (b)   3,550      70,326
        
           3,390,852
        
Computer Software & Services (2.4%)
Aspen Technology, Inc. (b)   5,150      67,568
Black Box Corp.   1,525      58,453
BMC Software, Inc. (b)   7,400      176,860
Cadence Design Systems, Inc. (b)   4,100      70,315
Cisco Systems, Inc. (b)   40,900      798,777
Citrix Systems, Inc. (b)   1,700      68,238
Computer Sciences Corp. (b)   1,250      60,550
EarthLink, Inc. (b)   4,625      40,053
Emulex Corp. (b)   4,575      74,435
EPIQ Systems, Inc. (b)   1,150      19,136
Google, Inc., Class A (b)   1,050      440,297
infoUSA, Inc.   500      5,155
Inter-Tel, Inc.   2,300      48,438
Intuit, Inc. (b)   1,300      78,507
Magma Design Automation, Inc. (b)   800      5,880
Microsoft Corp.   61,700      1,437,609
MicroStrategy, Inc. (b)   400      39,008
NCR Corp. (b)   1,800      65,952
NVIDIA Corp. (b)   2,700      57,483
Oracle Corp. (b)   71,725      1,039,295
SonicWALL, Inc. (b)   2,750      24,723
Sybase, Inc. (b)   6,475      125,615
Synopsys, Inc. (b)   2,425      45,517
TriZetto Group, Inc. (The) (b)   5,475      80,975
Unisys Corp. (b)   6,075      38,151
        
           4,966,990
        
Conglomerates (0.8%)           
Johnson Controls, Inc.   5,800      476,876
Tyco International Ltd.   25,000      687,500
United Technologies Corp.   8,300      526,386
        
           1,690,762
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Construction & Building Materials (0.4%)
Caterpillar, Inc.   4,800    $ 357,504
Centex Corp.   2,400      120,720
Deere & Co.   2,500      208,725
LSI Industries, Inc.   400      6,796
Sherwin Williams Co.   1,575      74,781
Texas Industries, Inc.   600      31,860
USG Corp. (b)   775      56,521
        
           856,907
        
Consumer Products (1.1%)           
Black & Decker Corp.   900      76,014
Colgate-Palmolive Co.   2,350      140,765
CSS Industries, Inc.   200      5,750
Fortune Brands, Inc.   100      7,101
Furniture Brands International, Inc.   2,825      58,873
Kellwood Co.   800      23,416
Kimberly-Clark Corp.   8,275      510,568
Newell Rubbermaid, Inc.   2,850      73,616
Playtex Products, Inc. (b)   3,075      32,072
Procter & Gamble Co.   21,700      1,206,519
Smurfit-Stone Container Corp. (b)   9,050      99,007
Stanley Furniture Co., Inc.   1,100      26,367
Whirlpool Corp.   850      70,253
        
           2,330,321
        
Containers & Packaging (0.0%)           
Graphic Packaging Corp. (b)   8,775      33,257
Silgan Holdings, Inc.   1,225      45,338
        
           78,595
        
Diversified Manufacturing Operations (0.4%)
Danaher Corp.   4,600      295,872
Illinois Tool Works, Inc.   3,100      147,250
Ingersoll-Rand Co.   6,700      286,626
SPX Corp.   1,700      95,115
Teleflex, Inc.   1,625      87,783
        
           912,646
        
Drugs (3.1%)           
Abbott Laboratories   16,100      702,120
Adolor Corp. (b)   1,050      26,261
Alpharma, Inc., Class A   225      5,409
Amgen, Inc. (b)   19,450      1,268,723
Amylin Pharmaceuticals, Inc. (b)   475      23,451
Barr Pharmaceuticals, Inc. (b)   100      4,769
Cardiome Pharma Corp. (b)   1,725      15,249

 

9

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J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Drugs (continued)           
CV Therapeutics, Inc. (b)   250    $ 3,493
Cypress Bioscience (b)   3,225      19,802
Eli Lilly & Co.   5,900      326,093
Endo Pharmaceuticals Holdings, Inc. (b)   2,500      82,450
Illumina, Inc. (b)   2,425      71,926
ImClone Systems, Inc. (b)   1,850      71,484
Johnson & Johnson, Inc.   8,000      479,360
King Pharmaceuticals, Inc. (b)   4,350      73,950
Martek Biosciences Corp. (b)   175      5,066
Medicis Pharmaceutical Corp., Class A   200      4,800
Merck & Co., Inc.   31,675      1,153,919
MGI Pharma, Inc. (b)   500      10,750
Myogen, Inc. (b)   850      24,650
Nektar Therapeutic (b)   1,450      26,593
OSI Pharmaceuticals, Inc. (b)   1,300      42,848
Pfizer, Inc.   52,900      1,241,562
Schering-Plough Corp.   27,100      515,713
Theravance, Inc. (b)   500      11,440
United Therapeutics Corp. (b)   350      20,220
Watson Pharmaceutical, Inc. (b)   1,300      30,264
        
           6,262,365
        
Electrical Equipment (1.6%)           
Eaton Corp.   5,100      384,540
EMCOR Group, Inc. (b)   1,125      54,754
Energizer Holdings, Inc. (b)   1,400      81,998
General Electric Co.   82,300      2,712,608
        
           3,233,900
        
Electrical Services (1.7%)           
American Electric Power Co., Inc.   400      13,700
CMS Energy Corp. (b)   13,200      170,808
Consolidated Edison, Inc.   1,400      62,216
Duke Energy Corp.   19,900      584,462
Edison International   11,700      456,300
FirstEnergy Corp.   5,150      279,182
Florida Power & Light, Inc.   1,400      57,932
Headwaters, Inc. (b)   200      5,112
Northeast Utilities   9,800      202,566
NorthWestern Corp.   1,625      55,819
Pinnacle West Capital Corp.   3,300      131,703
PPL Corp.   7,300      235,790
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Electrical Services (continued)           
Scana Corp.   2,200    $ 84,876
Sempra Energy   1,625      73,905
Sierra Pacific Resources (b)   14,100      197,400
TXU Corp.   8,350      499,247
Westar Energy, Inc.   700      14,735
Xcel Energy, Inc.   18,100      347,158
        
           3,472,911
        
Electronics (0.2%)           
Coherent, Inc. (b)   2,325      78,422
Lam Research Corp. (b)   1,600      74,592
Mettler Toledo International, Inc. (b)   300      18,171
Molecular Devices Corp. (b)   1,000      30,560
MTS Systems Corp.   2,425      95,812
Omnivision Technologies, Inc. (b)   3,750      79,200
Sanmina-SCI Corp. (b)   14,200      65,320
Solectron Corp. (b)   400      1,368
        
           443,445
        
Financial (4.0%)           
American Express Co.   13,300      707,826
AmeriCredit Corp. (b)   6,175      172,406
BISYS Group, Inc. (b)   1,000      13,700
CharterMac   900      16,839
CIT Group, Inc.   5,300      277,137
Citigroup, Inc.   55,500      2,677,319
CompuCredit Corp. (b)   1,725      66,309
Countrywide Credit Industries, Inc.   8,100      308,448
Credit Acceptance Corp (b)   300      8,142
Dollar Financial Corp. (b)   1,264      22,752
E*TRADE Financial Corp. (b)   3,200      73,024
Fannie Mae   700      33,670
Federal Agricultural Mortgage Corp.,   3,875      107,338
Class C           
Federated Investors, Inc.   1,300      40,950
Franklin Resources, Inc.   1,250      108,513
Freddie Mac   10,200      581,502
Gladstone Capital Corp.   400      8,556
Golden West Financial Corp.   2,250      166,950
Goldman Sachs Group, Inc.   7,550      1,135,746
Lehman Brothers Holdings, Inc.   3,650      237,798
Mellon Financial Corp.   900      30,987

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Financial (continued)           
Merrill Lynch & Co., Inc.   1,300    $ 90,428
Morgan Stanley   14,200      897,581
Radian Group, Inc.   1,200      74,136
Raymond James Financial, Inc.   2,050      62,054
Washington Mutual, Inc.   7,916      360,811
World Acceptance Corp. (b)   600      21,312
        
           8,302,234
        
Financial/Banks (3.5%)           
1st Source Corp.   200      6,766
A.G. Edwards, Inc.   325      17,979
BancFirst Corp.   2,325      104,044
Bank of America Corp.   46,300      2,227,029
Bank of New York Co., Inc.   1,600      51,520
BB&T Corp.   3,900      162,201
Camden National Corp.   700      27,930
Capital One Financial Corp.   4,500      384,525
Comerica, Inc.   4,500      233,955
Commerce Bancshares, Inc.   300      15,015
Community Bank System, Inc.   400      8,068
Corus Bankshares, Inc.   1,225      32,071
FNB Corp.   1,900      70,300
Great Southern Bancorp, Inc.   1,900      58,007
Heartland Financial USA, Inc.   1,325      35,311
Horizon Financial Corp.   700      19,201
KeyCorp   1,800      64,224
Lakeland Financial Corp.   1,400      34,006
Marshall & Ilsley Corp.   5,000      228,700
New York Community Bancorp, Inc.   6,200      102,362
PNC Financial Services Group   3,925      275,417
Simmons First National Corp., Class A   2,225      64,547
State Street Corp.   6,600      383,394
Suffolk Bancorp   1,425      46,669
Taylor Capital Group, Inc.   700      28,567
TCF Financial Corp.   11,350      300,208
U.S. Bancorp   29,300      904,784
W Holding Co., Inc.   800      5,320
Wachovia Corp.   4,897      264,830
Wells Fargo Co.   16,800      1,126,943
        
           7,283,893
        
Funeral Services (0.0%)           
Alderwoods Group, Inc. (b)   2,625      51,083
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Food & Beverage (1.1%)           
Coca-Cola Co. (The)   24,500    $ 1,053,989
Coca-Cola Enterprises, Inc.   11,400      232,218
Del Monte Foods Co.   8,650      97,140
General Mills, Inc.   4,400      227,304
Kellogg Co.   1,100      53,273
Kraft Foods, Inc.   10,700      330,630
M & F Worldwide Corp. (b)   1,625      26,163
Pilgrim’s Pride Corp.   400      10,320
SYSCO Corp.   8,400      256,704
        
           2,287,741
        
Healthcare (2.0%)           
Becton, Dickinson & Co.   300      18,339
Boston Scientific Corp. (b)   3,200      53,888
Coventry Health Care, Inc. (b)   1,362      74,828
Datascope Corp.   1,225      37,779
Emdeon Corp. (b)   6,250      77,563
Gilead Sciences, Inc. (b)   1,050      62,118
Humana, Inc. (b)   1,700      91,290
Immucor, Inc. (b)   500      9,615
LifeCell Corp. (b)   875      27,055
Magellan Health Services (b)   1,425      64,567
McKesson Corp.   10,750      508,260
Medco Health Solutions, Inc. (b)   3,100      177,568
Medtronic, Inc.   1,700      79,764
Mentor Corp.   1,025      44,588
Pediatrix Medical Group, Inc. (b)   1,400      63,420
PER-SE Technologies, Inc. (b)   2,325      58,544
Sepracor, Inc. (b)   6,100      348,554
UnitedHealth Group, Inc.   5,400      241,812
WellPoint, Inc. (b)   15,050      1,095,188
Wyeth   18,400      817,143
Zimmer Holdings, Inc. (b)   2,200      124,784
        
           4,076,667
        
Hotels & Motels (0.3%)           
Hilton Hotels Corp.   600      16,968
Host Marriott Corp.   17,800      389,286
Marriott International, Inc., Class A   900      34,308
Starwood Hotels & Resorts Worldwide, Inc.   2,800      168,952
Vail Resorts, Inc. (b)   1,125      41,738
        
           651,252
        

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Household Furnishing & Appliances (0.1%)
Kimball International, Inc., Class B   2,225    $ 43,855
Mohawk Industries, Inc. (b)   2,000      140,700
        
           184,555
        
Industrial Goods & Services (0.1%)
Fuller (H. B.) Co.   2,225      96,943
Kaman, Class A   2,425      44,135
Nordson Corp.   2,325      114,344
        
           255,422
        
Insurance (2.6%)           
ACE Ltd.   3,650      184,654
Aetna, Inc.   19,600      782,627
AFLAC, Inc.   1,200      55,620
Allstate Corp. (The)   600      32,838
AMBAC Financial Group, Inc.   8,500      689,350
American Financial Group, Inc.   1,550      66,495
American International Group, Inc.   4,000      236,200
AmerUs Group Co.   300      17,565
Argonaut Group, Inc. (b)   700      21,028
Assurant, Inc.   4,400      212,960
Chubb Corp. (The)   5,650      281,935
CIGNA Corp.   500      49,255
Conseco, Inc. (b)   1,350      31,185
Genworth Financial, Inc., Class A   11,800      411,112
Great American Financial Resources, Inc.   2,250      47,093
Hartford Financial Services Group, Inc.   9,000      761,399
LandAmerica Financial Group, Inc.   400      25,840
Lincoln National Corp.   1,300      73,372
MBIA, Inc.   4,900      286,895
MetLife, Inc.   1,300      66,573
Navigators Group, Inc. (The) (b)   500      21,910
ProAssurance Corp. (b)   500      24,090
Protective Life Corp.   2,800      130,536
Prudential Financial, Inc.   3,800      295,260
St. Paul Travelers Cos., Inc.   5,050      225,129
W.R. Berkley Corp.   10,350      353,246
        
           5,384,167
        
Leisure & Amusements (0.2%)           
Carnival Corp.   6,700      279,658
Dover Downs Gaming & Entertainment, Inc.   150      2,946
Walt Disney Co. (The)   5,350      160,500
        
           443,104
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Machinery (0.3%)           
AGCO Corp. (b)   4,050    $ 106,595
Cummins, Inc.   650      79,463
Cymer, Inc. (b)   1,525      70,852
Flowserve Corp. (b)   625      35,563
Imation Corp.   2,425      99,546
Parker-Hannifin Corp.   800      62,080
Terex Corp. (b)   2,125      209,737
Toro Co. (The)   1,025      47,868
        
           711,704
        
Medical Products (0.4%)           
Baxter International, Inc.   13,800      507,288
Bruker BioSciences Corp. (b)   11,875      63,650
Cooper Co., Inc. (The)   800      35,432
DJ Orthopedics, Inc. (b)   1,625      59,849
LCA-Vision, Inc.   600      31,746
MedImmune, Inc. (b)   200      5,420
St. Jude Medical, Inc. (b)   500      16,210
Zoll Medical Corp. (b)   800      26,208
        
           745,803
        
Metals & Mining (0.7%)           
Alcoa, Inc.   13,600      440,095
Century Aluminum Co. (b)   725      25,875
Cleveland-Cliffs, Inc.   750      59,468
Commercial Metals Co.   725      18,633
Freeport-McMoRan Copper & Gold, Inc., Class B   1,400      77,574
Phelps Dodge Corp.   3,150      258,804
Quanex Corp.   850      36,610
Reliance Steel & Aluminum Co.   900      74,655
Southern Copper Corp.   850      75,761
Stillwater Mining Co. (b)   2,450      31,066
United States Steel Corp.   6,100      427,731
USEC, Inc.   1,000      11,850
        
           1,538,122
        
Office Equipment & Services (0.1%)       
CompX International, Inc.   825      14,768
Marlin Business Services, Inc. (b)   1,450      32,712
Standard Register Co. (The)   6,600      78,210
        
           125,690
        
Oil & Gas (4.8%)           
Baker Hughes, Inc.   2,100      171,885
BJ Services Co.   1,200      44,712

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Oil & Gas (continued)           
ChevronTexaco Corp.   14,100    $ 875,045
Clayton Williams Energy, Inc. (b)   525      18,134
ConocoPhillips   18,328      1,201,033
Devon Energy Corp.   400      24,164
Dynegy, Inc. (b)   1,200      6,564
EOG Resources, Inc.   4,700      325,898
Exxon Mobil Corp.   53,950      3,309,832
Forest Oil Corp. (b)   1,050      34,818
Frontier Oil Corp.   1,300      42,120
Giant Industries, Inc. (b)   200      13,310
Global Industries Ltd. (b)   2,125      35,488
Halliburton Co.   5,400      400,734
Harvest Natural Resources, Inc. (b)   600      8,124
Helmerich & Payne, Inc.   300      18,078
Holly   400      19,280
Kerr-Mcgee Corp.   200      13,870
Marathon Oil Corp.   3,575      297,798
Mariner Energy, Inc. (b)   809      14,861
NICOR, Inc.   2,625      108,938
Occidental Petroleums Corp.   6,850      702,467
ONEOK, Inc.   1,850      62,974
Plains Exploration & Product (b)   2,425      98,310
Schlumberger Ltd.   6,100      397,171
Swift Energy Co. (b)   100      4,293
Todco, Class A   625      25,531
Valero Energy Corp.   11,500      764,979
Veritas DGC, Inc. (b)   2,525      130,240
Weatherford International Ltd. (b)   4,600      228,252
XTO Energy, Inc.   4,100      181,507
        
           9,580,410
        
Paper & Forest Products (0.1%)           
International Paper Co.   1,600      51,680
Louisiana-Pacific Corp.   2,900      63,510
        
           115,190
        
Pharmaceuticals (0.2%)           
Alexion Pharmaceuticals, Inc. (b)   750      27,089
Alkermes, Inc. (b)   525      9,933
AmerisourceBergen Corp.   1,600      67,071
AVANIR Pharmaceuticals (b)   1,575      10,773
Cubist Pharmaceuticals, Inc. (b)   1,025      25,810
ICOS Corp. (b)   400      8,796
Isis Pharmaceuticals, Inc. (b)   2,100      12,705
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Pharmaceuticals (continued)           
Nastech Pharmaceutical Co., Inc. (b)   1,125    $ 17,775
Neurocrine Biosciences, Inc. (b)   200      2,120
Progenics Pharmaceuticals, Inc. (b)   375      9,023
Renovis, Inc. (b)   1,325      20,286
Teva Pharmaceutical Industries Ltd.   5,250      165,847
Viropharma, Inc. (b)   625      5,388
Xenoport, Inc. (b)   850      15,394
        
           398,010
        
Printing & Publishing (0.6%)           
American Greetings Corp., Class A   2,425      50,949
Gannett Co., Inc.   13,900      777,427
McGraw-Hill Cos., Inc. (The)   4,325      217,245
New York Times Co. (The), Class A   1,000      24,540
R.H. Donnelley Corp.   400      21,628
R.R. Donnelley & Sons Co.   1,975      63,101
        
           1,154,890
        
Railroads (0.9%)           
Burlington Northern Santa Fe Corp.   2,000      158,500
CSX Corp.   9,300      655,092
Norfolk Southern Corp.   21,350      1,136,247
        
           1,949,839
        
Real Estate (0.3%)           
Crescent Real Estate Equities Co.   3,400      63,104
General Growth Properties, Inc.   1,525      68,717
Mills Corp. (The)   300      8,025
ProLogis   1,000      52,120
Simon Property Group, Inc.   3,725      308,951
Ventas, Inc.   1,850      62,678
        
           563,595
        
Real Estate Investment Trusts (0.4%)       
American Home Mortgage Investment Corp.   1,125      41,468
Anthracite Capital, Inc.   5,275      64,144
Apartment Investment & Management Co.   2,400      104,279
Arbor Realty Trust, Inc.   600      15,030
Centracore Properties Trust   1,025      25,369
Colonial Properties Trust   1,500      74,100

 

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J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Real Estate Investment Trusts (continued)
Cousins Properties, Inc.   2,725    $ 84,284
Hospitality Properties Trust   1,300      57,096
Mid-America Apartment Communities, Inc.   1,725      96,169
New Century Financial Corp.   1,500      68,625
Ramco-Gershenson Properties Trust   2,225      59,919
Sunstone Hotel Investors, Inc.   2,625      76,283
Winston Hotels, Inc.   2,425      29,706
        
           796,472
        
Restaurants (0.3%)           
Darden Restaurants, Inc.   1,850      72,890
Luby’s Cafeteria, Inc. (b)   4,350      45,371
McDonald’s Corp.   10,950      367,920
Papa John’s International, Inc. (b)   1,400      46,480
        
           532,661
        
Retail (2.5%)           
Abercrombie & Fitch Co.   2,300      127,489
American Eagle Outfitters Ltd.   2,250      76,590
Barnes & Noble, Inc.   4,425      161,513
Best Buy Co., Inc.   1,300      71,292
Big Lots, Inc. (b)   700      11,956
Books-A-Million, Inc.   1,700      28,356
Claire’s Stores, Inc.   2,700      68,877
Costco Wholesale Corp.   2,150      122,830
CVS Corp.   3,500      107,450
Family Dollar Stores, Inc.   500      12,215
Foot Locker, Inc.   300      7,347
Home Depot, Inc.   10,250      366,848
J.C. Penney Co., Inc.   7,650      516,451
Jones Apparel Group, Inc.   600      19,074
Kohl’s Corp. (b)   15,100      892,711
Kroger Co. (The)   10,100      220,786
Longs Drug Stores Corp.   1,025      46,761
Lowe’s Cos., Inc.   5,700      345,819
Nordstrom, Inc.   3,200      116,800
Payless ShoeSource, Inc. (b)   4,450      120,907
Rite Aid Corp. (b)   6,275      26,606
Ross Stores, Inc.   200      5,610
Safeway, Inc.   12,400      322,400
Staples, Inc.   17,000      413,439
SUPERVALU, INC.   2,425      74,448
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED STATES (continued)           
Retail (continued)           
Target Corp.   9,200    $ 449,603
Wal-Mart Stores, Inc.   7,400      356,458
WESCO International, Inc. (b)   1,000      69,000
Yum! Brands, Inc.   700      35,189
        
           5,194,825
        
Semiconductors (1.1%)           
Altera Corp. (b)   12,000      210,600
Amkor Technology, Inc. (b)   4,600      43,516
Applied Materials, Inc.   14,850      241,758
Asyst Technologies, Inc. (b)   1,000      7,530
Broadcom Corp., Class A (b)   8,400      252,420
Freescale Semiconductor, Inc., Class B (b)   2,300      67,620
Intel Corp.   8,800      166,760
Intersil Holding Corp., Class A   1,300      30,225
KLA-Tencor Corp.   1,200      49,884
Linear Technology Corp.   7,100      237,779
LSI Logic Corp. (b)   17,175      153,716
Mattson Technology, Inc. (b)   1,000      9,770
Maxim Integrated Products, Inc.   2,500      80,275
National Semiconductor Corp.   2,950      70,358
ON Semiconductor Corp. (b)   9,250      54,390
Texas Instruments, Inc.   9,800      296,842
Xilinx, Inc.   8,900      201,585
        
           2,175,028
        
Steel (0.2%)           
Chaparral Steel Co. (b)   700      50,414
Nucor Corp.   4,450      241,412
Steel Dynamics, Inc.   1,525      100,254
        
           392,080
        
Technology (0.1%)           
Intergraph Corp. (b)   2,625      82,662
Micrel, Inc. (b)   4,125      41,291
Sensient Technologies Corp.   900      18,819
Tech Data Corp. (b)   100      3,831
        
           146,603
        
Telecommunications (1.6%)           
ADTRAN, Inc.   800      17,944
AT&T, Inc.   41,875      1,167,893
Bellsouth Corp.   5,400      195,480
Carrier Access Corp. (b)   600      4,962

 

14

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J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Telecommunications (continued)       
CenturyTel, Inc.     1,950    $ 72,443
Citizens Communications Co.     2,800      36,540
Dobson Communications Corp., Class A (b)     6,375      49,279
EchoStar Communications Corp., Class A (b)     400      12,324
Embarq Corp. (b)     437      17,913
Harris Corp.     1,750      72,643
Lightbridge, Inc. (b)     400      5,180
Sprint Corp.     19,450      388,805
TALK America Holdings, Inc. (b)     2,325      14,392
Verizon Communications, Inc.     36,400      1,219,035
          
             3,274,833
          
Tobacco (1.0%)             
Altria Group, Inc.     24,400      1,791,692
Loews Corp — Carolina Group     1,525      78,339
Reynolds American, Inc.     2,350      270,955
          
             2,140,986
          
Toys (0.0%)             
Marvel Entertainment, Inc. (b)     4,200      84,000
          
Transportation Services (0.2%)       
Arkansas Best Corp.     400      20,084
Con-way, Inc.     600      34,758
Continental Airlines, Class B (b)     5,675      169,115
EGL, Inc. (b)     400      20,080
Laidlaw International, Inc.     3,050      76,860
Pacer International, Inc.     800      26,064
Sabre Holdings, Inc.     3,450      75,900
          
             422,861
          
Waste Management (0.1%)             
Waste Management, Inc.     3,450      123,786
          
             100,195,037
          
Total Common Stocks            125,639,107
          
COMMERCIAL PAPER (10.7%)       
Financial Services (10.7%)             
Alpine Securitization Corp., 5.07%, 07/06/06   $ 1,250,000      1,249,438
Cafco LLC,
5.03%, 07/19/06		     1,250,000      1,246,856
     Principal
Amount		    Value
              
COMMERCIAL PAPER (continued)       
Financial Services (continued)       
Citigroup,
5.12%, 08/02/06		   $ 1,250,000    $ 1,244,488
Dexia Delaware LLC, 5.15%, 08/16/06     1,500,000      1,490,265
Edison Asset Securitization LLC,
5.24%, 08/15/06		     1,250,000      1,242,025
Fairway Finance Corp., 5.24%, 07/20/06     1,500,000      1,496,205
Intesa Funding LLC, 5.04%, 07/03/06     1,500,000      1,499,999
KBC Financial Products International,
5.00%, 07/05/06		     1,500,000      1,499,166
Metlife, Inc.,
5.09%, 08/08/06		     1,500,000      1,492,035
Ranger Funding Co. LLC, 5.02%, 07/05/06     1,000,000      999,442
Sheffield Receivables, 5.16%, 08/09/06     1,250,000      1,243,138
Silver Tower,
5.26%, 08/16/06		     1,500,000      1,490,160
Skandinaviska Enskilda Banken,
5.02%, 07/12/06		     1,250,000      1,248,085
St. George Bank Ltd., 5.04%, 07/17/06     1,250,000      1,247,425
Stadshypotek Delaware, Inc., 5.13%, 08/10/06     1,000,000      994,410
Windmill Funding Corp., 5.04%, 07/05/06     1,000,000      999,700
Yorktown Capital, 5.18%, 07/17/06     1,250,000      1,247,122
          
Total Commercial Paper            21,929,959
          
CORPORATE BONDS (9.3%)             
Auto Related (0.6%)             
Breed Technologies, Inc., 0.00%, 04/15/08 (e) (f) (g)     125,000      0
Carmax Auto Owner Trust, 4.13%, 05/15/09     885,000      874,173
Carmax Auto Owner Trust, 4.21%, 01/15/10     335,000      329,147
General Motors Acceptance Corp.,
6.88%, 08/28/12		     25,000      23,554
          
             1,226,874
          

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Banking (1.1%)             
Commonwealth Bank of Australia,
6.02%, 03/15/16 (d) (h)		   $ 225,000    $ 214,310
Glitnir Banki HF, 6.69%, 06/15/16 (d)     145,000      144,170
HBOS PLC,
5.92%, 10/01/15 (d)		     200,000      184,254
Industrial Bank of Korea, 4.00%, 05/19/14 (d)     180,000      169,621
Korea First Bank,
7.27%, 03/03/34 (d)		     165,000      170,124
Shinhan Bank,
5.66%, 03/02/35		     180,000      162,275
Shinsei Finance, 7.16%, 07/25/16 (d) (i)     225,000      212,004
Suntrust Bank,
2.50%, 11/01/06		     275,000      272,197
United Overseas Bank Ltd., 5.38%, 09/03/19 (d)     275,000      257,126
Wachovia Capital Trust III, 5.80%, 03/15/11     340,000      329,936
Woori Bank,
5.75%, 03/13/14 (d)		     160,000      158,021
          
             2,274,038
          
Broadcast Media/Cable Television (0.1%)
Charter Communications LLC,
8.00%, 04/30/12 (d)		     20,000      19,900
Comcast Corp.,
6.50%, 01/15/15		     125,000      125,979
Comcast Corp.,
5.90%, 03/15/16		     70,000      67,254
Comcast Corp.,
4.95%, 06/15/16		     30,000      26,736
DIRECTV Holdings/Finance, 6.38%, 06/15/15     15,000      13,838
Echostar DBS Corp., 7.13%, 02/01/16 (d)     45,000      43,313
          
             297,020
          
Building—Residential/Commercial (0.0%)
Beazer Homes USA, Inc., 6.88%, 07/15/15     30,000      27,300
D.R. Horton, Inc., 8.50%, 04/15/12     30,000      31,564
D.R. Horton, Inc., 5.25%, 02/15/15     20,000      17,776
          
             76,640
          
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Casino Hotels (0.0%)       
MGM Mirage, Inc., 5.88%, 02/27/14   $ 30,000    $ 26,888
          
Chemicals (0.0%)       
Huntsman LLC, 11.50%, 07/15/12     30,000      33,525
Polyone Corp.,
10.63%, 05/15/10		     10,000      10,750
          
             44,275
          
Commercial Services (0.0%)       
Iron Mountain, Inc., 6.63%, 01/01/16     35,000      31,500
          
Computer Services (0.2%)       
Cisco Systems, Inc., 5.25%, 02/22/11     395,000      387,673
Sungard Data Systems, Inc., 9.13%, 08/15/13 (d)     15,000      15,563
UGS Corp.,
10.00%, 06/01/12		     25,000      26,875
          
             430,111
          
Construction Equipment (0.1%)       
CNH Equipment Trust, 4.27%, 01/15/10     125,000      122,775
          
Containers (0.0%)       
Owens-Brockway Glass Container,
8.25%, 05/15/13		     20,000      20,050
          
Diversified Manufacturing Operations (0.1%)
Hutchinson Whamp International Ltd.,
7.45%, 11/24/33 (d)		     145,000      153,274
          
Diversified Minerals (0.1%)       
Teck Cominco Ltd., 6.13%, 10/01/35     120,000      107,413
          
Electrical Services (0.8%)       
Alabama Power Co., 2.80%, 12/01/06     130,000      128,506
Appalachian Power Co., 5.80%, 10/01/35     110,000      98,145
Dominion Resources, Inc., 8.13%, 06/15/10     50,000      53,660
Dominion Resources, Inc., 7.20%, 09/15/14     95,000      99,812

 

16

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Electrical Services (continued)       
Dominion Resources, Inc., 5.15%, 07/15/15   $ 120,000    $ 110,305
FPL Group Capital, Inc., 7.63%, 09/15/06     215,000      215,758
GE Equipment Small Ticket LLC,
4.38%, 07/22/09		     200,000      197,096
MidAmerican Energy Holdings,
6.13%, 04/01/36 (d)		     250,000      233,696
Nisource Finance Corp., 5.45%, 09/15/20     215,000      194,062
Ohio Power Co. IBC, 6.00%, 06/01/16     80,000      78,887
Pacific Gas & Electric, 6.05%, 03/01/34     70,000      66,067
Pacificorp,
4.30%, 09/15/08		     125,000      121,605
Xcel Energy, Inc., 6.50%, 07/01/36     80,000      78,458
          
             1,676,057
          
Electronics—Military (0.0%)       
L-3 Communications Corp., 5.88%, 01/15/15     15,000      13,988
          
Financial Services (2.1%)       
American General Finance Corp.,
3.00%, 11/15/06		     315,000      312,117
American General Finance Corp.,
4.50%, 11/15/07		     330,000      325,040
Anadarko Finance Co., 7.50%, 05/01/31     110,000      118,185
Arch Western Finance, 6.75%, 07/01/13     25,000      23,938
Capital One Financial, 8.75%, 02/01/07     375,000      381,103
Ford Motor Credit Co., 6.62%, 01/15/10     15,000      13,665
Ford Motor Credit Co., 7.25%, 10/25/11     20,000      17,742
Goldman Sachs Group, Inc., 6.45%, 05/01/36     250,000      239,505
HSBC Finance Cap Trust IX, 5.91%, 11/30/35     100,000      95,432
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Financial Services (continued)       
International Lease Finance Corp,,
4.88%, 09/01/10		   $ 115,000    $ 111,228
Kaupthing Bank,
7.13%, 05/19/16 (d)		     190,000      190,057
Merrill Lynch & Co., 6.05%, 05/16/16     130,000      129,144
Mizuho JGB Investment, 9.87%, 06/30/08 (d) (h)     190,000      203,441
Mizuho Preferred Capital, 8.79%, 06/30/08 (d) (h)     310,000      325,759
Residential Capital Corp., 6.13%, 11/21/08     315,000      311,349
Residential Capital Corp., 6.38%, 06/30/10     485,000      478,399
Residential Capital Corp., 6.97%, 04/17/09 (d) (i)     455,000      454,974
Service Corp. International, 6.75%, 04/01/16     30,000      27,600
Temasek Financial I Ltd., 4.50%, 09/21/15 (d)     300,000      271,874
UBS Preferred Funding TR V, 6.24%, 05/15/16     130,000      128,072
          
             4,158,624
          
Healthcare (0.0%)             
HCA, Inc.,
6.95%, 05/01/12		     10,000      9,762
HCA, Inc.,
6.50%, 02/15/16		     10,000      9,246
          
             19,008
          
Home Furnishings (0.0%)             
Sealy Mattress Co., 8.25%, 06/15/14     25,000      25,000
          
Hotels & Motels (0.0%)             
Starwood Hotels & Resorts, 7.38%, 11/15/15     20,000      20,150
Vail Resorts, Inc., 6.75%, 02/15/14     30,000      28,500
          
             48,650
          
Insurance (0.7%)             
Axis Capital Holdings, 5.75%, 12/01/14     130,000      122,638
Axis Capital Holdings, 7.50%, 12/01/15     110,000      108,659

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Insurance (continued)             
Endurance Specialty Holdings,
7.00%, 07/15/34		   $ 125,000    $ 115,806
Great West Life & Annuity, 7.15%, 05/16/46 (d)     175,000      170,928
ING Groep NV, 5.78%, 12/08/15 (h)     240,000      227,739
Lincoln National Corp., 7.00%, 05/17/66     95,000      94,263
Oil Insurance Ltd., 7.56%, 06/30/11 (d) (h)     220,000      219,008
Stingray Pass Through, 5.90%, 01/12/15 (d)     300,000      283,489
          
             1,342,530
          
Mining (0.1%)             
Newmont Mining Corp., 5.88%, 04/01/35     120,000      107,397
          
Motion Pictures & Services (0.1%)       
Viacom, Inc., 6.25%, 04/30/16 (d)     110,000      106,782
Viacom, Inc., 6.88%, 04/30/36 (d)     110,000      106,157
          
             212,939
          
Motor Vehicles (0.3%)             
Daimler Chrysler NA Holding Corp,
5.88%, 03/15/11		     550,000      541,008
Daimler Chrysler NA Holding Corp.,
4.75%, 01/15/08		     125,000      122,956
TRW Automotive, Inc., 9.38%, 02/15/13     21,000      22,313
          
             686,277
          
Office Supplies (0.0%)             
Acco Brands Corp., 7.63%, 08/15/15     25,000      23,188
          
Oil & Gas (0.5%)             
BP Capital Markets PLC, 2.75%, 12/29/06     205,000      202,463
Chesapeake Energy Corp., 6.50%, 08/15/17     20,000      18,250
Enterprise Production Operations,
5.00%, 03/01/15		     175,000      158,035
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Oil & Gas (continued)             
Enterprise Production Operations,
6.65%, 10/15/34		   $ 125,000    $ 118,598
Gazprom International SA, 5.63%, 07/22/13 (d)     3,322      3,239
Gazprom International SA, 7.20%, 02/01/20     305,000      308,934
Kinder Morgan Energy Partners,
7.40%, 03/15/31		     60,000      62,073
Smith International, Inc., 6.00%, 06/15/16     130,000      128,845
XTO Energy,
5.65%, 04/01/16		     80,000      75,859
          
             1,076,296
          
Paper & Forest Products (0.0%)       
Georgia-Pacific Corp., 7.70%, 06/15/15     20,000      19,100
          
Pharmaceuticals (0.0%)             
Teva Pharmaceutical Finance LLC,
6.15%, 02/01/36		     110,000      98,771
          
Private Corrections (0.0%)             
Corrections Corp. of America,
6.25%, 03/15/13		     10,000      9,400
          
Real Estate (0.0%)             
SocGen Real Estate LLC, 7.64%, 09/30/07 (d) (h)     90,000      91,908
          
Sovereign (0.7%)             
Federal Republic of Brazil, 12.25%, 03/06/30     160,000      234,800
Republic of Argentina, 4.01%, 08/03/12 (i)     205,000      169,535
Republic of Peru, 7.35%, 07/21/25     75,000      72,000
Republic of Venezuela, 5.75%, 02/26/16     110,000      97,350
Republic of Venezuela, 7.00%, 12/01/18     10,000      9,400
Republic of Venezuela, 9.38%, 01/13/34     45,000      52,763
Russian Federation, 12.75%, 06/24/28     350,000      591,044
United Mexican States, 8.00%, 09/24/22     225,000      250,875
          
             1,477,767
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Special Purpose Entity (1.0%)       
Consolidated Communications Holdings,
9.75%, 04/01/12		   $ 15,000    $ 15,450
Core Invest Grade Trust, 4.73%, 11/30/07     600,000      590,267
Fresenius Medical Capital Trust II,
7.88%, 02/01/08		     45,000      45,675
ILFC E-Capital Trust I, 5.90%, 12/21/65 (d) (i)     190,000      185,213
Jostens, Inc.,
7.63%, 10/01/12		     15,000      14,550
Mantis Reef Ltd. II, 4.80%, 11/03/09 (d)     200,000      192,027
Mizuho Capital Investment 1 Ltd.,
6.69%, 06/30/16 (d) (h) (i)		     204,000      193,580
MUFG Capital Finance 1 Ltd.,
6.35%, 07/25/16 (h)		     180,000      173,626
Pricoa Global Funding I, 3.90%, 12/15/08 (d)     400,000      383,480
Resona PFD Global Securities,
7.19%, 07/30/15 (d)		     130,000      130,402
Swiss RE Capital I LP, 6.85%, 05/25/16 (d) (h) (i)     115,000      112,866
          
             2,037,136
          
Telecommunications (0.5%)             
AT&T, Inc.,
7.50%, 05/01/07		     150,000      152,098
AT&T, Inc.,
6.80%, 05/15/36		     195,000      193,279
Embarq Corp.,
7.08%, 06/01/16		     165,000      164,094
Embarq Corp.,
8.00%, 06/01/36		     70,000      70,357
Qwest Communications International,
8.86%, 02/15/09 (i)		     20,000      20,375
Qwest Corp.,
8.88%, 03/15/12		     5,000      5,275
Rogers Wireless, Inc., 6.38%, 03/01/14     20,000      19,050
Sprint Capital Corp., 6.90%, 05/01/19     205,000      210,614
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Telecommunications (continued)       
Tele-Communications, Inc., 7.88%, 08/01/13   $ 30,000    $ 32,318
Verizon Global Funding Corp.,
5.85%, 09/15/35		     225,000      195,738
          
             1,063,198
          
Transportation—Rail (0.1%)             
BNSF Funding Trust I, 6.61%, 12/15/55     145,000      136,112
          
Total Corporate Bonds            19,134,204
          
MORTGAGE-BACKED SECURITIES (21.9%)
Federal Home Loan Mortgage Corporation (6.4%)
5.13%, 10/15/08     850,000      844,030
5.00%, 11/15/28     670,137      659,063
6.75%, 03/15/31     375,000      430,305
6.50%, 09/25/33     446,876      450,505
6.00%, 02/01/35     295,209      290,838
6.50%, 05/15/35     349,777      354,642
TBA, 5.50%, 08/15/36     4,620,000      4,433,759
TBA, 6.00%, 07/01/34     1,750,000      1,722,656
TBA, 6.00%, 08/15/36     4,050,000      3,982,924
          
             13,168,722
          
Federal National Mortgage Association (7.2%)
5.00%, 03/15/16     1,355,000      1,300,998
6.63%, 11/15/30     30,000      33,972
6.50%, 10/25/33     425,000      428,660
6.50%, 10/25/33     425,000      428,660
6.50%, 12/25/33     330,000      332,797
6.50%, 12/25/33     420,000      423,559
6.50%, 02/01/35     432,521      434,853
7.00%, 02/01/35     122,653      125,494
TBA, 6.00%, 07/01/35     850,000      836,453
TBA, 5.50%, 07/01/20     1,406,000      1,379,638
TBA, 5.50%, 08/01/19     1,900,000      1,863,188
TBA, 5.50%, 08/15/36     847,000      812,856
TBA, 6.00%, 08/01/29     1,650,000      1,622,156
TBA, 6.50%, 08/01/32     4,790,000      4,809,456
          
             14,832,740
          
Financial Services (6.7%)             
Americredit Automobile Receivables Trust, Series 04-BM, Class A4, 2.67%, 03/07/11     550,000      535,145

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
MORTGAGE-BACKED SECURITIES (continued)
Financial Services (continued)       
Americredit Automobile Receivables Trust, Series 04-DF, Class A3,
2.98%, 07/06/09		   $ 96,370    $ 95,188
Bear Stearns Commercial Mortgage Securities, Series 04-PWR6, Class A4, 4.52%, 11/11/41     260,000      244,371
Bear Stearns Commercial Mortgage Securities, Series 05-PWR7, Class A3, 5.12%, 02/11/41     380,000      360,179
Capital Auto Receivables Asset Trust, Series 06-1, Class A3,
5.03%, 10/15/09		     340,000      336,849
Capital One Master Trust, Series 01-BA, Class A, 4.60%, 08/17/09     420,000      419,004
Capital One Multi-Asset Execution Trust, Series 03-A4, Class A4,
3.65%, 07/15/11		     520,000      499,979
Citigroup Commercial Mortgage Trust, Series 06-C4, Class A3,
5.77%, 03/15/49 (i)		     265,000      262,735
Countrywide Alternative Loan Trust, Series 04-28CB, Class 3A1,
6.00%, 01/25/35		     732,561      716,079
Countrywide Alternative Loan Trust, Series 06-12CB, Class A6,
6.00%, 05/25/36		     520,248      513,760
Countrywide Asset-Backed Certificates, Series 03-5, Class MF1,
5.41%, 01/25/34		     180,000      177,473
Credit Suisse Mortgage Capital Certificates, Series 06-C3, Class A3,
5.83%, 06/15/38		     400,000      399,625
CS First Boston Mortgage Securities Corp., Series 01-CK1, Class A3,
6.38%, 12/18/35		     270,000      275,814
Principal
Amount		    Value
              
MORTGAGE-BACKED SECURITIES (continued)
Financial Services (continued)       
CS First Boston Mortgage Securities Corp., Series 03-29, Class 7A1,
6.50%, 12/25/33		   $ 126,164    $ 126,032
CS First Boston Mortgage Securities Corp., Series 03-C4, Class A4,
5.14%, 08/15/36		     480,000      460,226
Greenwich Capital Commercial Funding Corp., Series 04-GG1, Class A3, 4.34%, 06/10/36     1,185,000      1,147,100
Greenwich Capital Commerical Funding Corp., Series 05-GG3, Class A4, 4.80%, 08/10/42     285,000      264,654
Household Automotive Trust, Series 03-2, Class A4, 3.02%, 12/17/10     350,000      340,984
Indymac Index Mortgage Loan Trust, Series 04-AR7, Class A1,
5.76%, 09/25/34		     255,358      257,639
LB-UBS Commercial Mortgage Trust, Series 05-C1, Class A4,
4.74%, 02/15/30		     485,000      449,129
LB-UBS Commercial Mortgage Trust, Series 06-C1, Class A4,
5.16%, 02/15/31		     250,000      236,983
LB-UBS Commercial Mortgage Trust, Series 06-C4, Class A4,
5.86%, 06/15/38		     190,000      190,938
MBNA Credit Card Master Note Trust, Series 03-A1, Class A1,
3.30%, 07/15/10		     485,000      468,228
Merrill Lynch Mortgage Trust, Series 06-C1, Class A4,
5.84%, 05/12/39		     120,000      118,764
Morgan Stanley Capital I, Series 04-HQ3, Class A2, 4.05%, 01/13/41     390,000      369,649

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
MORTGAGE-BACKED SECURITIES (continued)
Financial Services (continued)       
Morgan Stanley Capital I, Series 05, Class IQ9, 4.70%, 07/15/56   $ 265,000    $ 244,519
Morgan Stanley Dean Witter Capital I, Series 03-HQ2, Class A2,
4.92%, 03/12/35		     250,000      237,330
Onyx Acceptance Auto Trust, Series 03-D, Class A4, 3.20%, 03/15/10     119,926      118,234
Onyx Acceptance Auto Trust, Series 04-C, Class A4, 3.50%, 12/15/11     370,000      361,002
PSE&G Transition Funding LLC, Series 01-1, Class A6, 6.61%, 06/15/15     240,000      251,185
Residential Accredit Loans, Inc., Series 06-QS6, Class 1A2, 6.00%, 06/25/36     400,000      397,563
Residential Asset Securities Corp., Series 02-KS4, Class AIIB,
5.57%, 07/25/32		     25,656      25,662
Residential Asset Securities Corp., Series 03-KS5, Class AIIB,
5.61%, 07/25/33		     48,978      49,037
Residential Asset Securitization Trust, Series 06-A2, Class A3, 6.00%, 05/25/36     416,614      411,198
Special Underwriting & Residential Finance, Series 06-BC2, Class A2B, 5.57%, 02/25/37     750,000      742,433
Triad Auto Receivables Owner Trust, Series 03-B, Class A4, 3.20%, 12/13/10     235,000      229,954
Volkswagen Auto Lease Trust, Series 04-A, Class A3, 2.84%, 07/20/07     203,758      202,969
Volkswagen Auto Loan Enhanced Trust, Series 03-2, Class A4,
2.94%, 03/22/10		     275,000      269,084
Wachovia Asset Securitization, Inc., Series 03-HE2, Class AII1,
5.58%, 07/25/33		     122,056      122,386
Principal
Amount		    Value
              
MORTGAGE-BACKED SECURITIES (continued)
Financial Services (continued)       
Wachovia Bank Commerical Mortgage Trust, Series 06-C26, Class A3,
6.01%, 06/15/45		   $ 265,000    $ 266,316
WFS Financial Owner Trust, Series 03-4, Class A4, 3.15%, 05/20/11     149,072      146,393
Wmalt Mortgage Pass-Through Certificates, Series 06-5, Class 2CB1,
6.00%, 07/01/36		     405,000      401,472
          
             13,743,264
          
Government National Mortgage Association (1.6%)
TBA,
5.50%, 07/01/34		     1,623,000      1,572,788
TBA,
6.00%, 07/01/34		     1,700,000      1,685,655
          
             3,258,443
          
Total Mortgage-Backed Securities      45,003,169
          
              
U.S. GOVERNMENT LONG-TERM OBLIGATIONS (5.3%)
U.S. Treasury Bills (0.0%)             
4.65%, 09/28/06 (c)     40,000      39,550
          
U.S. Treasury Bonds (1.7%)       
6.25%, 05/15/30     1,425,000      1,614,035
5.38%, 02/15/31     750,000      762,950
4.50%, 02/15/36     1,055,000      945,956
8.88%, 02/15/19 (c)     200,000      265,750
          
             3,588,691
          
U.S. Treasury Notes (3.6%)       
3.63%, 06/30/07     75,000      73,802
4.63%, 03/31/08     550,000      544,801
4.88%, 05/31/08     835,000      830,336
4.88%, 04/30/11     725,000      717,609
4.88%, 05/31/11     1,805,000      1,786,667
5.13%, 05/15/16     1,715,000      1,712,990
2.38%, 08/15/06 (c)     1,295,000      1,291,054
2.88%, 11/30/06 (c)     25,000      24,758
4.13%, 05/15/15 (c)     200,000      185,711
          
             7,167,728
          
Total U.S. Government Long-Term Obligations            10,795,969
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value  
              
CASH EQUIVALENTS (2.1%)             
AIM Liquid Assets Portfolio   4,294,687    $ 4,294,687  
        
Total Cash Equivalents      4,294,687  
        
Total Investments
(Cost $219,026,531) (a) — 110.5%		      226,797,095  
Liabilities in excess of
other assets — (10.5)%		      (21,590,058 )
        
NET ASSETS — 100.0%    $ 205,207,037  
        

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Pledged as collateral for futures.

 

(d) Represents a restricted security acquired and eligible for resale under Rule 144A, which limits the resale to certain qualified buyers.

 

(e) Bond in default.

 

(f) Fair Valued Security.

 

(g) Security has been deemed illiquid. The pricing committee has deemed the security to have zero value based upon procedures adopted by the Board of Trustees.

 

(h) Securities with perpetual maturity. First call date disclosed.

 

(i) Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on June 30, 2006. The maturity date represents the actual maturity date.

 

TBA To Be Announced

At June 30, 2006 the Fund’s open futures contracts were as follows:

 

Number of Contracts   Contracts      Expiration      Market Value
Covered by
Contracts		      Unrealized
Appreciation
(Depreciation)		  
Long Contracts:                               

2

   S&P 500 Emini      09/15/06      $ 127,950      $ (70 )

1

   Russell 2000      09/15/06        365,750        6,120  

3

   Dow Jones Euro Stoxx 50      09/15/06        140,500        9,688  

1

   Finanical Times 100 Index      09/15/06        107,705        6,069  

104

   U.S. 5yr Note      09/29/06        10,754,250        985  

11

   U.S. 2yr Note      09/29/06        2,230,594        (3,362 )
Total Long Contracts                 $ 13,726,749      $ 19,430  
Short Contracts:                               

20

   Euro Bobl Future      08/24/06      $ (2,791,590 )    $ 7,704  

5

   S&P 500      09/15/06        (1,599,250 )      (23,524 )

24

   U.S. 10yr Treasury Note      09/20/06        (2,516,625 )      (9,414 )

9

   U.S. 30yr Treasury Note      09/20/06        (959,906 )      (10,150 )
Total Short Contracts                 $ (7,867,371 )    $ (35,384 )

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation/
(Depreciation)		  
Short Contracts:                                    

Euro

      07/03/06      $ 75,162      $ 76,751      $ (1,589 )

Swiss Franc

      08/14/06        132,370        131,868        502  

Danish Kroner

      08/14/06        159,023        158,911        112  

Euro

      08/14/06        1,106,379        1,107,216        (837 )

British Sterling Pound

      08/14/06        571,376        568,493        2,883  

Japanese Yen

      08/14/06        499,974        481,279        18,695  

Singapore Dollar

      08/14/06        134,971        135,981        (1,010 )
Total Short Contracts             $ 2,679,255      $ 2,660,499      $ 18,756  

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation/
(Depreciation)		  
Long Contracts:                                    

Australia Dollar

      08/14/06      $ 604,207      $ 586,798      $ (17,409 )

Swiss Franc

      08/14/06        366,130        364,067        (2,063 )

Danish Kroner

      08/14/06        112,877        112,115        (762 )

Euro

      08/14/06        134,971        136,407        1,436  

British Sterling Pound

      08/14/06        357,933        355,612        (2,321 )

Japanese Yen

      08/14/06        815,051        801,560        (13,491 )

Swedish Krone

      08/14/06        154,698        156,445        1,747  

Singapore Dollars

      08/14/06        70,533        69,575        (958 )
Total Long Contracts             $ 2,616,400      $ 2,582,579      $ (33,821 )

 

The following is a summary of option activity for the period ended June 30, 2006, by the Fund (amounts in thousands):

 

Covered Call Options      Shares
Subject
To Contract		    Premiums  

Balance at beginning of period

      0    $ 0  

Options written

      674      125  

Options closed

      (390)      (68 )

Options expired

      (199)      (17 )

Options exercised

      0      0  
      
  

Options outstanding at end of period

      85    $ 40  
      
  

 

At June 30, 2006, the Fund had the following outstanding options:

 

Contracts      Type     

Expiration

Date

     

Exercise

Price

      Number of
Contracts		      Value     

Unrealized

Appreciation

(Depreciation)

  

90 Day Euro Future

      Call      September 2006      94.9      52      $ 260      $ (1,706 )

90 Day Euro Future

      Call      September 2006      95      104        260        1,529  

90 Day Euro Future

      Call      September 2006      95.2      52        130        (536 )

U.S. Treasury Five Year

      Call      August 2006      102.5      12        11,436        4,334  

U.S. Treasury Five Year

      Call      August 2006      103      24        12,750        (3,976 )

U.S. Treasury Ten Year

      Put      August 2006      103      30        937.50        1,788  

U.S. Treasury Ten Year

      Put      August 2006      104      97        13,641        (15,562 )

U.S. Treasury Note Future

      Put      September 2006      103      30        4,219        (4,072 )

U.S. Treasury Bond Future

      Put      September 2006      103      12        2,063        1,278  

U.S. Treasury Long Bond

      Put      June 2006      101      12        750        (4,721 )

U.S. Treasury Long Bond

      Put      June 2006      102      12        1,125        715  

U.S. Treasury Long Bond

      Put      June 2006      104      12        3,750        (1,722 )
Net Unrealized Appreciation (Depreciation) on Written Option Contracts                      $ (22,651 )

 

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Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $214,731,844)

    $ 222,502,408  

Repurchase agreements, at cost and value

      4,294,687  
    

Total Investments

      226,797,095  
    

Cash collateral pledged for futures

      34,187  

Put options written, at fair value (premiums received $39,703)

      17,052  

Foreign currencies, at value (cost $21,948)

      18,730  

Interest and dividends receivable

      1,754,779  

Receivable for capital shares issued

      17,137  

Receivable for investments sold

      43,060,534  

Receivable for variation margin on futures contracts

      31,642  

Reclaims receivable

      2,857  

Prepaid expenses and other assets

      2,755  
    

Total Assets

      271,736,768  
    

Liabilities:

         

Payable to custodian

      138,889  

Securities sold short, at value (proceeds $126,586)

      127,607  

Payable for capital shares redeemed

      78,254  

Payable for investments purchased

      65,993,307  

Unrealized depreciation of forward foreign currency contracts

      15,065  

Accrued expenses and other payables:

         

Investment advisory fees

      126,478  

Fund administration and transfer agent fees

      17,122  

Administrative servicing fees

      24,367  

Other

      8,642  
    

Total Liabilities

      66,529,731  
    

Net Assets

    $ 205,207,037  
    

Represented by:

         

Capital

    $ 198,445,950  

Accumulated net investment income (loss)

      95,341  

Accumulated net realized gains (losses) from investment, futures and foreign currency transactions

      (1,046,027 )

Net unrealized appreciation (depreciation) on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

      7,711,773  
    

Net Assets

    $ 205,207,037  
    

Net Assets:

         

Class I Shares

    $ 159,016,144  

Class IV Shares

      46,190,893  
    

Total

    $ 205,207,037  
    

Shares outstanding (unlimited number of
shares authorized):

         

Class I Shares

      15,666,726  

Class IV Shares

      4,550,286  
    

Total

      20,217,012  
    

Net asset value and offering price per
share:*

         

Class I Shares

    $ 10.15  

Class IV Shares

    $ 10.15  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 2,166,579  

Dividend income (net of foreign withholding tax of $49,628)

      1,448,926  
    

Total Income

      3,615,505  
    

Expenses:

         

Investment advisory fees

      800,274  

Fund administration and transfer agent fees

      94,856  

Administrative servicing fees Class I Shares

      148,013  

Administrative servicing fees
Class IV Shares

      35,886  

Trustee fees

      3,866  

Other

      31,092  
    

Total expenses before reimbursed expenses or earnings credit

      1,113,987  

Expenses reimbursed

      (16,988 )

Earnings credit (Note 5)

      (2,679 )
    

Total Expenses

      1,094,320  
    

Net Investment Income (Loss)

      2,521,185  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      5,274,755  

Net realized gains (losses) on futures transactions

      (225,359 )

Net realized gains (losses) on foreign currency transactions

      62,683  
    

Net realized gains (losses) on investment, futures and foreign currency transactions

      5,112,079  

Net change in unrealized appreciation/depreciation on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

      (2,513,454 )
    

Net realized/unrealized gains (losses) on investments, futures, options, and foreign currencies

      2,598,625  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 5,119,810  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

J.P. MORGAN GVIT BALANCED FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
     (Unaudited)         

From Investment Activities:

                  

Operations:

                  

Net investment income (loss)

    $ 2,521,185      $ 4,623,170  

Net realized gains (losses) on investment, futures and foreign currency transactions

      5,112,079        14,932,975  

Net change in unrealized appreciation/depreciation on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

      (2,513,454 )      (13,608,174 )
    
  

Change in net assets resulting from operations

      5,119,810        5,947,971  
    
  

Distributions to Class I shareholders from:

                  

Net investment income

      (1,864,872 )      (3,659,435 )

Distributions to Class IV shareholders from:

                  

Net investment income

      (548,218 )      (1,015,674 )
    
  

Change in net assets from shareholder distributions

      (2,413,090 )      (4,675,109 )
    
  

Change in net assets from capital transactions

      (23,872,049 )      (15,193,383 )
    
  

Change in net assets

      (21,165,329 )      (13,920,521 )

Net Assets:

                  

Beginning of period

      226,372,366        240,292,887  
    
  

End of period

    $ 205,207,037      $ 226,372,366  
    
  

Accumulated net investment income (loss)

    $ 95,341      $ (12,754 )
    
  

CAPITAL TRANSACTIONS:

                  

Class I Shares

                  

Proceeds from shares issued

    $ 4,840,212      $ 14,520,328  

Dividends reinvested

      1,864,872        3,659,435  

Cost of shares redeemed

      (28,377,108 )      (29,871,913 )
    
  
       (21,672,024 )      (11,692,150 )
    
  

Class IV Shares

                  

Proceeds from shares issued

      765,832        1,984,880  

Dividends reinvested

      548,218        1,015,674  

Cost of shares redeemed

      (3,514,075 )      (6,501,787 )
    
  
       (2,200,025 )      (3,501,233 )
    
  

Change in net assets from capital transactions

    $ (23,872,049 )    $ (15,193,383 )
    
  

SHARE TRANSACTIONS:

                  

Class I Shares

                  

Issued

      471,858        1,467,988  

Reinvested

      184,025        369,490  

Redeemed

      (2,791,196 )      (3,005,670 )
    
  
       (2,135,313 )      (1,168,192 )
    
  

Class IV Shares

                  

Issued

      74,683        199,890  

Reinvested

      54,110        102,530  

Redeemed

      (343,207 )      (655,691 )
    
  
       (214,414 )      (353,271 )
    
  

 

See notes to financial statements.

 

25

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

JP Morgan GVIT Balanced Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
      
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                

Year Ended December 31, 2001(c)

   $ 10.00   0.22   (0.60 )   (0.38 )   (0.22 )   (0.22 )   $ 9.40   (3.77% )   $ 149,875   0.90%     2.34%     1.03%     2.21%     181.89%

Year Ended December 31, 2002

   $ 9.40   0.19   (1.34 )   (1.15 )   (0.19 )   (0.19 )   $ 8.06   (12.31% )   $ 147,289   0.99%     2.22%     1.00%     2.21%     297.08%

Year Ended December 31, 2003

   $ 8.06   0.15   1.32     1.47     (0.15 )   (0.15 )   $ 9.38   18.41%     $ 182,056   0.98%     1.80%     (g )   (g )   310.16%

Year Ended December 31, 2004

   $ 9.38   0.19   0.60     0.79     (0.19 )   (0.19 )   $ 9.98   8.49%     $ 189,232   0.98%     1.96%     (g )   (g )   293.17%

Year Ended December 31, 2005

   $ 9.98   0.20   0.05     0.25     (0.20 )   (0.20 )   $ 10.03   2.54%     $ 178,569   0.99%     1.97%     (g )   (g )   328.26%

Six months ended June 30, 2006 (Unaudited)

   $ 10.03   0.11   0.12     0.23     (0.11 )   (0.11 )   $ 10.15   2.25% (e)   $ 159,016   1.01% (f)   2.24% (f)   (g )   (g )   224.38%

Class IV Shares

                                                                                

Period Ended December 31, 2003(d)

   $ 8.23   0.11   1.16     1.27     (0.12 )   (0.12 )   $ 9.38   15.47% (e)   $ 50,811   0.91% (f)   1.79% (f)   0.96% (f)   1.74% (f)   310.16%

Year Ended December 31, 2004

   $ 9.38   0.19   0.60     0.79     (0.19 )   (0.19 )   $ 9.98   8.54%     $ 51,061   0.91%     2.02%     0.98%     1.95%     293.17%

Year Ended December 31, 2005

   $ 9.98   0.21   0.05     0.26     (0.21 )   (0.21 )   $ 10.03   2.62%     $ 47,803   0.91%     2.05%     0.99%     1.96%     328.26%

Six months ended June 30, 2006 (Unaudited)

   $ 10.03   0.12   0.12     0.24     (0.12 )   (0.12 )   $ 10.15   2.30% (e)   $ 46,191   0.92% (f)   2.33% (f)   0.99% (f)   2.26% (f)   224.38%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

See notes to financial statements.

 

26

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the J.P. Morgan GVIT Balanced Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is

 

27

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

28

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(e) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(f) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(g) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(h) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in capital.

 

29

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
     Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*
$ 220,386,437   $ (5,555,707 )   $ 11,966,365   $ 6,410,658

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(j) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund. JPMorgan Investment Management, Inc. (the “subadviser”) manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, the adviser pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total
Fees		      Fees
Retained		      Paid to
Sub-adviser

Up to $100 million

    0.75%      0.40%      0.35%

$100 million or more

    0.70%      0.40%      0.30%

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets

 

30

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, the cumulative potential reimbursements for the Class IV shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF would be:

 

Amount
Fiscal Year

2003

      Amount
Fiscal Year
2004		      Amount
Fiscal Year
2005		      Amount
Six Months Ended
June 30, 2006

$20,093

      $32,438      $41,390      $16,988

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $165,981 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $482,056,243 and sales of $594,200,819.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

For the six months ended June 30, 2006, the Fund had purchases of $283,781,709 and sales of $277,753,725 of U.S. Government securities, which are included in the total purchases and sales in the sentence above.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund had underperformed its composite benchmark (60% S&P 500 Index and 40% Lehman Brothers Aggregate Bond Index) for the one-, three-, and five-year periods ended September 30, 2005. The Board further noted that the Fund’s performance ranked in the fourth quartile of the Lipper Balanced Funds category for the one-year period, and in the third quartile for the three- and five- year periods. The Board then discussed with management the steps being taken to improve the Fund’s performance, including the addition by JPMorgan of more small-cap and international exposure to the Fund’s equity weighting. The Board directed the Performance Committee to closely monitor the Fund’s future performance to assess the effectiveness of the recent steps taken and to work with the adviser, and to recommend whether further steps should be required to improve performance.

 

Next, the Board considered the Fund’s contractual advisory fees and breakpoints and noted the Fund’s contractual advisory fee placed it in the fourth quintile of the Fund’s Lipper-constructed Expense Group. The Board also reviewed the Fund’s total expenses which were at the median of its Lipper Expense Group. The Board and management then discussed the

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

expense cap that had been in place since the acquisition of this Fund in 2003. As current expenses are running below the cap, management proposed not to renew the expense limitation and the Board agreed. Effective May 1, 2006, the expense cap for this Fund was terminated. Finally, the Board reviewed the adviser’s profitability and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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Management Information

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by

Trustee

   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President–Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by

Trustee

   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

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Gartmore GVIT Mid Cap Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
6    Statement of Assets and Liabilities
6    Statement of Operations
7    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GMCG (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Mid Cap Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Mid Cap Growth Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,036.50      $ 4.90      0.97%
       Hypothetical1    $ 1,000.00      $ 1,019.99      $ 4.87      0.97%

Class II

      Actual    $ 1,000.00      $ 1,034.70      $ 6.26      1.24%
       Hypothetical1    $ 1,000.00      $ 1,018.65      $ 6.23      1.24%

Class III

      Actual    $ 1,000.00      $ 1,036.40      $ 4.95      0.98%
       Hypothetical1    $ 1,000.00      $ 1,019.94      $ 4.92      0.98%

Class IV

      Actual    $ 1,000.00      $ 1,036.40      $ 4.80      0.95%
       Hypothetical1    $ 1,000.00      $ 1,020.09      $ 4.77      0.95%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

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Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Mid Cap Growth Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stock      98.3%
Cash Equivalents      2.5%
Other Investments*      26.3%
Liabilities in excess of other assets**      -27.1%
      
       100.0%
      

 

 

Top Holdings***       
Alliance Data Systems Corp.      2.7%
L-3 Communications Holdings, Inc.      2.5%
NII Holdings, Inc.      2.4%
ResMed, Inc.      2.4%
XTO Energy, Inc.      2.1%
Marvel Technology Group Ltd.      2.1%
Coach, Inc.      1.9%
J.B. Hunt Transport Services, Inc.      1.9%
W.R. Berkley Corp.      1.9%
Penn National Gaming, Inc.      1.8%
Other Assets      78.3%
      
       100.0%
      

 

Top Industries       
Medical Products & Services      9.3%
Retail      8.4%
Oil & Gas      7.9%
Electronics      6.8%
Consumer Products      6.8%
Telecommunications      6.6%
Computer Software & Services      6.6%
Financial Services      5.5%
Consumer & Commercial Services      5.0%
Semiconductors      4.3%
Other Assets      32.8%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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GARTMORE GVIT MID CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
        
COMMON STOCKS (98.3%)           
Aerospace & Defense (2.5%)       
L-3 Communications Holdings, Inc.   96,600    $ 7,285,572
        
Auction Houses & Art Dealers (1.0%)       
Ritchie Brothers Auctioneers, Inc. ADR — CA   51,860      2,757,915
        
Banks (1.3%)       
East West Bancorp, Inc. (c)   100,200      3,798,582
        
Business Services (1.2%)       
Corporate Executive Board Co. (The)   35,500      3,557,100
        
Computer Software & Services (6.6%)       
F5 Networks, Inc. (b)   40,700      2,176,636
Factset Research Systems, Inc. (c)   68,950      3,261,335
Intuit, Inc. (b)   49,000      2,959,110
Navteq Corp. (b)   55,900      2,497,612
Network Appliance, Inc. (b)   147,400      5,203,220
Satyam Computer Services Ltd. ADR — IN (c)   84,400      2,797,016
        
           18,894,929
        
Construction (3.0%)       
D.R. Horton, Inc.   94,033      2,239,866
Florida Rock Industries (c)   76,600      3,804,722
Pool Corp. (c)   56,900      2,482,547
        
           8,527,135
        
Consumer & Commercial Services (5.0%)
Alliance Data Systems Corp. (b)   133,500      7,852,470
Dun & Bradstreet Corp. (b)   49,500      3,449,160
Heartland Payment Systems, Inc. (b) (c)   109,500      3,052,860
        
           14,354,490
        
Consumer Products (6.8%)       
Crocs, Inc. (b) (c)   132,710      3,337,657
Ecolab, Inc.   81,700      3,315,386
Fortune Brands, Inc.   27,700      1,966,977
Gildan Activewear, Inc., Class A ADR — CA (b)   63,900      3,003,300
Jarden Corp. (b) (c)   141,950      4,322,377
Nutri/System, Inc. (b) (c)   56,900      3,535,197
        
           19,480,894
        
Shares or
Principal Amount		    Value
        
COMMON STOCKS (continued)           
Electronics (6.8%)       
Diodes, Inc. (b) (c)   83,915    $ 3,477,438
FLIR Systems, Inc. (b) (c)   134,300      2,962,658
Jabil Circuit, Inc.   158,900      4,067,840
Microchip Technology, Inc.   154,500      5,183,475
Multi-Fineline Electronix, Inc. (b) (c)   114,300      3,793,617
        
           19,485,028
        
Energy (1.2%)       
Headwaters, Inc. (b) (c)   135,000      3,450,600
        
Financial Services (5.5%)       
Affiliated Managers Group, Inc. (b) (c)   29,900      2,598,011
BlackRock, Inc. (c)   19,600      2,727,732
Investors Financial Services Corp. (c)   79,000      3,547,100
SEI Investments Co.   85,600      4,184,128
TD Ameritrade Holding Corp.   186,200      2,757,622
        
           15,814,593
        
Gaming & Leisure (4.0%)       
Penn National Gaming, Inc. (b)   134,700      5,223,666
Scientific Games Corp. (b)   80,600      2,870,972
Shuffle Master, Inc. (b) (c)   100,300      3,287,834
        
           11,382,472
        
Healthcare (3.4%)       
Express Scripts, Inc. (b)   16,300      1,169,362
Patterson Cos., Inc. (b) (c)   105,500      3,685,115
St. Jude Medical, Inc. (b)   155,100      5,028,342
        
           9,882,819
        
Industrial Services & Supplies (0.9%)       
Copart, Inc. (b) (c)   108,700      2,669,672
        
Insurance (1.9%)       
W.R. Berkley Corp.   155,500      5,307,215
        
Machinery (0.5%)       
Graco, Inc.   30,700      1,411,586
        
Medical Products & Services (9.3%)       
Dade Behring Holdings, Inc.   88,700      3,693,468
Fisher Scientific International, Inc. (b)   58,300      4,258,815
Kinetic Concept, Inc. (b)   72,153      3,185,555

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MID CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
        
COMMON STOCKS (continued)           
Medical Products & Services (continued)       
Palomar Medical Technologies, Inc. (b) (c)   40,200    $ 1,834,326
QIAGEN N.V. ADR — NL (b) (c)   208,500      2,860,620
ResMed, Inc. (b) (c)   144,600      6,788,969
VCA Antech, Inc. (c) (b) (c)   131,500      4,198,795
        
           26,820,548
        
Oil & Gas (7.9%)       
EOG Resources, Inc.   61,800      4,285,212
Kinder Morgan, Inc.   34,300      3,426,227
Patterson-UTI Energy, Inc.   158,900      4,498,459
World Fuel Services Corp. (c)   97,300      4,445,637
XTO Energy, Inc.   136,830      6,057,464
        
           22,712,999
        
Pharmaceuticals (1.3%)       
Barr Pharmaceuticals, Inc. (b)   76,600      3,653,054
        
Retail (8.4%)       
Abercrombie & Fitch Co.   56,300      3,120,709
Bed, Bath & Beyond, Inc. (b) (c)   96,500      3,200,905
Coach, Inc. (b)   180,600      5,399,939
J. Crew Group, Inc. (b)   107,690      2,956,091
Office Depot, Inc. (b)   136,000      5,168,000
Williams-Sonoma, Inc.   125,600      4,276,680
        
           24,122,324
        
Scientific & Technical Instruments (1.3%)
Waters Corp. (b)   84,700      3,760,680
        
Security & Commodity Exchanges (1.0%)
Chicago Mercantile Exchange   5,600      2,750,440
        
Semiconductors (4.3%)       
KLA-Tencor Corp.   7,800      324,246
Marvel Technology Group Ltd. (b)   132,700      5,882,591
MEMC Electronic Materials, Inc. (b)   65,200      2,445,000
QLogic Corp. (b)   180,700      3,115,268
Tessera Technologies, Inc. (b) (c)   17,601      484,028
        
           12,251,133
        
Shares or
Principal Amount		    Value
        
COMMON STOCKS (continued)       
Telecommunications (6.6%)       
Amdocs Ltd. ADR — GG (b)     130,400    $ 4,772,640
Comverse Technology, Inc. (b)     207,100      4,094,367
Neustar, Inc. (b)     89,600      3,024,000
NII Holdings, Inc. (b)     124,500      7,019,310
          
             18,910,317
          
Transportation (4.2%)       
Expeditors International of Washington, Inc.     60,800      3,405,408
J.B. Hunt Transport Services, Inc.     216,600      5,395,506
Oshkosh Truck Corp.     66,200      3,145,824
          
             11,946,738
          
Utilities (1.3%)       
MDU Resources Group, Inc.     102,200      3,741,542
          
Waste Disposal (1.1%)       
Stericycle, Inc. (b) (c)     47,200      3,072,720
          
Total Common Stocks            281,803,097
          
CASH EQUIVALENTS (2.5%)       
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $7,242,505)    $ 7,239,429      7,239,429
          
Total Cash Equivalents            7,239,429
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (26.3%)
Pool of short-term securities for Gartmore Mutual Funds — Note 2 (Securities Lending)     75,402,140      75,402,140
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      75,402,140
          

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MID CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value  
          
Total Investments
(Cost $324,536,190) (a) — 127.1%		    $ 364,444,666  
Liabilities in excess of
other assets — (27.1%)		          (77,883,796 )
        
NET ASSETS — 100.0%        $ 286,560,870  
        

 

 

(a) See notes to financial statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Represents non-income producing securities.

 

(c) All or part of this security was on loan as of June 30, 2006.

 

ADR American Depositary Receipt

 

CA Canada

 

GG Guernsey

 

IN India

 

NL Netherlands

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MID CAP GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $317,296,762)

    $ 357,205,238  

Repurchase agreements, at cost and value

      7,239,428  
    

Total Investments

      364,444,666  
    

Interest and dividends receivable

      126,609  

Receivable for capital shares issued

      504,477  

Receivable for investments sold

      1,617,459  

Prepaid expenses and other assets

      2,233  
    

Total Assets

      366,695,444  
    

Liabilities:

         

Payable for capital shares redeemed

      15,775  

Payable for investments purchased

      4,484,029  

Payable for return of collateral received for securities on loan

      75,402,140  

Accrued expenses and other payables:

         

Investment advisory fees

      168,520  

Fund administration and transfer agent fees

      18,891  

Distribution fees

      11,746  

Administrative servicing fees

      18,108  

Other

      15,365  
    

Total Liabilities

      80,134,574  
    

Net Assets

    $ 286,560,870  
    

Represented by:

         

Capital

    $ 352,147,401  

Accumulated net investment income (loss)

      269,647  

Accumulated net realized gains (losses) from investments

      (105,764,654 )

Net unrealized appreciation (depreciation) on investments

      39,908,476  
    

Net Assets

    $ 286,560,870  
    

Net Assets:

         

Class I Shares

    $ 129,175,267  

Class II Shares

      63,139,878  

Class III Shares

      1,368,528  

Class IV Shares

      92,877,197  
    

Total

    $ 286,560,870  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      4,591,006  

Class II Shares

      2,254,735  

Class III Shares

      48,582  

Class IV Shares

      3,297,005  
    

Total

      10,191,328  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 28.14  

Class II Shares

    $ 28.00  

Class III Shares

    $ 28.17  

Class IV Shares

    $ 28.17  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 183,454  

Dividend income

      1,325,015  

Income from securities lending

      167,443  
    

Total Income

      1,675,912  
    

Expenses:

         

Investment advisory fees

      1,030,806  

Fund administration and transfer agent fees

      97,530  

Distribution fees Class II Shares

      53,515  

Administrative servicing fees
Class I Shares

      94,468  

Administrative servicing fees
Class II Shares

      33,139  

Administrative servicing fees
Class III Shares

      1,094  

Administrative servicing fees
Class IV Shares

      66,312  

Trustee fees

      4,374  

Other

      35,027  
    

Total expenses before reimbursed expenses or earnings credit

      1,416,265  

Expenses reimbursed

      (9,983 )

Earnings credit (Note 6)

      (17 )
    

Total Expenses

      1,406,265  
    

Net Investment Income (Loss)

      269,647  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      24,014,647  

Net change in unrealized appreciation/depreciation on investments

      (15,830,991 )
    

Net realized/unrealized gains (losses) on investments

      8,183,656  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 8,453,303  
    

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT MID CAP GROWTH FUND

 

Statements of Changes in Net Assets

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 269,647      $ (1,122,131 )

Net realized gains (losses) on investment transactions

        24,014,647        21,483,712  

Net change in unrealized appreciation/depreciation on investments

        (15,830,991 )      1,009,545  
      
  

Change in net assets resulting from operations

        8,453,303        21,371,126  
      
  

Change in net assets from capital transactions

        20,539,767        (24,426,694 )
      
  

Change in net assets

        28,993,070        (3,055,568 )

Net Assets:

                    

Beginning of period

        257,567,800        260,623,368  
      
  

End of period

      $ 286,560,870      $ 257,567,800  
      
  

Accumulated net investment income (loss)

      $ 269,647      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 12,602,747      $ 29,092,365  

Cost of shares redeemed

        (22,230,549 )      (55,193,118 )
      
  
         (9,627,802 )      (26,100,753 )
      
  

Class II Shares

                    

Proceeds from shares issued

        37,215,372        14,803,430  

Cost of shares redeemed

        (975,038 )      (3,915,587 )
      
  
         36,240,334        10,887,843  
      
  

Class III Shares

                    

Proceeds from shares issued

        154,678        691,702  

Cost of shares redeemed

        (222,298 )      (590,368 )
      
  
         (67,620 )      101,334  
      
  

Class IV Shares

                    

Proceeds from shares issued

        2,141,269        4,534,590  

Cost of shares redeemed

        (8,146,414 )      (13,849,708 )
      
  
         (6,005,145 )      (9,315,118 )
      
  

Change in net assets from capital transactions

      $ 20,539,767      $ (24,426,694 )
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        433,623        1,144,146  

Redeemed

        (781,545 )      (2,240,933 )
      
  
         (347,922 )      (1,096,787 )
      
  

Class II Shares

                    

Issued

        1,297,028        574,663  

Redeemed

        (33,700 )      (160,673 )
      
  
         1,263,328        413,990  
      
  

Class III Shares

                    

Issued

        5,251        27,362  

Redeemed

        (7,869 )      (24,190 )
      
  
         (2,618 )      3,172  
      
  

Class IV Shares

                    

Issued

        74,656        179,589  

Redeemed

        (282,312 )      (547,483 )
      
  
         (207,656 )      (367,894 )
      
  

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Mid Cap Growth Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                        

Period Ended December 31, 2003(c)

   $ 16.53   (0.07 )   4.99     4.92     —     —     —     $ 21.45   29.76% (e)   $ 137,837   0.98% (f)   (0.49% )(f)    (g )    (g )   109.73%

Year Ended December 31, 2004

   $ 21.45   (0.11 )   3.40     3.29     —     —     —     $ 24.74   15.34%     $ 149,324   0.98%     (0.51% )    (g )    (g )   90.14%

Year Ended December 31, 2005

   $ 24.74   (0.13 )   2.54     2.41     —     —     —     $ 27.15   9.74%     $ 134,094   1.01%     (0.48% )    (g )    (g )   56.01%

Six Months Ended June 30, 2006 (Unaudited)

   $ 27.15   0.04     0.95     0.99     —     —     —     $ 28.14   3.65% (e)   $ 129,175   0.97% (f)   0.24% (f)    (g )    (g )   40.06%

Class II Shares

                                                                                        

Period Ended December 31, 2003(c)

   $ 16.77   (0.03 )   4.69     4.66     —     —     —     $ 21.43   27.79% (e)   $ 2,388   1.17% (f)   (0.64% )(f)    (g )    (g )   109.73%

Year Ended December 31, 2004

   $ 21.43   (0.09 )   3.35     3.26     —     —     —     $ 24.69   15.21%     $ 14,256   1.08%     (0.61% )    (g )    (g )   90.14%

Year Ended December 31, 2005

   $ 24.69   (0.11 )   2.48     2.37     —     —     —     $ 27.06   9.60%     $ 26,825   1.16%     (0.63% )    (g )    (g )   56.01%

Six Months Ended June 30, 2006 (Unaudited)

   $ 27.06   (0.01 )   0.95     0.94     —     —     —     $ 28.00   3.47% (e)   $ 63,140   1.24% (f)   (0.15% )(f)    (g )    (g )   40.06%

Class III Shares

                                                                                        

Period Ended December 31, 2003(c)

   $ 16.53   (0.03 )   4.98     4.95     —     —     —     $ 21.48   29.95% (e)   $ 628   0.98% (f)   (0.48% )(f)    (g )    (g )   109.73%

Year Ended December 31, 2004

   $ 21.48   (0.10 )   3.39     3.29     —     —     —     $ 24.77   15.32%     $ 1,190   0.98%     (0.50% )    (g )    (g )   90.14%

Year Ended December 31, 2005

   $ 24.77   (0.11 )   2.52     2.41     —     —     —     $ 27.18   9.73%     $ 1,392   1.01%     (0.48% )    (g )    (g )   56.01%

Six Months Ended June 30, 2006 (Unaudited)

   $ 27.18   0.03     0.96     0.99     —     —     —     $ 28.17   3.64% (e)   $ 1,369   0.98% (f)   0.23% (f)    (g )    (g )   40.06%

Class IV Shares(d)

                                                                                        

Year Ended December 31, 2001

   $ 27.71   (0.07 )   (1.00 )   (1.07 )   (0.18 )   (6.45 )   (6.63 )   $ 20.01   (3.36% )   $ 98,214   0.92%     (0.37% )   1.01%     (0.46% )   135.00%

Year Ended December 31, 2002

   $ 20.01   (0.11 )   (4.35 )   (4.46 )   —     (0.09 )   (0.09 )   $ 15.46   (22.38% )   $ 70,669   0.95%     (0.61% )   1.00%     (0.66% )   64.00%

Year Ended December 31, 2003

   $ 15.46   (0.10 )   6.10     6.00     —     —     —     $ 21.46   38.81%     $ 89,413   0.95%     (0.51% )   1.02%     (0.58% )   109.73%

Year Ended December 31, 2004

   $ 21.46   (0.11 )   3.40     3.29     —     —     —     $ 24.75   15.33%     $ 95,854   0.95%     (0.48% )   0.98%     (0.51% )   90.14%

Year Ended December 31, 2005

   $ 24.75   (0.11 )   2.54     2.43     —     —     —     $ 27.18   9.82%     $ 95,257   0.95%     (0.42% )   1.01%     (0.48% )   56.01%

Six Months Ended June 30, 2006 (Unaudited)

   $ 27.18   0.04     0.95     0.99     —     —     —     $ 28.17   3.64% (e)   $ 92,877   0.95% (f)   0.27% (f)   0.97% (f)   0.25% (f)   40.06%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(d) The Gartmore Mid Cap Growth Fund retained the financial history of the Market Street Mid Cap Growth Fund and the existing shares of the Fund were designated Class IV shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Mid Cap Growth Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by

 

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June 30, 2006 (Unaudited)

 

a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing counties.

 

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June 30, 2006 (Unaudited)

 

(e) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(f) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(g) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

    Issuer Name
    Value
    Maturity Rate
     Maturity Date
Commercial Paper    Aegis Finance LLC    $ 6,968,234    5.29 %   07/21/06
Funding Agreement — GIC    Protecetive Life Insurance Company      10,000,000    5.25 %   07/31/06
Master Note — Floating    CDC Financial Product Inc.      8,500,000    5.41 %   07/03/06
Medium Term Note — Floating    American Express Credit Corp.      1,000,000    5.17 %   07/12/06
Medium Term Note — Floating    Deutsche Bank Financial      3,000,000    5.44 %   07/03/06
Medium Term Note — Floating    General Electric Capital Corp.      2,000,114    5.27 %   09/08/06
Medium Term Note — Floating    ISLANDSBANKI HF Corp.      5,000,000    5.34 %   07/24/06
Medium Term Note — Floating    Northern Rock PLC      14,000,000    5.35 %   09/11/06
Medium Term Note — Floating    Tango Finance Corp.      1,999,414    5.39 %   07/03/06
Repurchase Agreement    Bank of America Securities LLC      22,934,378    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

   

Value of Collateral

$ 75,008,074

    $75,402,140

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*
$324,609,967   $50,283,125   $(10,448,426)   $39,834,699

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GMF”). GMF is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule    Fees    

Up to $200 million

    0.75%

$200 million or more

    0.70%

 

Effective May 1, 2006, GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) limiting operating expenses from exceeding 0.95% for Class IV Shares until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, the cumulative potential reimbursements for the Class IV shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF would be:

 

Amount Fiscal Year
2003

     

Amount Fiscal Year
2004

     

Amount Fiscal Year
2005

     

Amount Six months
Ended June 30,
2006

$56,667

      $26,956      $54,418      $9,983

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of the Class I, Class II, and Class III shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $210,407 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had no contributions to capital due to collection of redemption fees.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $131,693,339 and sales of $109,958,243.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the Russell Mid Cap Growth Index, for the one- and three-year periods ended September 30, 2005 while significantly outperforming its benchmark for the five-year period. The Board also noted that the Fund ranked in the top half of the Lipper Mid-Cap Growth Funds category over the one- and five-year periods and outperformed the median for this Lipper category by 84 basis points over the one-year period. The Board then discussed with management the Fund’s loss of assets over the past year and future plans for distributing the Fund.

 

Next, the Board reviewed the Fund’s contractual advisory fee and breakpoints noting that the contractual advisory fee placed the Fund in the second quintile of its Lipper-constructed Expense Group and the Fund’s total expenses placed it below the median for the Fund’s Lipper Expense Group. The Board also noted that the adviser manages institutional accounts in a similar manner to the Fund and determined that while the Fund’s management fee was higher, this was understandable given the more-extensive regulations and regulatory restrictions to which mutual funds are subject. The Board then reviewed the adviser’s profitability in light of this information and concluded that it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92  

Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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.

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

19

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President-Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

Table of Contents

 

Van Kampen GVIT Comstock Value Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
6    Statement of Assets and Liabilities
6    Statement of Operations
7    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-VKGC (8/06)

Table of Contents

 

Shareholder

Expense Example

Van Kampen GVIT Comstock Value Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

              Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
January 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Van Kampen GVIT Comstock Value Fund                                         

Class I

      Actual      $ 1,000.00      $ 1,038.00      $ 4.70      0.93%
       Hypothetical1      $ 1,000.00      $ 1,020.19      $ 4.67      0.93%

Class II

      Actual      $ 1,000.00      $ 1,035.90      $ 6.46      1.28%
       Hypothetical1      $ 1,000.00      $ 1,018.45      $ 6.43      1.28%

Class IV

      Actual      $ 1,000.00      $ 1,038.10      $ 4.55      0.90%
       Hypothetical1      $ 1,000.00      $ 1,020.34      $ 4.52      0.90%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Van Kampen GVIT Comstock Value Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stock      92.3%
Cash Equivalents      9.2%
Other Investments*      10.8%
Liabilities in excess of other assets**      -12.3%
      
       100.0%
      

 

 

Top Holdings***       
AT&T, Inc.      4.2%
GlaxoSmithKline PLC ADR - GB      4.0%
International Paper Co.      3.8%
Verizon Communications, Inc.      3.7%
Freddie Mac      3.5%
Bristol-Myers Squibb Co.      3.4%
Bank of America Corp.      3.3%
Citigroup, Inc.      3.2%
Alcoa, Inc.      2.5%
Wells Fargo & Co.      2.4%
Other Assets      66.0%
      
       100.0%
      
Top Industries       
Pharmaceuticals      15.6%
Banks      14.7%
Telecommunications      10.3%
Broadcast Media & Cable Television      8.2%
Insurance      5.4%
Food & Related      5.3%
Financial Services      5.0%
Paper & Forest Products      3.8%
Chemicals      3.2%
Computer Software & Services      2.5%
Other Assets      26.0%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT COMSTOCK VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount

    Value
            
COMMON STOCKS (92.3%)       
Airlines (0.5%)       
Southwest Airlines   92,300    $ 1,510,951
        
Banks (14.7%)           
Bank of America Corp.   192,834      9,275,315
Bank of New York Co., Inc.   84,000      2,704,800
Barclays PLC ADR — GB (c)   9,900      453,222
Citigroup, Inc.   190,500      9,189,720
J.P. Morgan Chase & Co.   63,400      2,662,800
PNC Bank Corp.   45,200      3,171,684
Suntrust Banks, Inc.   15,400      1,174,404
U.S. Bancorp   33,500      1,034,480
Wachovia Corp.   94,805      5,127,054
Wells Fargo & Co.   102,900      6,902,532
        
           41,696,011
        
Broadcast Media & Cable Television (8.2%)
CBS Corp., Class B   26,400      714,120
Clear Channel Communications, Inc.   204,800      6,338,560
Comcast Corp., Class A (b)   147,600      4,832,424
Liberty Media Holding Corp. — Capital, Series A (b)   20,015      1,676,657
News Corp., Class B (c)   107,000      2,159,260
Time Warner, Inc.   260,500      4,506,650
Viacom, Inc., Class A (b)   1,800      64,710
Viacom, Inc., Class B (b)   83,500      2,992,640
        
           23,285,021
        
Chemicals (3.2%)           
Dow Chemical Co.   22,700      885,981
E.I. du Pont de Nemours & Co.   154,600      6,431,360
Rohm & Haas Co.   37,100      1,859,452
        
           9,176,793
        
Computer Hardware (1.6%)           
Dell, Inc. (b)   107,000      2,611,870
Hewlett-Packard Co.   27,100      858,528
International Business Machines Corp.   14,800      1,136,936
        
           4,607,334
        
Computer Software & Services (2.5%)
Affiliated Computer Services, Inc., Class A (b) (c)   13,452      694,258
Cisco Systems, Inc. (b)   80,400      1,570,212
First Data Corp.   31,700      1,427,768

Shares or
Principal Amount

    Value
            
COMMON STOCKS (continued)       
Computer Software & Services (continued)
Liberty Media Holding Corp. — Interactive, Class A (b)   99,975    $ 1,725,568
McAfee, Inc. (b) (c)   28,200      684,414
Microsoft Corp.   48,200      1,123,060
        
           7,225,280
        
Consulting Services (0.1%)           
Accenture Ltd., Class A   10,200      288,864
        
Consumer Products (1.7%)           
Kimberly-Clark Corp.   79,900      4,929,830
        
Electronics (0.3%)           
Cognex Corp. (c)   15,300      398,259
Credence Systems Corp. (b)   32,000      112,000
Flextronics International Ltd. ADR — SG (b) (c)   36,800      390,816
        
           901,075
        
Entertainment (1.6%)           
Walt Disney Co. (The)   154,800      4,644,000
        
Financial Services (5.0%)           
AMBAC Financial, Inc.   11,600      940,760
Fannie Mae   19,750      949,975
Freddie Mac   175,580      10,009,816
Merrill Lynch & Co., Inc.   34,300      2,385,908
        
           14,286,459
        
Food & Related (5.3%)           
Anheuser-Busch Cos., Inc.   33,950      1,547,781
Cadbury Schweppes PLC ADR — GB   3,200      124,224
Coca-Cola Co.   105,700      4,547,214
Kraft Foods, Inc. (c)   115,200      3,559,680
Unilever NV ADR — NL   235,500      5,310,525
        
           15,089,424
        
Healthcare (1.4%)           
Boston Scientific Corp. (b)   109,700      1,847,348
Cardinal Health, Inc. (c)   33,900      2,180,787
        
           4,028,135
        
Industrial Goods & Services (0.5%)       
General Electric Co.   43,900      1,446,944
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT COMSTOCK VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount

    Value
            
COMMON STOCKS (continued)       
Insurance (5.4%)           
AFLAC, Inc.   23,100    $ 1,070,685
American International Group, Inc.   33,300      1,966,365
Berkshire Hathaway, Inc., Class B (b) (c)   470      1,430,210
Chubb Corp. (The)   72,280      3,606,772
Genworth Financial, Inc.   27,300      951,132
Hartford Financial Services Group, Inc. (The)   4,200      355,320
MetLife, Inc. (c)   32,700      1,674,567
St. Paul Travelers Cos., Inc.   52,400      2,335,992
Torchmark Corp. (c)   32,900      1,997,688
        
           15,388,731
        
Metals & Mining (2.5%)           
Alcoa, Inc.   219,700      7,109,492
        
Oil & Gas (0.8%)           
Total SA ADR — FR (c)   33,500      2,194,920
        
Paper & Forest Products (3.8%)       
International Paper Co. (c)   332,836      10,750,603
        
Pharmaceuticals (15.6%)           
Abbott Laboratories   67,500      2,943,675
Bristol-Myers Squibb Co.   375,200      9,702,671
Eli Lilly & Co.   10,600      585,862
GlaxoSmithKline PLC ADR — GB (c)   205,500      11,466,899
Pfizer, Inc.   166,900      3,917,143
Roche Holding AG ADR — CH   52,500      4,330,715
Sanofi-Aventis ADR — FR (c)   62,700      3,053,490
Schering-Plough Corp.   221,100      4,207,533
Wyeth   92,170      4,093,270
        
           44,301,258
        
Printing & Publishing (0.4%)       
Gannett Co.   19,100      1,068,263
        
Retail (2.4%)           
Federated Department Stores, Inc.   30,670      1,122,522
Wal-Mart Stores, Inc. (c)   120,300      5,794,851
        
           6,917,373
        

Shares or
Principal Amount

    Value
              
COMMON STOCKS (continued)       
Semiconductors (1.6%)             
Intel Corp.     171,200    $ 3,244,240
KLA-Tencor Corp.     28,400      1,180,588
Novellus Systems, Inc. (b)     3,800      93,860
          
             4,518,688
          
Telecommunications (10.3%)       
AT&T, Inc. (c)     430,400      12,003,856
Embarq Corp. (b)     14,085      577,344
Sprint Corp. (c)     297,900      5,955,021
Verizon Communications, Inc.     319,010      10,683,645
          
             29,219,866
          
Telecommunications Equipment (0.3%)
Ericsson (LM) Tel-SP ADR — SE (c)     11,000      363,440
Nokia Corp. ADR — FI     23,100      468,006
          
             831,446
          
Tobacco (1.6%)             
Altria Group, Inc.     63,850      4,688,506
          
Utilities (1.0%)             
American Electric Power Co., Inc.     46,040      1,576,870
FirstEnergy Corp.     19,900      1,078,779
FPL Group, Inc. (c)     7,400      306,212
          
             2,961,861
          
Total Common Stocks            263,067,128
          
CASH EQUIVALENTS (9.2%)       
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $26,323,405)   $ 26,312,224      26,312,224
          
Total Cash Equivalents            26,312,224
          

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT COMSTOCK VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount

    Value  
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (10.8%)   
Pool of short-term securities for Gartmore Mutual Funds — Note 2
(Securities Lending)		   $ 30,838,631    $ 30,838,631  
          
Total Short-Term Securities Held as Collateral for Securities on Loan      30,838,631  
          
Total Investments
(Cost $303,984,357) (a) — 112.3%		      320,217,983  
Liabilities in excess of
other assets — (12.3%)		      (35,095,362 )
          
NET ASSETS — 100.0%    $ 285,122,621  
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security

 

(c) All or part of the security was on loan as of June 30, 2006.

 

ADR American Depository Receipt

 

CH Switzerland

 

FI Finland

 

FR France

 

GB United Kingdom

 

NL Netherlands

 

SE Sweden

 

SG Singapore

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT COMSTOCK VALUE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $277,672,133)

    $ 293,905,759  

Repurchase agreements, at cost and value

      26,312,224  
    

Total Investments

      320,217,983  
    

Interest and dividends receivable

      493,292  

Receivable for capital shares issued

      586,386  

Receivable for investments sold

      1,478,365  

Prepaid expenses and other assets

      2,980  
    

Total Assets

      322,779,006  
    

Liabilities:

         

Payable for capital shares redeemed

      149,754  

Payable for investments purchased

      6,436,338  

Payable for return of collateral received for securities on loan

      30,838,631  

Accrued expenses and other payables:

         

Investment advisory fees

      151,372  

Fund administration and transfer agent fees

      17,257  

Distribution fees

      23,856  

Administrative servicing fees

      30,966  

Other

      8,211  
    

Total Liabilities

      37,656,385  
    

Net Assets

    $ 285,122,621  
    

Represented by:

         

Capital

    $ 269,538,908  

Accumulated net investment income (loss)

      54,583  

Accumulated net realized gains (losses) from investments

      (704,496 )

Net unrealized appreciation (depreciation) on investments

      16,233,626  
    

Net Assets

    $ 285,122,621  
    

Net Assets:

         

Class I Shares

    $ 104,666,599  

Class II Shares

      125,963,244  

Class IV Shares

      54,492,778  
    

Total

    $ 285,122,621  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      9,088,559  

Class II Shares

      10,972,173  

Class IV Shares

      4,731,918  
    

Total

      24,792,650  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 11.52  

Class II Shares

    $ 11.48  

Class IV Shares

    $ 11.52  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 520,885  

Dividend income

      2,933,743  

Income from securities lending

      19,698  
    

Total Income

      3,474,326  
    

Expenses:

         

Investment advisory fees

      834,170  

Fund administration and transfer agent fees

      85,223  

Distribution fees Class II Shares

      108,619  

Administrative servicing fees Class I Shares

      76,619  

Administrative servicing fees Class II Shares

      108,619  

Administrative servicing fees Class IV Shares

      32,905  

Trustee fees

      4,058  

Other

      32,505  
    

Total expenses before earnings credit

      1,282,718  

Earnings credit (Note 5)

      (1,350 )
    

Total Expenses

      1,281,368  
    

Net Investment Income (Loss)

      2,192,958  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      3,689,083  

Net change in unrealized appreciation/depreciation on investments

      2,665,374  
    

Net realized/unrealized gains (losses) on investments

      6,354,457  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 8,547,415  
    

 

See notes to financial statements.

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT COMSTOCK VALUE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 2,192,958      $ 3,244,786  

Net realized gains (losses) on investment transactions

        3,689,083        21,718,127  

Net change in unrealized appreciation/depreciation on investments

        2,665,374        (16,307,605 )
      
  

Change in net assets resulting from operations

        8,547,415        8,655,308  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (910,211 )      (1,711,326 )

Net realized gains on investments

        (2,978,456 )      (2,606,630 )

Distributions to Class II shareholders from:

                    

Net investment income

        (773,911 )      (622,244 )

Net realized gains on investments

        (3,480,871 )      (1,511,572 )

Distributions to Class IV shareholders from:

                    

Net investment income

        (486,777 )      (888,749 )

Net realized gain on investment

        (1,553,879 )      (1,389,338 )
      
  

Change in net assets from shareholder distributions

        (10,184,105 )      (8,729,859 )
      
  

Change in net assets from capital transactions

        67,280,160        17,356,343  
      
  

Change in net assets

        65,643,470        17,281,792  

Net Assets:

                    

Beginning of period

        219,479,151        202,197,359  
      
  

End of period

      $ 285,122,621      $ 219,479,151  
      
  

Accumulated net investment income (loss)

      $ 54,583      $ 32,524  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 12,388,406      $ 18,628,732  

Dividends reinvested

        3,888,664        4,317,954  

Cost of shares redeemed

        (15,183,469 )      (31,519,127 )
      
  
         1,093,601        (8,572,441 )
      
  

Class II Shares

                    

Proceeds from shares issued

        62,813,504        27,870,088  

Dividends reinvested

        4,254,778        2,133,816  

Cost of shares redeemed

        (69,927 )      (3,673,723 )
      
  
         66,998,355        26,330,181  
      
  

Class IV Shares

                    

Proceeds from shares issued

        1,525,516        4,616,712  

Dividends reinvested

        2,040,655        2,278,086  

Cost of shares redeemed

        (4,377,967 )      (7,296,195 )
      
  
         (811,796 )      (401,397 )
      
  

Change in net assets from capital transactions

      $ 67,280,160      $ 17,356,343  
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        1,046,393        1,635,483  

Reinvested

        340,870        375,367  

Redeemed

        (1,279,712 )      (2,765,203 )
      
  
         107,551        (754,353 )
      
  

Class II Shares

                    

Issued

        5,332,951        2,424,630  

Reinvested

        374,944        185,478  

Redeemed

        (5,749 )      (323,560 )
      
  
         5,702,146        2,286,548  
      
  

Class IV Shares

                    

Issued

        129,383        403,069  

Reinvested

        178,829        198,000  

Redeemed

        (371,653 )      (637,238 )
      
  
         (63,441 )      (36,169 )
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Van Kampen GVIT Comstock Value Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period
   Net
Investment
Income
(Loss)
   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments
     Total from
Investment
Activities
     Net
Investment
Income
     Net
Realized
Gains
     Total
Distributions
     Net
Asset
Value,
End of
Period
   Total
Return
     Net Assets
at End of
Period
(000s)
   Ratio of
Expenses
to
Average
Net
Assets
     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets
     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)
     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)
     Portfolio
Turnover(b)

Class I Shares

                                                                                      

Year Ended December 31, 2001(c)

   $ 11.99   0.15   (1.61 )   (1.46 )   (0.15 )   —     (0.15 )   $ 10.38   (12.15% )   $ 52,848   0.95%     1.41%     1.09%     1.27%     127.03%

Year Ended December 31, 2002

   $ 10.38   0.12   (2.72 )   (2.60 )   (0.12 )   —     (0.12 )   $ 7.66   (25.14% )   $ 39,424   1.11%     1.30%     1.11%     1.30%     245.24%

Year Ended December 31, 2003

   $ 7.66   0.11   2.28     2.39     (0.11 )   —     (0.11 )   $ 9.94   31.43%     $ 62,517   0.99%     1.37%     (h )   (h )   71.31%

Year Ended December 31, 2004

   $ 9.94   0.14   1.59     1.73     (0.14 )   —     (0.14 )   $ 11.53   17.50%     $ 112,202   0.94%     1.41%     (h )   (h )   31.95%

Year Ended December 31, 2005

   $ 11.53   0.20   0.29     0.49     (0.19 )   (0.30 )   (0.49 )   $ 11.53   4.25%     $ 103,565   0.94%     1.65%     (h )   (h )   33.13%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.53   0.11   0.32     0.43     (0.10 )   (0.34 )   (0.44 )   $ 11.52   3.80% (f)   $ 104,667   0.93% (g)   1.91% (g)   (h )   (h )   8.95%

Class II Shares

                                                                                      

Period Ended December 31, 2003(d)

   $ 7.47   0.08   2.47     2.55     (0.09 )   —     (0.09 )   $ 9.93   34.20% (f)   $ 6,092   1.20% (g)   1.27% (g)   1.31% (g)   1.16% (g)   71.31%

Year Ended December 31, 2004

   $ 9.93   0.11   1.58     1.69     (0.12 )   —     (0.12 )   $ 11.50   17.08%     $ 34,312   1.20%     1.20%     1.28%     1.11%     31.95%

Year Ended December 31, 2005

   $ 11.50   0.14   0.31     0.45     (0.15 )   (0.30 )   (0.45 )   $ 11.50   3.95%     $ 60,617   1.28%     1.31%     1.31%     1.29%     33.13%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.50   0.08   0.33     0.41     (0.09 )   (0.34 )   (0.43 )   $ 11.48   3.59% (f)   $ 125,963   1.28% (g)   1.54% (g)   (h )   (h )   8.95%

Class IV Shares

                                                                                      

Period Ended December 31, 2003(e)

   $ 7.76   0.09   2.18     2.27     (0.09 )   —     (0.09 )   $ 9.94   29.38% (f)   $ 48,070   0.94% (g)   1.50% (g)   (h )   (h )   71.31%

Year Ended December 31, 2004

   $ 9.94   0.15   1.57     1.72     (0.14 )   —     (0.14 )   $ 11.52   17.42%     $ 55,683   0.91%     1.42%     (h )   (h )   31.95%

Year Ended December 31, 2005

   $ 11.52   0.19   0.31     0.50     (0.19 )   (0.30 )   (0.49 )   $ 11.53   4.36%     $ 55,297   0.93%     1.67%     (h )   (h )   33.13%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.53   0.12   0.32     0.44     (0.11 )   (0.34 )   (0.45 )   $ 11.52   3.81% (f)   $ 54,493   0.90% (g)   1.93% (g)   (h )   (h )   8.95%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from March 28, 2003 (commencement of operations) through December 31, 2003.

 

(e) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Van Kampen GVIT Comstock Value Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(e) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(f) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(g) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 10,200,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      3,484,117    5.29%    07/21/06
Master Note — Floating    CDC Financial Product Inc.      6,000,000    5.41%    07/03/06
Medium Term Note — Floating    Macquarie Bank Ltd.      4,999,541    5.30%    07/21/06
Repurchase Agreement    Bank of America Securities LLC      6,154,972    5.32%    07/03/06

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

$30,572,115

    $30,838,631

 

(h) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(i) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*
$305,478,086   $23,375,872   $(8,635,975)   $14,739,897

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(j) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such a rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GMF advises. Van Kampen Asset Management, Inc. (the “subadviser”), manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total
Fees		      Fees
Retained		      Paid to
Sub-adviser

Up to $50 million

    0.80%      0.45%      0.35%

Next $200 million

    0.65%      0.35%      0.30%

Next $250 million

    0.60%      0.35%      0.25%

$500 million or more

    0.55%      0.35%      0.20%

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, the cumulative potential reimbursements for the Class IV shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF would be:

 

Amount
Fiscal Year
2003		      Amount
Fiscal Year
2004		      Amount
Fiscal Year
2005		      Amount
Six months ended
June 30, 2006

$1,369

      $14,072      $10,247      $0

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

*

The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

 

Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I and Class II shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $220,820 in Administrative Services Fees from the Fund.

 

For the six months ended June 30, 2006, the advisers or affiliates of the advisers directly held 4% of the shares outstanding of the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $72,954,395 and sales of $20,340,310.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensation balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the S&P 500 Index, for the one- and five-year periods ended September 30, 2005 while outperforming its benchmark for the three-year period. During those same periods, the Fund ranked in the fourth quartile of the Lipper Equity Funds category for the one- and five-year periods, and in the first quartile for the three-year period. The Board then discussed with management the Funds’ volatile performance and the actions management had recently taken to address the Fund’s underperformance and volatility. Management explained that the Fund employs a “deep value” style and deep value funds are generally very volatile. Moreover, the Board noted that some of the funds included in the Fund’s Lipper Equity Income Funds peer category, are not “deep value” funds and, consequently, the Fund’s performance should reasonably be expected to be more volatile than the performance of those funds. The Board considered that, in management’s view, the Fund’s performance has performed in line with management’s expectations for a deep value Fund.

 

The Board reviewed and considered the contractual advisory fee and breakpoints for the Fund and noted that the contractual advisory fee (including the subadvisory fee) placed the Fund in the third quintile of the Fund’s Lipper-constructed Expense

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Group. The Trustees considered the total expenses for the Fund and noted that the expense ratio placed the Fund in the second quintile of the Fund’s Lipper Expense Group. The Board and management then discussed the expense cap that had been in place since the acquisition of this Fund in 2003. As current expenses are running below the cap, management proposed not to renew the expense limitation and the Board agreed. Effective May 1, 2006, the expense cap for this Fund was terminated. The Board reviewed the adviser’s profitability, giving consideration to the expiring expense cap, and concluded that the adviser’s profitability was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

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Federated GVIT High Income Bond Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
13    Statement of Assets and Liabilities
13    Statement of Operations
14    Statements of Changes in Net Assets
15    Financial Highlights
16    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-FGHIB (8/06)

Table of Contents

 

Shareholder

Expense Example

Federated GVIT High Income Bond Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
     

Expenses

Paid

During Period*

     

Annualized

Expense Ratio*

Federated GVIT High Income Bond Fund                                

Class I

      Actual    $ 1,000.00      $ 1,028.10      $ 4.63      0.92%
       Hypothetical1    $ 1,000.00      $ 1,020.24      $ 4.62      0.92%

Class III

      Actual    $ 1,000.00      $ 1,027.90      $ 4.88      0.97%
       Hypothetical1    $ 1,000.00      $ 1,023.13      $ 4.87      0.97%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Federated GVIT High Income Bond Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Corporate Bonds      95.7%
Cash Equivalents      2.5%
Preferred Stocks      0.4%
Common Stocks      0.3%
Warrants      0.1%
Other assets in excess of liabilities      1.0%
      
       100.0%
      

 

 

Top Holdings*       
Qwest Corp., 8.88%, 03/15/12      1.6%
Ford Motor Credit Co., 7.25%, 10/25/11      1.1%
Intelsat Bermuda, 11.25%, 06/15/16      1.0%
General Motors Acceptance Corp., 8.00%, 11/01/31      0.8%
Kabel Deutschland GMBH, 10.63%, 07/01/14      0.8%
Tennessee Gas Pipeline, 8.38%, 06/15/32      0.8%
Dex Media West LLC, 9.88%, 08/15/13      0.8%
General Motors Acceptance Corp., 6.88%, 09/15/11      0.7%
Charter Communications, 10.25%, 09/15/10      0.7%
CDRV Investors, Inc., 10.44%, 01/01/15      0.7%
Other Assets      91.0%
      
       100.0%
      

 

Top Industries       
Media - Non-Cable      11.1%
Healthcare      6.8%
Gaming      6.1%
Automotive      6.0%
Industrial - Other      5.8%
Consumer Products      5.8%
Utility - Natural Gas      5.8%
Chemicals      5.6%
Food & Beverage      4.0%
Technology      3.8%
Other Assets      39.2%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (0.3%)             
Chemicals (0.1%)             
General Chemical Industrial Products, Inc. (d) (h) (i)     143    $ 137,000
          
Consumer Products (0.0%)             
Sleepmaster LLC (c) (d) (i)     185      463
          
Food & Beverage (0.1%)             
B&G Foods, Inc.     19,220      311,556
          
Media—Cable (0.1%)             
NTL, Inc. (h)     5,650      140,685
          
Packaging (0.0%)             
Russell Stanley Holdings, Inc. (d) (g) (h)     4,000      0
          
Wireline Communications (0.0%)       

Viatel Holdings (Bermuda) (h)

     2,209      22
          
Total Common Stocks            589,726
          
CORPORATE BONDS (95.7%)             
Aerospace/Defense (1.6%)             
Alliant Techsystems, Inc.,             
6.75%, 04/01/16   $ 800,000      772,000
DRS Technologies, Inc.,             
6.63%, 02/01/16     725,000      705,063
K&F Acquisition, Inc.,             
7.75%, 11/15/14     250,000      247,500
L-3 Communications Corp.,             
6.13%, 01/15/14     1,425,000      1,360,874
L-3 Communications Corp.,             
5.88%, 01/15/15     225,000      210,938
L-3 Communications Corp.,             
6.38%, 10/15/15     375,000      360,000
          
             3,656,375
          
Automotive (6.0%)             
Advanced Accessory Systems,             
10.75%, 06/15/11     600,000      619,500
Cooper-Standard Automotive, Inc.,             
8.38%, 12/15/14     1,000,000      793,750
Ford Motor Co.,             
7.45%, 07/16/31     1,675,000      1,218,563
Ford Motor Credit Co.,             
7.25%, 10/25/11     2,700,000      2,397,634
General Motors Acceptance Corp.,             
6.88%, 09/15/11     1,775,000      1,695,441
General Motors Acceptance Corp.,             
8.00%, 11/01/31     1,925,000      1,855,095
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Automotive (continued)       
General Motors Corp.,             
7.13%, 07/15/13   $ 450,000    $ 372,375
General Motors Corp.,             
8.38%, 07/15/33     925,000      749,250
Stanadyne Corp.,             
10.00%, 08/15/14     700,000      658,000
Stanadyne Holdings, Inc.,             
16.31%, 02/15/15 (j)     450,000      227,250
Stoneridge, Inc.,             
11.50%, 05/01/12     575,000      554,875
Tenneco Automotive, Inc.,             
8.63%, 11/15/14     650,000      651,625
TRW Automotive, Inc.,             
9.38%, 02/15/13     400,000      427,000
TRW Automotive, Inc.,             
11.00%, 02/15/13     534,000      586,065
United Components, Inc.,             
9.38%, 06/15/13     750,000      742,500
          
             13,548,923
          
Building Materials (2.3%)             
Collins & Aikman Floorcoverings, Inc.,             
9.75%, 02/15/10     375,000      370,313
ERICO International Corp.,             
8.88%, 03/01/12     625,000      642,188
Goodman Global Holdings,             
8.33%, 06/15/12, (e)     250,000      251,250
Goodman Global Holdings,             
7.88%, 12/15/12     725,000      696,000
Norcraft Cos. LLC,             
9.00%, 11/01/11     500,000      511,250
Norcraft Holdings LP,             
9.76%, 09/01/12 (j)     1,250,000      1,018,749
Nortek Holdings, Inc.,             
10.52%, 03/01/14 (j)     625,000      455,469
Nortek Holdings, Inc.,             
8.50%, 09/01/14     350,000      340,375
Texas Industries Inc,             
7.25%, 07/15/13     150,000      149,250
U.S. Concrete, Inc.,             
8.38%, 04/01/14     725,000      735,875
          
             5,170,719
          

 

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FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Chemicals (5.6%)             
Chemtura Corp.,   $ 600,000    $ 582,750
6.88%, 06/01/16             
Compass Mineral International,             
7.69%, 12/15/12 (j)     500,000      477,500
Compass Mineral International,             
7.94%, 06/01/13 (j)     1,050,000      960,750
Crystal US Holdings,             
9.63%, 06/15/14     575,000      626,750
Crystal US Holdings,             
8.87%, 10/01/14 (j)     1,689,000      1,330,087
Hexion U.S. Finance Corp.,             
9.00%, 07/15/14     1,200,000      1,220,999
Huntsman ICI Chemicals LLC,             
10.13%, 07/01/09     869,000      886,380
Invista,             
9.25%, 05/01/12 (b)     950,000      1,002,250
Koppers, Inc.,             
9.88%, 10/15/13     440,000      474,100
Lyondell Chemical Co.,             
9.63%, 05/01/07     475,000      484,500
Lyondell Chemical Co.,             
9.50%, 12/15/08     191,000      197,208
Lyondell Chemical Co.,             
10.88%, 05/01/09     450,000      459,000
Nalco Co.,             
8.88%, 11/15/13     875,000      885,938
Nalco Co.,             
9.47%, 02/01/14 (j)     481,000      363,155
Nell AF SARL,             
8.38%, 08/15/15 (b)     1,100,000      1,062,875
PQ Corp.,             
7.50%, 02/15/13     525,000      496,125
Union Carbide Corp.,             
7.88%, 04/01/23     225,000      235,608
Union Carbide Corp.,             
7.50%, 06/01/25     350,000      357,438
VeraSun Energy Corp.,             
9.88%, 12/15/12 (b)     550,000      583,000
          
             12,686,413
          
Construction Machinery (0.6%)       
Case New Holland, Inc.,             
9.25%, 08/01/11     675,000      713,813
Clark Material Handling, Inc.,             
0.00%, 11/15/06 (c) (d) (g) (h)     100,000      0
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Construction Machinery (continued)       
NationsRent Cos., Inc.,             
9.50%, 10/15/10   $ 500,000    $ 535,000
          
             1,248,813
          
Consumer Products (5.8%)             
AAC Group Holding Corp.,             
10.62%, 10/01/12 (j)     950,000      745,750
AAC Group Holding Corp.,             
12.75%, 10/01/12 (b)     325,000      326,625
Alltrista Corp.,             
9.75%, 05/01/12     825,000      845,625
American Achievement Corp.,             
8.25%, 04/01/12     250,000      247,500
American Greetings,             
7.38%, 06/01/16     550,000      555,500
Ames True Temper, Inc.,             
10.00%, 07/15/12     850,000      697,000
Church & Dwight Co.,             
6.00%, 12/15/12     625,000      581,250
Diamond Brands, Inc.,             
0.00%, 04/15/09 (c) (d) (f) (g) (h)     50,000      0
Jostens Holding Corp.,             
10.18%, 12/01/13 (j)     1,675,000      1,323,250
Jostens IH Corp.,             
7.63%, 10/01/12     1,050,000      1,023,750
Leiner Health Products,             
11.00%, 06/01/12     500,000      475,625
Nutro Products, Inc.,             
10.75%, 04/15/14 (b)     475,000      491,031
Playtex Products, Inc.,             
9.38%, 06/01/11     925,000      967,781
Rayovac Corp.,             
8.50%, 10/01/13     175,000      150,500
Sealy Mattress Co.,             
8.25%, 06/15/14     450,000      452,250
Spectrum Brands, Inc.,             
7.38%, 02/01/15     1,240,000      1,013,700
Steinway Musical Instruments,             
7.00%, 03/01/14 (b)     225,000      218,813
Tempur World,             
10.25%, 08/15/10     429,000      454,740
True Temper Sports, Inc.,             
8.38%, 09/15/11     1,150,000      1,052,250
Visant Holding Corp.,             
8.75%, 12/01/13 (b)     900,000      873,000

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Consumer Products (continued)       
WH Holdings Ltd.,             
9.50%, 04/01/11   $ 615,000    $ 676,500
          
             13,172,440
          
Energy (1.7%)             
Basic Energy Services,             
7.13%, 04/15/16 (b)     550,000      514,250
Chesapeake Energy Corp.,             
6.88%, 11/15/20     875,000      813,750
Grant Prideco, Inc.,             
6.13%, 08/15/15     200,000      187,500
Hilcorp Energy,             
9.00%, 06/01/16 (b)     350,000      354,375
Pioneer Natural Resources,             
6.88%, 05/01/18     850,000      823,314
Range Resources Corp.,             
7.38%, 07/15/13     250,000      249,375
Range Resources Corp.,             
6.38%, 03/15/15     450,000      417,375
Range Resources Corp.,             
7.50%, 05/15/16     550,000      545,875
          
             3,905,814
          
Entertainment (2.2%)             
AMC Entertainment, Inc.,             
9.88%, 02/01/12     575,000      575,000
Cinemark USA, Inc.,             
9.00%, 02/01/13     400,000      422,000
Cinemark, Inc.,             
9.62%, 03/15/14 (j)     1,575,000      1,228,500
Hard Rock Park Operation,             
9.82%, 04/01/12, (b) (e)     575,000      572,125
Intrawest Corp.,             
7.50%, 10/15/13     900,000      900,000
Universal City Development,             
11.75%, 04/01/10     950,000      1,039,063
Universal City Florida Holding Co.,             
9.90%, 05/01/10, (e)     250,000      259,375
          
             4,996,063
          
Environmental (0.7%)             
Allied Waste North America,             
9.25%, 09/01/12     300,000      319,500
Allied Waste North America,             
7.13%, 05/15/16, (b)     850,000      805,375
Clean Harbors, Inc.,             
11.25%, 07/15/12     341,000      385,330
          
             1,510,205
          
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Financial Institutions (0.2%)             
American Real Estate Partners LP,             
7.13%, 02/15/13   $ 575,000    $ 554,875
          
Food & Beverage (4.0%)             
Agrilink Foods, Inc.,             
11.88%, 11/01/08     350,000      358,313
ASG Consolidated LLC,             
9.16%, 11/01/11 (j)     1,675,000      1,419,562
B&G Foods, Inc., 8.00%, 10/01/11     725,000      728,625
Constellation Brands, Inc.,             
8.00%, 02/15/08     650,000      664,625
Cott Beverages, Inc.,             
8.00%, 12/15/11     500,000      501,250
Del Monte Corporation,             
6.75%, 02/15/15     1,275,000      1,188,937
Eagle Family Foods, Inc.,             
8.75%, 01/15/08     250,000      203,125
Eurofresh, Inc.,             
11.50%, 01/15/13 (b)     775,000      763,375
Michael Foods, Inc.,             
8.00%, 11/15/13     950,000      938,125
Pierre Foods, Inc.,             
9.88%, 07/15/12     825,000      843,563
Pilgrim’s Pride Corp.,             
9.25%, 11/15/13     325,000      325,813
Reddy Ice Group,             
9.27%, 11/01/12 (j)     1,025,000      830,250
Smithfield Foods, Inc.,             
7.75%, 05/15/13     200,000      197,000
          
             8,962,563
          
Gaming (6.1%)             
155 East Tropicana LLC,             
8.75%, 04/01/12     725,000      694,188
Boyd Gaming Corp.,             
7.75%, 12/15/12     475,000      481,531
Galaxy Entertainment,             
9.88%, 12/15/12 (b)     800,000      836,000
Herbst Gaming, Inc.,             
7.00%, 11/15/14     500,000      477,500
Jacobs Entertainment,             
9.75%, 06/15/14 (b)     525,000      530,250
Kerzner International,             
6.75%, 10/01/15     700,000      734,125

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Gaming (continued)             
Magna Entertainment Corp.,             
7.25%, 12/15/09   $ 425,000    $ 408,000
Mandalay Resort Group,             
10.25%, 08/01/07     1,150,000      1,197,437
Mandalay Resort Group,             
9.50%, 08/01/08     250,000      265,625
MGM Grand, Inc.,             
9.75%, 06/01/07     925,000      955,062
MGM Grand, Inc.,             
6.00%, 10/01/09     500,000      488,750
MGM Grand, Inc.,             
8.38%, 02/01/11     700,000      721,000
MTR Gaming Group, Inc.,             
9.75%, 04/01/10     800,000      849,000
MTR Gaming Group, Inc.,             
9.00%, 06/01/12 (b)     250,000      252,188
Park Place Entertainment Corp.,             
9.38%, 02/15/07     375,000      382,500
Park Place Entertainment Corp.,             
8.13%, 05/15/11     1,000,000      1,058,749
Penn National Gaming, Inc.,             
6.75%, 03/01/15     925,000      867,188
San Pasqual Casino,             
8.00%, 09/15/13 (b)     600,000      601,500
Station Casinos, Inc.,             
6.00%, 04/01/12     200,000      188,250
Station Casinos, Inc.,             
6.50%, 02/01/14     525,000      490,875
Tunica-Biloxi Gaming Authority,             
9.00%, 11/15/15 (b)     475,000      489,250
Wynn Las Vegas LLC,             
6.63%, 12/01/14     800,000      758,000
          
             13,726,968
          
Healthcare (6.8%)             
Accellent, Inc.,             
10.50%, 12/01/13     600,000      616,500
AmeriPath, Inc.,             
10.50%, 04/01/13     1,300,000      1,369,874
AMR Holding Co./Emcare H,             
10.00%, 02/15/15     550,000      578,875
Bio Rad Laboratories, Inc.,             
6.13%, 12/15/14     375,000      345,938
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Healthcare (continued)             
CDRV Investors, Inc.,             
10.44%, 01/01/15 (j)   $ 2,250,000    $ 1,529,999
Concentra Operating Corp.,             
9.50%, 08/15/10     625,000      650,000
CRC Health Corp.,             
10.75%, 02/01/16 (b)     675,000      690,188
Fisher Scientific International, Inc.,             
6.13%, 07/01/15     1,000,000      968,750
HCA, Inc., 8.75%, 09/01/10     300,000      317,780
HCA, Inc., 7.88%, 02/01/11     575,000      590,256
HCA, Inc., 6.75%, 07/15/13     1,250,000      1,199,909
HCA, Inc., 6.38%, 01/15/15     1,300,000      1,211,013
HCA, Inc., 7.50%, 11/06/33     900,000      827,086
National Mentor Holdings,             
11.25%, 07/01/14 (b)     700,000      715,750
Omnicare, Inc.,             
6.88%, 12/15/15     875,000      835,625
Psychiatric Solutions, Inc.,             
7.75%, 07/15/15     550,000      541,063
Vanguard Health Holdings,             
9.00%, 10/01/14     550,000      551,375
Ventas Realty LP,             
6.63%, 10/15/14     875,000      853,125
Ventas Realty LP,             
7.13%, 06/01/15     325,000      326,625
VWR International, Inc.,             
8.00%, 04/15/14     750,000      732,188
          
             15,451,919
          
Industrial—Other (5.8%)             
ALH Finance LLC/ALH Finance Corp.,             
8.50%, 01/15/13     1,250,000      1,212,499
American Tire Distributor,             
10.75%, 04/01/13     425,000      388,875
Amsted Industries, Inc.,             
10.25%, 10/15/11 (b)     425,000      456,875
Brand Services, Inc.,             
12.00%, 10/15/12     1,050,000      1,189,125
Da-Lite Screen Co. Inc.,             
9.50%, 05/15/11     525,000      559,125
Hawk Corp.,             
8.75%, 11/01/14     675,000      681,750
Interline Brands Inc,             
8.13%, 06/15/14     700,000      701,750

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Industrial—Other (continued)             
Knowledge Learning Corp.,             
7.75%, 02/01/15 (b)   $ 1,300,000    $ 1,196,000
Mueller Group, Inc.,             
10.00%, 05/01/12     525,000      567,000
Neenah Corp.,             
11.00%, 09/30/10 (b)     842,000      913,570
Norcross Safety Products,             
9.88%, 08/15/11     750,000      781,875
Panolam Industries International, Inc.,             
10.75%, 10/01/13 (b)     825,000      804,375
Rexnord Corp.,             
10.13%, 12/15/12     675,000      747,455
Safety Products Holdings,             
11.75%, 01/01/12     858,110      896,725
Sensus Metering Systems,             
8.63%, 12/15/13     875,000      857,500
Superior Essex Communications,             
9.00%, 04/15/12     850,000      867,000
Valmont Industries, Inc.,             
6.88%, 05/01/14     300,000      291,000
          
             13,112,499
          
Lodging (1.1%)             
Host Marriott LP,             
7.13%, 11/01/13     450,000      450,563
Host Marriott LP,             
6.38%, 03/15/15     450,000      425,250
Host Marriott LP,             
6.75%, 06/01/16 (b)     375,000      359,531
Royal Caribbean Cruises,             
8.00%, 05/15/10     550,000      577,772
Royal Caribbean Cruises,             
7.25%, 06/15/16     300,000      298,580
Starwood Hotels & Resort,             
7.88%, 05/01/12     450,000      471,938
          
             2,583,634
          
Media—Cable (2.8%)             
Cablevision Systems Corp.,             
7.88%, 12/15/07     375,000      380,625
Cablevision Systems Corp.,             
8.13%, 07/15/09     875,000      894,688
CCH I Holdings LLC,             
9.92%, 04/01/14     455,000      275,275
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Media—Cable (continued)             
CCH I Holdings LLC,             
11.00%, 10/01/15   $ 445,000    $ 391,600
Charter Communications,             
10.25%, 09/15/10     1,575,000      1,586,813
Iesy Repository Gmbh,             
10.38%, 02/15/15 (b)     625,000      600,000
Kabel Deutschland GMBH,             
10.63%, 07/01/14 (b)     1,750,000      1,854,999
Videotron Ltee,             
6.38%, 12/15/15     325,000      298,188
          
             6,282,188
          
Media—Non-Cable (11.1%)             
Advanstar Communications, Inc.,             
10.75%, 08/15/10     200,000      215,500
Advanstar Communications, Inc.,             
12.00%, 02/15/11     650,000      687,375
Advanstar Communications, Inc.,             
8.50%, 10/15/11 (j)     600,000      631,500
Affinity Group Holding,             
10.88%, 02/15/12     742,016      727,176
Affinity Group, Inc.,             
9.00%, 02/15/12     425,000      425,000
Baker & Taylor, Inc.,             
11.50%, 07/01/13 (b)     700,000      703,500
CBD Media Holdings,             
9.25%, 07/15/12     1,175,000      1,175,000
CSC Holdings, Inc.,             
7.25%, 07/15/08     325,000      327,031
Dex Media East LLC,             
12.13%, 11/15/12     325,000      366,438
Dex Media West LLC,             
9.88%, 08/15/13     1,591,000      1,732,192
Dex Media, Inc.,             
8.15%, 11/15/13 (j)     500,000      423,750
DIRECTV Holdings LLC,             
8.38%, 03/15/13     844,000      888,310
DIRECTV Holdings LLC,             
6.38%, 06/15/15     400,000      371,000
Echostar DBS Corp.,             
5.75%, 10/01/08     1,250,000      1,225,000
Houghton Mifflin Co.,             
2.71%, 10/15/13 (j)     725,000      601,750
Intelsat Bermuda,             
11.25%, 06/15/16 (b)     2,250,000      2,317,499

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Media—Non-Cable (continued)       
Intelsat Sub Holdings Co. Ltd.,             
8.63%, 01/15/15   $ 575,000    $ 579,313
Lamar Media Corp,             
6.63%, 08/15/15     275,000      255,750
Lamar Media Corp.,             
7.25%, 01/01/13     550,000      540,375
NBC Acquisition Corp.,             
13.75%; 03/15/13 (j)     625,000      460,938
Nebraska Book Co.,             
8.63%, 03/15/12     625,000      584,375
PanAmSat Corp.,             
9.00%, 08/15/14     453,000      462,060
PanAmSat Holding Corp.,             
9.69%, 11/01/14 (j)     1,875,000      1,395,355
Primedia, Inc.,             
8.88%, 05/15/11     500,000      482,500
Quebecor Media, Inc.,             
7.75%, 03/15/16 (b)     300,000      295,500
R.H. Donnelley Corp.,             
10.88%, 12/15/12     575,000      633,938
R.H. Donnelley Corp.,             
6.88%, 01/15/13 (b)     750,000      693,750
R.H. Donnelley Corp.,             
6.88%, 01/15/13 (b)     400,000      370,000
R.H. Donnelley Corp.,             
8.88%, 01/15/16 (b)     775,000      785,656
Rainbow National Services LLC,             
10.38%, 09/01/14 (b)     725,000      806,563
Readers Digest Association, Inc.,             
6.50%, 03/01/11     575,000      557,750
SGS International, Inc.,             
12.00%, 12/15/13 (b)     675,000      678,375
Sirius Satellite Radio,             
9.63%, 08/01/13     500,000      471,250
WDAC Subsidiary Corp.,             
8.38%, 12/01/14 (b)     1,250,000      1,234,375
XM Satellite Radio, Inc.,             
9.75%, 05/01/14 (b)     1,075,000      989,000
Ziff Davis Media, Inc.,             
12.00%, 08/12/09     45,947      24,180
          
             25,119,024
          
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Metals & Mining (0.8%)             
Aleris International, Inc.,             
10.38%, 10/15/10   $ 850,000    $ 922,250
Novelis, Inc.,             
7.25%, 02/15/15 (b)     825,000      796,125
          
             1,718,375
          
Packaging (2.7%)             
Ball Corp.,             
6.63%, 03/15/18     850,000      794,750
Berry Plastics Corp.,             
10.75%, 07/15/12     950,000      1,033,125
Covalence Specialty,             
10.25%, 03/01/16 (b)     925,000      892,625
Crown Americas LLC,             
7.75%, 11/15/15 (b)     700,000      693,000
Graham Packaging Co.,             
8.50%, 10/15/12     300,000      295,500
Greif Brothers Corp.,             
8.88%, 08/01/12     700,000      740,250
Owens-Brockway Glass Container,             
8.25%, 05/15/13     150,000      151,125
Owens-Brockway Glass Container,             
6.75%, 12/01/14     800,000      746,000
Owens-Illinois, Inc.,             
7.35%, 05/15/08     300,000      303,750
Plastipak Holdings, Inc.,             
8.50%, 12/15/15 (b)     350,000      351,750
Russell Stanley Holdings, Inc.,             
9.00%, 11/30/08 (b) (d) (f) (h) (i)     27,898      13,056
          
             6,014,931
          
Paper (2.4%)             
Abitibi-Consolidated,             
8.38%, 04/01/15     700,000      642,250
Graphic Packaging International,             
9.50%, 08/15/13     1,150,000      1,144,250
Jefferson Smurfit Corp.,             
8.25%, 10/01/12     490,000      461,825
Jefferson Smurfit Corp.,             
7.50%, 06/01/13     400,000      360,000
MDP Acquisitions PLC,             
9.63%, 10/01/12     700,000      724,500

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Paper (continued)             
Mercer International, Inc.,             
9.25%, 02/15/13   $ 800,000    $ 716,000
NewPage Corp.,             
12.00%, 05/01/13     850,000      884,000
Stone Container Corp.,             
9.75%, 02/01/11     225,000      232,313
Tembec Industries, Inc.,             
8.50%, 02/01/11     525,000      278,250
          
             5,443,388
          
Restaurants (0.7%)             
Dave & Buster’s, Inc.,             
11.25%, 03/15/14 (b)     400,000      386,000
El Pollo Loco, Inc.,             
11.75%, 11/15/13 (b)     475,000      545,063
Landry’s Seafood Restaurants, Inc.,             
7.50%, 12/15/14     625,000      576,562
          
             1,507,625
          
Retailers (1.8%)             
Autonation, Inc.,             
7.04%, 04/15/13, (b) (e)     275,000      275,000
Autonation, Inc.,             
7.00%, 04/15/14 (b)     250,000      247,500
Couche-Tard Financing Co.,             
7.50%, 12/15/13     1,000,000      1,000,000
FTD, Inc.,             
7.75%, 02/15/14     632,000      625,680
General Nutrition Center,             
8.50%, 12/01/10     350,000      340,375
Penney (J.C.) Co. Inc.,             
9.00%, 08/01/12     929,000      1,066,083
U.S. Office Products Co.,             
0.00%, 06/15/08 (c) (d) (g) (h)     475,000      0
United Auto Group, Inc.,             
9.63%, 03/15/12     575,000      603,750
          
             4,158,388
          
Services (1.3%)             
CB Richard Ellis Services, Inc.,             
9.75%, 05/15/10     214,000      230,050
Education Management LLC,             
10.25%, 06/01/16 (b)     950,000      950,000
Global Cash Access LLC,             
8.75%, 03/15/12     503,000      532,551
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Services (continued)             
Insurance Automotive Auctions, Inc.,             
11.00%, 04/01/13   $ 825,000    $ 816,750
IPayment, Inc.,             
9.75%, 05/15/14 (b)     475,000      475,000
          
             3,004,351
          
Supermarkets (0.0%)             
Jitney-Jungle Stores of America, Inc.,             
0.00%, 09/15/07 (c) (d) (g) (h)     100,000      0
          
Technology (3.8%)             
Activant Solutions Inc.,             
9.50%, 05/01/16 (b)     200,000      194,500
Danka Business Systems,             
11.00%, 06/15/10     425,000      354,875
Freescale Semiconductor, Inc.,             
7.13%, 07/15/14     575,000      583,625
MagnaChip Semiconductor,             
8.00%, 12/15/14     350,000      292,250
Seagate Technology HDD Holding,             
8.00%, 05/15/09     350,000      360,500
SERENA Software, Inc.,             
10.38%, 03/15/16 (b)     250,000      251,875
Smart Modular Technologies, Inc.,             
10.49%, 04/01/12, (e)     405,000      430,819
Solar Capital Corp.,             
9.13%, 08/15/13 (b)     1,000,000      1,042,500
Solar Capital Corp.,             
10.25%, 08/15/15 (b)     800,000      831,000
SS&C Technologies, Inc.,             
11.75%, 12/01/13 (b)     700,000      728,000
Telex Communications, Inc.,             
11.50%, 10/15/08     400,000      426,000
UGS Corp., 10.00%, 06/01/12     1,150,000      1,241,999
Xerox Corp., 9.75%, 01/15/09     650,000      697,125
Xerox Corp., 7.63%, 06/15/13     475,000      480,938
Xerox Corp., 6.40%, 03/15/16     625,000      592,969
          
             8,508,975
          
Textile (0.4%)             
Glenoit Corp.,             
0.00%, 04/15/07 (c) (d) (g) (h)     125,000      0
Phillips Van Heusen Corp.,             
8.13%, 05/01/13     325,000      333,938

 

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FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Textile (continued)             
Warnaco Group, Inc.,             
8.88%, 06/15/13   $ 575,000    $ 586,500
          
             920,438
          
Tobacco (0.5%)             
Reynolds American, Inc.,             
7.75%, 06/01/18 (b)     1,225,000      1,182,125
          
Transportation (1.5%)             
Hertz Corp. (The),             
8.88%, 01/01/14 (b)     625,000      643,750
Hertz Corp. (The),             
10.50%, 01/01/16 (b)     1,075,000      1,144,875
Holt Group, Inc. (The)             
0.00%, 01/15/06 (c) (d) (g) (h)     50,000      0
Stena AB, 9.63%, 12/01/12     825,000      880,688
Stena AB, 7.50%, 11/01/13     575,000      560,625
Stena AB, 7.00%, 12/01/16     250,000      231,250
          
             3,461,188
          
Utility—Electric (3.5%)             
CMS Energy Corp.,             
7.50%, 01/15/09     600,000      610,500
Edison Mission Energy,             
7.73%, 06/15/09     1,200,000      1,218,000
Edison Mission Energy,             
7.75%, Series 144A 06/15/16 (b)     675,000      666,563
FPL Energy National Wind,             
6.13%, 03/25/19 (b)     329,665      319,917
Nevada Power Co.,             
6.50%, 04/15/12     75,000      74,974
Nevada Power Co.,             
9.00%, 08/15/13     909,000      988,398
Nevada Power Co.,             
5.88%, 01/15/15     350,000      333,674
Nevada Power Co.,             
6.50%, 05/15/18 (b)     625,000      612,514
Northwestern Corp.,             
5.88%, 11/01/14     200,000      196,943
NRG Energy, Inc.,             
7.25%, 02/01/14     375,000      366,563
NRG Energy, Inc.,             
7.38%, 02/01/16     725,000      708,688
PSEG Energy Holdings,             
10.00%, 10/01/09     1,125,000      1,220,624
Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Utility—Electric (continued)             
Sierra Pacific Resources,             
6.75%, 08/15/17   $ 400,000    $ 379,928
TECO Energy, Inc.,             
6.75%, 05/01/15     225,000      219,938
          
             7,917,224
          
Utility—Natural Gas (5.8%)             
Amerigas Partners LP,             
7.13%, 05/20/16     875,000      824,688
ANR Pipeline Co.,             
8.88%, 03/15/10     150,000      159,188
EL Paso Corp.,
6.75%, 05/15/09		     250,000      248,125
EL Paso Corp.,
7.80%, 08/01/31		     1,450,000      1,415,563
EL Paso Production Corp.,             
7.75%, 06/01/13     950,000      961,875
Holly Energy Partners LP,             
6.25%, 03/01/15     1,375,000      1,265,000
Inergy LP,             
6.88%, 12/15/14     850,000      794,750
Pacific Energy Partners,             
7.13%, 06/15/14     700,000      710,500
Pacific Energy Partners,             
6.25%, 09/15/15     150,000      146,250
Semco Energy, Inc.,             
7.13%, 05/15/08     400,000      399,145
SemGroup LP,             
8.75%, 11/15/15 (b)     500,000      500,000
Southern Star Central Corp.,             
6.75%, 03/01/16 (b)     175,000      168,875
Tennessee Gas Pipeline,             
7.50%, 04/01/17     200,000      201,126
Tennessee Gas Pipeline,             
8.38%, 06/15/32     1,675,000      1,799,723
Transcontinental Gas Pipeline Corp.,             
8.88%, 07/15/12     350,000      387,625
Transcontinental Gas Pipeline Corp.,             
6.40%, 04/15/16 (b)     500,000      481,250
Williams Cos., Inc. (The),             
7.63%, 07/15/19     1,125,000      1,147,500
Williams Cos., Inc. (The),             
7.88%, 09/01/21     1,425,000      1,453,500
          
             13,064,683
          

 

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FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Wireless Communications (2.9%)       
Centennial Cellular Corp.,             
10.74%, 01/01/13, (e)   $ 325,000    $ 333,125
Centennial Communication,             
10.00%, 01/01/13     600,000      597,000
New Skies Satellites NV,             
9.13%, 11/01/12     475,000      504,688
Nextel Communications,             
7.38%, 08/01/15     875,000      891,246
Rogers Wireless, Inc.,             
7.25%, 12/15/12     200,000      202,500
Rogers Wireless, Inc.,             
8.00%, 12/15/12     800,000      822,000
Rogers Wireless, Inc.,             
6.38%, 03/01/14     1,050,000      1,005,374
Rogers Wireless, Inc.,             
7.50%, 03/15/15     200,000      203,000
Rogers Wireless, Inc.,             
8.45%, 12/15/10, (e)     425,000      439,344
U.S. Unwired, Inc.,             
10.00%, 06/15/12     650,000      724,750
Zeus Ltd.,             
9.82%, 02/01/15 (b) (j)     1,050,000      729,750
          
             6,452,777
          
Wireline Communications (3.2%)       
AT&T Corp.,             
8.00%, 11/15/31 (e)     1,200,000      1,381,756
Citizens Communications,             
6.25%, 01/15/13     250,000      237,500
Citizens Communications,             
9.00%, 08/15/31     550,000      559,625
Nordic Telephone Company,             
8.88%, 05/01/16 (b)     525,000      542,063
Qwest Corp.,             
8.88%, 03/15/12     3,350,000      3,550,999
Valor Telecommunications,             
7.75%, 02/15/15     650,000      674,375
Windstream Corp.,             
8.63%, 08/01/16 (b)     275,000      282,563
          
             7,228,881
          
Total Corporate Bonds            216,272,784
          
Shares or
Principal Amount		    Value
            
PREFERRED STOCKS (0.4%)       
Media—Non-Cable (0.0%)           

Ziff Davis Media, Inc.,

Series E-1, PIK

   12    $ 1,800
        
Retailers (0.4%)           
General Nutrition Center, Series A   725      871,813
        
Total Preferred Stocks          873,613
        
WARRANTS (0.1%)           
Chemicals (0.0%)           
General Chemical Industrial Products Series A, expiring 06/01/10 (d) (h) (i)   83      63,214
General Chemical Industrial Products Series B, expiring 06/01/10 (g) (h)   61      0
        
           63,214
        
Entertainment (0.0%)           
AMF Bowling Worldwide, Inc., Class B, expiring 03/09/09 (d) (g) (h)   811      0
        
Industrial—Other (0.1%)           
ACP Holding Co., expiring 09/13/13 (b) (h) (i)   96,400      192,800
        
Media—Non-Cable (0.0%)           
Advanstar Holdings Corp., expiring 10/15/11 (b) (d) (g) (h)   150      0
XM Satellite Radio, Inc., expiring 03/15/10 (h)   300      2,250
Ziff Davis Media, Inc., expiring 08/12/12 (d) (g) (h)   2,200      0
        
           2,250
        
Packaging (0.0%)           
Pliant Corp., expiring 06/01/10 (b) (d) (g) (h)   275      0
        
Paper (0.0%)           
MDP Acquisitions, expiring 10/01/13 (b) (h) (i)   300      6,000
        
Total Warrants          264,264
        

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Principal
Amount		    Value
CASH EQUIVALENTS (2.5%)             
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $5,684,797), 5.17%, 04/01/42   $ 5,682,382    $ 5,682,382
          
Total Cash Equivalents            5,682,382
          

Total Investments

(Cost $225,907,010) (a) — 99.0%

      223,682,769
Other assets in excess of liabilities — 1.0%      2,407,585
          
NET ASSETS — 100.0%    $ 226,089,891
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Represents a restricted security acquired and eligible for resale under Rule 144A, which limits the resale to certain qualified buyers.

 

(c) Bond in default.

 

(d) Fair Valued Security.

 

(e) Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on June 30, 2006. The maturity date represents the actual maturity date.

 

(f) Security has filed for bankruptcy protection.

 

(g) Security has been deemed illiquid. The pricing committee has deemed the security to have zero value based upon procedures adopted by the Board of Trustees.

 

(h) Denotes a non-income producing security.

 

(i) Security has been deemed illiquid.

 

(j) Step up bonds. The rate reflected in the Statement of Investments is the yield as of June 30, 2006.

 

PIK Paid-In-Kind

 

TRAINS Targeted Return Index Securities Trust

 

See notes to financial statements.

 

12

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FEDERATED GVIT HIGH INCOME BOND FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $220,224,628)

    $ 218,000,387  

Repurchase agreements, at cost and value

      5,682,382  
    

Total Investments

      223,682,769  
    

Cash

      120  

Interest and dividends receivable

      4,466,893  

Receivable for capital shares issued

      302,357  

Receivable for investments sold

      1,152,250  

Prepaid expenses and other assets

      3,102  
    

Total Assets

      229,607,491  
    

Liabilities:

         

Payable for capital shares redeemed

      123,495  

Payable for investments purchased

      3,218,254  

Accrued expenses and other payables:

         

Investment advisory fees

      130,976  

Fund administration and transfer agent fees

      23,457  

Administrative servicing fees

      9,232  

Other

      12,186  
    

Total Liabilities

      3,517,600  
    

Net Assets

    $ 226,089,891  
    

Represented by:

         

Capital

    $ 242,239,873  

Accumulated net investment income (loss)

      372,731  

Accumulated net realized gains (losses) from investments

      (14,298,472 )

Net unrealized appreciation (depreciation) on investments

      (2,224,241 )
    

Net Assets

    $ 226,089,891  
    

Net Assets:

         

Class I Shares

    $ 159,329,614  

Class III Shares

      66,760,277  
    

Total

    $ 226,089,891  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      20,700,771  

Class III Shares

      8,680,698  
    

Total

      29,381,469  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 7.70  

Class III Shares

    $ 7.69  

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 9,997,433  

Dividend income

      16,451  
    

Total Income

      10,013,884  
    

Expenses:

         

Investment advisory fees

      820,224  

Fund administration and transfer agent fees

      107,636  

Administrative servicing fees Class I Shares

      102,908  

Administrative servicing fees Class III Shares

      60,655  

Trustee fees

      4,112  

Other

      33,392  
    

Total expenses before earnings credit

      1,128,927  

Earnings credit (Note 7)

      (1,438 )
    

Total Expenses

      1,127,489  
    

Net Investment Income (Loss)

      8,886,395  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      360,423  

Net change in unrealized appreciation/depreciation on investments

      (2,423,287 )
    

Net realized/unrealized gains (losses) on investments

      (2,062,864 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 6,823,531  
    

 

See notes to financial statements.

 

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FEDERATED GVIT HIGH INCOME BOND FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 8,886,395      $ 19,271,809  

Net realized gains (losses) on investment transactions

        360,423        1,793,834  

Net change in unrealized appreciation/depreciation on investments

        (2,423,287 )      (15,739,602 )
      
  

Change in net assets resulting from operations

        6,823,531        5,326,041  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (6,029,752 )      (16,626,700 )

Distributions to Class III shareholders from:

                    

Net investment income

        (2,483,912 )      (2,692,367 )(a)
      
  

Change in net assets from shareholder distributions

        (8,513,664 )      (19,319,067 )
      
  

Change in net assets from capital transactions

        (17,389,468 )      (43,122,058 )
      
  

Change in net assets

        (19,079,601 )      (57,115,084 )

Net Assets:

                    

Beginning of period

        245,169,492        302,284,576  
      
  

End of period

      $ 226,089,891      $ 245,169,492  
      
  

Accumulated net investment income (loss)

      $ 372,731      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 5,955,082      $ 40,039,358  

Dividends reinvested

        6,029,751        16,626,700  

Cost of shares redeemed

        (33,471,127 )      (163,884,437 )
      
  
         (21,486,294 )      (107,218,379 )
      
  

Class III Capital Transactions:

                    

Proceeds from shares issued

        23,111,546        82,510,302 (a)

Dividends reinvested

        2,483,912        2,692,367 (a)

Cost of shares redeemed

        (21,498,632 )      (21,106,348 )(a)
      
  
         4,096,826        64,096,321  
      
  

Change in net assets from capital transactions

      $ (17,389,468 )    $ (43,122,058 )
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        754,340        4,935,319  

Reinvested

        779,187        2,114,150  

Redeemed

        (4,255,702 )      (20,486,757 )
      
  
         (2,722,175 )      (13,437,288 )
      
  

Class III Share Transactions:

                    

Issued

        2,941,342        10,468,265 (a)

Reinvested

        321,161        345,265 (a)

Redeemed

        (2,734,011 )      (2,661,324 )(a)
      
  
         528,492        8,152,206  
      
  

 

 

(a) For the period from April 28, 2005 (commencement of operations) through December 31, 2005.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

Federated GVIT High Income Bond Fund

 

        Investment Activities:
   Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		   Net
Investment
Income		     Total
Distributions		     Net Asset
Value, End
of Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                              

Year Ended December 31, 2001(c)

   $ 7.89   0.76   (0.45 )   0.31   (0.76 )   (0.76 )   $ 7.44   4.22%     $ 114,022   0.95%     9.96%     1.03%     9.88%     31.64%

Year Ended December 31, 2002

   $ 7.44   0.61   (0.38 )   0.23   (0.61 )   (0.61 )   $ 7.06   3.23%     $ 162,733   0.97%     8.82%     0.97%     8.82%     30.59%

Year Ended December 31, 2003

   $ 7.06   0.57   0.96     1.53   (0.57 )   (0.57 )   $ 8.02   22.27%     $ 268,336   0.95%     7.74%     (d )   (d )   41.30%

Year Ended December 31, 2004

   $ 8.02   0.60   0.18     0.78   (0.60 )   (0.60 )   $ 8.20   10.10%     $ 302,285   0.94%     7.46%     (d )   (d )   61.24%

Year Ended December 31, 2005

   $ 8.20   0.64   (0.46 )   0.18   (0.61 )   (0.61 )   $ 7.77   2.38%     $ 181,905   0.96%     7.35%     (d )   (d )   37.06%

Six Months Ended June 30, 2006 (Unaudited)

   $ 7.77   0.30   (0.08 )   0.22   (0.29 )   (0.29 )   $ 7.70   2.81% (e)   $ 159,330   0.92% (f)   7.39% (f)   (d )   (d )   19.41%

Class III Shares

                                                                              

Year Ended December 31, 2005(g)

   $ 7.83   0.39   0.01     0.40   (0.47 )   (0.47 )   $ 7.76   5.14% (e)   $ 63,264   0.95% (f)   7.23% (f)   (d )   (d )   37.06%

Six Months Ended June 30, 2006 (Unaudited)

   $ 7.76   0.30   (0.08 )   0.22   (0.29 )   (0.29 )   $ 7.69   2.79% (e)   $ 66,760   0.97% (f)   7.34% (f)   (d )   (d )   19.41%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) There were no fee reductions during the period.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) For the period from April 28, 2005 (commencement of operations) through June 30, 2005.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Federated GVIT High Income Bond Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee,

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-2, permanent difference (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
  
$ 225,907,760   $ 5,241,708   $ (7,466,699 )   $ (2,224,991 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

proportion to the total net assets of the Fund. Expenses specific to a class (such a Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GMF advises. Federated Investment Management Company (the “subadviser”), manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total
Fees		     Fees
Retained		     Paid to
Sub-adviser		  

Up to $50 million

    0.80 %   0.40 %   0.40 %

Next $200 million

    0.65 %   0.40 %   0.25 %

Next $250 million

    0.60 %   0.40 %   0.20 %

$500 million or more

    0.55 %   0.40 %   0.15 %

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $180,595 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is designed to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $41,502.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $44,820,204 and sales of $59,675,171.

 

6. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in high yield instruments and are subject to certain additional credit and market risks. The yields of high yield debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading.

 

7. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the Lehman High Yield Index and the Lipper High Current Yield Funds category median for the one-year period ended September 30, 2005. The Board also considered that the Fund’s performance ranked in the third quartile of the Fund’s Lipper category for the three- and five-year periods. The Board discussed with management the Fund’s performance and decrease in assets. Management explained that the adviser continues to closely monitor the Fund, and that the Fund’s performance had suffered over the past two years because of its quality bias as lower quality bonds outperformed higher quality bonds. The Board directed the Performance Committee to closely monitor the performance of this Fund, particularly in light of the Fund’s recent benchmark change, on October 1, 2005, to the Lehman Corporate High Yield 2% Cap Index.

 

Next, the Board reviewed the fund’s contractual advisory fee and breakpoints and noted the contractual advisory fee (including, advisory fee) placed the Fund in the fourth quintile of its Lipper-constructed Expense Group. The Board also

 

22

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

considered that the Fund’s total expenses placed the Fund in the second quintile of its Lipper Expense Group. The Board concluded that the adviser’s profitability was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of

Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee

   Other
Directorships
Held by
Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

26

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

27

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

 

Conshohocken, PA 19428

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

28

Table of Contents

 

GVIT S&P 500 Index Fund

(formerly GVIT Equity 500 Index Fund)

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
12    Statement of Assets and Liabilities
12    Statement of Operations
13    Statements of Changes in Net Assets
14    Financial Highlights
15    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GS&P (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT S&P 500 Index Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
    Annualized
Expense Ratio*
GVIT S&P 500 Index Fund                                     

Class IV

      Actual    $ 1,000.00      $ 1,025.40      $ 1.31    0.26%
       Hypothetical1    $ 1,000.00      $ 1,023.51      $ 1.31    0.26%

Class ID

      Actual    $ 1,000.00      $ 976.60      $ 0.93a    0.19%a
       Hypothetical1    $ 1,000.00      $ 1,007.46      $ 0.95b    0.19%b

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

a Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

b Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT S&P 500 Index Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Common Stocks      87.4%
Cash Equivalents      13.4%
Other Investments*      4.1%
Liabilities in excess of other assets**      -4.9%
      
       100.0%
      
Top Industries       
Financial Services      9.1%
Oil & Gas      7.5%
Computers      7.5%
Retail      5.1%
Healthcare      5.0%
Banks      4.8%
Telecommunications      4.5%
Insurance      4.2%
Drugs      3.7%
Electrical Equipment      3.0%
Other Assets      45.6%
      
       100.0%
      
Top Holdings***       
Exxon Mobil Corp.      2.8%
General Electric Co.      2.6%
Citigroup, Inc.      1.8%
Bank of America Corp.      1.7%
Microsoft Corp.      1.6%
Procter & Gamble Co.      1.4%
Johnson & Johnson, Inc.      1.3%
Pfizer, Inc.      1.3%
American Int’l Group, Inc.      1.2%
Altria Group, Inc.      1.2%
Other Assets      83.1%
      
       100.0%
      

 

* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (87.4%)       
Aerospace & Defense (1.8%)       
Boeing Co. (The)   21,962    $ 1,798,907
General Dynamics Corp.   10,500      687,330
Lockheed Martin Corp.   9,700      695,878
Northrop Grumman Corp.   9,962      638,166
Raytheon Co.   11,400      508,098
Rockwell Collins, Inc.   4,014      224,262
United Technologies Corp.   27,700      1,756,734
Xilinx, Inc.   10,600      240,090
        
           6,549,465
        
Agriculture (0.2%)           
Monsanto Co.   7,895      664,680
        
Airlines (0.1%)           
Southwest Airlines Co.   17,750      290,568
        
Apparel (0.2%)           
Jones Apparel Group, Inc.   2,400      76,296
Liz Claiborne, Inc. (c)   2,500      92,650
Nike, Inc., Class B   5,600      453,600
V.F. Corp.   2,100      142,632
        
           765,178
        
Auto Parts & Equipment (0.5%)
AutoNation, Inc. (b) (c)   3,683      78,964
AutoZone, Inc. (b)   1,800      158,760
Genuine Parts Co.   4,000      166,640
Ingersoll Rand Co.   9,800      419,243
Johnson Controls, Inc.   4,900      402,878
Navistar Int’l Corp. (b)   1,200      29,532
PACCAR, Inc.   5,025      413,960
Snap-On, Inc.   1,400      56,588
        
           1,726,565
        
Automobiles (0.4%)           
Ford Motor Co. (c)   54,632      378,600
General Motors Corp. (c)   16,252      484,147
Harley-Davidson, Inc. (c)   8,000      439,120
        
           1,301,867
        
Banks (4.8%)           
AmSouth Bancorp   8,000      211,600
Bank of America Corp.   125,193      6,021,782
Bank of New York Co., Inc.   21,028      677,102
BB&T Corp.   14,200      590,578
Bear Stearns Cos., Inc.   3,600      504,288
Commerce Bancorp, Inc. (c)   5,900      210,453
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Banks (continued)           
Compass Bancshares, Inc. (c)   2,800    $ 155,680
Fifth Third Bancorp   16,285      601,731
Huntington Bancshares, Inc.   5,410      127,568
KeyCorp.   10,100      360,368
M & T Bank Corp. (c)   1,800      212,256
Mellon Financial Corp.   10,300      354,629
National City Corp.   15,900      575,421
Northern Trust Corp.   4,300      237,790
PNC Bank Corp.   8,600      603,462
Regions Financial Corp.   13,660      452,419
Sovereign Bancorp   8,505      172,737
SunTrust Banks, Inc.   10,400      793,104
Synovus Financial Corp.   7,500      200,850
U.S. Bancorp   48,868      1,509,044
Wachovia Corp.   44,754      2,420,296
Zions Bancorp   3,400      264,996
        
           17,258,154
        
Beverages (1.9%)           
Anheuser-Busch Cos., Inc.   22,043      1,004,940
Brown-Forman Corp., Class B   1,900      136,211
Coca-Cola Co.   56,212      2,418,240
Coca-Cola Enterprises, Inc.   7,200      146,664
Constellation Brands, Inc. (b) (c)   4,400      110,000
Molson Coors Brewing Co.   1,200      81,456
Pepsi Bottling Group, Inc. (The)   3,300      106,095
PepsiCo, Inc.   45,330      2,721,614
        
           6,725,220
        
Biotechnology (0.3%)           
Applera Corp.   5,800      187,630
Gilead Sciences, Inc. (b)   12,100      715,836
Waters Corp. (b)   2,400      106,560
        
           1,010,026
        
Business Services (2.9%)           
Apollo Group, Inc. (b) (c)   4,200      217,014
AutoDesk, Inc. (b)   6,430      221,578
Automatic Data Processing, Inc.   15,508      703,288
Cintas Corp.   3,000      119,280
Compuware Corp. (b)   8,300      55,610

 

3

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GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Business Services (continued)       
Convergys Corp. (b)   3,500    $ 68,250
Dow Jones & Co., Inc. (c)   1,200      42,012
eBay, Inc. (b)   31,000      907,990
Electronic Data Systems Corp.   13,300      319,998
Equifax, Inc.   3,100      106,454
Exelon Corp.   17,724      1,007,255
First Data Corp.   20,216      910,529
Fiserv, Inc. (b) (c)   5,450      247,212
Google, Inc. (b)   5,621      2,357,053
IMS Health, Inc. (c)   4,253      114,193
Interpublic Group Cos., Inc. (The) (b)   14,500      121,075
Monster Worldwide, Inc. (b)   4,000      170,640
Moody’s Corp.   7,108      387,102
Omnicom Group, Inc. (c)   5,100      454,359
Paychex, Inc.   9,850      383,953
Pitney Bowes, Inc.   5,200      214,760
Robert Half Int’l, Inc.   3,900      163,800
Sabre Holdings, Inc.   2,768      60,896
Verisign, Inc. (b)   7,700      178,409
Yahoo!, Inc. (b)   33,700      1,112,100
        
           10,644,810
        
Chemicals & Allied Products (1.3%)       
Air Products & Chemicals, Inc.   6,700      428,264
Dow Chemical Co.   25,466      993,938
E.I. du Pont de Nemours & Co.   26,100      1,085,760
Eastman Chemical Co. (c)   2,800      151,200
Hercules, Inc. (b) (c)   3,200      48,832
Millipore Corp. (b)   1,900      119,681
Occidental Petroleum Corp.   11,400      1,169,070
Praxair, Inc.   9,600      518,400
Rohm & Haas Co.   3,300      165,396
Sigma-Aldrich Corp. (c)   1,500      108,960
        
           4,789,501
        
Computers (7.5%)           
Adobe Systems, Inc. (b)   17,100      519,156
Affiliated Computer Services, Class A (b) (c)   3,700      190,957
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Computers (continued)       
American Power Conversion Corp. (c)   3,700    $ 72,113
Apple Computer, Inc. (b)   23,000      1,313,760
Avaya, Inc. (b) (c)   9,566      109,244
BMC Software, Inc. (b)   4,700      112,330
CA, Inc. (c)   11,600      238,380
Cisco Systems, Inc. (b)   167,457      3,270,435
Citrix Systems, Inc. (b)   5,500      220,770
Computer Sciences Corp. (b)   4,600      222,824
Dell, Inc. (b)   61,300      1,496,333
EMC Corp. (b)   67,000      734,990
Gateway, Inc. (b)   5,700      10,830
Hewlett Packard Co.   76,500      2,423,520
Int’l Business Machines Corp.   42,517      3,266,156
Intel Corp.   159,573      3,023,908
Intuit, Inc. (b)   5,200      314,028
Lexmark Int’l Group, Inc. (b)   3,200      178,656
Microsoft Corp.   240,640      5,606,913
NCR Corp. (b)   4,100      150,224
Network Appliance, Inc. (b)   10,800      381,240
Novell, Inc. (b) (c)   8,100      53,703
NVIDIA Corp. (b)   10,600      225,674
Oracle Corp. (b)   106,936      1,549,503
Parametric Technology Corp. (b)   2,840      36,096
SanDisk Corp. (b)   5,700      290,586
Sun Microsystems, Inc. (b)   100,856      418,552
Symantec Corp. (b)   29,791      462,952
Symbol Technologies, Inc.   5,600      60,424
Unisys Corp. (b)   8,400      52,752
        
           27,007,009
        
Conglomerates (0.6%)           
Illinois Tool Works, Inc.   10,600      503,500
ITT Industries, Inc.   4,500      222,750
Tyco Int’l Ltd.   54,856      1,508,540
        
           2,234,790
        
Construction & Building Materials (1.0%)
Caterpillar, Inc.   18,000      1,340,640
Centex Corp.   3,700      186,110
D. R. Horton, Inc.   8,300      197,706

 

4

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GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
COMMON STOCKS (continued)       
Construction & Building Materials (continued)
            
Deere & Co.   6,800    $ 567,732
Fluor Corp.   2,700      250,911
KB Home (c)   2,300      105,455
Lennar Corp., Class A   4,300      190,791
Masco Corp. (c)   11,981      355,117
Pulte Corp.   5,000      143,950
Sherwin Williams Co.   2,600      123,448
Vulcan Materials Co. (c)   2,292      178,776
        
           3,640,636
        
Consumer Products (2.5%)       
Alberto Culver Co., Class B   2,850      138,852
Avery-Dennison Corp.   2,400      139,344
Avon Products, Inc.   11,300      350,300
Black & Decker Corp.   2,500      211,150
Clorox Co. (The)   4,399      268,207
Colgate-Palmolive Co.   14,761      884,184
Danaher Corp.   6,000      385,920
Ecolab, Inc.   4,000      162,320
Estee Lauder Co., Inc. (The), Class A (c)   2,600      100,542
Fortune Brands, Inc.   3,500      248,535
Int’l Flavors & Fragrances, Inc.   2,000      70,480
Kimberly-Clark Corp.   13,200      814,440
Leggett & Platt, Inc. (c)   4,100      102,418
Pall Corp. (c)   2,800      78,400
Procter & Gamble Co.   89,999      5,003,944
Whirlpool Corp. (c)   2,450      202,493
        
           9,161,529
        
Containers (0.1%)           
Ball Corp. (c)   2,200      81,488
Bemis Co.   2,300      70,426
Newell Rubbermaid, Inc.   6,100      157,563
Sealed Air Corp. (c)   1,900      98,952
        
           408,429
        
Drugs (3.7%)           
Amerisource Bergen Corp.   6,408      268,623
Barr Parmaceuticals, Inc. (b)   3,300      157,377
Biogen, Inc. (b)   9,239      428,043
Eli Lilly & Co.   31,570      1,744,874
   

Shares or

Principal Amount

    Value
COMMON STOCKS (continued)       
Drugs (continued)       
Express Scripts, Inc.,
Class A (b)		   4,400    $ 315,656
Forest Laboratories, Inc., Class A (b)   8,400      324,996
Genzyme Corp. (b)   7,500      457,875
Medimmune, Inc. (b)   7,609      206,204
            
Merck & Co., Inc.   60,764      2,213,633
Mylan Laboratories, Inc.   4,800      96,000
Pfizer, Inc.   200,961      4,716,554
Schering Plough Corp.   39,300      747,879
Wyeth   36,900      1,638,729
        
           13,316,443
        
Electrical Equipment (3.0%)       
Cooper Industries Ltd., Class A   2,115      196,526
Eaton Corp.   4,600      346,840
Emerson Electric Co.   10,800      905,148
General Electric Co.   285,248      9,401,774
Grainger (W.W.), Inc.   1,700      127,891
        
           10,978,179
        
Electronics (0.9%)           
Agilent Technologies, Inc. (b)   12,361      390,113
Altera Corp. (b)   11,200      196,560
Broadcom Corp., Class A (b)   11,900      357,595
Harman Int’l Industries, Inc.   1,500      128,055
Molex, Inc.   3,425      114,977
Radioshack Corp. (c)   3,000      42,000
Rockwell Int’l Corp.   5,300      381,653
Sanmina Corp. (b)   11,500      52,900
Solectron Corp. (b)   19,500      66,690
Tektronix, Inc.   2,100      61,782
Teradyne, Inc. (b) (c)   4,800      66,864
Texas Instruments, Inc.   41,800      1,266,122
        
           3,125,311
        
Entertainment (0.7%)           
Electronic Arts, Inc. (b)   8,900      383,056
Int’l Game Technology   8,700      330,078
Walt Disney Co. (The)   60,200      1,806,000
        
           2,519,134
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Financial Services (9.1%)       
AMBAC Financial Group, Inc.   3,350    $ 271,685
American Express Co.   33,800      1,798,836
Ameriprise Financial, Inc.   6,080      271,594
Capital One Financial Corp.   8,000      683,600
Charles Schwab Corp.   26,850      429,063
Cit Group, Inc.   6,000      313,740
Citigroup, Inc.   136,354      6,577,716
Comerica, Inc.   5,200      270,348
Countrywide Credit Industries, Inc.   16,000      609,280
E*TRADE Financial Corp. (b)   12,600      287,532
Federal Home Loan Mortgage Corp.   19,600      1,117,396
Federal National Mortgage Association   25,986      1,249,927
Federated Investors, Inc.   2,100      66,150
First Horizon National Corp. (c)   3,000      120,600
Franklin Resources, Inc.   3,800      329,878
Genworth Financial, Inc., Class A   11,100      386,724
Golden West Financial Corp.   6,500      482,300
Goldman Sachs Group, Inc.   11,900      1,790,117
H & R Block, Inc. (c)   10,100      240,986
J.P. Morgan Chase & Co.   95,301      4,002,642
Janus Capital Group, Inc. (c)   4,800      85,920
Legg Mason, Inc. (c)   3,900      388,128
Lehman Brothers Holdings, Inc.   14,734      959,920
Marshall & Ilsley Corp.   5,400      246,996
Merrill Lynch & Co.   25,300      1,759,868
Morgan Stanley Dean Witter & Co.   29,400      1,858,374
North Fork Bancorp, Inc.   11,600      349,972
SLM Corp.   10,600      560,952
State Street Corp.   9,700      563,473
T. Rowe Price Group, Inc.   6,300      238,203
Washington Mutual, Inc. (c)   27,178      1,238,773
Wells Fargo Co.   46,059      3,089,638
        
           32,640,331
        
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Food & Related (2.4%)           
Altria Group, Inc.   57,300    $ 4,207,538
Archer-Daniels Midland Co.   17,237      711,543
Campbell Soup Co.   6,100      226,371
ConAgra, Inc.   12,600      278,586
Dean Foods Co. (b)   4,200      156,198
General Mills, Inc. (c)   10,500      542,430
H.J. Heinz Co.   10,100      416,322
Hershey Foods Corp. (c)   4,800      264,336
Kellogg Co. (c)   7,400      358,382
McCormick & Co.   3,200      107,360
Sara Lee Corp.   22,929      367,323
SYSCO Corp. (c)   16,900      516,464
Tyson Foods, Inc., Class A (c)   5,300      78,758
Wrigley (Wm.) Jr. Co., Class A   5,800      263,088
Wrigley (Wm.) Jr. Co., Class B   1,025      46,433
        
           8,541,132
        
Healthcare (5.0%)           
Abbott Laboratories   41,867      1,825,821
Allergan, Inc.   4,400      471,944
Bausch & Lomb, Inc.   1,700      83,368
Baxter Int’l, Inc.   17,100      628,596
Becton Dickinson & Co.   6,200      379,006
Bristol-Myers Squibb Co.   54,262      1,403,215
Cardinal Health, Inc. (c)   11,153      717,472
Coventry Health Care, Inc. (b)   4,900      269,206
HCA, Inc.   10,300      444,445
Health Management Associates, Inc., Class A (c)   5,400      106,434
Humana, Inc. (b)   4,900      263,130
Johnson & Johnson, Inc.   81,211      4,866,164
King Pharmaceuticals, Inc. (b)   5,233      88,961
McKesson HBOC, Inc.   8,900      420,792
Medco Health Solutions, Inc. (b)   8,848      506,813
Medtronic, Inc.   33,900      1,590,588
Quest Diagnostics, Inc.   4,900      293,608
St. Jude Medical, Inc. (b)   10,500      340,410
Stryker Corp.   7,400      311,614
Tenet Healthcare Corp. (b)   9,800      68,404
Unitedhealth Group, Inc.   36,944      1,654,352

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Healthcare (continued)       
Watson Pharmaceutical, Inc. (b) (c)   2,100    $ 48,888
Wellpoint Health Networks, Inc. (b)   17,000      1,237,090
        
           18,020,321
        
Hotels & Motels (0.5%)           
Cendant Corp.   26,000      423,540
Harrah’s Entertainment, Inc.   5,500      391,490
Hilton Hotels Corp.   8,000      226,240
Marriott Int’l, Inc., Class A (c)   9,300      354,516
Starwood Hotels & Resorts Worldwide, Inc.   6,500      392,210
        
           1,787,996
        
Industrial (0.1%)           
Parker Hannifin Corp.   3,700      287,120
Thermo Electron Corp. (b) (c)   5,200      188,448
        
           475,568
        
Insurance (4.2%)           
ACE Ltd.   8,712      440,740
Aetna, Inc.   15,100      602,943
AFLAC, Inc.   12,900      597,915
Allstate Corp. (The)   16,800      919,464
American Int’l Group, Inc.   71,268      4,208,375
AON Corp. (c)   8,800      306,416
Chubb Corp. (The)   11,300      563,870
CIGNA Corp.   3,500      344,785
Cincinnati Financial Corp.   3,921      184,326
Hartford Financial Services Group, Inc.   8,800      744,480
Lincoln National Corp.   8,477      478,442
Loews Corp.   10,101      358,080
Marsh & McLennan Cos., Inc.   14,100      379,149
MBIA, Inc. (c)   4,350      254,693
MetLife, Inc.   20,100      1,029,321
MGIC Investment Corp. (c)   2,900      188,500
Principal Financial Group, Inc.   6,900      383,985
Progressive Corp. (The)   20,100      516,771
Prudential Financial, Inc.   13,000      1,010,100
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Insurance (continued)       
SAFECO Corp.   3,700    $ 208,495
St. Paul Travelers Cos., Inc. (The)   18,265      814,254
Torchmark Corp. (c)   2,200      133,584
UnumProvident Corp. (c)   8,900      161,357
XL Capital Ltd., Class A   4,400      269,720
        
           15,099,765
        
Leisure Products (0.2%)           
Brunswick Corp.   2,300      76,475
Carnival Corp.   12,500      521,750
Hasbro, Inc.   3,800      68,818
Mattel, Inc.   9,100      150,241
        
           817,284
        
Manufacturing (1.1%)           
3M Co.   20,638      1,666,931
American Standard Cos., Inc.   5,500      237,985
Cummins Engine, Inc.   1,400      171,150
Dover Corp.   4,800      237,264
Honeywell Int’l, Inc.   21,800      878,540
PPG Industries, Inc.   4,000      264,000
Stanley Works (The)   1,800      84,996
Textron, Inc. (c)   3,900      359,502
        
           3,900,368
        
Medical Equipment & Supplies (0.6%)       
Bard (C.R.), Inc.   3,200      234,432
Biomet, Inc.   7,651      239,400
Boston Scientific Corp. (b)   34,467      580,424
Fisher Scientific Int’l, Inc. (b)   2,900      211,845
Laboratory Corp. of America Holdings (b) (c)   4,000      248,920
Patterson Cos., Inc. (b)   4,400      153,692
PerkinElmer, Inc.   2,800      58,520
Zimmer Holdings, Inc. (b)   7,226      409,859
        
           2,137,092
        
Medical Services (0.8%)           
Amgen, Inc. (b)   32,332      2,109,016
Caremark Rx, Inc.   11,841      590,511
Hospira, Inc. (b)   3,636      156,130
Manor Care, Inc. (c)   2,600      121,992
        
           2,977,649
        

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Metals & Mining (0.7%)           
Alcoa, Inc.   23,040    $ 745,574
CONSOL Energy, Inc.   5,500      256,960
Freeport-McMoran Copper & Gold, Inc., Class B   5,600      310,296
Newmont Mining Corp.   12,858      680,574
Phelps Dodge Corp.   5,300      435,448
        
           2,428,852
        
Multimedia (2.0%)           
CBS Corp., Class B   22,564      610,356
Clear Channel Communications, Inc.   12,800      396,160
Comcast Corp., Class A (b)   57,948      1,897,218
E.W. Scripps Co., Class A   1,900      81,966
L-3 Communications Holdings, Inc.   3,700      279,054
News Corp.   63,000      1,208,340
Time Warner, Inc.   119,521      2,067,713
Viacom Inc., Class B (b)   18,764      672,502
        
           7,213,309
        
Office Equipment & Supplies (0.1%)       
Xerox Corp. (b) (c)   23,500      326,885
        
Oil & Gas (7.5%)           
Anadarko Petroleum Corp.   13,398      638,951
Apache Corp.   9,598      655,064
Ashland, Inc.   2,400      160,080
Baker Hughes, Inc.   9,000      736,650
BJ Services Co. (c)   9,600      357,696
Chesapeake Energy Corp. (c)   11,400      344,850
ChevronTexaco Corp.   60,846      3,776,103
ConocoPhillips   45,236      2,964,315
Devon Energy Corp.   11,500      694,715
El Paso Corp.   19,177      287,655
EOG Resources, Inc.   7,100      492,314
Exxon Mobil Corp.   165,954      10,181,277
Hess Corp.   7,200      380,520
KeySpan Corp.   3,800      153,520
Kinder Morgan, Inc.   2,500      249,725
Marathon Oil Corp. (c)   10,301      858,073
Murphy Oil Corp.   5,100      284,886
Nabors Industries Ltd. (b) (c)   9,300      314,247
NICOR, Inc. (c)   2,100      87,150
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Oil & Gas (continued)       
Noble Corp. (c)   4,200    $ 312,564
People’s Energy Corp. (c)   1,200      43,092
Sempra Energy   6,307      286,842
Sunoco, Inc.   3,900      270,231
Transocean Sedco Forex, Inc. (b)   9,300      746,976
Valero Energy Corp.   16,600      1,104,232
Williams Cos., Inc. (The)   15,400      359,744
XTO Energy, Inc.   9,366      414,633
        
           27,156,105
        
Oil Equipment & Services (1.2%)       
Dynergy, Inc., Class A (b)   6,300      34,461
Halliburton Co.   13,700      1,016,677
Kerr-Mcgee Corp.   6,332      439,124
National-OilWell, Inc. (b)   5,300      335,596
Rowan Cos., Inc.   3,700      131,683
Schlumberger Ltd.   32,380      2,108,262
Weatherford Int’l Ltd. (b)   8,900      441,618
        
           4,507,421
        
Paper & Forest Products (0.4%)       
Int’l Paper Co.   12,421      401,198
Louisiana-Pacific Corp.   2,500      54,750
MeadWestvaco Corp. (c)   3,907      109,123
Pactiv Corp. (b)   3,500      86,625
Plum Creek Timber Co., Inc.   4,024      142,852
Temple-Inland, Inc.   3,100      132,897
Weyerhaeuser Co.   7,400      460,650
        
           1,388,095
        
Photographic Equipment (0.1%)       
Eastman Kodak Co. (c)   8,800      209,264
        
Printing & Publishing (0.4%)       
Donnelley (R.R.) & Sons Co.   4,800      153,360
Gannett Co., Inc.   7,200      402,696
McGraw-Hill Cos., Inc. (The)   10,600      532,438
Meredith Corp. (c)   800      39,632
New York Times Co., Class A (c)   3,500      85,890
Tribune Co. (c)   6,964      225,843
        
           1,439,859
        

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
COMMON STOCKS (continued)       
Railroads (0.7%)           
Burlington Northern Santa Fe Corp.   9,600    $ 760,800
CSX Corp.   6,600      464,904
Norfolk Southern Corp.   10,700      569,454
Union Pacific Corp.   7,800      725,088
        
           2,520,246
        
            
Real Estate Investment Trusts (0.8%)       
Apartment Investment & Management Co.   2,500      108,625
Archstone-Smith Trust   5,100      259,437
Boston Properties, Inc.   2,900      262,160
Equity Office Properties Trust   11,000      401,610
Equity Residential Property Trust   7,200      322,056
Kimco Realty Corp.   4,800      175,152
ProLogis Trust   6,000      312,720
Public Storage, Inc. (c)   1,900      144,210
Simon Property Group, Inc.   5,500      456,170
Vornado Realty Trust (c)   3,600      351,180
        
           2,793,320
        
Restaurants (0.5%)           
Darden Restaurants, Inc.   4,250      167,450
McDonald’s Corp.   33,100      1,112,160
Wendy’s Int’l, Inc.   3,800      221,502
YUM! Brands, Inc.   7,900      397,133
        
           1,898,245
        
Retail (5.1%)       
Amazon.com, Inc. (b) (c)   9,000      348,120
Bed Bath & Beyond, Inc. (b) (c)   8,500      281,945
Best Buy Co., Inc. (c)   10,575      579,933
Big Lots, Inc. (b) (c)   4,400      75,152
Circuit City Stores, Inc.   4,900      133,378
Coach, Inc. (b)   11,300      337,870
Costco Wholesale Corp.   13,600      776,968
CVS Corp.   22,208      681,786
Dillards, Inc. (c)   2,200      70,070
Dollar General Corp.   7,175      100,307
Family Dollar Stores, Inc.   3,400      83,062
Federated Department Stores, Inc.   14,722      538,825
Gap, Inc. (The)   13,500      234,900
   

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Retail (continued)       
Home Depot, Inc.   56,682    $ 2,028,649
J.C. Penney Co., Inc.   6,800      459,068
Kohl’s Corp. (b)   9,800      579,376
Kroger Co.   18,400      402,224
Limited, Inc. (The)   8,066      206,409
Lowe’s Cos., Inc.   20,786      1,261,087
Nordstrom, Inc.   6,600      240,900
Office Depot, Inc. (b)   7,100      269,800
Officemax, Inc. (c)   2,300      93,725
Safeway, Inc.   13,600      353,600
Sears Holdings Corp. (b)   2,773      429,371
Staples, Inc.   21,150      514,368
Starbucks Corp. (b)   21,900      826,944
Supervalu, Inc.   4,403      135,172
Target Corp.   23,116      1,129,679
Tiffany & Co.   4,600      151,892
TJX Cos., Inc.   11,300      258,318
Wal-Mart Stores, Inc.   68,588      3,303,883
Walgreen Co.   28,500      1,277,940
Whole Foods Market, Inc. (c)   4,200      271,488
        
           18,436,209
        
Semiconductors (1.0%)       
Advanced Micro Devices, Inc. (b)   12,500      305,250
Analog Devices, Inc.   10,100      324,614
Applied Materials, Inc.   44,800      729,344
Freescale Semiconductor, Inc. (b)   10,246      301,232
Jabil Circuit, Inc.   5,700      145,920
KLA-Tencor Corp.   4,900      203,693
Linear Technology Corp.   9,400      314,806
LSI Logic Corp. (b)   8,400      75,180
Maxim Integrated Products, Inc.   9,600      308,256
Micron Technology, Inc. (b) (c)   21,300      320,778
National Semiconductor Corp.   8,300      197,955
Novellus Systems (b)   4,100      101,270
PMC-Sierra, Inc. (b) (c)   7,300      68,620
QLogic Corp. (b)   3,400      58,616
        
           3,455,534
        

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
COMMON STOCKS (continued)       
Steel (0.2%)       
Allegheny Technologies, Inc.   2,700    $ 186,948
Nucor Corp.   8,200      444,850
United States Steel Corp.   3,700      259,444
        
           891,242
        
Telecommunications (4.5%)       
ADC Telecomm, Inc. (b)   4,157      70,087
ALLTEL Corp.   11,300      721,279
            
Andrew Corp. (b)   3,700      32,782
AT&T, Inc.   106,649      2,974,440
BellSouth Corp.   49,600      1,795,520
CenturyTel, Inc.   4,000      148,600
CIENA Corp. (b) (c)   19,439      93,502
Citizens Communications Co.   7,800      101,790
Comverse Technology, Inc. (b)   6,100      120,597
Corning, Inc. (b)   41,900      1,013,561
Embarq Corp. (b)   4,634      189,948
JDS Uniphase Corp. (b) (c)   50,600      128,018
Juniper Networks, Inc. (b)   16,900      270,231
Lucent Technologies, Inc. (b)   114,800      277,816
Motorola, Inc.   66,600      1,341,990
QUALCOMM, Inc.   46,000      1,843,220
Qwest Communications Int’l, Inc. (b)   40,623      328,640
Sprint Corp.   81,699      1,633,163
Tellabs, Inc. (b)   13,900      185,009
Univision Communications, Inc. (b)   5,200      174,200
Verizon Communications, Inc.   81,102      2,716,106
        
           16,160,499
        
Tire & Rubber (0.0%)       
B.F. Goodrich Co. (The)   2,800      112,812
Cooper Tire & Rubber Co. (c)   1,800      20,052
Goodyear Tire & Rubber Co. (b) (c)   4,200      46,620
        
           179,484
        
Tobacco (0.1%)           
Reynolds American, Inc. (c)   2,300      265,190
UST, Inc. (c)   4,900      221,431
        
           486,621
        
   

Shares or

Principal Amount

    Value
COMMON STOCKS (continued)       
Trucking (1.0%)           
FedEx Corp.   8,100    $ 946,566
Ryder System, Inc. (c)   2,000      116,860
United Parcel Service, Inc., Class B   29,800      2,453,434
        
           3,516,860
        
Utilities (2.5%)           
AES Corp. (b)   16,900      311,805
Allegheny Energy, Inc. (b)   3,600      133,452
Ameren Corp. (c)   4,900      247,450
American Electric Power Co., Inc.   11,860      406,205
Centerpoint Energy, Inc. (c)   6,500      81,250
CMS Energy Corp. (b) (c)   4,900      63,406
Consolidated Edison, Inc. (c)   7,600      337,744
Constellation Energy Group, Inc.   4,300      234,436
Detroit Edison Co. (c)   3,900      158,886
Dominion Resources, Inc. (c)   10,000      747,900
Duke Energy Corp.   32,776      962,631
Edison Int’l   9,800      382,200
Entergy Corp.   6,200      438,650
FirstEnergy Corp.   9,686      525,078
FPL Group, Inc.   10,200      422,076
Nisource, Inc. (c)   6,064      132,438
PG & E Corp.   10,400      408,512
Pinnacle West Capital Corp.   2,400      95,784
PPL Corp.   11,600      374,680
Progress Energy, Inc. (c)   7,526      322,640
Public Service Enterprise Group, Inc.   6,400      423,168
Southern Co.   21,500      689,075
TECO Energy, Inc.   5,100      76,194
TXU Corp.   13,200      789,228
Xcel Energy, Inc. (c)   8,880      170,318
        
           8,935,206
        
Waste Management (0.2%)       
Allied Waste Industries, Inc. (b)   4,700      53,392
Waste Management, Inc.   16,000      574,080
        
           627,472
        
Total Common Stocks          315,085,728
        

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

   

Shares or

Principal Amount

    Value
              
CASH EQUIVALENTS (13.4%)       
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $48,203,122)   $ 48,182,648    $ 48,182,648
          
Total Cash Equivalents            48,182,648
          
   

Shares or

Principal Amount

    Value  
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (4.1%)   
Pool of short-term securities for Gartmore Variable Insurance Trust Funds — Note 2 (Securities Lending)   $ 14,777,174      14,777,174  
          
Total Short Term Securities Held as Collateral for Securities on Loan    $ 14,777,174  
          
Total Investments
(Cost $374,792,672) (a) — 104.9%		      378,045,550  
Liabilities in excess of other assets — (4.9)%            (17,577,076 )
          
NET ASSETS — 100.0%    $ 360,468,474  
          

 

 

(a) See notes to financial statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

At June 30, 2006, the Fund’s open futures contracts were as follows:

 

Number of

Contracts

   Long Contracts*   Expiration  

Market Value

Covered by

Contracts

  

Unrealized

Appreciation/

Depreciation

97   S&P 500 Emini Futures   09/15/06   31,025,450   560,973

 

* Cash pledged as collateral.

 

See notes to financial statements.

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $326,610,024)

    $ 329,862,902  

Repurchase agreements, at cost and value

      48,182,648  
    

Total investments

      378,045,550  
    

Cash

      1,385,449  

Cash collateral pledged for futures

      1,779,750  

Interest and dividends receivable

      519,972  

Receivable for capital shares issued

      14,224,858  

Receivable from adviser

      156  

Prepaid expenses and other assets

      3,213  
    

Total Assets

      395,958,948  
    

Liabilities:

         

Payable for capital shares redeemed

      119,029  

Payable for investments purchased

      20,435,809  

Payable for variation margin on futures contracts

      77,312  

Payable for return of collateral received for securities on loan

      14,777,174  

Accrued expenses and other payables:

         

Investment advisory fees

      34,264  

Fund administration and transfer agent fees

      21,798  

Administrative servicing fees

      8,234  

Other

      16,854  
    

Total Liabilities

      35,490,474  
    

Net Assets

    $ 360,468,474  
    

Represented by:

         

Capital

    $ 420,121,891  

Accumulated net investment income (loss)

      101,983  

Accumulated net realized gains (losses) from investment and futures transactions

      (63,569,251 )

Net unrealized appreciation (depreciation) on investments and futures

      3,813,851  
    

Net Assets

    $ 360,468,474  
    

Net Assets:

         

Class IV Shares

    $ 255,959,310  

Class ID Shares

      104,509,164  
    

Total

    $ 360,468,474  
    

Shares outstanding (unlimited number of shares authorized):

         

Class IV Shares

      28,900,132  

Class ID Shares

      11,800,133  
    

Total

      40,700,265  
    

Net asset value and offering price per share:*

         

Class IV Shares

    $ 8.86  

Class ID Shares

    $ 8.86  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 324,172  

Dividend income

      2,505,924  

Income from securities lending

      16,066  
    

Total Income

      2,846,162  
    

Expenses:

         

Investment advisory fees

      278,595  

Fund administration and transfer agent fees

      100,132  

Administrative servicing fees Class IV Shares

      130,520  

Trustee fees

      4,630  

Other

      45,144  
    

Total expenses before waived or reimbursed expenses

      559,021  

Expenses waived or reimbursed

      (199,344 )

Earnings credit (Note 5)

      (250 )
    

Total Expenses

      359,427  
    

Net Investment Income (Loss)

      2,486,735  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (1,100,026 )

Net realized gains (losses) on futures

      (1,402,522 )
    

Net realized gains (losses) on investment and futures transactions

      (2,502,548 )

Net change in unrealized appreciation/depreciation on investments and futures

      6,925,733  
    

Net realized/unrealized gains (losses) on investments and futures

      4,423,185  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 6,909,920  
    

 

See notes to financial statements.

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT S&P 500 INDEX FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
       (Unaudited)        

From Investment Activities:

                   

Operations:

                   

Net investment income (loss)

      $ 2,486,735     $ 4,280,053  

Net realized gains (losses) on investment and futures transactions

        (2,502,548 )     (7,066,693 )

Net change in unrealized appreciation/depreciation on investments and futures

        6,925,733       14,675,801  
      
 

Change in net assets resulting from operations

        6,909,920       11,889,161  
      
 

Distributions to Class IV shareholders from:

                   

Net investment income

        (2,079,074 )     (4,289,933 )

Distributions to Class ID shareholders from:

                   

Net investment income

        (327,199 )(a)     —  
      
 

Change in net assets from shareholder distributions

        (2,406,273 )     (4,289,933 )
      
 

Change in net assets from capital transactions

        90,393,806       (28,961,641 )
      
 

Change in net assets

        94,897,453       (21,362,413 )

Net Assets:

                   

Beginning of period

        265,571,021       286,933,434  
      
 

End of period

      $ 360,468,474     $ 265,571,021  
      
 

Accumulated net investment income (loss)

      $ 101,983     $ 21,521  
      
 

CAPITAL TRANSACTIONS:

                   

Class IV Shares

                   

Proceeds from shares issued

      $ 5,266,147     $ 10,342,944  

Dividends reinvested

        2,079,084       4,289,933  

Cost of shares redeemed

        (21,784,533 )     (43,594,518 )
      
 
         (14,439,302 )     (28,961,641 )
      
 

Class ID Shares

                   

Proceeds from shares issued

        104,505,909 (a)     —  

Dividends reinvested

        327,199 (a)     —  
      
 
         104,833,108       —  
      
 

Change in net assets from capital transactions

      $ 90,393,806     $ (28,961,641 )
      
 

SHARE TRANSACTIONS:

                   

Class IV Shares

                   

Issued

        588,638       1,225,443  

Reinvested

        233,521       508,558  

Redeemed

        (2,429,640 )     (5,172,768 )
      
 
         (1,607,481 )     (3,438,767 )
      
 

Class ID Shares

                   

Issued

        11,762,610 (a)     —  

Reinvested

        37,523 (a)     —  
      
 
         11,800,133       —  
      
 
(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

13

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT S&P 500 Index Fund

 

    Net Asset
Value,
Beginning
of Period		   Investment Activities
     Distributions
    

Net Asset
Value, End
of Period

  

Total
Return

    

Net Assets at
End of Period
(000s)

   Ratios/Supplemental Data:
    Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		           Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class IV Shares

                                                                                      

Year Ended December 31, 2001

   $ 9.36   0.09   (1.22 )   (1.13 )   (0.09 )   (0.02 )   (0.11 )   $ 8.12   (12.24% )   $ 324,915   0.28%     1.06%     0.53%     0.81%     6.00%

Year Ended December 31, 2002

   $ 8.12   0.10   (1.89 )   (1.79 )   (0.09 )   —     (0.09 )   $ 6.24   (22.31% )   $ 235,961   0.28%     1.32%     0.50%     1.10%     19.00%

Year Ended December 31, 2003(c)

   $ 6.24   0.11   1.63     1.74     (0.13 )   —     (0.13 )   $ 7.85   28.33%     $ 281,115   0.28%     1.51%     0.47%     1.32%     2.41%

Year Ended December 31, 2004

   $ 7.85   0.14   0.68     0.82     (0.22 )   —     (0.22 )   $ 8.45   10.59%     $ 286,933   0.28%     1.74%     0.43%     1.59%     3.10%

Year Ended December 31, 2005

   $ 8.45   0.14   0.26     0.40     (0.14 )   —     (0.14 )   $ 8.71   4.75%     $ 265,571   0.28%     1.58%     0.47%     1.40%     4.29%

Six Months Ended June 30, 2006 (Unaudited)

   $ 8.71   0.15   0.07     0.22     (0.07 )   —     (0.07 )   $ 8.86   2.54% (d)   $ 255,959   0.26% (e)   1.76% (e)   0.41% (e)   1.62% (e)   5.26%

Class ID Shares

                                                                                      

Period Ended June 30, 2006 (Unaudited)(f)

   $ 9.15   1.31   (1.56 )   (0.25 )   (0.04 )   —     (0.04 )   $ 8.86   (2.77% )(d)   $ 104,509   0.19% (e)   2.14% (e)   0.23% (e)   2.11% (e)   5.26%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The GVIT Equity 500 Index Fund retained the history of Market Street Equity 500 Index Fund and the existing shares of the fund were designated Class IV Shares.

 

(d) Not annualized

 

(e) Annualized

 

(f) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

14

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT S&P 500 Index Fund (the “Fund”), (formerly “GVIT Equity 500 Index Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
     Maturity Date
Commercial Paper    Aegis Finance LLC    $ 1,493,193    5.29 %   07/21/06
Repurchase Agreement    Bank of America Securities LLC      13,283,981    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities
   Value of Collateral
$14,615,082   $ 14,777,174

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
  
$399,323,102   $ 61,987,731   $ (83,265,283 )   $ (21,277,552 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GMF advises. Fund Asset Management, L.P. (the “subadviser”), manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Prior to May 1, 2006, the Fund’s subadviser was SsgA Funds.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule      Total
Fees		      Fees
Retained		    Paid to
Sub-adviser

Up to $1.5 billion

      0.13 %    0.11%    0.02%

Next $1.5 billion

      0.12 %    0.10%    0.02%

$3 billion or more

      0.11 %    0.09%    0.02%

 

Effective May 1, 2006, GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses from exceeding 0.23% for all classes of shares until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of the six months ended June 30, 2006, the cumulative potential reimbursements for the Class IV shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF would be:

 

Amount
Fiscal Year
2003
   Amount
Fiscal Year
2004
   Amount
Fiscal Year
2005
   Amount
Six months ended
June 30, 2006
$486,617   $ 414,515   $ 500,657   $ 199,344

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

  

Up to $1 billion

    0.15 %

$1 billion up to $3 billion

    0.10 %

$3 billion up to $8 billion

    0.05 %

$8 billion up to $10 billion

    0.04 %

$10 billion up to $12 billion

    0.02 %

$12 billion or more

    0.01 %

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class II shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $131,856 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $61,698,965 and sales of $14,324,281.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan & Chase Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in custodian fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed the bank’s reduce its fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that the Fund underperformed its benchmark, the S&P 500 Index, over the one-, three- and five-year periods ended September 30, 2005. The Fund outperformed the benchmark on a gross basis. The Board concluded that the underperformance on net basis was understandable given that an index fund, such as the Fund, must take into account its fees and expenses in calculating performance while the index it tracks has no such fees or expenses. The Board also considered that the Fund ranked in the first quartile of the Lipper S&P 500 Index Objective Funds category in each of the one-, three-, and five-year periods.

 

The Board next reviewed and considered the Fund’s contractual advisory fee (including subadvisory fees) and breakpoints and noted that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed peer group. The Board considered, however, that due to substantial fee waivers and expense reimbursements by the adviser, the actual advisory fee ranked in the first quintile of the Lipper Expense Group. Additionally, the Board noted that the Fund’s

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

total expenses are below the median of the Fund’s Lipper Expense Group. The Board also considered the adviser’s profitability, and concluded that the adviser’s profitability was not excessive.

 

Finally, the Board considered management’s recommendation to replace the Fund’s current subadviser, SSgA Funds Management (“SSgA”) with Fund Asset Management (“FAM”), the current subadviser to the retail version of this Fund. The Board noted that management was proposing the change for several reasons including: (1) management’s decision to manage the Fund in a manner substantially similar to the retail version of the Fund; (2) FAM’s investment process, risk management, performance and the experienced team of FAM portfolio managers who would be managing the Fund’s assets; (3) and management’s successful negotiation of a reduction in the subadvisory fee that will be paid to FAM which enables management to significantly reduce the Fund’s overall advisory fee.

 

Specifically, the Board considered that FAM’s contractual subadvisory fee (0.02% - 0.0125%) is considerably lower than SSgA’s fee (0.025% - 0.015%). This enables management to propose a significant reduction in the Fund’s overall advisory fee (from 0.24% - 0.22% to 0.13% - 0.11%) which is a considerably greater amount than the reduction in the subadvisory fee. The Board noted that management seeks to make the Fund an attractive underlying investment in certain “fund-of-funds” arrangements and enables management to conform the price structure of this Fund to that of its retail counterpart, the Gartmore S&P 500 Index Fund.

 

In addition to its consideration of the reduced subadvisory (and advisory) fees, the Board also considered that FAM will manage the Fund in substantially the same manner as FAM manages the Fund’s retail counterpart. The Board further noted FAM’s demonstrated performance to date in managing the Fund’s retail counterpart.

 

Having considered management’s recommendation, including the reasons and related information presented, the Board approved: (1) the termination of SSgA; (2) the hiring of FAM as subadviser; (3) the new subadvisory agreement and fees; and (4) the renewal of the advisory agreement at the reduced fee rate proposed, all to become effective on May 1, 2006, the Trust’s annual contract renewal date.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

25

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

26

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President–Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

27

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

28

Table of Contents

 

Van Kampen GVIT Multi Sector Bond Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
19    Statement of Assets and Liabilities
19    Statement of Operations
20    Statements of Changes in Net Assets
21    Financial Highlights
22    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-VKGMS (8/06)

Table of Contents

 

Shareholder

Expense Example

Van Kampen GVIT Multi Sector Bond Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
     

Expenses

Paid
During Period*

      Annualized
Expense Ratio*
Van Kampen GVIT Multi Sector Bond Fund                                

Class I

      Actual    $ 1,000.00      $ 999.50      $ 5.06      1.02%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.12      1.02%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Van Kampen GVIT Multi Sector Bond Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Corporate Bonds      44.4%
Cash Equivalents      24.2%
Sovereign Bonds      16.1%
Mortgage - Backed Obligations      11.9%
Interest Only Bonds      5.3%
U.S. Government Agencies      2.9%
Warrants      0.1%
Other Investments*      11.5%
Liabilities in excess of other assets**      -16.4%
      
       100.0%
      

 

Top Holdings***       
U.S. Treasury Notes, 3.50%, 11/15/06      6.1%
U.S. Treasury Notes, 6.13%, 08/15/29      5.2%
Federal National Mortgage Association, 7.00%, 12/01/35      3.0%
Mexican Fixed Rate Bonds, 8.00%, 12/17/15      2.4%
Bundes Republic of Deutschland, 5.63%, 01/04/28      2.3%
Federal National Mortgage Association Discount Notes, 5.01%, 07/12/06      2.0%
U.S. Treasury Notes, 3.13%, 05/15/07      2.0%
U.S. Treasury Notes, 8.13%, 08/15/19      1.9%
Federal National Mortgage Association, 7.00%, 06/01/36      1.7%
Federal Home Loan Bank - Discount Note, 1.71%, 07/05/06      1.6%
Other Assets      71.8%
      
       100.0%
      
Top Industries       
U.S. Treasury Notes      17.0%
Asset Backed Securities      15.1%
Federal National Mortgage Association      13.2%
Financial Services      13.1%
Oil & Gas      2.4%
Federal National Mortgage Association Discount Notes      2.0%
Federal Home Loan Mortgage Corporation      1.7%
Telecommunications      1.7%
Federal Home Loan Bank - Discount Note      1.6%
Fannie Mae Discount Note      1.6%
Other Assets      30.6%
      
       100.0%
      

 

Top Countries       
United States      66.4%
Mexico      4.2%
Germany      2.6%
Spain      1.4%
Canada      1.3%
Phillipines      1.3%
Brazil      1.2%
Russia      1.2%
United Kingdom      1.1%
Venezuela      0.7%
Other Assets      18.6%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (44.4%)       
Advertising (0.3%)
Interpublic Group Co., Inc.,
5.40%, 11/15/09		   $ 280,000    $ 256,900
WPP Finance (UK) Corp.,
5.88%, 06/15/14		     385,000      373,053
WPP Group, PLC,
6.00%, 06/18/08 (EUR)		     120,000      159,403
          
             789,356
          
Aerospace & Defense (0.2%)
Northrop Grumman Corp.,
4.08%, 11/16/06		     115,000      114,343
Systems 2001 Asset Trust,
6.66%, 09/15/13 (c)		     284,021      292,463
          
             406,806
          
Asset Backed Securities (10.5%)
Aegis Asset Backed Securities Trust,
5.19%, 10/25/35 (e)		     937,159      937,317
Asset Backed Funding Certificates,
5.16%, 01/25/35 (e)		     61,725      61,719
Banc of America Funding Corp.,
5.43%, 09/20/35 (e)		     583,470      586,740
Bear Stearns Asset Backed, Inc.,
5.30%, 03/25/35 (e)		     981,040      981,477
Bear Stearns Asset Backed, Inc.,
5.20%, 08/25/35 (e)		     519,601      519,704
Capital Auto Receivables Asset Trust,
5.26%, 04/15/08 (e)		     1,248,403      1,248,605
Credit Based Asset Servicing and Securities,
5.18%, 08/25/35 (e)		     669,372      669,526
Credit Based Asset Servicing and Securities,
5.19%, 08/25/35 (e)		     635,430      635,573
DSLA Mortgage Loan Trust,
5.08%, 03/19/45 (e)		     1,817,887      1,817,887
First Franklin Mortgage Loan Asset Backed Certificates,
5.18%, 07/25/35 (e)		     757,279      757,412
Greenpoint Mortgage Funding Trust,
5.40%, 08/25/35 (e)		     1,672,886      1,674,012
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Asset Backed Securities (continued)
GSAMP Trust,
5.17%, 04/25/35 (e)		   $ 53,006    $ 53,008
GSAMP Trust,
5.17%, 06/25/35 (e)		     198,015      198,029
GSAMP Trust,
5.20%, 08/01/35		     795,699      795,820
Indymac Index Mortgage Loan Trust,
5.33%, 05/25/46 (e)		     1,733,635      1,739,458
Indymac Index Mortgage Loan Trust,
5.21%, 07/25/46 (e)		     1,725,000      1,727,515
Master Asset Backed Securities Trust,
5.17%, 03/25/35 (e)		     156,467      156,479
MBNA Master Credit Card Trust,
5.40%, 09/15/09 		    1,675,000      1,677,653
Structured Asset Investment Loan Trust,
5.42%, 11/25/33 (e)		     170,615      170,803
Structured Asset Investment Loan Trust,
5.17%, 06/25/35 (e)		     117,791      117,796
Structured Asset Investment Loan Trust,
5.18%, 07/25/35 (e)		     649,998      650,031
Structured Asset Mortgage Investments, Inc,
5.41%, 07/25/36		     1,300,000      1,300,000
Structured Asset Mortgage Investments, Inc.,
5.35%, 09/25/35		     2,102,906      2,104,220
Structured Asset Mortgage Investments, Inc.,
5.27%, 02/25/36 (e)		     1,219,148      1,221,783
Structured Asset Mortgage Investments, Inc.,
5.41%, 07/25/36		     825,000      825,000
Structured Asset Mortgage Investments, Inc.,
5.27%, 04/25/45 (e)		     815,086      815,218
Structured Asset Securities Corp.,
5.16%, 05/25/35 (e)		     462,308      462,221

 

3

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GARTMORE VARIABLE INSURANCE TRUST

 

VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Asset Backed Securities (continued)
Structured Asset Securities Corp.,
5.28%, 06/25/35 (e)		   $ 1,600,000    $ 1,600,695
          
             25,505,701
          
Automotive (1.3%)             
Daimler Chrysler NA Holdings,
8.50%, 01/18/31 (g)		     180,000      203,810
General Motors Corp.,
8.38%, 07/05/33 (EUR)		     180,000      178,983
General Motors Corp.,
8.38%, 07/15/33 (g)		     3,090,000      2,487,449
Sonic Automotive Inc.,
Series B,
8.63%, 08/15/13 (g)		     445,000      440,550
          
             3,310,792
          
Banking (0.9%)             
Banco ABN AMRO Real SA,
15.86%, 12/13/07 (BRL) (c)		     50,000      23,228
Bank One Corp.,
6.00%, 02/17/09		     95,000      95,705
Chase Manhattan Corp.,
7.00%, 11/15/09		     240,000      248,780
Citibank N.A.,
15.00%, 01/30/09		     275,900      298,400
Deutsche Bank AG,
5.13%, 01/31/13 (EUR)		     80,000      106,399
JP Morgan Chase & Co.,
5.35%, 03/01/07		     140,000      139,714
KFW International Finance,
2.05%, 09/21/09 (JPY)		     94,000,000      844,553
Marshall & Ilsley Bank,
3.80%, 02/08/08		     605,000      587,620
          
             2,344,399
          
Brewery (0.1%)             
FBG Finance Ltd.,
5.13%, 06/15/15 (c) (g)		     250,000      229,035
          
Broadcast Media (0.1%)             
Salem Communications Holding Corp.,
9.00%, 07/01/11		     184,000      192,280
          
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Business Services (0.1%)             
Iron Mountain, Inc.,
8.63%, 04/01/13		   $ 195,000    $ 195,000
Iron Mountain, Inc.,
7.75%, 01/15/15		     180,000      171,900
          
             366,900
          
Cable (0.6%)             
Cablevision Systems Corp.,
9.62%, 04/01/09 (e) (g)		     290,000      307,400
CCH I LLC,
11.00%, 10/01/15		     210,000      183,750
Comcast Cable Communication, Inc.,
6.75%, 01/30/11		     300,000      309,579
Echostar DBS Corp.,
6.38%, 10/01/11		     550,000      526,625
Echostar DBS Corp.,
6.63%, 10/01/14		     70,000      65,800
General Cable Corp.,
9.50%, 11/15/10		     100,000      106,000
TCI Communications, Inc.,
7.88%, 02/15/26		     90,000      96,913
          
             1,596,067
          
Chemicals & Plastics (0.8%)             
Equistar Chemical,
10.13%, 09/01/08		     330,000      347,325
Huntsman Corp.,
10.13%, 07/01/09		     195,000      197,925
ICI Wilmington,
4.38%, 12/01/08		     115,000      110,983
JohnsonDiversey, Inc.,
9.63%, 05/15/12 (g)		     180,000      179,100
Nalco Co.,
7.75%, 11/15/11 (g)		     165,000      164,588
Westlake Chemicals,
6.63%, 01/15/16 (g)		     1,070,000      988,412
          
             1,988,333
          
Cigarettes (0.2%)             
Reynolds American, Inc.,
7.25%, 06/01/13		     520,000      508,300
          
Computers (0.1%)             
Hewlett-Packard Co.,
5.34%, 01/01/49 (e)		     290,000      290,009
          

 

4

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VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Construction & Building Materials (0.1%)
Technical Olympic USA, Inc.,
9.00%, 07/01/10		   $ 100,000    $ 97,250
Technical Olympic USA, Inc.,
10.38%, 07/01/12 (g)		     100,000      96,000
          
             193,250
          
Consumer Products (0.1%)             
Clorox Co.,
5.44%, 12/14/07 (e)		     210,000      210,233
          
Distribution & Wholesale (0.0%)       
Nebraska Book Co.,
8.63%, 03/15/12		     65,000      60,450
          
Diversified (0.0%)             
Murrin Murrin Holdings,
0.00%, 08/31/07 (f) (g)		     125,000      0
Tyco International Group SA,
6.13%, 04/04/07 (EUR)		     40,000      51,975
          
             51,975
          
Drugs (0.1%)             
AmerisourceBergen Corp.,
5.63%, 09/15/12 (c)		     120,000      114,600
Warner Chilcott Corp.,
8.75%, 02/01/15 (c)		     210,000      212,100
          
             326,700
          
Electric (0.3%)             
Ipalco Enterprises, Inc.,
8.38%, 11/14/08		     465,000      477,788
Ohio Power Company — IBC,
6.00%, 06/01/16		     225,000      221,870
          
             699,658
          
Entertainment (0.2%)             
Isle Of Capri Casinos,
7.00%, 03/01/14		     490,000      462,438
          
Environmental Controls (0.2%)             
Waste Management, Inc.,
7.13%, 10/01/07		     450,000      456,334
          
Financial Services (13.1%)             
AIG SunAmerica Global Finance,
6.30%, 05/10/11 (c)		     395,000      403,619
Altria Finance Ltd.,
5.63%, 06/24/08 (EUR)		     90,000      118,359
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Financial Services (continued)             
American General Finance Corp.,
4.63%, 05/15/09		   $ 95,000    $ 92,231
American Home Mortgage Investment Trust,
5.43%, 04/25/44 (e)		     522,872      523,353
Ameriquest Mortgage Securities,
5.22%, 07/25/35 (e)		     371,149      371,189
AXA Financial, Inc.,
7.75%, 08/01/10		     460,000      489,514
Capital Auto Receivables Asset Trust,
5.28%, 01/15/08 (e)		     912,505      912,802
Carrington Mortgage Loan Trust,
5.16%, 06/25/35 (e)		     172,785      172,785
Carrington Mortgage Loan Trust,
5.23%, 09/25/35 		    684,416      684,565
Carrington Mortgage Loan Trust,
5.20%, 10/25/35 (e)		     931,876      932,028
Caterpillar Financial Services Corp.,
5.26%, 08/20/07 (e)		     220,000      220,132
Caterpillar Financial Services Corp.,
3.63%, 11/15/07		     75,000      73,004
CIT Group, Inc.,
7.38%, 04/02/07		     120,000      121,495
Citigroup Mortgage Loan Trust, Inc.,
5.17%, 05/25/35 (e)		     346,835      346,865
Countrywide Alternative Loan Trust,
5.36%, 10/25/35 (e)		     651,914      652,893
Countrywide Alternative Loan Trust,
5.53%, 11/20/35 (e)		     1,147,243      1,151,386
Countrywide Alternative Loan Trust,
5.23%, 05/25/36 (e)		     1,141,247      1,141,470
Countrywide Alternative Loan Trust,
0.65%, 02/25/37 		    7,675,827      419,772

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Financial Services (continued)             
Countrywide Home Loans, Inc.,
3.25%, 05/21/08		   $ 220,000    $ 210,493
Equifirst Mortgage Loan Trust,
5.14%, 04/25/35 (e)		     123,938      123,942
Farmers Exchange Capital,
7.05%, 07/15/28 (c)		     285,000      272,707
GE Capital Credit Card Master Note Trust,
5.25%, 06/15/10 (e)		     1,350,000      1,350,546
General Electric Capital Corp.,
4.25%, 12/01/10		     100,000      94,675
General Motors Acceptance Corp.,
6.88%, 09/15/11		     1,280,000      1,221,325
Harborview Mortgage Loan Trust,
5.63%, 09/19/35 (e)		     1,046,507      1,053,938
Harborview Mortgage Loan Trust,
0.94%, 03/19/37		     2,982      2,237
Harborview Mortgage Loan Trust,
5.54%, 07/19/45 (e)		     623,589      625,305
Household Finance Corp.,
6.50%, 05/05/09 (EUR)		     140,000      191,062
John Hancock Global Funding,
7.90%, 07/02/10 (c)		     155,000      168,270
JP Morgan Chase & Co.,
10.70%, 06/27/07 (c)		     295,000      198,211
JSG Funding, PLC,
10.13%, 10/01/12 (EUR)		     80,000      111,009
Mantis Reef, Ltd.,
4.69%, 11/14/08 (c)		     425,000      411,932
MBNA Corp.,
5.58%, 05/05/08 (e)		     460,000      463,315
MBNA Credit Card Master Note Trust,
5.32%, 08/16/10 (e)		     1,750,000      1,753,356
Merrill Lynch Mortgage Investors, Inc.,
5.09%, 04/25/08 (e)		     1,075,609      1,075,663
Merrill Lynch Mortgage Investors, Inc.,
5.28%, 06/25/35 (e)		     288,340      288,382
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Financial Services (continued)             
Merrill Lynch Mortgage Investors, Inc.,
5.20%, 07/25/35 		  $ 970,637    $ 970,682
New Century Home Equity Loan Trust,
5.61%, 11/25/34 (e)		     1,250,000      1,253,033
Novastar Home Equity Loan,
5.20%, 06/25/35 (e)		     301,650      301,680
Option One Morgage Loan Trust,
5.38%, 11/25/34 (e)		     728,932      729,541
Park Place Securities, Inc.,
5.16%, 06/25/35 (e)		     67,390      67,380
Residential Accredit Loans, Inc.,
5.34%, 02/25/46 (e)		     706,550      706,977
Residential Accredit Loans, Inc.,
5.35%, 02/25/46 (e)		     645,456      647,874
Residential Capital Corp.,
6.38%, 06/30/10		     460,000      453,740
Saxon Asset Securities Trust,
5.17%, 10/25/35 (e)		     393,360      393,395
Terwin Mortgage Trust,
5.20%, 07/25/35 (c) (e)		     364,453      364,515
Wachovia Morgage Loan Trust, LLC,
5.19%, 10/25/35 (e)		     551,701      551,774
Washington Mutual, Inc.,
5.35%, 04/25/45 		    1,069,349      1,070,384
Washington Mutual, Inc.,
5.18%, 05/25/45 		    975,268      974,041
Washington Mutual, Inc.,
5.61%, 08/25/45 (e)		     677,322      679,365
Washington Mutual, Inc.,
5.34%, 10/25/45 (e)		     1,201,859      1,204,356
Washington Mutual, Inc.,
5.33%, 11/25/45 (e)		     1,021,858      1,025,288
Washington Mutual, Inc.,
5.33%, 12/25/45 (e)		     918,654      919,046
Washington Mutual, Inc.,
4.95%, 01/01/49 (e)		     1,396,817      1,409,222
          
             32,166,123
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Food Products & Services (0.3%)       
Conagra Foods, Inc.,
7.00%, 10/01/28		   $ 150,000    $ 152,528
Conagra Foods, Inc.,
8.25%, 09/15/30		     100,000      115,236
Michael Foods,
8.00%, 11/15/13 (g)		     120,000      117,900
Pilgrim’s Pride Corp.,
9.63%, 09/15/11		     270,000      280,799
Pilgrim’s Pride Corp.,
9.25%, 11/15/13 (g)		     95,000      94,763
Smithfield Foods, Inc.,
8.00%, 10/15/09 (g)		     90,000      90,900
          
             852,126
          
Foreign Banks & Agencies (0.1%)       
RSHB Capital,
7.18%, 05/16/13 (c) (g)		     280,000      277,550
          
Health Care & Health Care Services (0.5%)
Columbia HCA Healthcare,
7.69%, 06/15/25		     370,000      349,646
Fresenius Medical Care Capital Trust Series IV,
7.88%, 06/15/11		     95,000      95,950
HCA, Inc.,
7.58%, 09/15/25		     175,000      162,991
Health Net, Inc.,
9.88%, 04/15/11		     295,000      330,005
Tenet Healthcare Corp.,
7.38%, 02/01/13		     310,000      282,875
          
             1,221,467
          
Hotels & Casinos (0.5%)             
Host Marriott LP,
7.13%, 11/01/13 (g)		     80,000      79,700
Host Marriott LP,
6.38%, 03/15/15		     235,000      220,900
Hyatt Equities, LLC,
6.88%, 06/15/07 (c)		     130,000      130,772
MGM Mirage, Inc.,
6.00%, 10/01/09		     300,000      291,750
Starwood Hotels & Resorts,
7.38%, 05/01/07		     150,000      150,938
Station Casinos, Inc.,
6.00%, 04/01/12		     340,000      318,325
          
             1,192,385
          
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Insurance (1.0%)             
Farmers Insurance Exchange,
8.63%, 05/01/24 (c)		   $ 250,000    $ 277,383
Marsh & McLennan Cos., Inc.,
5.88%, 08/01/33		     660,000      573,218
Munich Re Finance BV,
6.75%, 06/21/23 (EUR)		     130,000      185,178
Specialty Underwriting & Residential Finance,
5.18%, 12/25/35 (e)		     249,511      249,549
Specialty Underwriting & Residential Finance,
5.44%, 06/25/36 (e)		     866,107      866,227
St. Paul Travelers,
5.01%, 08/16/07		     240,000      237,260
          
             2,388,815
          
Internet (0.0%)             
Exodus Communications, Inc.,
0.00%, 07/15/10 (f)		     124,552      0
Rhythms Netconnections,
0.00%, 02/15/10 (f)		     366,692      0
          
Machinery, Construction & Mining (0.1%)
Manitowoc Co., Inc.,
10.50%, 08/01/12 (g)		     214,000      232,190
          
Manufacturing (0.3%)             
Goodman Global Holdings,
8.33%, 06/15/12 (e)		     50,000      50,125
Interface, Inc.,
7.30%, 04/01/08		     55,000      55,275
Interface, Inc.,
10.38%, 02/01/10		     60,000      65,625
Interface, Inc.,
9.50%, 02/01/14 (g)		     225,000      232,312
Koppers, Inc.,
9.88%, 10/15/13		     47,000      50,408
Levi Strauss & Co.,
9.74%, 04/01/12 (e) (g)		     190,000      193,325
Propex Fabrics, Inc.,
10.00%, 12/01/12		     215,000      196,725
          
             843,795
          
Medical (0.2%)             
Fresenius Medical Cap TR II,
7.88%, 02/01/08		     350,000      355,250
Tenet Healthcare Corp.,
9.88%, 07/01/14		     100,000      100,000
          
             455,250
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Multimedia (0.4%)             
News America, Inc.,
6.40%, 12/15/35 (c)		   $ 770,000    $ 712,177
Viacom, Inc.,
6.88%, 04/30/36 (c)		     380,000      366,723
          
             1,078,900
          
Oil & Gas (2.4%)             
Colorado Interstate Gas,
6.80%, 11/15/15 (c)		     150,000      144,577
Consolidated Natural Gas,
6.25%, 11/01/11		     330,000      333,227
Consumers Energy Co.,
4.80%, 02/17/09		     210,000      204,215
Cooper Industries, Inc.,
5.25%, 11/15/12 (c)		     205,000      198,240
El Paso Production Holdings,
7.75%, 06/01/13		     265,000      266,988
Empresa Nacional del Petroleo,
6.75%, 11/15/12		     180,000      185,220
Empresa Nacional del Petroleo,
6.75%, 11/15/12 (c)		     230,000      237,393
Entergy Gulf States,
6.02%, 12/08/08 (c) (e)		     270,000      270,232
Gazprom Capital,
8.63%, 04/28/34		     190,000      214,700
Hanover Equipment Trust, Series A,
8.50%, 09/01/08 (g)		     126,000      129,150
Hilcorp Energy,
10.50%, 09/01/10 (c)		     153,000      164,858
Hilcorp Energy,
7.75%, 11/01/15 (c) (g)		     125,000      119,375
Husky Oil Ltd.,
8.90%, 08/15/28		     525,000      552,036
Magnum Hunter Resources,
9.60%, 03/15/12		     29,000      30,668
National Gas Co.,
6.05%, 01/15/36 (c)		     220,000      202,518
Pemex Project Funding Master Trust,
6.63%, 04/04/10 (EUR)		     250,000      340,187
Pemex Project Funding Master Trust,
6.63%, 06/15/10 (c) (e)		     570,000      581,969
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Oil & Gas (continued)             
Pemex Project Funding Master Trust,
8.63%, 12/01/23 (c)		   $ 250,000    $ 273,500
Pemex Project Funding Master Trust,
9.50%, 09/15/27		     30,000      35,850
Pemex Project Funding Master Trust,
9.50%, 09/15/27		     110,000      131,450
Petro Shopping Centre,
9.00%, 02/15/12		     320,000      317,600
Petroleos Mexicanos,
9.50%, 09/15/27 (c)		     580,000      695,999
Pogo Producing Co.,
6.88%, 10/01/17 (g)		     210,000      194,513
Sempra Energy,
4.62%, 05/17/07		     155,000      153,490
          
             5,977,955
          
Packaging & Containers (0.6%)             
Graham Packaging Co.,
8.50%, 10/15/12 (g)		     155,000      151,900
Graphic Packaging International,
9.50%, 08/15/13 (g)		     165,000      163,350
Owens-Illinois, Inc.,
7.50%, 05/15/10 (g)		     650,000      635,375
Sealed Air Corp.,
5.63%, 07/15/13 (c)		     520,000      495,472
          
             1,446,097
          
Paper & Forest Products (0.9%)             
Abitibi-Consolidated, Inc.,
8.85%, 08/01/30		     315,000      266,175
Bowater, Inc.,
7.95%, 11/15/11		     920,000      874,000
P.H. Glatfelter,
7.13%, 05/01/16 (c) (g)		     65,000      64,163
Pindo Deli Finance BV,
4.68%, 04/28/15 (c) (e)		     171,871      128,903
Pindo Deli Finance BV,
4.68%, 04/28/18 (c) (e)		     446,898      245,794
Pindo Deli Finance BV,
7.80%, 04/28/27 (c)		     901,231      180,246
Tjiwi Kimia Finance BV,
4.68%, 04/28/15 (e)		     238,358      181,152

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Paper & Forest Products (continued)       
Tjiwi Kimia International BV,
5.66%, 04/28/15 (c) (e)		   $ 220,290    $ 167,420
Tjiwi Kimia International BV,
4.68%, 04/28/18 (c) (e)		     183,062      106,176
Tjiwi Kimia International BV,
7.88%, 04/28/27 (c)		     473,111      94,622
          
             2,308,651
          
Pipelines (0.7%)             
Consolidated Natural Gas,
5.00%, 12/01/14		     230,000      211,568
Kinder Morgan Energy Partners, L.P.,
5.13%, 11/15/14		     90,000      82,163
Kinder Morgan Finance,
5.70%, 01/05/16		     635,000      551,353
Pacific Energy Partners,
7.13%, 06/15/14		     150,000      151,500
Panhandle Eastern Pipelines Series B,
2.75%, 03/15/07		     85,000      83,189
Plains All American Pipeline,
6.70%, 05/15/36 (c)		     230,000      224,183
Texas Eastern Transmission,
7.00%, 07/15/32		     130,000      138,957
The Williams Cos., Inc.,
7.88%, 09/01/21 (g)		     255,000      258,825
          
             1,701,738
          
Printing & Publishing (0.3%)             
Dex Media West/Finance
Series B,
9.88%, 08/15/13		     75,000      81,281
Houghton Mifflin Co.,
8.25%, 02/01/11		     80,000      81,000
Houghton Mifflin Co.,
9.88%, 02/01/13		     130,000      134,875
Quebecor World Capital Corp.,
8.75%, 03/15/16 (c) (g)		     495,000      451,687
          
             748,843
          
Real Estate (0.3%)             
Brascan Corp.,
7.13%, 06/15/12 (g)		     250,000      263,374
World Financial,
6.91%, 09/01/13 (c)		     537,783      554,729
          
             818,103
          
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Real Estate Investment Trusts (1.2%)       
American Home Mortgage Assets,
5.31%, 05/25/46		   $ 1,746,799    $ 1,745,920
Luminent Mortgage Trust,
5.32%, 04/25/36 (e)		     1,188,193      1,191,101
          
             2,937,021
          
Research & Testing Services (0.0%)       
Geophysique,
7.50%, 05/15/15		     40,000      39,100
          
Retail (0.8%)       
Bon-Ton Department Stores, Inc.,
10.25%, 03/15/14 (c) (g)		     470,000      435,925
Delhaize America, Inc.,
8.13%, 04/15/11		     215,000      226,112
Jean Coutu Group PJC, Inc.,
7.63%, 08/01/12		     370,000      358,900
Limited Brands,
6.95%, 03/01/33		     150,000      143,009
Linens ‘N Things, Inc.,
10.70%, 01/15/14 (c) (e) (g)		     560,000      530,600
Rite Aid Corp.,
8.13%, 05/01/10		     55,000      55,275
Yum! Brands, Inc.,
8.88%, 04/15/11		     165,000      183,767
          
             1,933,588
          
Special Purpose Entity (1.1%)       
Aries Vermogenswaltung,
9.60%, 10/25/14		     500,000      623,850
Innophos Investments,
13.17%, 02/15/15 (e)		     288,300      288,660
Innophos, Inc.,
8.88%, 08/15/14		     1,270,000      1,250,950
K&F Acquisition, Inc.,
7.75%, 11/15/14 (g)		     370,000      364,450
Medcath Holdings Corp.,
9.88%, 07/15/12 (g)		     105,000      108,413
          
             2,636,323
          
Telecommunications (1.7%)       
American Tower Corp.,
7.50%, 05/01/12		     275,000      277,750
American Tower Corp.,
7.13%, 10/15/12		     100,000      99,750

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Telecommunications (continued)       
AT&T Corp.,
6.00%, 11/21/06 (EUR)		   $ 100,000    $ 129,092
AT&T Corp.,
8.00%, 11/15/31 (e)		     295,000      338,689
Axtel SA,
11.00%, 12/15/13		     285,000      312,075
Corning, Inc.,
6.25%, 02/18/10 (EUR)		     60,000      80,955
Deutsche Telekom,
8.25%, 06/15/30		     40,000      46,182
Deutsche Telekom International Finance,
8.13%, 05/29/12 (EUR)		     160,000      240,800
France Telecom,
8.50%, 03/01/31		     115,000      138,377
France Telecom SA,
8.13%, 01/28/33 (EUR)		     90,000      150,046
Intelsat Bermuda Ltd.,
9.61%, 01/15/12 		    190,000      191,900
Nextlink Communications, Inc.,
0.00%, 06/01/09 (f)		     500,000      0
Nextlink Communications, Inc.,
0.00%, 06/01/09 (f)		     350,000      0
Nordic Tel Co. Hldgs,
8.88%, 05/01/16 (c)		     155,000      159,263
Nortel Networks Corp.,
4.25%, 09/01/08		     190,000      179,075
National Cable PLC,
8.75%, 04/15/14		     75,000      74,438
Qwest Communications International,
8.86%, 02/15/09 (e)		     225,000      229,219
Qwest Corp.,
5.63%, 11/15/08		     45,000      43,875
SBC Communications, Inc.,
6.15%, 09/15/34 (g)		     140,000      128,485
Sprint Capital Corp.,
8.38%, 03/15/12		     150,000      165,735
Sprint Capital Corp.,
8.75%, 03/15/32		     40,000      48,236
Telecom Italia Capital,
4.00%, 11/15/08		     110,000      105,522
Telecom Italia Capital,
4.00%, 01/15/10		     195,000      182,476
    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Telecommunications (continued)       
Ubiquitel Operating Co.,
9.88%, 03/01/11		   $ 220,000    $ 239,250
Verizon New England,
6.50%, 09/15/11		     10,000      10,003
Wind Acquisition Financial SA,
10.75%, 12/01/15 (c) (g)		     490,000      520,624
          
             4,091,817
          
Telephone Communications (0.1%)       
Telefonica Europe,
8.25%, 09/15/30		     135,000      152,476
          
Textiles (0.1%)       
Mohawk Industries, Inc., Series D,
7.20%, 04/15/12		     125,000      128,825
Tempur-Pedic, Inc.,
10.25%, 08/15/10		     71,000      74,905
          
             203,730
          
Tobacco (0.1%)       
Reynolds American, Inc.,
6.50%, 07/15/10 (c)		     200,000      193,500
          
Transportation Services (0.2%)       
CHC Helicopter Corp.,
7.38%, 05/01/14		     220,000      211,200
Norfolk Southern Corp.,
7.35%, 05/15/07		     115,000      116,517
Union Pacific Corp.,
6.79%, 11/09/07		     100,000      101,292
Union Pacific Corp.,
6.63%, 02/01/08		     180,000      182,358
          
             611,367
          
Utilities & Power Producers (1.2%)       
AES Corp.,
9.38%, 09/15/10		     53,000      56,710
AES Corp.,
7.75%, 03/01/14 (g)		     95,000      95,475
AES Corp.,
9.00%, 05/15/15 (c) (g)		     305,000      327,875
Arizona Public Service Co.,
5.80%, 06/30/14		     250,000      241,656
CC Funding Trust I,
6.90%, 02/16/07		     305,000      306,711

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
CORPORATE BONDS (continued)       
Utilities & Power Producers (continued)       
Cincinnati Gas & Electric Co.,
5.70%, 09/15/12		   $ 380,000    $ 372,431
Detroit Edison Co.,
6.13%, 10/01/10		     200,000      201,569
Entergy Gulf States,
3.60%, 06/01/08		     65,000      62,097
Entergy Gulf States,
5.63%, 12/01/09 (e)		     105,000      103,894
Foundation PA Coal Co.,
7.25%, 08/01/14 (g)		     50,000      48,750
Monongahela Power Co.,
5.00%, 10/01/06		     170,000      169,600
MSW Energy Holdings,
7.38%, 09/01/10		     185,000      185,000
MSW Energy Holdings,
8.50%, 09/01/10 (c)		     45,000      46,350
National Grid Transco, PLC,
5.00%, 07/02/18 (EUR)		     110,000      139,437
NiSource Finance Corp.,
5.76%, 11/23/09 (e)		     120,000      120,132
Pacific Gas & Electric,
6.05%, 03/01/34		     140,000      132,134
RWE Finance BV,
5.50%, 10/26/07 (EUR)		     9,000      11,788
TXU Corp.,
4.81%, 11/17/14		     300,000      286,308
Wisconsin Electric Power Co.,
3.50%, 12/01/07		     110,000      106,801
          
             3,014,718
          
Total Corporate Bonds            109,512,644
          
SOVEREIGN BONDS (16.1%)             
ARGENTINA (0.3%)             
Republic of Argentina,
5.83%, 12/31/33		     1,400,000      527,800
Republic of Argentina,
8.28%, 12/31/33		     47,709      42,415
Republic of Argentina,
2.15%, 04/10/49		     390,000      156,000
          
             726,215
          
BRAZIL (1.0%)             
Federal Republic of Brazil,
14.50%, 10/15/09		     520,000      646,880
Federal Republic of Brazil,
10.50%, 07/14/14		     180,000      216,720
    Principal
Amount		    Value
              
SOVEREIGN BONDS (continued)       
BRAZIL (continued)             
Federal Republic of Brazil,
8.00%, 01/15/18		   $ 136,000    $ 143,480
Federal Republic of Brazil,
8.88%, 10/14/19		     956,000      1,064,984
Federal Republic of Brazil,
8.88%, 04/15/24		     470,000      520,995
          
             2,593,059
          
BULGARIA (0.1%)             
Republic of Bulgaria,
8.25%, 01/15/15		     210,000      237,594
Republic of Bulgaria,
8.25%, 01/15/15 (c)		     99,000      111,573
          
             349,167
          
CANADA (0.3%)             
Canadian Government,
5.25%, 06/01/12		     700,000      650,335
          
COLUMBIA (0.3%)             
Republic of Columbia,
9.75%, 04/09/11		     129,528      139,890
Republic of Columbia,
8.25%, 12/22/14		     155,000      162,750
Republic of Columbia,
11.75%, 02/25/20		     150,000      197,250
Republic of Columbia,
8.13%, 05/21/24		     170,000      172,125
          
             672,015
          
ECUADOR (0.2%)             
Republic of Ecuador,
9.38%, 12/15/15		     100,000      98,500
Republic of Ecuador,
9.00%, 08/15/30		     290,000      278,400
          
             376,900
          
GERMANY (2.3%)             
Bundes Republic of Deutschland,
5.63%, 01/04/28		     3,820,000      5,761,437
          
ITALY (0.1%)             
Buoni Poliennali Del Tesson,
5.25%, 11/01/29		     120,000      166,326
          
IVORY COAST (0.0%)             
Ivory Coast,
11.72%, 03/29/18		     285,000      73,388
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
SOVEREIGN BONDS (continued)       
JAPAN (0.2%)             
Japanese Government,
0.80%, 03/20/13		   $ 50,000,000    $ 413,221
          
MALAYSIA (0.1%)             
Malaysia,
8.75%, 06/01/09		     290,000      311,784
Malaysia,
7.50%, 07/15/11		     40,000      42,574
          
             354,358
          
MEXICO (4.2%)             
Mexican Fixed Rate Bonds,
8.00%, 12/17/15		     6,360,000      5,899,535
Mexican Fixed Rate Bonds,
10.00%, 12/05/24		     27,760,000      2,559,617
United Mexican States,
8.38%, 01/14/11		     1,360,000      1,482,400
United Mexican States,
8.13%, 12/30/19		     260,000      293,800
United Mexican States,
11.50%, 05/15/26		     58,000      85,550
          
             10,320,902
          
NIGERIA (0.2%)             
Central Bank Of Nigeria,
6.25%, 11/15/20		     500,000      493,750
          
PANAMA (0.2%)             
Republic of Panama,
9.63%, 02/08/11		     90,000      99,900
Republic of Panama,
7.13%, 01/29/26		     220,000      212,300
Republic of Panama,
9.38%, 04/01/29		     140,000      165,200
          
             477,400
          
PERU (0.3%)             
Republic of Peru,
9.88%, 02/06/15		     145,000      169,650
Republic of Peru,
8.38%, 05/03/16		     120,000      129,600
Republic of Peru,
8.75%, 11/21/33		     390,000      433,875
          
             733,125
          
PHILIPPINES (1.3%)             
Republic of Philippines,
9.00%, 02/15/13		     270,000      290,588
    Principal
Amount		    Value
              
SOVEREIGN BONDS (continued)       
PHILIPPINES (continued)             
Republic of Philippines,
8.88%, 03/17/15		   $ 1,060,000    $ 1,147,450
Republic of Philippines,
10.63%, 03/16/25		     270,000      333,450
Republic of Philippines,
9.50%, 02/02/30		     1,170,000      1,339,650
          
             3,111,138
          
QATAR (0.1%)             
State of Qatar,
9.75%, 06/15/30		     170,000      237,320
          
RUSSIA (1.2%)             
Russian Federation,
8.25%, 03/31/10		     391,114      406,211
Russian Federation,
11.00%, 07/24/18		     616,000      849,156
Russian Federation,
12.75%, 06/24/28		     960,000      1,621,152
Russian Federation,
5.00%, 03/31/30		     948      1,009
          
             2,877,528
          
SOUTH AFRICA (0.1%)             
Republic of South Africa,
13.50%, 09/15/15		     1,035,000      188,435
          
SPAIN (1.4%)             
Bonos Y Oblig Del Estado,
5.15%, 07/30/09		     2,250,000      2,994,852
Bonos Y Oblig Del Estado,
6.15%, 01/31/13		     330,000      475,046
          
             3,469,898
          
SWEDEN (0.3%)             
Swedish Government, 5.00%, 01/28/09     4,500,000      648,076
          
TUNISIA (0.0%)             
Banque Cent De Tunisie, 7.38%, 04/25/12     110,000      114,400
          
TURKEY (0.3%)             
Republic of Turkey, 11.50%, 01/23/12     300,000      342,750
Republic of Turkey, 11.00%, 01/14/13     340,000      387,600
          
             730,350
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
SOVEREIGN BONDS (continued)       
UNITED KINGDOM (0.9%)             
United Kingdom Treasury, 7.25%, 12/07/07   $ 1,200,000    $ 2,294,251
          
VENEZUELA (0.7%)             
Republic of Venezuela, 10.75%, 09/19/13     640,000      763,520
Republic of Venezuela, 8.50%, 10/08/14     270,000      285,525
Republic of Venezuela, 5.75%, 02/26/16     90,000      79,650
Republic of Venezuela, 9.38%, 01/13/34     512,000      600,320
          
             1,729,015
          
Total Sovereign Bonds            39,562,009
          
MORTGAGE BACKED OBLIGATIONS (11.9%)
Federal Home Loan Mortgage Corporation (0.5%)
Gold, Pool # C00712, 6.50%, 02/01/29     37,070      37,471
Gold, Pool # C01104, 8.00%, 12/01/30     43,227      45,597
Gold, Pool # C01132, 8.00%, 01/01/31     39,234      41,385
Gold, Pool # C01150, 8.00%, 02/01/31     37,825      39,900
Gold, Pool # C29808, 8.00%, 08/01/29     24,693      26,071
Gold, Pool # C37329, 8.00%, 03/01/30     3,273      3,453
Gold, Pool # C39060, 8.00%, 06/01/30     1,812      1,912
Gold, Pool # C41333, 7.50%, 08/01/30     23,330      24,152
Gold, Pool # C41531, 8.00%, 08/01/30     15,205      16,039
Gold, Pool # C42327, 8.00%, 09/01/30     2,520      2,658
Gold, Pool # C44964, 7.50%, 11/01/30     60,855      62,999
Gold, Pool # C46763, 8.00%, 01/01/31     4,663      4,923
Gold, Pool # C46946, 8.00%, 01/01/31     12,464      13,147
Gold, Pool # C48997, 8.00%, 03/01/31     90,518      95,482
    Principal
Amount		    Value
              
MORTGAGE BACKED OBLIGATIONS (continued)
Federal Home Loan Mortgage Corporation (continued)
Gold, Pool # C49587, 8.00%, 03/01/31   $ 31,220    $ 32,918
Gold, Pool # C50477, 8.00%, 04/01/31     35,112      37,021
Gold, Pool # C53381, 8.00%, 06/01/31     5,300      5,591
Gold, Pool # C53597, 8.00%, 06/01/31     153,889      162,256
Gold, Pool # C53657, 8.00%, 06/01/31     14,841      15,648
Gold, Pool # C60019, 7.50%, 11/01/31     10,498      10,866
Gold, Pool # C67851, 7.50%, 06/01/32     204,622      211,747
Gold, Pool # C69951, 6.50%, 08/01/32     59,995      60,559
Gold, Pool # C90381, 7.50%, 11/01/20     1,630      1,692
Pool # 170271, 12.00%, 08/01/15     291,865      316,209
          
             1,269,696
          
Federal National Mortgage Association (10.9%)
Pool # 251752,
6.50%, 06/01/28		     146,618      148,122
Pool # 252009,
6.50%, 07/01/28		     344,237      347,768
Pool # 253113,
7.50%, 03/01/30		     23,736      24,618
Pool # 253673,
7.50%, 03/01/31		     36,514      37,829
Pool # 253674,
8.00%, 03/01/31		     2,914      3,075
Pool # 254695,
6.50%, 04/01/33		     377,005      379,837
Pool # 256317,
7.00%, 06/01/36		     4,025,402      4,118,155
Pool # 323591,
6.50%, 03/01/29		     246,297      248,823
Pool # 346286,
6.50%, 05/01/26		     90,550      91,488
Pool # 370191,
6.50%, 01/01/27		     6,111      6,174
Pool # 415967,
6.50%, 10/01/28		     131,317      132,664

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
MORTGAGE BACKED OBLIGATIONS (continued)
Federal National Mortgage Association (continued)
Pool # 457953,
6.50%, 01/01/29		   $ 116,620    $ 117,817
Pool # 482616,
6.50%, 02/01/29		     215,005      217,194
Pool # 50946,
6.50%, 12/01/23		     28,875      29,135
Pool # 511954,
7.50%, 10/01/29		     8,454      8,765
Pool # 517874,
7.50%, 02/01/30		     43,048      44,599
Pool # 519145,
7.50%, 10/01/29		     25,284      26,214
Pool # 523284,
7.50%, 11/01/29		     3,990      4,136
Pool # 527589,
7.50%, 01/01/30		     10,246      10,623
Pool # 535399,
8.00%, 07/01/30		     36,930      38,974
Pool # 535533,
8.00%, 10/01/30		     134,137      141,563
Pool # 540017,
8.00%, 05/01/30		     6,103      6,441
Pool # 540091,
7.50%, 06/01/30		     21,766      22,551
Pool # 545239,
8.00%, 09/01/31		     51,406      54,252
Pool # 545551,
8.00%, 04/01/32		     32,765      34,579
Pool # 545604,
8.00%, 09/01/31		     19,896      21,022
Pool # 545759,
6.50%, 07/01/32		     223,872      225,848
Pool # 555533,
6.50%, 04/01/33		     108,392      109,381
Pool # 563324,
7.00%, 12/01/30		     80,453      82,307
Pool # 564363,
8.00%, 01/01/31		     3,040      3,208
Pool # 564993,
7.50%, 03/01/31		     30,447      31,544
Pool # 576112,
7.00%, 05/01/31		     4,612      4,725
Pool # 577304,
7.50%, 04/01/31		     8,255      8,538
    Principal
Amount		    Value
              
MORTGAGE BACKED OBLIGATIONS (continued)
Federal National Mortgage Association (continued)
Pool # 577407,
7.50%, 07/01/31		   $ 56,177    $ 58,106
Pool # 606566,
7.50%, 10/01/31		     39,138      40,482
Pool # 613017,
8.00%, 03/01/31		     3,740      3,951
Pool # 630601,
7.00%, 05/01/32		     261,627      268,024
Pool # 642656,
7.00%, 07/01/32		     69,800      71,506
Pool # 666097,
7.00%, 10/01/32		     97,178      99,554
Pool # 741875,
6.50%, 09/01/33		     38,062      38,348
Pool # 745114,
7.00%, 12/01/35		     1,051,160      1,075,380
Pool # 826194,
7.00%, 07/01/35		     25,265      25,847
Pool #826810,
7.00%, 08/01/35		     728,151      745,019
Pool # 836067,
7.00%, 09/01/35		     877,852      898,080
Pool # 836295,
7.00%, 10/01/35		     776,787      794,686
Pool # 837999,
7.00%, 09/01/35		     537,004      549,377
Pool # 843922,
7.00%, 11/01/35		     1,620,273      1,657,608
Pool # 844517,
7.00%, 12/01/35		     7,317,729      7,486,345
Pool # 849245,
7.00%, 01/01/36		     500,001      511,583
Pool # 865286,
7.00%, 02/01/36		     2,999,998      3,069,123
Pool # 865190,
7.00%, 02/01/36		     196,849      201,409
Pool # 868995,
6.16%, 05/01/36		     2,374,047      2,453,429
          
             26,829,826
          
Government National Mortgage Association (0.5%)
Pool # 780141, 10.00%, 12/15/20     201,253      219,379
Pool # 780349, 10.00%, 09/15/21     245,262      267,359

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
MORTGAGE BACKED OBLIGATIONS (continued)
Government National Mortgage Association (continued)
Pool # 780378, 11.00%, 01/15/19   $ 228,642    $ 249,181
Pool # 780699,
9.50%, 12/15/17		     219,314      237,537
Pool # 780709, 11.00%, 01/15/21     273,518      297,492
          
             1,270,948
          
Total Mortgage Backed Obligations      29,370,470
          
INTEREST ONLY BONDS (5.3%)       
Asset Backed Securities (4.8%)       
Countrywide Alternative Loan Trust,
5.65%, 11/20/35		     1,060,432      1,063,961
Countrywide Alternative Loan Trust,
0.97%, 12/20/35 (c)		     11,765,833      305,665
Countrywide Alternative Loan Trust,
1.33%, 12/20/35 (c)		     10,399,104      522,014
Countrywide Alternative Loan Trust,
5.59%, 02/25/36 (e)		     1,786,225      1,809,036
Countrywide Alternative Loan Trust,
5.35%, 05/25/45 (e)		     1,108,706      1,110,591
Countrywide Alternative Loan Trust,
5.28%, 07/25/46 (e)		     1,750,000      1,750,000
Countrywide Alternative Loan Trust,
1.04%, 03/25/46		     7,797,003      379,465
Greenpoint Mortgage Funding Trust,
1.21%, 08/25/45 (e)		     5,491,884      168,189
Greenpoint Mortgage Funding Trust,
1.95%, 10/25/45 (e)		     4,619,314      107,543
Greenpoint Mortgage Funding Trust,
1.80%, 12/31/49 (e)		     7,210,305      223,069
Harborview Mortgage Loan Trust,
0.80%, 06/19/35 (e)		     7,962,695      175,428
    Principal
Amount		    Value
              
INTEREST ONLY BONDS (continued)       
Asset Backed Securities (continued)       
Harborview Mortgage Loan Trust,
0.77%, 11/19/34 (e)		   $ 14,022,735    $ 254,162
Harborview Mortgage Loan Trust,
1.09%, 05/19/35 (e)		     12,026,934      291,277
Harborview Mortgage Loan Trust,
1.42%, 03/19/37 (e)		     7,293,725      357,848
Harborview Mortgage Loan Trust,
5.37%, 07/20/46 (e)		     1,300,000      1,300,000
Harborview Mortgage Loan Trust,
1.73%, 07/25/46 (e)		     41      21
Harborview Mortgage Loan Trust,
2.19%, 08/25/46 (e)		     8,050,000      347,156
Indymac Indx Mortgage Loan Trust,
0.64%, 07/25/35 (e)		     6,444,070      199,363
Zuni Mortgage Loan Trust, 5.41%, 07/25/36 (e)     1,400,000      1,400,000
          
             11,764,788
          
Federal Home Loan Mortgage Corporation (0.2%)
IOETTE, Series 1103, Class N, 1156.50%, 06/15/21 (e)     15      29
1.88%, 06/17/27 (e)     1,839,636      50,439
6.00%, 04/15/32 (e)     1,220,110      230,988
7.00%, 07/15/33 (e)     525,754      131,622
          
             413,078
          
Federal National Mortgage Association (0.3%)
6.00%, 08/25/32 (e)     394,296      66,817
6.00%, 05/25/33 (e)     485,355      125,277
6.50%, 05/25/33 (e)     451,865      113,586
6.50%, 05/25/33 (e)     1,109,089      280,310
6.00%, 06/25/33 (e)     507,942      121,852
6.50%, 06/25/33 (e)     450,974      114,569
          
             822,411
          
Total Interest Only Bonds            13,000,277
          

 

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Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Principal
Amount		    Value
              
U.S. GOVERNMENT AGENCIES (2.9%)
Federal Home Loan Mortgage Corporation (1.0%)
TBA, 5.50%, 08/01/19 (d)   $ 2,550,000    $ 2,498,204
          
Federal National Mortgage Association (1.9%)
TBA, 7.00%, 08/16/29 (d)     3,200,000      3,270,000
TBA, 6.00%, 07/25/36 (d)     1,450,000      1,498,938
          
             4,768,938
          
Total U.S. Government Agencies      7,267,142
          
WARRANTS (0.1%)             
Banking (0.0%)             
Central Bank of Nigeria, 0.00%, 11/15/20 (b) (f)     500      0
          
Foreign Government (0.1%)             
Republic of Argentina, 5.83%, 12/15/35 (b)     4,154,313      106,973
Republic of Argentina, 8.28%, 12/15/35 (b)     130,001      11,461
Republic of Venezuela, 0.00%, 04/15/20 (b) (f)     1,250      0
United Mexican States, 0.00%, 09/01/06 (b)     250      15,000
          
             133,434
          
Telecommunications (0.0%)             
XO Holdings, Inc. (b)     248      1,091
XO Holdings, Inc., Series A (b)     497      427
XO Holdings, Inc., Series B (b)     373      179
XO Holdings, Inc., Series C (b)     373      131
          
             1,828
          
Total Warrants            135,262
          
CASH EQUIVALENTS (24.2%)             
Cash Sweeps (0.8%)             
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $1,823,424)     1,822,649      1,822,649
          
Brazil (0.1%)             
Citigroup, Inc., 1.87%, 05/18/09     250,000      237,017
          
    Principal
Amount		    Value  
                
CASH EQUIVALENTS (continued)         
Fannie Mae Discount Note (1.6%)         
1.84% 7/24/06   $ 4,000,000    $ 3,987,984  
          
Federal Home Loan Bank—Discount Note (1.6%)  
1.71%, 07/05/06 (g)     4,000,000      3,998,856  
          
Federal National Mortgage Association Discount Notes (2.0%)   
5.01%, 07/12/06     5,000,000      4,991,966  
          
Turkey (0.2%)  
Citigroup, Inc., 1.35%, 06/28/07     710,000      576,747  
          
U.S. Treasury Bill (0.3%)  
3.22%, 07/13/06     700,000      699,187  
          
U.S. Treasury Bonds (0.6%)  
6.38%, 08/15/27     1,300,000      1,475,601  
          
U.S. Treasury Notes (17.0%)  
3.50%, 11/15/06 (g)     15,200,000      15,103,222  
3.13%, 05/15/07 (g)     5,000,000      4,908,205  
5.75%, 08/15/10 (g)     1,000,000      1,024,570  
3.88%, 02/15/13     2,360,000      2,196,827  
8.13%, 08/15/19     3,625,000      4,589,308  
7.63%, 02/15/25 (g)     1,000,000      1,270,000  
6.13%, 08/15/29 (g)     11,475,000      12,758,766  
          
             41,850,898  
          
Total Cash Equivalents            59,640,905  
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (11.5%)   
Pool of short-term securities for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)     28,234,936      28,234,936  
          
Total Short-Term Securities Held as Collateral for Securities on Loan      28,234,936  
          
Total Investments
(Cost $284,540,539) (a) — 116.4%		      286,723,645  
Liabilities in excess of
other assets — (16.4%)		      (40,351,547 )
          
NET ASSETS — 100.0%          $ 246,372,098  
          

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

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VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

(b) Denotes a non-income producing security.

 

(c) Represents a restricted security acquired and eligible for resale under Rule 144A, which limits the resale to certain qualified buyers. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees.

 

(d) Mortgage Dollar Rolls

 

(e) Variable Rate security. The rate reflected in the Statement of Investments is the rate reflected in effect on June 30, 2006. The maturity date represents the actual maturity date.

 

(f) Security in default.

 

(g) All or part of the security was on loan as of June 30, 2006.

 

(BRL) Principal amount denominated in Brazilian Real.

 

(EUR) Principal amount denominated in Euro.

 

(JPY) Principal amount denominated in Japanese Yen.

 

TBA To Be Announced

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract Value      Market
Value		      Unrealized
Appreciation/
(Depreciation)		  
Short Contract:                                    

Euro

      09/27/06      $ (6,563,985 )    $ (6,698,147 )    $ (134,162 )

Japanese Yen

      08/07/06        (1,011,634 )      (966,951 )      44,683  

Swedish Krone

      09/21/06        (408,831 )      (420,001 )      (11,170 )

United States Dollar

      08/07/06        (20,972,499 )      (20,972,499 )      0  
Total Short Contracts             $ (28,956,949 )    $ (29,057,598 )    $ (100,649 )
Long Contracts:                                    

Japanese Yen

      08/07/06      $ 20,972,499      $ 20,349,919      $ (622,580 )

United States Dollar

      08/07/06        1,011,634        1,011,634        0  

United States Dollar

      09/21/06        408,831        408,831        0  

United States Dollar

      09/27/06        6,563,985        6,563,985        0  
Total Long Contracts             $ 28,956,949      $ 28,334,369      $ (622,580 )

 

At June 30, 2006, the Fund’s open futures contracts were as follows:

 

Number of
Contracts		      Long Contracts      Expiration      Market Value
Covered by
Securities		      Unrealized
Appreciation
(Depreciation)		  

564

      U.S.10 yr. Note Future      09/20/06      $ 59,140,688      $ (245,570 )

2

      Japanese Gov’t Bond      09/08/06        263,300,000        812,400  
                     $ 322,440,688      $ 566,830  
Number of
Contracts		      Short Contracts      Expiration      Market Value
Covered by
Securities		      Unrealized
Appreciation
(Depreciation)		  

32

      U.S. 5 yr. Note Future      09/29/06      $ (3,309,000 )    $ 11,881  

100

      U.S. 2 yr. Note Future      09/29/06        (20,278,125 )      19,548  

25

      U.S. Long Bond      09/20/06        (2,666,406 )      2,681  

12

      Euro Bond Future      09/07/06        (1,383,840 )      5,727  
                     $ (27,637,371 )    $ 39,837  

 

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VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

The following is a summary of option activity for the period ended June 30, 2006, by the Fund (amount in thousands):

 

Covered Call Options      Shares Subject
To Contract		      Premiums  

Balance at beginning of period

      0      $ 0  

Options written

      (813 )      (9 )

Options closed

      262        92  

Options expired

      813        9  

Options exercised

      0        0  

Options outstanding at end of period

      262      $ 92  

 

At June 30, 2006, the Fund had the following outstanding options:

 

Written Option Contracts

 

Contracts    Type    Expiration
Date		    Exercise
Price		    Number Of
Contracts		    Value    Unrealized
Appreciation
(Depreciation)		  

Brazilian Real Option

    Put    September 2006    2.287    261,740    $ 5,986    $ (2,782 )

Euro Option

    Put    June 2007    94.25    333      141,525      58,234  
Net Unrealized Appreciation On Written Option Contracts           $ 55,452  

 

See notes to financial statements.

 

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VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $282,717,890)

    $ 284,900,996  

Repurchase agreements, at cost and value

      1,822,649  
    

Total Investments

      286,723,645  
    

Cash collateral pledged for futures

      310,866  

Put options written, at fair value (premiums received $92,059)

      147,511  

Interest and dividends receivable

      2,828,580  

Receivable for capital shares issued

      321  

Receivable for investments sold

      14,472,600  

Receivable for variation margin on futures contracts

      329,815  

Reclaims receivable

      13,920  

Prepaid expenses and other assets

      3,356  
    

Total Assets

      304,830,614  
    

Liabilities:

         

Payable to custodian

      4,852,247  

Securities sold short, at value
(proceeds $11,089,875)

      11,097,510  

Payable to foreign currencies, at value
(cost $458,407)

      461,243  

Payable for investments purchased

      12,756,710  

Payable for capital shares redeemed

      119,478  

Unrealized depreciation on forward foreign currency contracts

      723,229  

Payable for return of collateral received for securities on loan

      28,234,936  

Accrued expenses and other payables:

         

Investment advisory fees

      150,705  

Fund administration and transfer agent fees

      28,967  

Administrative servicing fees

      19,576  

Other

      13,915  
    

Total Liabilities

      58,458,516  
    

Net Assets

    $ 246,372,098  
    

Represented by:

         

Capital

    $ 243,848,041  

Accumulated net investment income (loss)

      1,847,224  

Accumulated net realized gain (losses) from investment, futures, options and foreign currency transactions

      (741,792 )

Net unrealized appreciation (depreciation) on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

      1,418,625  
    

Net Assets

    $ 246,372,098  
    

Net Assets:

         

Class I Shares

    $ 246,372,098  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      25,656,517  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 9.60  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 6,376,280  

Income from securities lending

      68,015  
    

Total Income

      6,444,295  
    

Expenses:

         

Investment advisory fees

      927,426  

Fund administration and transfer agent fees

      117,803  

Administrative servicing fees Class I Shares

      190,103  

Trustee fees

      4,413  

Other

      35,818  
    

Total expenses before earnings credit

      1,275,563  

Earnings credit (note 5)

      (5,410 )
    

Total Expenses

      1,270,153  
    

Net Investment Income (Loss)

      5,174,142  
    

REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (196,466 )

Net realized gains (losses) on futures

      (696,761 )

Net realized gains (losses) on options

      32,167  

Net realized gains (losses) on foreign currency transactions

      330,094  
    

Net realized gains (losses) on investment, futures, options and foreign currency transactions

      (530,966 )

Net change in unrealized appreciation/depreciation on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

      (4,846,869 )
    

Net realized/unrealized gains (losses) on investments, futures, options and foreign currencies

      (5,377,835 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (203,693 )
    

 

See notes to financial statements.

 

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VAN KAMPEN GVIT MULTI SECTOR BOND FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 5,174,142      $ 10,812,990  

Net realized gains (losses) on investment, futures, options and foreign currency transactions

        (530,966 )      1,758,010  

Net change in unrealized appreciation/depreciation on investments, futures, options and translation of assets and liabilities denominated in foreign currencies

        (4,846,869 )      (7,058,219 )
      
  

Change in net assets resulting from operations

        (203,693 )      5,512,781  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (3,659,159 )      (9,925,208 )

Net realized gains on investments

        (554,113 )      (1,403,948 )
      
  

Change in net assets from shareholder distributions

        (4,213,272 )      (11,329,156 )
      
  

Change in net assets from capital transactions

        (8,169,333 )      26,272,319  
      
  

Change in net assets

        (12,586,298 )      20,455,944  

Net Assets:

                    

Beginning of period

        258,958,396        238,502,452  
      
  

End of period

      $ 246,372,098      $ 258,958,396  
      
  

Accumulated net investment income (loss)

      $ 1,847,224      $ 332,241  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Capital Transactions:

                    

Proceeds from shares issued

      $ 15,472,109      $ 50,005,573  

Dividends reinvested

        4,213,223        11,329,161  

Cost of shares redeemed

        (27,854,665 )      (35,062,415 )
      
  
       $ (8,169,333 )    $ 26,272,319  
      
  

SHARE TRANSACTIONS:

                    

Class I Share Transactions:

                    

Issued

        1,588,178        5,033,371  

Reinvested

        437,944        1,155,803  

Redeemed

        (2,857,179 )      (3,545,087 )
      
  
         (831,057 )      2,644,087  
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Van Kampen GVIT Multi Sector Bond Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover

Class I Shares

                                                                                      

Year Ended December 31, 2001(b)

   $ 9.28   0.54   (0.16 )   0.38     (0.52 )   —     (0.52 )   $ 9.14   4.19%     $ 177,324   0.90%     5.99%     1.04%     5.85%     340.77%

Year Ended December 31, 2002

   $ 9.14   0.42   0.22     0.64     (0.50 )   —     (0.50 )   $ 9.28   7.21%     $ 209,280   1.01%     4.61%     1.02%     4.60%     385.94%

Year Ended December 31, 2003

   $ 9.28   0.36   0.74     1.10     (0.52 )   —     (0.52 )   $ 9.86   12.12%     $ 226,525   1.01%     3.75%     (c )   (c )   296.62%

Year Ended December 31, 2004

   $ 9.86   0.42   0.21     0.63     (0.49 )   —     (0.49 )   $ 10.00   6.53%     $ 238,502   1.01%     4.23%     (c )   (c )   212.84%

Year Ended December 31, 2005

   $ 10.00   0.42   (0.20 )   0.22     (0.39 )   (0.05 )   (0.44 )   $ 9.78   2.18%     $ 258,958   1.03%     4.26%     (c )   (c )   157.82%

Six Months Ended June 30, 2006 (Unaudited)

   $ 9.78   0.20   (0.22 )   (0.02 )   (0.14 )   (0.02 )   (0.16 )   $ 9.60   (0.05% )(d)   $ 246,372   1.02% (e)   4.12% (e)   (c )   (c )   60.54%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(c) There were no fee reductions during the period.

 

(d) Not annualized.

 

(e) Annualized.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Van Kampen GVIT Multi Sector Bond Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee,

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the

 

23

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Such compensation is amortized over the life of the dollar roll and included in investment income on the Statement of Operations. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 1,500,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      2,986,386    5.29%    07/21/06
Master Note — Floating    CDC Financial Product Inc.      5,000,000    5.41%    07/03/06
Medium Term Note — Floating    Beta Finance Inc.      300,000    5.37%    07/03/06
Medium Term Note — Floating    Macquarie Bank Ltd.      4,999,541    5.30%    07/21/06
Medium Term Note — Floating    Tango Finance Corp.      1,999,414    5.39%    07/03/06
Repurchase Agreement    Bank of America Securities LLC      11,449,594    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

        $ 27,461,085

    $ 28,234,936

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
     

Unrealized

Appreciation

      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
       $ 284,647,235      $ 6,314,200      $ (4,237,790 )      $ 2,076,410

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GMF advises. Morgan Stanley Investment Management, Inc. (the “subadviser”), manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

    Fee Schedule      Total
Fees		      Fees
Retained		      Paid to
Sub-adviser
   

Up to $200 million

      0.75%      0.45%      0.30%
    $200 million or more      0.70%      0.45%      0.25%

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $188,028 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $142,512,687 and sales of $141,409,022.

 

For the six months ended June 30, 2006, the Fund had purchases of $144,680,768 and sales of $105,529,293 of U.S. Government securities, which are included in the total purchases and sales in the sentence above.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreements) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed the Fund’s composite benchmark (60% Citigroup U.S. Broad Investment-Grade Bond Index, 15% Citigroup U.S. High Yield Market Index, 15% Citigroup World Government Bond Index: Unhedged, and 10% JPMorgan Emerging Markets Bond Index) for the one- and three-year periods while underperforming the benchmark for the five year period end September 30, 2005. During each of these same periods, the Fund ranked in the third quartile of the Lipper General Bond Funds category. The Board discussed with management the Fund’s third quartile performance and noted the changes that had recently been made to the Fund that are intended to improve performance. The Board also considered management’s explanation that this Fund is intended to provide less risk and volatility than similar funds and consequently may underperform those funds.

 

Next, the Board considered the Fund’s contractual advisory fees and breakpoints which placed the Fund in the fifth quintile of its Lipper-constructed Expense Group, but within the range of contractual advisory fees of other funds in the Lipper Expense Group. The Board considered the Fund’s total expenses which placed the Fund in the fourth quintile of the Lipper Expense Group. The Board also considered, however, that the Fund’s total expenses are only four basis points above the median of the Lipper Expense Group. Finally, the Board reviewed the adviser’s profitability information and concluded that it is not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

29

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

30

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.  

N/A

  

N/A

 

32

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		  

Position(s)

Held with the
Trust

and Length of
Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

  

Other

Directorships

Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.  

N/A

  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.  

N/A

  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

33

Table of Contents

 

GVIT Small Cap Value Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
16    Statement of Assets and Liabilities
16    Statement of Operations
17    Statements of Changes in Net Assets
19    Financial Highlights
20    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GSCV (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT Small Cap Value Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
GVIT Small Cap Value                                       

Class I

      Actual    $ 1,000.00      $ 1,077.20      $ 5.87      1.14%
       Hypothetical1    $ 1,000.00      $ 1,019.15      $ 5.72      1.14%

Class II

      Actual    $ 1,000.00      $ 1,075.80      $ 7.10      1.38%
       Hypothetical1    $ 1,000.00      $ 1,017.96      $ 6.93      1.38%

Class III

      Actual    $ 1,000.00      $ 1,077.30      $ 5.72      1.11%
       Hypothetical1    $ 1,000.00      $ 1,019.30      $ 5.57      1.11%

Class IV

      Actual    $ 1,000.00      $ 1,077.40      $ 5.72      1.11%
       Hypothetical1    $ 1,000.00      $ 1,019.30      $ 5.57      1.11%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT Small Cap Value Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stock      96.2%
Treasury Notes      0.1%
Cash Equivalents      2.2%
Warrants      0.0%
Other assets in excess of liabilities      1.5%
      
       100.0%
      

 

 

Top Holdings*       
Todco, Class A      0.9%
Texas Regional Bancshares, Inc.      0.9%
Powerwave Technologies, Inc.      0.8%
Infocrossing, Inc.      0.8%
OMI Corp.      0.7%
Oregon Steel Mills, Inc.      0.7%
Washington Group Int’l, Inc.      0.7%
Ventas, Inc.      0.7%
Sybase, Inc.      0.7%
Cincinnati Bell, Inc.      0.7%
Endo Pharmaceuticals Holdings, Inc.      0.7%
Other Assets      91.7%
      
       100.0%
      
Top Industries       
Banks      9.6%
Real Estate Investment Trusts      9.0%
Oil & Gas      6.8%
Computer Software & Services      5.6%
Utilities      3.8%
Metals      3.7%
Aerospace & Defense      3.6%
Machinery      3.4%
Building      3.0%
Retail      2.8%
Other Assets      48.7%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (96.2%)           
Advanced Materials & Products (0.2%)       
Ceradyne, Inc. (b)   28,100    $ 1,390,669
        
Aerospace & Defense (3.6%)           
AAR Corp. (b)   60,000      1,333,800
Alliant Techsystems, Inc. (b)   49,150      3,752,603
Curtiss-Wright Corp.   27,600      852,288
DRS Technologies, Inc.   81,850      3,990,188
EDO Corp.   169,220      4,118,814
Esterline Technologies Corp. (b)   17,200      715,348
HEICO Corp.   7,000      198,450
Hexcel Corp. (b)   81,600      1,281,936
K&F Industries Holdings, Inc. (b)   189,480      3,359,480
Kaman Corp., Class A   82,600      1,503,320
Moog, Inc., Class A (b)   118,375      4,050,793
Orbital Sciences Corp. (b)   18,700      301,818
Triumph Group, Inc. (b)   8,800      422,400
        
           25,881,238
        
Agriculture (0.2%)           
Andersons, Inc. (The)   37,800      1,572,858
Delta & Pine Land Co.   500      14,700
        
           1,587,558
        
Airlines (0.8%)           
Alaska Air Group, Inc. (b)   37,700      1,486,134
Continental Airlines, Inc., Class B (b)   47,900      1,427,420
Enpro Industries, Inc. (b)   14,600      490,560
ExpressJet Holdings, Inc. (b)   61,400      424,274
Mesa Air Group, Inc. (b)   36,700      361,495
Republic Airways Holdings, Inc. (b)   27,200      462,944
SkyWest, Inc.   49,400      1,225,120
        
           5,877,947
        
Apparel (0.9%)           
Carter’s, Inc. (b)   26,000      687,180
Maidenform Brands, Inc. (b)   1,100      13,563
Oxford Industries, Inc.   2,300      90,643
Perry Ellis International, Inc. (b)   41,267      1,044,468
Phillips-Van Heusen Corp.   101,600      3,877,056
Quiksilver, Inc. (b)   31,700      386,106
Russell Corp.   13,000      236,080
        
           6,335,096
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Auto Dealers (0.4%)           
Group 1 Automotive, Inc.   16,000    $ 901,440
Lithia Motors, Inc., Class A   61,400      1,861,648
Sonic Automotive, Inc.   11,500      255,070
United Auto Group, Inc.   1,100      23,485
        
           3,041,643
        
Auto Parts & Equipment (0.6%)
Aftermarket Technology Corp. (b)   22,400      556,640
American Axle & Manufacturing Holdings, Inc.   12,500      213,875
Arvinmeritor, Inc.   40,100      689,319
Asbury Automotive Group, Inc. (b)   58,100      1,216,614
Keystone Automotive Industries, Inc. (b)   7,200      303,984
Standard Motor Products, Inc.   15,300      127,602
Tenneco Automotive, Inc. (b)   44,700      1,162,200
Visteon Corp. (b)   13,300      95,893
        
           4,366,127
        
Banks (9.6%)           
1st Source Corp.   4,900      165,767
Amcore Financial, Inc.   50,900      1,491,879
Americanwest Bancorp   5,300      120,045
Ameris Bancorp   12,280      284,159
Associated Banc-Corp.   12,800      403,584
BancFirst Corp.   9,000      402,750
Bank of the Ozarks, Inc.   7,600      253,080
Banner Corp.   4,600      177,284
Berkshire Hills Bancorp, Inc.   1,000      35,480
BOK Financial Corp.   32,100      1,594,407
Cadence Financial Corp.   85,600      1,906,312
Capital Crossing Bank (b)   700      17,220
Capitol Bancorp Ltd.   8,800      342,760
Cardinal Financial Corp.   5,800      67,396
Cathay General Bancorp   9,900      360,162
Central Pacific Financial Corp.   67,100      2,596,770
Chemical Financial Corp.   13,955      427,023
Chittenden Corp.   14,000      361,900
City Bank   3,700      172,642
City Holding Co.   16,700      603,538
Colonial Bancgroup, Inc.   113,500      2,914,680
Columbia Banking System, Inc.   11,630      434,729
Community Bank System, Inc.   14,400      290,448
Community Trust Bancorp, Inc.   15,270      533,381

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Banks (continued)           
Corus Bankshares, Inc.   106,400    $ 2,785,552
Cullen/Frost Bankers, Inc.   20,300      1,163,190
Dynamic Materials Corp.   60,500      2,040,665
East West Bancorp, Inc.   34,490      1,307,516
Eurobancshares, Inc. (b)   18,400      177,928
Farmers Capital Bank Corp.   400      13,100
Financial Institutions, Inc.   1,400      29,204
First BanCorp. ADR — PR   48,600      451,980
First Citizens BancShares, Class A   8,100      1,624,050
First Commonwealth Financial Corp.   34,400      436,880
First Community Bankshares, Inc.   200      6,598
First Oak Brook Bank   4,500      166,500
First Regional Bancorp (b)   200      17,600
First Republic Bancorp, Inc.   22,650      1,037,370
First State Bancorp   77,587      1,845,019
FNB Corp.   2,900      107,300
Fremont General Corp.   35,600      660,736
Great Southern Bancorp, Inc.   7,800      238,134
Greater Bay Bancorp   28,300      813,625
Greene County Bancshares, Inc.   2,800      86,688
Hanmi Financial Corp.   160,750      3,124,980
Heartland Financial USA, Inc.   5,500      146,575
Heritage Commerce Corp.   2,700      66,933
Horizon Financial Corp   4,900      134,407
Iberiabank Corp.   30,900      1,777,986
Independent Bank Corp. (Mass.)   27,600      896,172
Independent Bank Corp. (Mich.)   29,058      764,225
Intervest Bancshares Corp. (b)   1,200      48,600
Irwin Financial Corp.   32,400      628,236
Lakeland Financial Corp.   3,300      80,157
Mainsource Financial Group, Inc.   5,496      95,795
MB Financial, Inc.   5,450      192,712
MBT Financial Corp.   6,600      105,600
Mercantile Bank Corp.   9,962      396,986
Mid-State Bancshares   14,300      400,400
Nara Bankcorp, Inc.   5,200      97,500
National Penn Bancshares, Inc.   89,470      1,776,874
Old Second Bancorp, Inc.   3,700      114,700
Oriental Financial Group ADR — PR   20,100      256,476
Pacific Capital Bancorp   21,500      669,080

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Banks (continued)           
Peoples Bancorp, Inc.   5,500    $ 164,120
Prosperity Bancshares, Inc.   12,600      414,414
Provident Bankshares Corp.   57,400      2,088,786
R & G Financial Corp. ADR — PR   56,350      484,047
Republic Bancorp, Inc.   72,271      895,438
Republic Bancorp, Inc., Class A   5,181      106,729
Royal Bancshares of Pennsylvania, Class A   5,358      130,092
Santander Bancorp ADR — PR   2,300      56,626
SCBT Financial Corp.   4,195      149,552
Security Bank Corp.   10,500      233,835
Sierra Bancorp   1,200      31,464
Signature Bank (b)   130,400      4,222,351
Simmons First National Corp., Class A   7,600      220,476
Southside Bancshares, Inc.   6,955      155,236
Southwest Bancorp   6,500      165,750
Sterling Bancshares, Inc.   32,000      600,000
Sterling Financial Corp.   60,512      1,325,213
Summit Bancshares, Inc.   14,800      313,908
Sun Bancorp, Inc. (b)   5,754      93,445
Taylor Capital Group, Inc.   9,700      395,857
Texas Regional Bancshares, Inc.   164,705      6,245,613
Trico Bancshares   8,600      235,468
TrustCo Bank Corp.   36,400      401,128
UMB Financial Corp.   54,500      1,817,030
Umpqua Holdings Corp.   32,496      833,522
Union Bankshares Corp.   25,800      1,113,012
United Bankshares, Inc.   8,200      300,366
W Holding Co. Inc. ADR — PR   74,091      492,705
West Coast Bancorp   42,900      1,264,263
Wilmington Trust Corp.   34,400      1,450,992
        
           69,142,863
        
Beverages (0.4%)       
Boston Beer Co. Inc., Class A (b)   89,190      2,612,375
        
Biotechnology Research & Production (0.1%)
Infinity Bio-Energy Ltd.   155,500      816,375
        
Broadcast Media & Television (0.6%)
Arbitron, Inc.   3,400      130,322
Citadel Broadcasting Corp.   111,590      993,151
Entercom Communications Corp.   1,000      26,160

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Broadcast Media & Television (continued)
Entravision Communications Corp. (b)   223,300    $ 1,913,681
Lin TV Corp., Class A (b)   5,400      40,770
Radio One, Inc. (b)   105,300      779,220
Saga Communications, Inc. (b)   3,900      35,334
Sinclair Broadcast Group, Inc.   5,800      49,648
Westwood One, Inc.   15,800      118,500
        
           4,086,786
        
Building (3.0%)       
Apogee Enterprises, Inc.   23,100      339,570
Baker (Michael) Corp. (b)   45,800      993,860
Building Materials Holding Corp.   35,600      992,172
Genlyte Group, Inc. (b)   19,800      1,434,114
Granite Construction, Inc.   55,300      2,503,431
Levitt Corp., Class A   14,375      230,000
Martin Marietta Materials, Inc.   5,200      473,980
Modine Manufacturing Co.   20,400      476,544
Modtech Holdings, Inc. (b)   272,410      1,844,216
NCI Building Systems, Inc. (b)   35,500      1,887,535
U.S. Concrete, Inc. (b)   164,210      1,814,521
Universal Forest Products, Inc.   32,300      2,026,179
Washington Group International, Inc.   97,950      5,224,652
Watsco, Inc.   7,200      430,704
WCI Communities, Inc. (b)   13,100      263,834
Williams Scotsman International, Inc. (b)   36,155      789,625
        
           21,724,937
        
Business Services (1.2%)           
CRA International, Inc. (b)   4,500      203,130
Deluxe Corp.   54,000      943,920
Fair Issac & Co. Inc.   108,300      3,932,373
FTD Group, Inc. (b)   33,200      448,200
IKON Office Solutions, Inc.   64,500      812,700
infoUSA, Inc.   4,600      47,426
Marlin Business Services Corp. (b)   12,200      275,232
Spherion Corp. (b)   49,000      446,880
StarTek, Inc.   5,500      82,225
TALX Corp.   49,250      1,077,098
Viad Corp.   18,400      575,920
        
           8,845,104
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Casinos & Gambling (0.1%)           
Ameristar Casinos, Inc.   12,900    $ 250,905
Aztar Corp. (b)   9,900      514,404
        
           765,309
        
Chemicals (2.0%)           
FMC Corp.   17,600      1,133,264
Georgia Gulf Corp.   3,100      77,562
H. B. Fuller Co.   26,800      1,167,676
Hercules, Inc. (b)   67,800      1,034,628
Methanex Corp. ADR — CA   216,350      4,582,293
Minerals Technologies, Inc.   10,500      546,000
Newmarket Corp.   18,800      922,328
OM Group, Inc. (b)   1,400      43,190
PolyOne Corp. (b)   80,600      707,668
Sensient Technologies Corp.   20,200      422,382
Terra Industries, Inc. (b)   1,600      10,192
Tronox, Inc.   213,950      2,817,722
UAP Holding Corp.   21,300      464,553
W.R. Grace & Co. (b)   33,800      395,460
Wellman, Inc.   32,500      131,300
        
           14,456,218
        
Coal (0.6%)           
Foundation Coal Holdings, Inc.   43,390      2,036,292
James River Coal Co. (b)   45,400      1,202,646
KFX, Inc. (b)   57,620      880,434
        
           4,119,372
        
Commercial Services (0.7%)           
CBIZ, Inc. (b)   21,900      162,279
Clark, Inc.   7,200      95,040
Consolidated Graphics, Inc. (b)   9,700      504,982
DynCorp International, Inc. (b)   51,600      535,608
Learning Tree International, Inc. (b)   205,650      1,803,551
LodgeNet Entertainment Corp. (b)   37,900      706,835
Maximus, Inc.   3,500      81,025
NCO Group, Inc. (b)   7,600      200,944
Sourcecorp (b)   10,100      250,379
TeleTech Holdings, Inc. (b)   38,400      486,144
Vertrue, Inc. (b)   3,500      150,605
Volt Information Sciences, Inc. (b)   5,500      256,300
        
           5,233,692
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Communications Technology (2.6%)       
3COM Corp. (b)   124,800    $ 638,976
CIENA Corp. (b)   470,800      2,264,548
CommScope, Inc. (b)   23,700      744,654
Digi International, Inc. (b)   1,900      23,807
Dycom Industries, Inc. (b)   93,790      1,996,789
Fairpoint Communications, Inc.   49,900      718,560
Glenayre Technologies, Inc. (b)   11,400      30,096
Inter-Tel, Inc.   22,800      480,168
Powerwave Technologies,
Inc. (b)		   659,600      6,015,552
RF Micro Devices, Inc. (b)   448,200      2,675,754
SureWest Communications   6,400      123,648
Symbol Technologies, Inc.   92,500      998,075
Valor Communications Group   178,000      2,038,100
        
           18,748,727
        
Computer Software & Services (5.6%)
Actuate Corp. (b)   212,813      859,765
Agilysys, Inc.   33,700      606,600
Altiris, Inc. (b)   12,900      232,716
Aspen Technologies, Inc. (b)   18,400      241,408
Avocent Corp. (b)   19,700      517,125
Black Box Corp.   12,500      479,125
Brocade Communications Systems, Inc. (b)   135,200      830,128
Ciber, Inc. (b)   39,300      258,987
Corel Corp. ADR — CA (b)   169,250      2,041,155
Covansys Corp. (b)   22,700      285,339
CSG Systems International, Inc. (b)   18,000      445,320
Diebold, Inc.   47,200      1,917,264
Electronics for Imaging, Inc. (b)   33,600      701,568
Hutchinson Technology, Inc. (b)   19,100      413,133
Infocrossing, Inc. (b)   490,370      5,663,773
Intergraph Corp. (b)   4,800      151,152
Internet Security Systems,
Inc. (b)		   4,100      77,285
Interwoven Software, Inc. (b)   157,900      1,354,782
iPass, Inc. (b)   16,300      91,280
JDA Software Group, Inc. (b)   13,800      193,614
Komag, Inc. (b)   11,500      531,070
Lawson Software, Inc. (b)   39,800      266,660
Magma Design Automation, Inc. (b)   20,400      149,940
ManTech International, Corp. (b)   9,700      299,342
McDATA Corp., Class A (b)   107,700      439,416
Mentor Graphics Corp. (b)   47,800      620,444

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Computer Software & Services (continued)
Neoware, Inc. (b)   40,000    $ 491,600
NetIQ Corp. (b)   10,300      125,557
Palm, Inc. (b)   47,400      763,140
Parametric Technology Corp. (b)   34,020      432,394
Perot Systems Corp., Class A (b)   42,500      615,400
Phoenix Technologies Ltd. (b)   7,300      35,113
Progress Software Corp. (b)   14,100      330,081
QAD, Inc.   6,800      52,700
Quantum Corp. (b)   196,400      514,568
Quest Software, Inc. (b)   141,300      1,983,852
RadiSys Corp. (b)   9,700      213,012
RSA Security, Inc. (b)   7,700      209,363
Sapient Corp. (b)   366,950      1,944,835
SI International, Inc. (b)   6,000      183,960
Silicon Storage Technology, Inc. (b)   143,100      580,986
SPSS, Inc. (b)   2,900      93,206
Sybase, Inc. (b)   258,450      5,013,930
Sykes Enterprises, Inc. (b)   17,900      289,264
Synnex Corp. (b)   3,100      58,776
THQ, Inc. (b)   201,900      4,361,040
TIBCO Software, Inc. (b)   160,050      1,128,353
TTM Technologies, Inc. (b)   19,600      283,612
Tyler Technologies, Inc. (b)   20,700      231,840
United Online, Inc.   37,200      446,400
        
           40,051,373
        
Computers (0.0%)           
Gateway, Inc. (b)   44,600      84,740
        
Consulting Services (0.7%)           
Bearingpoint, Inc. (b)   130,000      1,088,100
Gartner Group, Inc., Class A (b)   31,200      443,040
LECG Corp. (b)   116,100      2,144,367
Tetra Technology, Inc. (b)   2,900      51,446
Watson Wyatt Worldwide, Inc.   33,200      1,166,648
        
           4,893,601
        
Consumer Products (1.5%)           
Central Garden & Pet Co. (b)   21,200      912,660
Elizabeth Arden, Inc. (b)   100,200      1,791,576
Hasbro, Inc.   100,000      1,811,000
Jarden Corp. (b)   24,150      735,368
Parlux Fragrances, Inc. (b)   68,000      658,920
Prestige Brands Holdings, Inc. (b)   7,900      78,763

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Consumer Products (continued)
RC2 Corp. (b)   15,600    $ 603,096
Revlon, Inc. (b)   1,576,150      1,985,949
Spectrum Brands, Inc. (b)   600      7,752
Tupperware Corp.   70,300      1,384,207
Weis Markets, Inc.   14,000      576,800
Yankee Candle Co. Inc.   5,800      145,058
        
           10,691,149
        
Containers & Packaging (0.3%)       
Greif, Inc., Class A   10,800      809,568
Silgan Holdings, Inc.   39,100      1,447,091
        
           2,256,659
        
Distribution & Wholesale (0.6%)       
Aviall, Inc. (b)   29,600      1,406,592
Bell Microproducts, Inc. (b)   83,600      453,112
Brightpoint, Inc. (b)   17,660      238,940
Directed Electronics, Inc. (b)   123,650      1,622,288
United Stationers, Inc. (b)   18,600      917,352
        
           4,638,284
        
Diversified Minerals (0.2%)           
AMCOL International, Corp.   41,960      1,105,646
        
Drugs & Pharmaceuticals (1.6%)       
Adams Respiratory Therapeutics, Inc. (b)   8,000      356,960
Adolor Corp. (b)   14,000      350,140
Alexion Pharmaceuticals, Inc. (b)   9,500      343,140
Alpharma, Inc., Class A   61,400      1,476,056
Atherogenics, Inc. (b)   9,404      122,722
AVANIR Pharmaceuticals (b)   39,625      271,035
Biosite, Inc. (b)   5,300      241,998
Biovail Corp. ADR-CA   35,000      819,350
Cubist Pharmaceuticals, Inc. (b)   13,400      337,412
Cypress Bioscience, Inc. (b)   38,500      236,390
Endo Pharmaceuticals Holdings, Inc. (b)   151,050      4,981,629
Martek Biosciences Corp. (b)   1,000      28,950
Myogen, Inc. (b)   8,100      234,900
Nektar Therapeutics (b)   14,500      265,930
Nuvelo, Inc. (b)   7,500      124,875
Perrigo Co.   19,800      318,780
Progenics Pharmaceuticals (b)   11,200      269,472
Renovis, Inc. (b)   9,900      151,569

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Drugs & Pharmaceuticals (continued)       
United Therapeutics Corp. (b)   4,900    $ 283,073
Valeant Pharmaceuticals International   10,000      169,200
        
           11,383,581
        
Electronics (1.4%)           
Aeroflex, Inc. (b)   31,800      371,106
Amis Holdings, Inc. (b)   12,900      129,000
Amphenol Corp., Class A   11,000      615,560
Applied Micro Circuits Corp. (b)   90,400      246,792
Ariba, Inc. (b)   26,300      216,449
Avnet, Inc. (b)   38,800      776,776
Bel Fuse, Inc., Class B   23,400      767,754
Belden CDT, Inc.   38,200      1,262,510
Benchmark Electronics, Inc. (b)   32,725      789,327
CTS Corp.   33,100      492,859
Entegris, Inc. (b)   115,138      1,097,265
Greatbatch, Inc. (b)   5,000      118,000
Integrated Device Technology, Inc. (b)   69,400      984,092
Kopin Corp. (b)   25,800      93,138
Molecular Devices Corp. (b)   4,900      149,744
Park Electrochemical Corp.   8,400      216,300
Plexus Corp. (b)   7,500      256,575
Sypris Solutions, Inc.   12,200      115,290
Technitrol, Inc.   7,400      171,310
Teradyne, Inc. (b)   42,760      595,647
Trident Microsystems, Inc. (b)   31,000      588,380
        
           10,053,874
        
Engineering (0.1%)           
Emcor Group, Inc. (b)   9,000      438,030
        
Financial Services (1.5%)           
Accredited Home Lenders Holding Co. (b)   13,500      645,435
Advanta Corp., Class B   21,800      783,710
Aventine Renewable Energy Holdings, Inc. (b)   51,290      1,995,181
Capital Corp. of the West   4,160      133,120
CharterMac   19,600      366,716
CompuCredit Corp. (b)   8,700      334,428
Dollar Financial Corp. (b)   15,723      283,014
Doral Financial Corp. ADR — PR   26,000      166,660
eSPEED, Inc. (b)   2,800      23,324
Federal Agricultural Mortgage Corp., Class C   5,100      141,270

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Financial Services (continued)           
Financial Federal Corp.   17,900    $ 497,799
FirstCity Financial Corp. (b)   137,723      1,439,205
Investment Technology Group, Inc. (b)   17,500      890,050
Medallion Financial Corp.   600      7,776
United PanAm Financial Corp. (b)   52,860      1,606,944
World Acceptance Corp. (b)   35,300      1,253,856
        
           10,568,488
        
Foods (0.7%)           
American Italian Pasta Co. (b)   15,600      133,536
Chiquita Brands International, Inc.   45,200      622,856
Corn Products International, Inc.   16,600      507,960
Flowers Foods, Inc.   14,550      416,712
Gold Kist, Inc. (b)   6,500      86,905
J & J Snack Foods Corp.   10,000      330,700
Nasch-Finch Co.   6,100      129,869
NBTY, Inc. (b)   34,900      834,459
Premium Brands, Inc.   1,200      19,476
Ralcorp Holding, Inc. (b)   8,800      374,264
Ruddick Corp.   6,000      147,060
Tootsie Roll Industries   43,157      1,257,163
        
           4,860,960
        
Funeral Services (0.4%)           
Alderwoods Group, Inc. (b)   17,800      346,388
Service Corp. International   243,850      1,984,939
Stewart Enterprises, Inc., Class A   93,900      539,925
        
           2,871,252
        
Healthcare (2.0%)           
Amedisys, Inc. (b)   62,700      2,376,330
America Service Group, Inc. (b)   110,954      1,722,006
AMERIGROUP Corp. (b)   19,900      617,696
AMN Healthcare Services, Inc. (b)   1,500      30,450
Apria Healthcare Group, Inc. (b)   8,300      156,870
Genesis Healthcare Corp. (b)   600      28,422
Gentiva Health Services, Inc. (b)   11,700      187,551
Healthspring, Inc. (b)   7,700      144,375
Healthtronics Surgical Services, Inc. (b)   15,500      118,575
Kindred Healthcare, Inc. (b)   19,500      507,000
LCA-Vision, Inc.   8,300      439,153

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Healthcare (continued)           
LifePoint Hospitals, Inc. (b)   67,650    $ 2,173,595
Magellan Health Services, Inc. (b)   16,400      743,084
Molina Healthcare, Inc. (b)   5,600      213,080
Pediatrix Medical Group, Inc. (b)   17,100      774,630
Res-Care, Inc. (b)   7,000      140,000
Rural/Metro Corp. (b)   522,056      3,654,392
Sierra Health Services, Inc. (b)   13,600      612,408
        
           14,639,617
        
Hotels & Motels (0.3%)           
Felcor Lodging Trust, Inc.   82,200      1,787,028
Winston Hotels, Inc.   100      1,225
        
           1,788,253
        
Household Furnishings (0.4%)           
Bassett Furniture Industries, Inc.   50,900      942,159
Ethan Allen Interiors, Inc.   18,600      679,830
Furniture Brands International, Inc.   28,900      602,276
Kimball International, Inc., Class B   18,700      368,577
        
           2,592,842
        
Identification Systems (0.1%)           
Checkpoint Systems, Inc. (b)   14,400      319,824
Paxar Corp. (b)   3,700      76,109
        
           395,933
        
Instruments (0.2%)           
Analogic Corp.   6,400      298,304
Watts Industries, Inc.   30,200      1,013,210
        
           1,311,514
        
Insurance (1.2%)           
American Physicians Capital, Inc. (b)   6,800      357,612
Aspen Insurance Holdings Ltd.   142,340      3,315,099
Delphi Financial Group, Inc., Class A   52,575      1,911,627
Endurance Specialty Holdings Ltd.   27,000      864,000
Harleysville Group, Inc.   1,700      53,924
Odyssey Re Holdings Corp.   600      15,810
Ohio Casualty Corp.   25,200      749,196
Phoenix Companies Inc.   12,500      176,000
Protective Life Corp.   14,000      652,680
United Fire & Casualty Corp.   23,700      714,081
        
           8,810,029
        

 

8

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GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Insurance: Property–Casualty (1.6%)       
Argonaut Group, Inc. (b)   25,500    $ 766,020
Direct General Corp.   11,400      192,888
Infinity Property & Casualty Corp.   13,900      569,900
LandAmerica Financial Group, Inc.   20,900      1,350,140
Midland Co.   4,500      170,910
Navigators Group, Inc. (The) (b)   10,900      477,638
PMA Capital Corp., Class A (b)   104,000      1,071,200
ProAssurance Corp. (b)   2,400      115,632
RLI Corp.   4,400      211,992
Safety Insurance Group, Inc.   39,300      1,868,715
Selective Insurance Group, Inc.   19,000      1,061,530
State Auto Financial Corp.   7,200      234,288
Stewart Information Services Corp.   25,100      911,381
Zenith National Insurance Co.   56,380      2,236,595
        
           11,238,829
        
Internet Software & Services (0.1%)       
Redback Networks, Inc. (b)   13,100      240,254
SonicWALL, Inc. (b)   27,300      245,427
Stellent, Inc.   8,600      82,130
Webmethods, Inc. (b)   34,300      338,541
        
           906,352
        
Investment Banks & Brokers (1.0%)       
Affiliated Managers Group, Inc. (b)   23,460      2,038,439
Greenhill & Co. Inc.   1,200      72,912
Knight Capital Group, Inc., Class A (b)   63,000      959,490
LaBranche & Co. Inc. (b)   33,400      404,474
Piper Jaffray Cos. (b)   5,800      355,018
Technology Investment Capital Corp.   64,490      944,779
Thomas Weisel Partners Group, Inc. (b)   95,930      1,823,629
TradeStation Group, Inc. (b)   70,270      890,321
        
           7,489,062
        
Lasers—Systems & Components (0.1%)       
Coherent, Inc. (b)   7,900      266,467
Electro Scientific Industries, Inc. (b)   6,500      116,935
        
           383,402
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Leisure (0.5%)           
Great Wolf Resorts, Inc. (b)   249,772    $ 2,999,762
K2, Inc. (b)   40,900      447,446
        
           3,447,208
        
Linen Supply & Related Items (0.1%)       
Angelica Corp.   31,800      557,772
Unifirst Corp.   10,600      365,700
        
           923,472
        
Machinery (3.4%)           
Actuant Corp.   98,400      4,915,080
Alamo Group, Inc.   2,800      58,940
Applied Industrial Technologies, Inc.   92,350      2,245,029
Astec Industries, Inc. (b)   28,700      979,244
ASV, Inc. (b)   15,100      347,904
Cascade Corp.   10,900      431,095
Flowserve Corp. (b)   8,300      472,270
Gardner Denver Machinery, Inc. (b)   21,900      843,150
Gehl Co. (b)   5,500      140,415
Imation Corp.   19,900      816,895
JLG Industries, Inc.   32,100      722,250
Kadant, Inc. (b)   1,800      41,400
Kennametal, Inc.   29,200      1,817,700
Kulicke & Soffa Industries, Inc. (b)   22,000      163,020
Lincoln Electric Holdings, Inc.   14,200      889,630
Manitowoc Co.   67,550      3,005,975
NACCO Industries, Inc., Class A   5,300      728,273
Regal-Beloit Corp.   30,500      1,346,575
Sauer-Danfoss, Inc.   9,500      241,490
Tecumseh Products Co. (b)   7,600      145,920
Tennant Co.   1,200      60,336
Toro Co.   87,800      4,100,260
        
           24,512,851
        
Manufacturing (2.1%)           
A.O. Smith Corp.   20,300      941,108
Acuity Brands, Inc.   42,100      1,638,111
Ameron International, Corp.   6,900      462,438
Asyst Technologies, Inc. (b)   49,300      371,229
Barnes Group, Inc.   101,200      2,018,940
Chaparral Steel Co. (b)   13,000      936,260
CLARCOR, Inc.   28,700      854,973
Griffon Corp. (b)   18,700      488,070

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Manufacturing (contined)
Jacuzzi Brands, Inc. (b)   14,700    $ 129,360
KEMET Corp. (b)   17,000      156,740
Knoll, Inc.   29,190      535,928
Maverick Tube Corp. (b)   9,700      612,943
Mueller Industries, Inc.   45,860      1,514,756
Oshkosh Truck Corp.   20,400      969,408
PGT, Inc. (b)   53,400      843,720
Quanex Corp.   56,880      2,449,822
Reddy Ice Holdings, Inc.   300      6,105
Trinity Industries, Inc.   11,800      476,720
        
           15,406,631
        
Medical & Dental Instruments & Supplies (0.4%)
CONMED Corp. (b)   8,400      173,880
ICU Medical, Inc. (b)   3,000      126,720
Invacare Corp.   8,100      201,528
Neurometrix, Inc. (b)   8,500      258,910
Owens & Minor, Inc.   31,000      886,600
PSS World Medical, Inc. (b)   28,800      508,320
STERIS Corp.   11,400      260,604
Surmodics, Inc. (b)   1,200      43,332
Viasys Healthcare, Inc. (b)   6,500      166,400
        
           2,626,294
        
Medical—Biomedical & Genetic (0.8%)       
Bio-Rad Laboratories, Inc., Class A (b)   26,600      1,727,404
Cambrex Corp.   153,150      3,190,115
Celera Genomics Group (b)   10,400      134,680
GTX, Inc. (b)   14,500      131,950
Human Genome Sciences, Inc. (b)   6,600      70,620
LifeCell Corp. (b)   14,300      442,156
        
           5,696,925
        
Medical Information Systems (0.2%)       
Alliance Imaging, Inc. (b)   20,400      130,560
Computer Programs & Systems, Inc.   12,600      503,496
PER-SE Technologies, Inc. (b)   35,300      888,854
        
           1,522,910
        
Metals (3.7%)           
Apex Silver Mines Ltd. (b)   46,000      692,300
Brush Engineered Materials, Inc. (b)   98,250      2,048,513
Century Aluminum Co. (b)   54,800      1,955,812

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Metals (continued)           
Circor International, Inc.   12,000    $ 365,880
Cleveland-Cliffs, Inc.   44,600      3,536,334
Coeur d’Alene Mines Corp. (b)   210,000      1,010,100
Commercial Metals Co.   128,000      3,289,600
NN, Inc.   25,400      313,690
NS Group, Inc. (b)   12,900      710,532
Oregon Steel Mills, Inc. (b)   103,180      5,227,098
Pan American Silver Corp. (b)   31,000      557,690
Reliance Steel & Aluminum Co.   6,500      539,175
Ryerson, Inc.   27,580      744,660
Schnitzer Steel Industries, Inc.   8,400      298,032
Shaw Group, Inc. (b)   45,790      1,272,962
Steel Dynamics   46,000      3,024,040
Valmont Industries, Inc.   26,000      1,208,740
        
           26,795,158
        
Multimedia (0.7%)           
Carmike Cinemas, Inc.   7,100      149,668
Cox Radio, Inc. (b)   9,300      134,106
DTS, Inc. (b)   137,620      2,680,838
InterVideo, Inc. (b)   12,800      125,056
Macrovision Corp. (b)   68,621      1,476,724
Media General, Inc.   6,400      268,096
        
           4,834,488
        
Music (0.0%)           
Steinway Musical Instruments, Inc. (b)   12,900      316,308
        
Networking Products (0.2%)           
Adaptec, Inc. (b)   50,200      217,868
Anixter International, Inc.   14,900      707,154
Foundry Networks, Inc. (b)   20,300      216,398
Hypercom Corp. (b)   18,100      169,235
Safenet, Inc. (b)   11,985      212,374
        
           1,523,029
        
Office Equipment & Services (0.3%)       
BioMed Realty Trust, Inc.   7,200      215,568
Ennis, Inc.   8,000      157,440
Global Imaging Systems, Inc. (b)   2,000      82,560
John H. Harland Co.   31,800      1,383,300
        
           1,838,868
        
Oil & Gas (6.8%)           
Alon USA Energy, Inc.   7,200      226,584
Bois d’Arc Energy, Inc. (b)   14,400      237,168

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Oil & Gas (continued)           
Bronco Drilling Co. Inc. (b)   28,060    $ 586,173
Buckeye Partners LP   100,050      4,211,105
Cabot Oil & Gas Corp.   8,300      406,700
Callon Petroleum Corp. (b)   7,700      148,918
Carbo Ceramics, Inc.   36,000      1,768,680
Cimarex Energy Co.   53,285      2,291,255
Comstock Resources, Inc. (b)   16,900      504,634
Energy Partners Ltd. (b)   19,100      361,945
Giant Industries, Inc. (b)   5,800      385,990
Hanover Compressor Co. (b)   13,830      259,727
Harvest Natural Resources, Inc. (b)   24,100      326,314
Houston Exploration Co. (b)   14,400      881,136
Hydril (b)   12,200      957,944
Laclede Group, Inc. (The)   6,000      206,160
Lone Star Technologies, Inc. (b)   9,900      534,798
New Jersey Resources Corp.   32,800      1,534,384
Northwest Natural Gas Co.   17,800      659,134
Oceaneering International, Inc. (b)   4,000      183,400
Oil States International, Inc. (b)   52,100      1,785,988
OMI Corp.   241,600      5,230,640
Petrohawk Energy Corp. (b)   22,500      283,500
Pioneer Drilling Co. (b)   41,800      645,392
Range Resources Corp.   25,000      679,750
Remington Oil & Gas Corp. (b)   4,100      180,277
Rossetta Resources, Inc. (b)   1,100      18,282
RPC Energy Services, Inc.   40,225      976,663
SEACOR Holdings, Inc. (b)   31,050      2,549,205
South Jersey Industries, Inc.   47,200      1,292,808
St. Mary Land & Exploration Co.   8,100      326,025
Stone Energy Corp. (b)   18,900      879,795
Superior Well Services, Inc. (b)   39,700      988,530
Swift Energy Co. (b)   18,000      772,740
Todco, Class A   158,600      6,478,809
Trico Marine Services, Inc. (b)   4,100      139,400
Union Drilling, Inc. (b)   4,500      66,870
Unit Corp. (b)   28,600      1,627,054
Universal Compression Holdings, Inc. (b)   8,500      535,245
Valero LP   64,750      3,195,413
Veritas DGC, Inc. (b)   16,000      825,280
Warren Resources, Inc. (b)   158,550      2,276,778
Western Refining, Inc.   2,700      58,266
        
           48,484,859
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Paper & Related Products (0.2%)       
Glatfelter   17,000    $ 269,790
Rock-Tenn Co.   30,200      481,690
Schweitzer-Mauduit International, Inc.   26,300      569,395
        
           1,320,875
        
Plastics (0.2%)           
Myers Industries, Inc.   59,200      1,017,648
Spartech Corp.   12,800      289,280
        
           1,306,928
        
Private Corrections (0.1%)           
Geo Group, Inc. (The) (b)   20,500      718,525
        
Publishing (0.2%)           
Banta Corp.   4,500      208,485
Journal Register Co.   23,300      208,768
Lee Enterprises, Inc.   9,900      266,805
ProQuest Co. (b)   12,700      156,083
Scholastic Corp. (b)   23,700      615,489
Valassis Communications,
Inc. (b)		   10,000      235,900
        
           1,691,530
        
Racetracks (0.1%)           
Speedway Motorsports, Inc.   28,500      1,075,590
        
Railroads (1.0%)           
Florida East Coast Industries, Inc.   90,060      4,712,839
Genesee & Wyoming, Inc. (b)   77,850      2,761,340
        
           7,474,179
        
Real Estate (0.3%)           
HouseValues, Inc. (b)   11,000      76,230
Realty Income   20,000      438,000
Sirva, Inc. (b)   37,500      242,625
Tejon Ranch Co. (b)   30,600      1,259,496
        
           2,016,351
        
Real Estate Investment Trusts (9.0%)       
American Financial Realty Trust   114,300      1,106,424
American Home Mortgage Investment Corp.   64,189      2,366,007
Anthracite Capital, Inc.   101,000      1,228,160
Ashford Hospitality Trust   213,720      2,697,146
Boykin Lodging Co. (b)   10,800      117,612
Capital Trust, Inc., Class A   9,400      334,828
CarrAmerica Realty Corp.   9,000      400,950

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Real Estate Investment Trusts (continued)
Cedarshopping Centers, Inc.   64,100    $ 943,552
Columbia Equity Trust, Inc.   7,200      110,592
Deerfield Triarc Capital Corp.   92,600      1,201,948
Eagle Materials, Inc.   71,322      3,387,795
Education Realty Trust, Inc.   14,600      243,090
Entertainment Properties Trust   25,700      1,106,385
Equity Inns, Inc.   154,100      2,551,896
Extra Space Storage, Inc.   9,800      159,152
First Industrial Realty Trust   34,400      1,305,136
First Potomac Realty Trust   30,200      899,658
Five Star Quality Care (b)   132,300      1,464,561
Glenborough Realty Trust, Inc.   22,300      480,342
Glimcher Realty Trust   49,400      1,225,614
Government Properties Trust   31,500      298,935
Healthcare Realty Trust, Inc.   18,400      586,040
Hersha Hospitality Trust   120,400      1,118,516
Hospitality Properties Trust   28,000      1,229,760
Impac Mortgage Holdings   41,700      466,206
InnKeepers USA Trust   89,000      1,537,920
Jer Investors Trust, Inc.   55,200      858,360
Kilroy Realty Corp.   36,900      2,666,025
KKR Financial Corp.   46,400      965,584
Lasalle Hotel Properties   53,600      2,481,680
Lexington Corporate Properties Trust   143,100      3,090,960
LTC Properties, Inc.   23,200      518,520
Maguire Properties, Inc.   14,500      509,965
MFA Mortgage Investments, Inc.   28,400      195,392
Mid-America Apartment Communities, Inc.   40,300      2,246,725
National Health Investors, Inc.   52,300      1,406,347
Nationwide Health Properties, Inc.   71,100      1,600,461
Novastar Financial, Inc.   8,300      262,363
Omega Healthcare Investors, Inc. ADR — GR   126,020      1,665,984
Parkway Properties, Inc.   12,900      586,950
Pennsylvania Real Estate Investment Trust   52,400      2,115,388
Post Properties, Inc.   57,000      2,584,380
Rait Investment Trust   40,100      1,170,920
Republic Property Trust   123,900      1,224,132
Saul Centers, Inc.   25,100      1,023,578
Senior Housing Properties Trust   53,600      959,976
Spirit Finance Corp.   6,100      68,686

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Real Estate Investment Trusts (continued)
Sunstone Hotel Investors, Inc.   51,700    $ 1,502,402
Taubman Centers, Inc.   26,000      1,063,400
Ventas, Inc.   152,900      5,180,251
        
           64,516,654
        
Recycling (0.1%)           
Aleris International, Inc. (b)   20,900      958,265
        
Rental & Leasing Services & Commercial (0.4%)
Aaron Rents, Inc.   32,050      861,504
Dollar Thrifty Automotive Group, Inc. (b)   23,300      1,050,131
Electro Rent Corp. (b)   9,100      145,782
Rent-A-Center, Inc. (b)   7,800      193,908
Rent-Way, Inc. (b)   34,100      251,658
        
           2,502,983
        
Research & Development (0.1%)
URS Corp. (b)   8,700      365,400
        
Restaurants (0.9%)           
Bob Evans Farms   1,900      57,019
Domino’s Pizza, Inc.   7,100      175,654
Jack in the Box, Inc. (b)   28,200      1,105,440
Landry’s Seafood Restaurants, Inc.   38,400      1,246,080
Lone Star Steakhouse & Saloon   108,729      2,851,962
Papa John’s International, Inc. (b)   14,400      478,080
Ryans Restaurant Group, Inc. (b)   67,500      803,925
        
           6,718,160
        
Retail (2.8%)           
Big Lots, Inc. (b)   26,600      454,328
Blockbuster, Inc. (b)   400      1,992
Bon-Ton Stores, Inc.   2,700      59,076
Brown Shoe Co. Inc.   38,300      1,305,264
Build-A-Bear-Workshop, Inc. (b)   7,200      154,872
Casey’s General Stores, Inc.   11,700      292,617
Cash America International, Inc.   48,100      1,539,200
Charlotte Russe Holding, Inc. (b)   41,900      1,003,086
Charming Shoppes, Inc. (b)   169,100      1,900,684
Cole (Kenneth) Productions, Inc.   11,500      256,795
CSK Auto Corp. (b)   30,000      359,100
Deckers Outdoor Corp. (b)   4,700      181,232
Dress Barn, Inc. (b)   14,000      354,900
Finish Line (The), Class A   36,200      428,246

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Retail (continued)           
Genesco, Inc. (b)   33,800    $ 1,144,806
Great Atlantic & Pacific Tea Co. Inc. (The)   8,600      195,392
Inland Real Estate Corp.   45,800      681,504
Insight Enterprises, Inc. (b)   12,200      232,410
Movado Group, Inc.   10,700      245,565
New York & Co. Inc. (b)   68,400      668,268
Pantry, Inc. (b)   6,000      345,240
Payless Shoesource, Inc. (b)   23,300      633,061
Retail Ventures, Inc. (b)   22,800      406,296
Rex Stores Corp. (b)   38,330      550,036
Sealy Corp. (b)   22,300      295,921
Shoe Carnival, Inc. (b)   6,400      152,704
Skechers U.S.A., Inc. (b)   25,300      609,983
Smart & Final, Inc. (b)   22,700      382,268
Spartan Stores, Inc.   15,100      220,913
Stage Stores, Inc.   91,115      3,006,795
Systemax, Inc. (b)   22,400      174,720
Talbots, Inc.   46,400      856,080
Too, Inc. (b)   21,100      810,029
Tuesday Morning Corp.   39,100      514,165
        
           20,417,548
        
Savings & Loans (1.8%)           
Bankunited Financial Corp.   18,100      552,412
Brookline Bancorp, Inc.   239,050      3,291,718
Commercial Capital Bancorp   12,466      196,340
Dime Community Bancshares   17,150      232,726
Downey Financial Corp.   2,400      162,840
First Financial Holdings, Inc.   5,200      166,400
First Niagara Financial Group, Inc.   73,496      1,030,414
First Place Financial Corp.   13,300      306,033
FirstFed Financial Corp. (b)   11,400      657,438
Flagstar Bancorp   21,400      341,544
Franklin Bank Corp. (b)   58,800      1,187,172
ITLA Capital Corp.   5,000      262,900
MAF Bancorp, Inc.   19,643      841,506
Ocwen Financial Corp. (b)   21,700      275,807
Partners Trust Financial Group   39,500      450,695
Sterling Financial Corp.   62,705      1,913,129
Tierone Corp.   16,600      560,582
WSFS Financial Corp.   8,500      522,325
        
           12,951,981
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Semiconductors (2.2%)           
Actel Corp. (b)   12,400    $ 177,940
Amkor Technology, Inc. (b)   43,600      412,456
Axcelis Technologies, Inc. (b)   221,600      1,307,440
Brooks Automation, Inc. (b)   14,900      175,820
Cirrus Logic, Inc. (b)   30,200      245,828
Cohu, Inc.   13,900      243,945
Conexant Systems, Inc. (b)   585,800      1,464,500
Credence Systems Corp. (b)   26,200      91,700
Cypress Semiconductor Corp. (b)   125,830      1,829,568
DSP Group, Inc. (b)   12,500      310,625
Emulex Corp. (b)   10,600      172,462
Exar Corp. (b)   7,100      94,217
Genesis Microchip, Inc. (b)   7,700      89,012
Integrated Silicon Solution, Inc. (b)   15,500      85,405
Lattice Semiconductor Corp. (b)   32,500      200,850
LTX Corp. (b)   59,500      417,095
Mattson Technology, Inc. (b)   11,000      107,470
MKS Instruments, Inc. (b)   23,700      476,844
On Semiconductor Corp. (b)   34,700      204,036
Optical Communication Products, Inc. (b)   29,900      60,099
Pericom Semiconductor Corp. (b)   6,900      57,270
Photronics, Inc. (b)   17,300      256,040
Rockwood Holdings, Inc. (b)   22,300      513,123
Silicon Image, Inc. (b)   424,600      4,577,188
Silicon Laboratories (b)   22,300      783,845
Skyworks Solutions, Inc. (b)   29,100      160,341
Standard Microsystems Corp. (b)   13,300      290,339
TriQuint Semiconductor, Inc. (b)   141,000      628,860
Vitesse Semiconductor Corp. (b)   26,100      37,584
Zoran Corp. (b)   14,900      362,666
        
           15,834,568
        
Telecommunications (1.4%)           
Alaska Communications Systems   66,700      843,755
Holdings, Inc.           
Arris Group, Inc. (b)   193,110      2,533,603
AsiaInfo Holdings, Inc. (b)   6,200      26,598
Broadwing Corp. (b)   32,680      338,238
C&D Technologies, Inc.   47,050      353,816
C-COR.net Corp. (b)   6,000      46,320
Centennial Communications   20,400      106,080
Ditech Networks, Inc. (b)   13,900      121,208

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)
Telecommunications (continued)
Dobson Communications Corp., Class A (b)   52,800    $ 408,144
Finisar Corp. (b)   29,500      96,465
General Communication, Inc. (b)   20,000      246,400
Level 3 Communications, Inc. (b)   223,700      993,228
Lightbridge, Inc. (b)   1,300      16,835
MasTec, Inc. (b)   25,500      336,855
MRV Communications, Inc. (b)   16,400      51,004
Newport Corp. (b)   28,600      461,032
North Pittsburgh Systems, Inc.   9,700      267,332
Polycom, Inc. (b)   53,500      1,172,720
Premiere Global Services, Inc. (b)   124,600      940,730
Sycamore Networks, Inc. (b)   31,200      126,672
Talk America Holdings, Inc. (b)   18,500      114,515
Utstarcom, Inc. (b)   19,900      155,021
        
           9,756,571
        
Tobacco (0.6%)           
Alliance One International, Inc.   63,700      282,828
Loews Corp. — Carolina Group   45,900      2,357,883
Universal Corp.   40,100      1,492,522
        
           4,133,233
        
Toys (0.1%)           
JAKKS Pacific, Inc. (b)   41,500      833,735
        
Transportation (1.9%)           
AMERCO (b)   5,300      533,498
Arkansas Best Corp.   3,300      165,693
Bristow Group, Inc. (b)   9,400      338,400
Gatx Corp.   7,900      335,750
Greenbrier Cos., Inc.   112,000      3,666,880
Interpool, Inc.   12,800      284,416
Kirby Corp. (b)   45,700      1,805,150
Marten Transport Ltd. (b)   1,300      28,262
Omega Navigation Enterprises, Inc. (b)   197,930      2,854,151
RailAmerica, Inc. (b)   35,300      369,238
SCS Transportation, Inc. (b)   25,000      688,250
U.S. Xpress Enterprises, Inc. (b)   9,300      251,286
Werner Enterprises, Inc.   98,500      1,996,595
        
           13,317,569
        
Travel Services (0.0%)           
Navigant International, Inc. (b)   5,400      86,562
        

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)       
Utilities (3.8%)           
Advanced Energy Industries, Inc. (b)   13,800    $ 182,712
American States Water Co.   7,200      256,680
Avista Corp.   15,600      356,148
Black Hills Corp.   16,600      569,878
California Water Service Group   7,100      253,754
CH Energy Group, Inc.   10,900      523,200
Charter Communications, Inc. (b)   301,100      340,243
Cincinnati Bell, Inc. (b)   1,221,950      5,009,995
Cleco Corp.   30,800      716,100
Commonwealth Telephone Enterprises, Inc.   6,200      205,592
CT Communications, Inc.   42,600      974,262
El Paso Electric Co. (b)   49,000      987,840
Idacorp, Inc.   39,000      1,337,310
NICOR, Inc.   24,300      1,008,450
ONEOK, Inc.   92,600      3,152,104
PNM Resource, Inc.   16,800      419,328
Quantum Fuel Systems Technology (b)   4,300      14,620
Sierra Pacific Resources (b)   139,200      1,948,800
SJW Corp.   4,300      109,435
Southwest Gas Corp.   49,900      1,563,866
Time Warner Telecom, Inc. (b)   45,500      675,675
UIL Holdings Corp.   3,500      197,015
UniSource Energy Corp.   58,500      1,822,275
Westar Energy, Inc.   220,345      4,638,262
        
           27,263,544
        
Waste Disposal (0.2%)           
American Ecology Corp.   62,230      1,649,095
Waste Services, Inc. (b)   9,300      83,607
        
           1,732,702
        
Water Treatment Systems (0.2%)       
Nalco Holding Co. (b)   68,410      1,206,068
        
Wire & Cable Products (0.2%)       
Encore Wire Corp. (b)   9,950      357,603
General Cable Corp. (b)   23,200      812,000
        
           1,169,603
        
Total Common Stocks          689,783,631
        

 

14

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
              
CASH EQUIVALENTS (2.2%)
AIM Liquid Assets Portfolio, 4.53%     16,100,232    $ 16,100,232
          
Total Cash Equivalents      16,100,232
          
TREASURY NOTES (0.1%)       
United States Treasury Note, 2.88%, 11/30/06   $ 615,000      609,042
          
Total Treasury Notes            609,042
          

Shares or

Principal Amount

    Value
WARRANTS (0.0%)           
Biotechnology Research & Production (0.0%)
Infinity Bio-Energy Ltd. (b)   311,000    $ 149,280
        
Total Warrants          149,280
        
Total Investments (Cost $662,676,748) (a) — 98.5%      706,642,185
Other assets in excess of
liabilities — 1.5%		          10,552,379
        
NET ASSETS — 100.0%        $ 717,194,564
        

 

 

(a) See Notes to Financial Statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

ADR American Depositary Receipt

 

CA Canada

 

GR Greece

 

PR Puerto Rico

 

At June 30, 2006 the Fund’s open futures contracts were as follows:

 

Number of
Contracts		      Long Contracts*      Expiration      Market Value
Covered by
Contracts		      Unrealized
Appreciation/
Depreciation

25

      Russell 2000 Future      09/15/06      $ 9,143,750      $ 227,256

 

* Cash pledged as collateral.

 

See notes to financial statements.

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $646,576,516)

    $ 690,541,953

Repurchase agreements, at cost and value

      16,100,232
    

Total Investments

      706,642,185
    

Cash

      398,496

Interest and dividends receivable

      1,035,229

Receivable for capital shares issued

      3,274,668

Receivable for investments sold

      30,882,301

Receivable for variation margin on futures contracts

      131,261

Prepaid expenses and other assets

      8,969
    

Total Assets

      742,373,109
    

Liabilities:

       

Payable for investments purchased

      24,482,230

Payable for capital shares redeemed

      13,100

Accrued expenses and other payables:

       

Investment advisory fees

      497,813

Fund administration and transfer agent fees

      44,037

Distribution fees

      9,145

Administrative servicing fees

      91,105

Other

      41,115
    

Total Liabilities

      25,178,545
    

Net Assets

    $ 717,194,564
    

Represented by:

       

Capital

    $ 631,924,675

Accumulated net investment income (loss)

      1,188,406

Accumulated net realized gain (losses) from investment and futures transactions

      39,526,610

Net unrealized appreciation (depreciation) on investments and futures

      44,554,873
    

Net Assets

    $ 717,194,564
    

Net Assets:

       

Class I Shares

    $ 617,480,609

Class II Shares

      46,120,636

Class III Shares

      1,590,674

Class IV Shares

      52,002,645
    

Total

    $ 717,194,564
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      50,414,886

Class II Shares

      3,798,615

Class III Shares

      129,658

Class IV Shares

      4,245,341
    

Total

      58,588,500
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 12.25

Class II Shares

    $ 12.14

Class III Shares

    $ 12.27

Class IV Shares

    $ 12.25

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 363,920  

Dividend income (net of foreign witholding tax of $299)

      6,102,762  
    

Total Income

      6,466,682  
    

Expenses:

         

Investment advisory fees

      3,241,805  

Fund administration and transfer agent fees

      269,755  

Distribution fees Class II Shares

      58,525  

Administrative servicing fees Class I Shares

      565,924  

Administrative servicing fees Class II Shares

      38,265  

Administrative servicing fees Class III Shares

      1,180  

Administrative servicing fees Class IV Shares

      38,445  

Trustee fees

      13,039  

Custodian fees

      743,355  

Other

      91,939  
    

Total expenses before earnings credit

      5,062,232  
    

Earnings credit (Note 6)

      (728,317 )

Total Expenses

      4,333,915  
    

Net Investment Income (Loss)

      2,132,767  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      44,401,977  

Net realized gains (losses) on futures

      (242,115 )
    

Net realized gains (losses) on investment and futures transactions

      44,159,862  

Net change in unrealized appreciation/depreciation on investments and futures

      9,666,678  
    

Net realized/unrealized gains (losses) on investments and futures

      53,826,540  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 55,959,307  
    

 

See notes to financial statements.

 

16

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 2,132,767      $ 627,104  

Net realized gains (losses) on investment and futures transactions

        44,159,862        84,343,055  

Net change in unrealized appreciation/depreciation on investments and futures

        9,666,678        (65,820,811 )
      
  

Change in net assets resulting from operations

        55,959,307        19,149,348  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (997,674 )      (423,215 )

Net realized gains on investments

        (7,236,630 )      (74,221,499 )

Distributions to Class II shareholders from:

                    

Net investment income

        (21,291 )      (158 )

Net realized gains on investments

        (542,660 )      (5,146,029 )

Distributions to Class III shareholders from:

                    

Net investment income

        (2,858 )      (855 )

Net realized gains on investments

        (19,278 )      (173,428 )

Distributions to Class IV shareholders from:

                    

Net investment income

        (92,420 )      (32,994 )

Net realized gain on investment

        (611,867 )      (6,098,184 )
      
  

Change in net assets from shareholder distributions

        (9,524,678 )      (86,096,362 )
      
  

Change in net assets from capital transactions

        (61,616,121 )      (57,443,650 )
      
  

Change in net assets

        (15,181,492 )      (124,390,664 )

Net Assets:

                    

Beginning of period

        732,376,056        856,766,720  
      
  

End of period

      $ 717,194,564      $ 732,376,056  
      
  

Accumulated net investment income (loss)

      $ 1,188,406      $ 169,882  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Capital Transactions:

                    

Proceeds from shares issued

      $ 39,626,544      $ 37,905,074  

Dividends reinvested

        8,234,297        74,644,664  

Cost of shares redeemed

        (104,723,284 )      (174,572,041 )
      
  
         (56,862,443 )      (62,022,303 )
      
  

Class II Capital Transactions:

                    

Proceeds from shares issued

        5,084,948        13,795,351  

Dividends reinvested

        563,950        5,146,184  

Cost of shares redeemed

        (6,377,151 )      (12,873,745 )
      
  
         (728,253 )      6,067,790  
      
  

Class III Capital Transactions:

                    

Proceeds from shares issued

        338,315        534,641  

Dividends reinvested

        22,136        174,282  

Cost of shares redeemed

        (297,505 )      (1,150,889 )
      
  
         62,946        (441,966 )
      
  

Class IV Capital Transactions:

                    

Proceeds from shares issued

        1,319,031        3,596,419  

Dividends reinvested

        704,287        6,131,174  

Cost of shares redeemed

        (6,111,689 )      (10,774,764 )
      
  
         (4,088,371 )      (1,047,171 )
      
  

Change in net assets from capital transactions

      $ (61,616,121 )    $ (57,443,650 )
      
  

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP VALUE FUND

 

Statements of Changes in Net Assets (continued)

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Share Transactions:

                

Issued

      3,139,614      3,037,441  

Reinvested

      691,352      6,387,509  

Redeemed

      (8,414,398 )    (14,193,748 )
      
  
       (4,583,432 )    (4,768,798 )
      
  

Class II Share Transactions:

                

Issued

      411,136      1,133,868  

Reinvested

      47,926      444,184  

Redeemed

      (517,932 )    (1,051,531 )
      
  
       (58,870 )    526,521  
      
  

Class III Share Transactions:

                

Issued

      26,450      43,707  

Reinvested

      1,856      14,885  

Redeemed

      (23,787 )    (93,976 )
      
  
       4,519      (35,384 )
      
  

Class IV Share Transactions:

                

Issued

      105,958      290,845  

Reinvested

      59,137      524,752  

Redeemed

      (492,396 )    (878,822 )
      
  
       (327,301 )    (63,225 )
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT Small Cap Value Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains
(Losses)		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		    

Ratio of
Expenses

(Prior to
Reimbursements)
to Average

Net Assets(a)

     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                        

Year Ended December 31, 2001(c)

   $ 8.70   —     2.44     2.44     —     (0.78 )   (0.78 )   $ 10.36   28.28%     $ 697,860   1.05%     0.04%     1.15%     (0.06% )   164.87%

Year Ended December 31, 2002

   $ 10.36   —     (2.78 )   (2.78 )   —     (0.21 )   (0.21 )   $ 7.37   (27.16%)     $ 467,165   1.11%     0.01%     1.11%     0.01%     127.77%

Year Ended December 31, 2003

   $ 7.37   (0.02 )   4.21     4.19     —     —     —     $ 11.56   56.85%     $ 715,099   1.11%     (0.18% )   (k )   (k )   126.29%

Year Ended December 31, 2004

   $ 11.56   (0.01 )   2.01     2.00     — (h)   (0.94 )   (0.94 )   $ 12.62   17.30%     $ 754,412   1.11%     (0.09% )   (k )   (k )   132.11%

Year Ended December 31, 2005

   $ 12.62   0.03     0.35     0.38     (0.01 )   (1.46 )   (1.47 )   $ 11.53   3.07%     $ 634,107   1.12%     0.09%     (k )   (k )   188.69%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.53   0.04     0.85     0.89     (0.02 )   (0.15 )   (0.17 )   $ 12.25   7.72% (i)   $ 617,512   1.14% (j)   0.58% (j)   (k )   (k )   64.57%

Class II Shares

                                                                                        

Period Ended December 31, 2002(d)

   $ 10.26   —     (2.68 )   (2.68 )   —     (0.21 )   (0.21 )   $ 7.37   (26.46%) (i)   $ 1,472   1.32% (j)   0.13% (j)   (k )   (k )   127.77%

Year Ended December 31, 2003(e)

   $ 7.37   (0.04 )   4.20     4.16     —     —     —     $ 11.53   56.45%     $ 18,446   1.36%     (0.41% )   (k )   (k )   126.29%

Year Ended December 31, 2004

   $ 11.53   (0.03 )   1.99     1.96     —     (0.94 )   (0.94 )   $ 12.55   17.00%     $ 41,804   1.36%     (0.30% )   (k )   (k )   132.11%

Year Ended December 31, 2005

   $ 12.55   (0.02 )   0.36     0.34     — (h)   (1.46 )   (1.46 )   $ 11.43   2.78%     $ 44,096   1.38%     (0.15% )   (k )   (k )   188.69%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.43   0.03     0.84     0.87     (0.01 )   (0.15 )   (0.16 )   $ 12.14   7.58% (i)   $ 46,123   1.38% (j)   0.35% (j)   (k )   (k )   64.57%

Class III Shares

                                                                                        

Period Ended December 31, 2002(f)

   $ 10.48   —     (2.89 )   (2.89 )   —     (0.21 )   (0.21 )   $ 7.38   (27.88%) (i)   $ 63   1.07% (j)   0.60% (j)   (k )   (k )   127.77%

Year Ended December 31, 2003(e)

   $ 7.38   (0.01 )   4.20     4.19     —     —     —     $ 11.57   56.78%     $ 2,568   1.11%     (0.13% )   (k )   (k )   126.29%

Year Ended December 31, 2004

   $ 11.57   (0.01 )   2.02     2.01     — (h)   (0.94 )   (0.94 )   $ 12.64   17.37%     $ 2,029   1.11%     (0.09% )   (k )   (k )   132.11%

Year Ended December 31, 2005

   $ 12.64   0.03     0.35     0.38     (0.01 )   (1.46 )   (1.47 )   $ 11.55   3.06%     $ 1,445   1.13%     0.08%     (k )   (k )   188.69%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.55   0.04     0.85     0.89     (0.02 )   (0.15 )   (0.17 )   $ 12.27   7.73% (i)   $ 1,591   1.11% (j)   0.62% (j)   (k )   (k )   64.57%

Class IV Shares

                                                                                        

Period Ended December 31, 2003(g)

   $ 7.49   (0.01 )   4.08     4.07     —     —     —     $ 11.56   54.34% (i)   $ 53,826   1.10% (j)   (0.18% )(j)   (k )   (k )   126.29%

Year Ended December 31, 2004

   $ 11.56   (0.01 )   2.01     2.00     — (h)   (0.94 )   (0.94 )   $ 12.62   17.30%     $ 58,521   1.11%     (0.08% )   (k )   (k )   132.11%

Year Ended December 31, 2005

   $ 12.62   0.03     0.35     0.38     (0.01 )   (1.46 )   (1.47 )   $ 11.53   3.07%     $ 52,727   1.12%     0.10%     (k )   (k )   188.69%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.53   0.04     0.85     0.89     (0.02 )   (0.15 )   (0.17 )   $ 12.25   7.74% (i)   $ 52,005   1.11% (j)   0.61% (j)   (k )   (k )   64.57%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from May 6, 2002 (commencement of operations) through December 31, 2002.

 

(e) Net investment income (loss) is based on average shares outstanding during the period.

 

(f) For the period from May 3, 2002 (commencement of operations) through December 31, 2002.

 

(g) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(h) The amount is less than $0.005.

 

(i) Not annualized.

 

(j) Annualized.

 

(k) There were no fee reductions during the period.

 

See notes to financial statements.

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT Small Cap Value Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by

 

20

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation

 

21

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(e) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(f) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(g) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(h) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code,

 

22

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

  

Unrealized
Appreciation

  

Unrealized
Depreciation

  

Net Unrealized
Appreciation
(Depreciation)*

$667,405,147

   $87,125,640   $(47,888,602)   $39,237,038

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(i) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadvisers, for the Fund. The subadvisers listed below manage all or a portion of the Fund’s investments and have the responsibility for making all investment decisions for that portion of the Fund unless otherwise indicated. Below is a list of the subadvisers to the Fund:

 

     Subadvisers*
    

- J.P. Morgan Investment Management, Inc.

- Epoch Investment Partners, Inc.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, GMF pays fees to the subadvisers. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadvisers is as follows for the six months ended June 30, 2006:

 

     Fee Schedule      Total
Fees		      Fees
Retained		      Paid to
Sub-adviser
     Up to $200 million      0.90%      0.40%      0.50%
     $200 million or more      0.85%      0.40%      0.45%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under

 

23

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class I, Class II, and Class III shares of the Fund and 0.20% of Class IV shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $561,821 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $466.

 

24

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $472,513,742 and sales of $555,344,584.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

25

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the Russell 2000 Value Index, for the one-and three-year periods ended September 30, 2005, while underperforming its benchmark for the five-year period. The Board considered that the Fund ranked in the top quartile of the Lipper Small Cap Value Funds category for the three-year period ended September 30, 2005, but had underperformed the median of the category for the one-year period. The Board discussed with management the recent portfolio manager change on the sleeve of the portfolio managed directly by Gartmore and the replacement of one of the Fund’s subadvisers, Dreyfus Corporation with Epoch Investment Partners, Inc. in September 2005.

 

Next, the Board reviewed and considered the Fund’s contractual advisory fee (including subadvisory fees) and breakpoints and noted the contractual advisory fee placed the Fund in the fourth quintile of its Lipper-constructed Expense Group. The Board also considered that the Fund’s total expenses were slightly above the median for the Fund’s Expense Group. The Board discussed with management the Fund’s fees and expenses in light of the breakpoints in place on this Fund. Finally, the Board considered the adviser’s profitability with respect to its management of this Fund and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

29

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

30

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

31

Table of Contents

 

GVIT Small Cap Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
7    Statement of Assets and Liabilities
7    Statement of Operations
8    Statements of Changes in Net Assets
9    Financial Highlights
10    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GSCG (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT Small Cap Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1,
2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
GVIT Small Cap Growth Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,004.40      $ 6.11      1.23%
       Hypothetical1    $ 1,000.00      $ 1,018.70      $ 6.18      1.23%

Class II

      Actual    $ 1,000.00      $ 1,003.20      $ 7.45      1.50%
       Hypothetical1    $ 1,000.00      $ 1,017.36      $ 7.53      1.50%

Class III

      Actual    $ 1,000.00      $ 1,004.40      $ 6.01      1.21%
       Hypothetical1    $ 1,000.00      $ 1,018.80      $ 6.07      1.21%

 

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT Small Cap Growth Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stock      97.1%
Cash Equivalents      2.8%
Other Investments*      11.7%
Liabilities in excess of other assets**      -11.6%
      
       100.0%
      

 

 

 

Top Holdings***       
Healthways, Inc.      2.4%
ITT Educational Services, Inc.      2.3%
Focus Media Holding, Ltd. ADR      2.1%
FactSet Research Systems, Inc.      2.0%
Ceradyne, Inc.      2.0%
Kyphon, Inc.      1.9%
Checkfree Corp.      1.9%
Blackbaud, Inc.      1.7%
ASV, Inc.      1.7%
Financial Federal Corp.      1.6%
Other Assets      80.4%
      
       100.0%
      

 

Top Industries       
Oil & Gas      6.5%
Health Care Services      5.7%
Computer Services, Software & Systems      5.6%
Financial Services      5.6%
Machinery, Equipment, & Supplies      4.3%
Advertising Agencies      4.0%
Internet      2.9%
Transportation      2.9%
Computer Software & Services      2.8%
Casinos & Gambling      2.7%
Other Assets      57.0%
      
       100.0%
      

 

 

* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or

Principal Amount

    Value
        
COMMON STOCKS (97.1%)           
Advertising Agencies (4.0%)           
aQuantive, Inc. (b)   76,902    $ 1,947,928
Focus Media Holding, Ltd. ADR (b)   48,100      3,134,196
ValueClick, Inc. (b)   65,449      1,004,642
        
           6,086,766
        
Advertising Services (1.8%)           
Getty Images, Inc. (b) (c)   26,750      1,698,893
Inventiv Health, Inc. (b)   35,971      1,035,245
        
           2,734,138
        
Auction Houses & Art Dealers (0.6%)       
Sotheby’s Holdings (b) (c)   31,900      837,375
        
Auto Parts & Equipment (2.7%)       
Gentex Corp. (c)   49,100      687,400
LKQ Corp. (b) (c)   77,394      1,470,486
O’Reilly Automotive, Inc. (b)   60,700      1,893,233
        
           4,051,119
        
Biotechnology Research & Production (2.5%)
Adams Respiratory Therapeutics, Inc. (b)   35,400      1,579,548
Arthrocare Corp. (b)   31,900      1,340,119
Palomar Medical Technologies, Inc. (b)   19,000      866,970
        
           3,786,637
        
Business Services (0.2%)           
Optimal Group, Inc. (b)   27,500      371,525
        
Casinos & Gambling (2.7%)           
Scientific Games Corp. (b)   64,400      2,293,928
Shuffle Master, Inc. (b) (c)   53,800      1,763,564
        
           4,057,492
        
Chemicals (0.5%)           
Zoltek Companies, Inc. (b)   26,800      801,052
        
Commercial Information Services (0.6%)
LECG Corp. (b)   47,071      869,401
        
Commercial Services (1.7%)           
CoStar Group, Inc. (b) (c)   30,800      1,842,764
Vertrue, Inc. (b) (c)   18,150      780,995
        
           2,623,759
        
Communications Technology (2.0%)       
AudioCodes Ltd. (b)   2,679      29,201

Shares or

Principal Amount

    Value
        
COMMON STOCKS (continued)       
Communications Technology (continued)
Essex Corp. (b)   47,400    $ 873,108
Glenayre Technologies, Inc. (b)   129,655      342,289
TALX Corp.   28,396      621,021
Veritas DGC, Inc. (b)   22,853      1,178,758
        
           3,044,377
        
Computer Services, Software & Systems (5.6%)
Concur Technologies, Inc. (b)   60,200      931,294
Dealertrack Holdings, Inc. (b)   40,300      891,033
Falconstor Software, Inc. (b)   56,000      390,320
Jupiter Media Corp. (b)   50,018      650,234
Merge Technologies, Inc. (b)   7,744      95,329
MRO Software, Inc. (b)   11,100      222,777
Neoware Systems, Inc. (b)   32,800      403,112
Online Resources Corp. (b)   53,770      555,982
Openwave Systems, Inc. (b)   61,279      707,160
PDF Solutions, Inc. (b)   27,146      336,882
Redback Networks, Inc. (b)   37,000      678,580
Retalix Ltd. (b)   13,700      305,647
RightNow Technologies, Inc. (b)   33,596      560,381
Vasco Data Security International, Inc. (b)   88,800      741,480
Zoran Corp. (b)   44,200      1,075,827
        
           8,546,038
        
Computer Software & Services (2.8%)       
Avid Technology, Inc. (b) (c)   21,600      719,928
Cerner Corp. (b) (c)   44,300      1,643,973
EPIQ Systems, Inc. (b) (c)   44,910      747,302
MicroStrategy, Inc. (b)   11,300      1,101,976
        
           4,213,179
        
Computer Technology (1.1%)           
Trident Microsystems, Inc. (b)   88,100      1,672,138
        
Construction & Engineering (1.1%)       
Chicago Bridge & Iron Co.   71,200      1,719,480
        
Consulting Services (0.5%)           
CRA International, Inc. (b)   17,346      782,998
        
Consumer Electronics (0.4%)           
Websidestory, Inc. (b)   56,000      683,200
        
Cosmetics (0.1%)           
Parlux Fragrances, Inc. (b)   14,340      138,955
        
Diversified Financial Services (1.0%)       
Euronet Worldwide, Inc. (b) (c)   41,147      1,578,810
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
        
COMMON STOCKS (continued)           
Drugs & Pharmaceuticals (0.9%)       
Kos Pharmaceuticals, Inc. (b)   18,780    $ 706,504
Salix Pharmaceuticals, Inc. (b)   54,408      669,218
        
           1,375,722
        
E-Commerce & Services (0.9%)       
Ctrip.com International Ltd. ADR   16,810      858,151
Gmarket, Inc. ADR (b)   29,700      456,489
        
           1,314,640
        
Education (2.3%)           
ITT Educational Services, Inc. (b)   52,700      3,468,187
        
Educational Software (1.3%)           
Blackboard, Inc. (b) (c)   68,300      1,977,968
        
Electronics (1.1%)           
Cree, Inc. (b) (c)   31,250      742,500
Daktronics, Inc.   21,100      609,157
Directed Electronics, Inc. (b)   26,300      345,056
        
           1,696,713
        
Electronics & Medical Systems (2.1%)       
Aspect Medical Systems, Inc. (b)   25,159      438,773
Intralase Corp. (b) (c)   115,857      1,939,446
Syneron Medical Ltd. (b)   41,056      857,249
        
           3,235,468
        
Electronics & Semiconductors (1.3%)       
Kanos Communications, Inc. (b)   29,700      451,143
Supertex, Inc. (b)   20,300      810,782
Tessera Technologies, Inc. (b)   26,844      738,210
        
           2,000,135
        
Entertainment Software (0.7%)       
Take-Two Interactive Software, Inc. (b) (c)   97,790      1,042,441
        
Financial Services (5.6%)           
Corporate Executive Board Co. (The )   19,600      1,963,920
FactSet Research Systems, Inc.   65,975      3,120,617
Financial Federal Corp. (c)   90,075      2,504,986
Open Solutions, Inc. (b)   8,600      228,846
Tradestation Group, Inc. (b)   55,200      699,384
        
           8,517,753
        

Shares or

Principal Amount

    Value
        
COMMON STOCKS (continued)           
Food Distributors (0.6%)           
United Natural Foods, Inc. (b) (c)   28,800    $ 950,976
        
Footwear & Related Apparel (1.1%)       
Crocs, Inc. (b)   23,000      578,450
Iconix Brand Group, Inc. (b)   36,700      599,678
Steve Madden, Ltd.   15,000      444,300
        
           1,622,428
        
Hazardous Waste Disposal (0.5%)       
American Ecology Corp.   27,300      723,450
        
Health Care Facilities (1.1%)           
LCA-Vision, Inc.   31,192      1,650,369
        
Health Care Management Services (0.5%)
Centene Corp. (b)   30,227      711,241
        
Health Care Products (0.5%)           
PSS World Medical, Inc. (b) (c)   41,500      732,475
        
Health Care Services (5.7%)           
Adeza Biomedical Corp. (b)   38,700      542,574
AmSurg Corp. (b) (c)   76,600      1,742,650
Dendrite International, Inc.(b) (c)   64,700      597,828
Healthspring, Inc. (b)   53,600      1,005,000
Healthways, Inc. (b)   68,623      3,612,316
Nighthawk Radiology Holdings, Inc. (b)   25,400      455,676
Visicu, Inc. (b)   40,800      720,120
        
           8,676,164
        
Home Building (0.5%)           
Desarrolladora Homex SA de CV (b)   25,347      831,635
        
Hotels & Motels (1.0%)           
Gaylord Entertainment Co. (b) (c)   35,900      1,566,676
        
Human Resources (0.6%)           
Kenexa Corp. (b)   29,600      942,760
        
Internet (2.9%)           
Checkfree Corp. (b)   57,606      2,854,953
Loopnet, Inc. (b)   5,900      109,799
Stamps.com, Inc. (b) (c)   53,085      1,476,825
        
           4,441,577
        
Jewelry (0.3%)           
Charles & Colvard Ltd.   38,751      408,048
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (continued)           
Machinery, Equipment, & Supplies (4.3%)
ASV, Inc. (b) (c)   109,992    $ 2,534,216
Bucyrus International, Inc. Class A   31,050      1,568,025
Lufkin Industries   16,600      986,538
Nordson Corp.   16,300      801,634
TurboChef Technologies, Inc. (b)   65,843      732,174
        
           6,622,587
        
Medical & Dental Instruments & Supplies (2.7%)
Abaxis, Inc. (b)   24,500      548,065
American Science & Engineering, Inc. (b)   5,750      333,040
Kyphon, Inc. (b) (c)   76,490      2,934,156
Natus Medical, Inc. (b)   22,600      223,514
        
           4,038,775
        
Medical Products (1.4%)           
Allscripts Healthcare Solutions, Inc. (b) (c)   118,600      2,081,430
        
Medical Products & Services (0.2%)       
Vital Images, Inc. (b)   14,300      353,210
        
Metal Forgings & Stampings (0.6%)       
Ladish Company, Inc. (b)   23,300      873,051
        
Miscellaneous Materials & Processing (2.0%)
Ceradyne, Inc. (b)   62,566      3,096,391
        
Multi-Line Insurance (0.8%)           
HealthExtras, Inc. (b)   38,500      1,163,470
        
Networking Products (0.1%)           
Zhone Technologies, Inc. (b)   100,900      205,836
        
Offshore Drilling (0.7%)           
Bronco Drilling Co., Inc. (b)   49,900      1,042,411
        
Oil & Gas (6.5%)           
ATP Oil & Gas Corp. (b)   29,691      1,244,944
Bill Barrett Corp. (b) (c)   33,600      994,896
Carrizo Oil & Gas, Inc. (b)   71,605      2,241,953
Exco Resources, Inc. (b)   44,500      507,300
Hercules Offshore, Inc. (b)   27,600      966,000
Newfield Exploration Co. (b)   41,500      2,031,010
Petrohawk Energy Corp. (b)   84,200      1,060,920
Pioneer Drilling Co. (b)   50,400      778,176
        
           9,825,199
        

Shares or

Principal Amount

    Value
        
COMMON STOCKS (continued)       
Oil Wells Services & Equipment (1.1%)
Drill-Quip, Inc. (b)    20,800    $ 1,714,752
         
Pharmaceuticals (1.9%)            
Aspreva Pharmaceuticals Corp. (b)    70,900      1,924,226
Sciele Pharma, Inc. (b)    40,348      935,670
         
            2,859,896
         
Printing (0.2%)            
VistaPrint Ltd. (b) (c)    12,500      334,250
         
Resorts & Theme Parks (1.0%)       
Vail Resorts, Inc. (b) (c)    41,700      1,547,070
         
Restaurants (0.9%)            
Panera Bread Co., Class A (b)    21,200      1,425,488
         
Retail (0.3%)            
Citi Trends, Inc. (b)    9,700      414,093
         
Software & Services (1.7%)       
Blackbaud, Inc.    116,100      2,635,470
         
Sporting & Recreational Goods (0.9%)       
Zumiez, Inc. (b)    35,400      1,329,978
         
Storage (0.5%)            
Mobile Mini, Inc. (b) (c)    27,300      798,798
         
Telecommunications (0.8%)       
Anadigics, Inc. (b)    49,600      333,312
Oplink Communications, Inc. (b)    47,200      864,232
         
            1,197,544
         
Textile & Apparel (0.6%)            
Volcom, Inc. (b)    29,600      946,904
         
Transportation (2.9%)            
J.B. Hunt Transport Services, Inc.    81,300      2,025,183
Kansas City Southern Industries, Inc. (b)    87,050      2,411,285
         
            4,436,468
         
Wholesale & International Trade (0.8%)
Central European Distribution Corp. (b)    48,850      1,229,066
         

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or

Principal Amount

    Value
               
COMMON STOCKS (continued)       
Wireless Equipment (0.8%)       
Carrier Access Corp. (b)      33,500    $ 277,045
Sierra Wireless, Inc. (b)      44,300      799,172
Stratex Networks, Inc. (b)      49,900      169,161
           
              1,245,378
           
Total Common Stocks             147,902,780
           
CASH EQUIVALENTS (2.8%)       
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages in a joint trading account at 5.17% Dated 06/30/06, due 07/03/06, repurchase
price $4,296,832) 		    $ 4,295,007      4,295,007
           
Total Cash Equivalents             4,295,007
           

Shares or

Principal Amount

    Value  
                 
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (11.7%)   
Pool of short-term securities for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)    $ 17,877,903    $ 17,877,903  
           
Total Short-Term Securities Held
as Collateral for Securities on Loan		      17,877,903  
           
Total Investments (Cost $137,264,774) (a) — 111.6%      170,075,690  
           
Liabilities in excess of other assets — (11.6%)             (17,722,891 )
           
NET ASSETS — 100.0%           $ 152,352,799  
           

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Represents non-income producing securities.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

ADR American Depository Receipt

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $132,969,767)

    $ 165,780,683  

Repurchase agreements, at cost and value

      4,295,007  
    

Total Investments

      170,075,690  
    

Cash

      534  

Interest and dividends receivable

      36,933  

Receivable for capital shares issued

      209,243  

Receivable for investments sold

      1,032,178  

Prepaid expenses and other assets

      28,934  
    

Total Assets

      171,383,512  
    

Liabilities:

         

Payable for investments purchased

      1,004,104  

Payable for capital shares redeemed

      1,603  

Payable for return of collateral received for securities on loan

     17,877,903  

Accrued expenses and other payables:

         

Investment advisory fees

      116,484  

Fund administration and transfer agent fees

      10,226  

Distribution fees

      4,012  

Administrative servicing fees

      16,362  

Other

      19  
    

Total Liabilities

      19,030,713  
    

Net Assets

    $ 152,352,799  
    

Represented by:

         

Capital

    $ 154,130,918  

Accumulated net investment income (loss)

      (680,012 )

Accumulated net realized gain (losses) from investments

      (33,909,023 )

Net unrealized appreciation (depreciation) on investments

      32,810,916  
    

Net Assets

    $ 152,352,799  
    

Net Assets:

         

Class I Shares

    $ 131,793,494  

Class II Shares

      19,774,809  

Class III Shares

      784,496  
    

Total

    $ 152,352,799  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      8,254,946  

Class II Shares

      1,252,250  

Class III Shares

      49,422  
    

Total

      9,556,618  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 15.97  

Class II Shares

    $ 15.79  

Class III Shares

    $ 15.87  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 193,754  

Dividend income

      141,599  

Income from securities lending

      25,137  
    

Total Income

      360,490  
    

Expenses:

         

Investment advisory fees

      781,634  

Fund administration and transfer agent fees

      59,099  

Distribution fees Class II Shares

      25,766  

Administrative servicing fees
Class I Shares

      113,523  

Administrative servicing fees
Class II Shares

      17,921  

Administrative servicing fees
Class III Shares

      605  

Trustee fees

      5,018  

Other

      37,652  
    

Total expenses before earnings credit

      1,041,218  

Earnings credit (Note 6)

      (716 )
    

Total Expenses

      1,040,502  
    

Net Investment Income (Loss)

      (680,012 )
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      10,547,938  

Net change in unrealized appreciation/depreciation on investments

      (8,724,523 )
    

Net realized/unrealized gains (losses) on investments

      1,823,415  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 1,143,403  
    

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT SMALL CAP GROWTH FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

From Investment Activities:

                 

Operations:

                 

Net investment income (loss)

    $ (680,012 )   $ (1,336,349 )

Net realized gains (losses) on investment transactions

      10,547,938       9,880,349  

Net change in unrealized appreciation/depreciation on investments

      (8,724,523 )     2,054,166  
    
 

Change in net assets resulting from operations

      1,143,403       10,598,166  
    
 

Change in net assets from capital transactions

      (10,828,968 )     (22,008,335 )
    
 

Change in net assets

      (9,685,565 )     (11,410,169 )

Net Assets:

                 

Beginning of period

      162,038,364       173,448,533  
    
 

End of period

    $ 152,352,799     $ 162,038,364  
    
 

Accumulated net investment income (loss)

    $ (680,012 )   $ —  
    
 

CAPITAL TRANSACTIONS:

                 

Class I Capital Transactions:

                 

Proceeds from shares issued

    $ 18,695,617     $ 54,670,402  

Cost of shares redeemed

      (29,747,883 )     (78,750,506 )
    
 
       (11,052,266 )     (24,080,104 )
    
 

Class II Capital Transactions:

                 

Proceeds from shares issued

      4,258,327       8,239,519  

Cost of shares redeemed

      (3,980,916 )     (5,935,905 )
    
 
       277,411       2,303,614  
    
 

Class III Capital Transactions:

                 

Proceeds from shares issued

      200,511       255,322  

Cost of shares redeemed

      (254,624 )     (487,167 )
    
 
       (54,113 )     (231,845 )
    
 

Change in net assets from capital transactions

    $ (10,828,968 )   $ (22,008,335 )
    
 

SHARE TRANSACTIONS:

                 

Class I Share Transactions:

                 

Issued

      1,127,469       3,701,411  

Redeemed

      (1,785,890 )     (5,428,371 )
    
 
       (658,421 )     (1,726,960 )
    
 

Class II Share Transactions:

                 

Issued

      256,618       559,291  

Redeemed

      (244,333 )     (409,024 )
    
 
       12,285       150,267  
    
 

Class III Share Transactions:

                 

Issued

      12,150       17,732  

Redeemed

      (15,422 )     (33,167 )
    
 
       (3,272 )     (15,435 )
    
 

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT Small Cap Growth Fund

 

        Investment Activities:
               Ratios/Supplemental Data:
  
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)		  

Class I Shares

                                                                        

Year Ended December 31, 2001(c)

   $ 16.24   (0.07 )   (1.69 )   (1.76 )   $ 14.48   (10.84 %)   $ 143,982   1.30 %   (0.65 %)   1.43 %   (0.78 %)   124.61 %

Year Ended December 31, 2002

   $ 14.48   (0.11 )   (4.71 )   (4.82 )   $ 9.66   (33.29 %)   $ 100,308   1.35 %   (1.03 %)   1.35 %   (1.03 %)   165.97 %

Year Ended December 31, 2003

   $ 9.66   (0.11 )   3.42     3.31     $ 12.97   34.27 %   $ 156,978   1.34 %   (1.03 %)    (h )    (h )   121.69 %

Year Ended December 31, 2004

   $ 12.97   (0.12 )   1.86     1.74     $ 14.71   13.42 %   $ 156,535   1.21 %   (0.90 %)    (h )    (h )   112.22 %

Year Ended December 31, 2005

   $ 14.71   (0.13 )   1.32     1.19     $ 15.90   8.09 %   $ 141,684   1.22 %   (0.83 %)    (h )    (h )   58.28 %

Six Months Ended June 30, 2006 (Unaudited)

   $ 15.90   (0.07 )   0.14     0.07     $ 15.97   0.44 %(f)   $ 131,793   1.23 %(g)   (0.79 %)(g)    (h )    (h )   30.51 %

Class II Shares

                                                                        

Period Ended December 31, 2002(d)

   $ 13.59   (0.04 )   (3.92 )   (3.96 )   $ 9.63   (29.14 %)(f)   $ 1,652   1.63 %(g)   (1.33 %)(g)    (h )    (h )   165.97 %

Year Ended December 31, 2003

   $ 9.63   (0.09 )   3.37     3.28     $ 12.91   34.06 %   $ 8,842   1.59 %   (1.29 %)    (h )    (h )   121.69 %

Year Ended December 31, 2004

   $ 12.91   (0.12 )   1.82     1.70     $ 14.61   13.17 %   $ 15,917   1.47 %   (1.16 %)    (h )    (h )   112.22 %

Year Ended December 31, 2005

   $ 14.61   (0.14 )   1.27     1.13     $ 15.74   7.73 %   $ 19,521   1.46 %   (1.08 %)    (h )    (h )   58.28 %

Six Months Ended June 30, 2006 (Unaudited)

   $ 15.74   (0.09 )   0.14     0.05     $ 15.79   0.32 %(f)   $ 19,775   1.50 %(g)   (1.06 %)(g)    (h )    (h )   30.51 %

Class III Shares

                                                                        

Period Ended December 31, 2002(e)

   $ 10.95   (0.04 )   (1.29 )   (1.33 )   $ 9.62   (12.15 %)(f)   $ 17   1.27 %(g)   (0.94 %)(g)    (h )    (h )   165.97 %

Year Ended December 31, 2003

   $ 9.62   (0.05 )   3.33     3.28     $ 12.90   34.10 %   $ 978   1.34 %   (1.04 %)    (h )    (h )   121.69 %

Year Ended December 31, 2004

   $ 12.90   (0.14 )   1.87     1.73     $ 14.63   13.41 %   $ 996   1.21 %   (0.91 %)    (h )    (h )   112.22 %

Year Ended December 31, 2005

   $ 14.63   (0.14 )   1.31     1.17     $ 15.80   8.00 %   $ 833   1.23 %   (0.84 %)    (h )    (h )   58.28 %

Six Months Ended June 30, 2006 (Unaudited)

   $ 15.80   (0.07 )   0.14     0.07     $ 15.87   0.44 %(f)   $ 784   1.21 %(g)   (0.77 %)(g)    (h )    (h )   30.51 %

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from March 7, 2002 (commencement of operations) through December 31, 2002.

 

(e) For the period from July 5, 2002 (commencement of operations) through December 31, 2002.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT Small Cap Growth Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
     Maturity Date
Bank Note — Floating Rate    Bank of America    $ 1,500,000    5.31 %   07/03/06
Commercial Paper    Aegis Finance LLC      1,493,193    5.29 %   07/21/06
Funding Agreement — GIC    GE Life and Annuity      1,000,000    5.28 %   07/14/06
Master Note — Floating    CDC Financial Product Inc.      9,950,000    5.41 %   07/03/06
Medium Term Note — Floating    General Electric Capital Corp.      1,000,057    5.27 %   09/08/06
Medium Term Note — Floating    Tango Finance Corp.      1,002,099    5.39 %   07/03/06
Repurchase Agreement    Bank of America Securities LLC      1,932,554    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

        $17,404,836

    $ 17,877,903

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify to or continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

    Unrealized
Appreciation
    Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*

$137,733,838

    $40,816,880    $(8,475,028)   $32,341,852

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadvisers, for the Fund. The subadvisers listed below manage all or a portion of the Fund’s investments and have the responsibility for making all investment decisions for that portion of the Fund unless otherwise indicated. Below is a list of the subadvisers to the Fund:

 

     Subadvisers
    

- Waddell & Reed Investment Management Company

- Oberweis Asset Management, Inc.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.95% based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, GMF pays fees of 0.60% to the subadvisers.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

*

The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

 

Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months June 30, 2006, Nationwide Financial Services received $123,323 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $148.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $48,049,188 and sales of $59,315,661.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the Russell 2000 Growth Index, for the one-year period ended September 30, 2005 but had underperformed the benchmark over the three- and five-year periods. The Board noted however, that the Fund ranked in the top quartile of the Lipper Small-Cap Growth Funds category for the one- and three-year periods.

 

The Board then considered the Fund’s contractual advisory fee (including subadvisory fees) which placed the Fund in the fourth quintile of its Lipper-constructed Expense Group and the Fund’s total expenses which were slightly above the median of its Lipper Expense Group. The Board discussed with management the absence of breakpoints on the Fund’s advisory fee and determined that management’s decision to not provide breakpoints on this capacity-constrained fund was reasonable. The Board determined that although the contractual advisory fee was higher than the median of the Lipper Expense Group, the Fund had delivered good relative performance. Finally, the Board reviewed and considered the adviser’s profitability and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92  

Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

18

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

19

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

Table of Contents

 

Gartmore GVIT Worldwide Leaders Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
7    Financial Highlights
8    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GWWL (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Worldwide Leaders Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

           Beginning
Account Value,
January 1, 2006
   

Ending
Account Value,
June 30,

2006

   

Expenses

Paid
During Period*

    Annualized
Expense Ratio*
Gartmore GVIT Worldwide Leaders Fund                                

Class I

      Actual   $ 1,000.00    $ 1,077.90    $ 6.08    1.18%
       Hypothetical1   $ 1,000.00    $ 1,018.95    $ 5.92    1.18%

Class III

      Actual   $ 1,000.00    $ 1,077.20    $ 6.08    1.18%
       Hypothetical1   $ 1,000.00    $ 1,018.95    $ 5.92    1.18%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Worldwide Leaders Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      99.0%
Cash Equivalents      3.8%
Other Investments*      11.1%
Liabilities in excess of other assets**      -13.9%
      
       100.0%
      

 

 

Top Holdings***       
AstraZeneca PLC      5.0%
JP Morgan Chase & Co.      4.6%
Fedex Corp.      4.5%
Lloyds TSB Group PLC      4.3%
UniCredito Italiano SPA      4.2%
ConocoPhillips      4.2%
Renault SA      4.1%
CB Richard Ellis Group, Inc      4.0%
General Electric Co.      4.0%
DSG International PLC      4.0%
Other Assets      57.1%
      
       100.0%
      
Top Industries       
Financial Services      13.3%
Real Estate      9.7%
Transportation      7.9%
Oil & Gas      7.4%
Finance      7.1%
Telecommunications      6.9%
Electronics      5.9%
Pharmaceuticals      5.0%
Banking      4.2%
Automotive      4.1%
Other Assets      28.5%
      
       100.0%
      

 

Top Countries       
United States      42.1%
United Kingdom      20.3%
Japan      13.8%
France      8.4%
Italy      4.2%
Switzerland      3.9%
Finland      3.0%
Germany      2.1%
Australia      0.8%
South Korea      0.4%
Other Assets      1.0%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT WORLDWIDE LEADERS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (99.0%)           
AUSTRALIA (0.8%)           
Computer Software & Services (0.8%)       
Computershare Ltd. (c) (d)   63,270    $ 368,607
        
FINLAND (3.0%)           
Telecommunications (3.0%)           
Nokia Oyj (c)   72,100      1,461,496
        
FRANCE (8.4%)           
Automotive (4.1%)           
Renault SA (c)   18,800      2,017,138
        
Chemicals (1.1%)           
Arkema (b) (d)   13,680      533,785
        
Oil & Gas (3.2%)           
Total SA (c) (d)   24,000      1,576,423
        
           4,127,346
        
GERMANY (2.1%)           
Machinery (2.1%)           
MAN AG (c)   14,400      1,042,106
        
ITALY (4.2%)           
Banking (4.2%)           
UniCredito Italiano SPA (c)   265,500      2,076,260
        
JAPAN (13.8%)           
Electronics (3.0%)           
Toshiba Corp. (c) (d)   227,000      1,482,448
        
Financial Services (5.2%)           
Mizuho Financial Group, Inc. (c)   182      1,543,786
Nomura Holdings, Inc. (c)   52,200      980,512
        
           2,524,298
        
Real Estate (5.6%)           
Mitsui Fudosan Co. Ltd. (c) (d)   72,000      1,565,040
Sumitomo Realty & Development Co. Ltd. (c)   49,000      1,209,296
        
           2,774,336
        
           6,781,082
        
SOUTH KOREA (0.4%)           
Semiconductors (0.4%)           
Hynix Semiconductor, Inc. (b)   5,800      181,656
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWITZERLAND (3.9%)           
Financial Services (3.9%)           
Julius Baer Holding Ltd. (c) (d)   21,875    $ 1,891,329
        
UNITED KINGDOM (20.3%)           
Aerospace & Defense (0.0%)           
Rolls-Royce Group PLC, B Shares   8,285,200      15,473
        
Financial Services (4.3%)           
Lloyds TSB Group PLC (c)   217,000      2,125,519
        
Mining (3.1%)           
Rio Tinto PLC (c)   28,500      1,500,533
        
Pharmaceuticals (5.0%)           
AstraZeneca PLC (c)   41,100      2,471,125
        
Retail (4.0%)           
DSG International PLC (c)   554,000      1,954,275
        
Telecommunications (3.9%)           
Vodafone Group PLC (c)   892,700      1,899,773
        
           9,966,698
        
UNITED STATES (42.1%)           
Agriculture (3.4%)           
Archer-Daniels-Midland Co.   40,600      1,675,968
        
Computers (3.6%)           
Apple Computer, Inc. (b)   31,100      1,776,432
        
Diversified Manufacturing (4.0%)       
General Electric Co.   59,300      1,954,528
        
Electronics (2.9%)           
Intel Corp.   75,400      1,428,076
        
Finance (7.1%)           
JP Morgan Chase & Co.   53,300      2,238,600
Lazard Ltd.   30,200      1,220,080
        
           3,458,680
        
Machinery & Equipment (3.1%)       
Caterpillar, Inc.   20,200      1,504,496
        
Oil & Gas (4.2%)           
ConocoPhillips   31,500      2,064,195
        
Real Estate (4.0%)           
CB Richard Ellis Group, Inc (b)   78,800      1,962,120
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT WORLDWIDE LEADERS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
UNITED STATES (continued)             
Restaurants (1.9%)             
McDonald’s Corp.     27,500    $ 924,000
          
Transportation (7.9%)             
Fedex Corp.     18,700      2,185,283
Norfolk Southern Corp.     31,900      1,697,718
          
             3,883,001
          
             20,631,496
          
Total Common Stocks            48,528,076
          
CASH EQUIVALENTS (3.8%)             
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $1,849,767)   $ 1,848,981      1,848,981
          
Total Cash Equivalents            1,848,981
          
Shares or
Principal Amount		    Value  
                
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (11.1%)   
Pool of short-term securities for Gartmore Variable Insurance Mutual Funds — Note 2 (Securities Lending)   $ 5,427,355    $ 5,427,355  
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      5,427,355  
          
Total Investments (Cost $52,326,763) (a) — 113.9%      55,804,412  
Liabilities in excess of
other assets — (13.9%)		            (6,796,087 )
          
NET ASSETS — 100%          $ 49,008,325  
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Non-income producing securities.

 

(c) Fair Valued Security.

 

(d) All or part of security was on loan as of June 30, 2006.

 

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation
(Depreciation)		  
Short Contracts:                                    

Japanese Yen

      07/05/06      $ (424,530 )    $ (432,204 )    $ (7,674 )

Euro

      07/03/06        (467,475 )      (476,865 )      (9,390 )
Total Short Contracts:             $ (892,005 )    $ (909,069 )    $ (17,064 )
Long Contract:                                    

Euro

      07/03/06      $ 196,464      $ 197,742      $ 1,278  

Swiss Franc

      07/03/06        42,302        42,694        392  

British Sterling Pound

      07/03/06        113,440        115,739        2,299  

British Sterling Pound

      07/03/06        209,296        211,112        1,816  

Japanese Yen

      07/05/06        116,957        117,263        306  
Total Long Contracts:             $ 678,459      $ 684,550      $ 6,091  

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT WORLDWIDE LEADERS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $50,477,782)

    $ 53,955,431  

Repurchase agreements, at cost and value

      1,848,981  
    

Total Investments

      55,804,412  
    

Foreign currencies, at value (cost $6,524)

      6,535  

Interest and dividends receivable

      92,522  

Receivable for capital shares issued

      22,843  

Receivable for investments sold

      1,402,371  

Reclaims receivable

      3,923  

Prepaid expenses and other assets

      625  
    

Total Assets

      57,333,231  
    

Liabilities:

         

Payable to custodian

      5,670  

Payable for investments purchased

      2,742,859  

Payable for capital shares redeemed

      16,545  

Unrealized depreciation on forward foreign currency contracts

      10,973  

Payable for return of collateral received for securities on loan

      5,427,355  

Accrued expenses and other payables:

         

Investment advisory fees

      110,824  

Fund administration and transfer agent fees

      4,562  

Administrative servicing fees

      3,971  

Other

      2,147  
    

Total Liabilities

      8,324,906  
    

Net Assets

    $ 49,008,325  
    

Represented by:

         

Capital

    $ 53,656,414  

Accumulated net investment income (loss)

      160,351  

Accumulated net realized gains (losses) from investment and foreign currency transactions

      (8,280,261 )

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      3,471,821  
    

Net Assets

    $ 49,008,325  
    

Net Assets:

         

Class I Shares

    $ 28,256,030  

Class III Shares

      20,752,295  
    

Total

    $ 49,008,325  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      2,067,617  

Class III Shares

      1,518,994  
    

Total

      3,586,611  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 13.67  

Class III Shares

    $ 13.66  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 18,463  

Dividend income (net of foreign withholding tax of $55,657)

      642,736  

Income from securities lending

      13,763  
    

Total Income

      674,962  
    

Expenses:

         

Investment advisory fees

      217,034  

Fund administration and transfer agent fees

      22,751  

Administrative servicing fees
Class I Shares

      22,284  

Administrative servicing fees
Class III Shares

      14,003  

Trustee fees

      858  

Other

      7,678  
    

Total expenses before earnings credit

      284,608  

Earnings credit (Note 6)

      (107 )
    

Total Expenses

      284,501  
    

Net Investment Income (Loss)

      390,461  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      3,606,949  

Net realized gains (losses) on foreign currency transactions

      44,483  
    

Net realized gains (losses) on investment and foreign currency transactions

      3,651,432  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (428,920 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      3,222,512  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 3,612,973  
    

 

See notes to financial statements.

 

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Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT WORLDWIDE LEADERS FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 390,461      $ 65,442  

Net realized gains (losses) on investment and foreign currency transactions

        3,651,432        7,595,008  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (428,920 )      (796,330 )
      
  

Change in net assets resulting from operations

        3,612,973        6,864,120  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (129,884 )      (270,433 )

Distributions to Class III shareholders from:

                    

Net investment income

        (91,425 )      (79,754 )
      
  

Change in net assets from shareholder distributions

        (221,309 )      (350,187 )
      
  

Change in net assets from capital transactions

        244,845        2,705,661  
      
  

Change in net assets

        3,636,509        9,219,594  

Net Assets:

                    

Beginning of period

        45,371,816        36,152,222  
      
  

End of period

      $ 49,008,325      $ 45,371,816  
      
  

Accumulated net investment income (loss)

      $ 160,351      $ (8,801 )
      
  

CAPITAL TRANSACTIONS:

                    

Class I Capital Transactions:

                    

Proceeds from shares issued

      $ 1,072,221      $ 3,652,072  

Dividends reinvested

        129,884        270,433  

Cost of shares redeemed

        (4,283,574 )      (8,105,205 )
      
  
         (3,081,469 )      (4,182,700 )
      
  

Class III Capital Transactions:

                    

Proceeds from shares issued

        5,592,594        9,013,088  

Dividends reinvested

        91,425        79,754  

Cost of shares redeemed

        (2,357,705 )      (2,204,481 )
      
  
         3,326,314        6,888,361  
                     
      
  

Change in net assets from capital transactions

      $ 244,845      $ 2,705,661  
      
  

SHARE TRANSACTIONS:

                    

Class I Share Transactions:

                    

Issued

        78,801        324,392  

Reinvested

        9,656        25,257  

Redeemed

        (311,786 )      (727,932 )
      
  
         (223,329 )      (378,283 )
      
  

Class III Share Transactions:

                    

Issued

        415,235        770,878  

Reinvested

        6,806        7,448  

Redeemed

        (175,461 )      (190,295 )
      
  
         246,580        588,031  
      
  

 

See notes to financial statements.

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Worldwide Leaders Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Tax
Return of
Capital		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                        

Year Ended December 31, 2001(c)

   $ 11.65   0.07     (2.26 )   (2.19 )   (0.18 )   —     (0.18 )   $ 9.28   (18.81% )   $ 70,469   1.20%     0.66%     1.30%     0.56%     128.06%

Year Ended December 31, 2002

   $ 9.28   (0.04 )   (2.29 )   (2.33 )   (0.08 )   (0.02 )   (0.10 )   $ 6.85   (25.39% )   $ 26,467   1.32%     0.29%     1.32%     0.29%     529.97%

Year Ended December 31, 2003

   $ 6.85   0.01     2.46     2.47     —     —     —     $ 9.32   36.06%     $ 27,624   1.32%     0.30%     (g )   (g )   603.34%

Year Ended December 31, 2004

   $ 9.32   0.09     1.37     1.46     —     —     —     $ 10.78   15.67%     $ 28,776   1.25%     0.95%     (g )   (g )   452.01%

Year Ended December 31, 2005

   $ 10.78   0.01     2.04     2.05     (0.10 )   —     (0.10 )   $ 12.73   19.34%     $ 29,173   1.29%     0.18%     (g )   (g )   360.00%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.73   0.10     0.90     1.00     (0.06 )   —     (0.06 )   $ 13.67   7.79% (e)   $ 28,256   1.18% (f)   1.51% (f)   (g )   (g )   141.44%

Class III Shares

                                                                                        

Period Ended December 31, 2003(d)

   $ 6.89   (0.01 )   2.44     2.43     —     —     —     $ 9.32   35.27% (e)   $ 5,853   1.35% (f)   (0.31% )(f)   (g )   (g )   603.34%

Year Ended December 31, 2004

   $ 9.32   0.09     1.37     1.46     —     —     —     $ 10.78   15.67%     $ 7,376   1.25%     0.94%     (g )   (g )   452.01%

Year Ended December 31, 2005

   $ 10.78   0.01     2.04     2.05     (0.10 )   —     (0.10 )   $ 12.73   19.34%     $ 16,198   1.29%     0.13%     (g )   (g )   360.00%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.73   0.09     0.90     0.99     (0.06 )   —     (0.06 )   $ 13.66   7.72% (e)   $ 20,752   1.18% (f)   1.56% (f)   (g )   (g )   141.44%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distingguishing amoung the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period May 2, 2003 (commencement of operations) through December 31, 2003.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

See notes to financial statements.

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Worldwide Leaders Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee,

 

8

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 300,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      497,731    5.29%    07/21/06
Master Note — Floating    CDC Financial Product Inc.      750,000    5.41%    07/03/06
Medium Term Note — Floating    Beta Finance Inc.      100,000    5.37%    07/03/06
Repurchase Agreement    Bank of America Securities LLC      3,779,624    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

     

Value of Collateral

$5,315,375

     

$5,427,355

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e.,

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of

Securities

   

Unrealized

Appreciation

   

Unrealized

Depreciation

  

Net Unrealized

Appreciation

(Depreciation)*

$52,462,054

    $4,273,849    $(931,491)   $3,342,358

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund. Gartmore Global Partners (the “subadviser”) manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. The subadviser is an affiliate of GMF and GGAMT. Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

     Fee Schedule      Total
Fees		      Fees
Retained		      Paid to
Sub-adviser
    

Up to $50 million

      0.90%      0.35%      0.55%
    

$50 million or more

      0.85%      0.35%      0.50%

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the MSCI World Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to the Fund’s base fee.

 

Out or Underperformance

    Change in Fees

+/- 1 percentage point

    +/-0.02%

+/- 2 percentage point

    +/-0.04%

+/- 3 percentage point

    +/-0.06%

+/- 4 percentage point

    +/-0.08%

+/- 5 percentage point

    +/-0.10%

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months June 30, 2006, Nationwide Financial Services received $36,192 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $2,707.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $69,019,000 and sales of $68,899,044.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs if any, would be included in custodian fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub- advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;
  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the MSCI World Index, for the one- and three-year periods ended September 30, 2005, while slightly underperforming the benchmark for the five-year period. The Board further considered that the Fund’s performance ranked in the top quartile of the Lipper Global Large-Cap Core Funds category for the one- and three-year periods ended September 30, 2005, and had outperformed the median of this Lipper category by 1,438 basis points for the one year period ended September 30, 2005.

 

Next, the Board reviewed the Fund’s contractual advisory fee (including the subadvisory fee) and considered this fee placed the Fund in the fifth quintile of the Fund’s Lipper-constructed Expense Group. The Board noted, however, that the Fund implemented a performance-based fee structure on January 1, 2006, and upon such implementation, immediately reduced its base management fee by 10 basis points. The Board considered that total expenses for the Fund placed it above the median of the Lipper Expense Group, and noted that the higher expense ratio was primarily due to distribution costs. Finally, the Board reviewed the adviser’s profitability in light of all of these factors and concluded it was not excessive.

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Board approve a new Subadvisory agreement with newly-unaffiliated GGP, in reliance upon the Manager of Managers Exemptive order the Funds have obtained from the SEC to take effect immediately upon the closing of the U.K. Sale to ensure continued provision of Subadvisory services by GGP to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale: (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of affiliated GGP at this time; (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies used by affiliated GGP now; and (3) the Subadvisory fees paid to unaffiliated GGP will be the same as those currently paid to affiliated GGP. At the time the Board selected and approved the adviser to the Fund, Board considered, among other factors, the advisory fee compared to a peer group of funds, the extent to which economies of scale would be realized as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of Fund shareholders. Since the adviser will pay the sub-adviser from the fees paid by the Fund to the adviser, and since the fees and expenses for the Fund will not change as a result of the change to the sub-adviser, the Board did not further consider these factors. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the continuation of affiliated GGP’s subadvisory agreement with new unaffiliated GGP, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by
Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

20

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

Table of Contents

 

GVIT Mid Cap Index Fund

 

(formerly Dreyfus GVIT Mid Cap Index Fund)

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
10    Statement of Assets and Liabilities
10    Statement of Operations
11    Statements of Changes in Net Assets
13    Financial Highlights
14    Notes to Financial Statements

 

Commentary provided by Gartmore Global Investments, investment adviser to Gartmore Variable Insurance Trust. All opinions and estimates included in this report constitute Gartmore Global Investments’ judgment as of the date of this report and are subject to change without notice.

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GMCI (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT Mid Cap Index Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
  
Mid Cap Index Fund                                         

Class I

      Actual    $ 1,000.00      $ 1,040.80      $ 2.63      0.52%  
       Hypothetical1    $ 1,000.00      $ 1,022.22      $ 2.61      0.52%  

Class II

      Actual    $ 1,000.00      $ 1,040.10      $ 3.49      0.69%  
       Hypothetical1    $ 1,000.00      $ 1,021.38      $ 3.46      0.69%  

Class ID

      Actual    $ 1,000.00      $ 957.30      $ 0.51 (a)    0.31% (a)
       Hypothetical1    $ 1,000.00      $ 1,023.26      $ 1.56 (b)    0.31% (b)

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

a Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

b Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT Mid Cap Index Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Common Stock      96.7%
Cash Equivalents      3.3%
Other Investments*      24.5%
Liabilities in excess of other assets**      -24.5%
      
       100.0%
      

 

 

Top Holdings***       
Peabody Energy Corp.      1.3%
Expeditors International of Washington, Inc.      1.1%
Cognizant Technology Solutions Corp.      0.8%
C.H. Robinson Worldwide, Inc.      0.8%
Smith International, Inc.      0.8%
Noble Energy, Inc.      0.7%
Precision Castparts Corp.      0.7%
Microchip Technology, Inc.      0.6%
ENSCO International, Inc.      0.6%
Questar Corp.      0.6%
Other Assets      92.0%
      
       100.0%
      

 

Top Industries       
Oil & Gas      7.9%
Utilities      7.5%
Retail      6.8%
Health Care      6.1%
Electronics      6.0%
Insurance      5.7%
Computer Software & Services      5.2%
Banks      4.4%
Manufacturing      3.6%
Real Estate Investment Trusts      3.6%
Other Assets      43.2%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (96.7%)           
Aerospace & Defense (1.0%)       
Alliant Techsystems, Inc. (c) (b)   20,200    $ 1,542,270
Precision Castparts Corp.   76,400      4,565,664
Sequa Corp., Class A (c) (b)   3,500      285,250
        
           6,393,184
        
Airlines (0.4%)           
AirTran Holdings, Inc. (c) (b)   49,000      728,140
Alaska Air Group, Inc. (c) (b)   20,800      819,936
JetBlue Airways Corp. (c) (b)   90,200      1,095,028
        
           2,643,104
        
Amusement & Recreation (0.4%)       
Boyd Gaming Corp.   23,900      964,604
Callaway Golf Co. (c)   36,000      467,640
International Speedway Corp.   19,300      894,941
        
           2,327,185
        
Auto Parts & Equipment (1.1%)       
Advance Auto Parts, Inc.   60,050      1,735,445
ArvinMeritor, Inc. (c)   40,825      701,782
Bandag, Inc. (c)   6,400      234,176
BorgWarner Automotive, Inc.   31,300      2,037,630
Gentex Corp. (c)   84,700      1,185,800
Lear Corp. (c)   36,800      817,328
Modine Manufacturing Co.   18,400      429,824
        
           7,141,985
        
Automotive (0.5%)           
Adesa, Inc.   49,100      1,091,984
Carmax, Inc. (b)   60,400      2,141,784
        
           3,233,768
        
Banks (4.4%)           
Associated Banc Corp.   74,515      2,349,458
Astoria Financial Corp.   47,350      1,441,808
Cathay Bancorp, Inc. (c)   27,500      1,000,450
City National Corp.   24,400      1,588,196
Colonial Bancgroup, Inc.   89,700      2,303,496
Cullen Frost Bankers, Inc.   26,000      1,489,800
First Niagara Financial Group, Inc.   67,400      944,948
FirstMerit Corp. (c)   43,700      915,078
Greater Bay Bancorp (c)   27,600      793,500
IndyMac Bancorp, Inc. (c)   38,100      1,746,885
Mercantile Bankshare Corp.   67,450      2,405,941
New York Community Bancorp, Inc. (c)   145,488      2,402,007
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Banks (continued)           
SVB Financial Group (c) (b)   21,500    $ 977,390
TCF Financial Corp.   62,100      1,642,545
Texas Regional Bancshares, Inc., Class A (c)   24,920      944,966
Washington Federal, Inc. (c)   47,689      1,105,908
Webster Financial Corp.   29,100      1,380,504
West America Bancorp (c)   19,100      935,327
Wilmington Trust Corp.   37,200      1,569,096
        
           27,937,303
        
Biotechnology (1.3%)           
Millenium Pharmaceuticals, Inc. (b)   181,587      1,810,422
PDL Biopharma, Inc. (c) (b)   63,700      1,172,717
Pharmaceutical Product Development, Inc.   55,700      1,956,184
Valeant Pharmaceuticals International   50,700      857,844
Vertex Pharmaceuticals, Inc. (c) (b)   60,900      2,235,639
        
           8,032,806
        
Broadcasting (0.2%)           
Emmis Communications Corp. (b)   20,200      315,928
Entercom Communications Corp.   21,200      554,592
Westwood One, Inc.   35,000      262,500
        
           1,133,020
        
Building & Construction (0.1%)       
M.D.C. Holdings, Inc.   19,300      1,002,249
        
Business Services (3.0%)           
Acxiom Corp. (c)   42,300      1,057,500
Catalina Marketing Corp. (c)   22,900      651,734
Ceridian Corp. (b)   80,500      1,967,420
CheckFree Corp. (b)   52,400      2,596,944
ChoicePoint, Inc. (b)   48,433      2,023,046
Corporate Executive Board Co. (The)   23,100      2,314,620
CSG Systems International, Inc. (c) (b)   26,600      658,084
Fair Issac Corp.   38,100      1,383,411
Gartner Group, Inc. (c) (b)   32,000      454,400
Harte-Hanks, Inc.   31,150      798,686
Kelly Services, Inc. (c)   10,500      285,285
Korn Ferry International (c) (b)   23,200      454,488
Manpower, Inc.   50,200      3,242,920

 

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GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Business Services (continued)           
MPS Group, Inc. (c) (b)   55,400    $ 834,324
Navigant Consulting, Inc. (c) (b)   27,600      625,140
        
           19,348,002
        
Chemicals (2.5%)           
Airgas, Inc. (c)   36,900      1,374,525
Albemarle Corp. (c)   20,900      1,000,692
Cabot Corp.   36,900      1,273,788
Chemtura Corp.   131,400      1,227,276
Cytec Industries, Inc.   21,900      1,175,154
Ferro Corp. (c)   26,900      429,324
FMC Corp.   23,100      1,487,409
Lubrizol Corp.   37,400      1,490,390
Lyondell Chemical Co.   113,900      2,580,974
Minerals Technologies, Inc.   12,500      650,000
Olin Corp.   39,500      708,235
RPM, Inc. (c)   64,800      1,166,400
Valspar Corp. (c)   55,700      1,471,037
        
           16,035,204
        
Communication Equipment (1.7%)       
Adtran, Inc. (c)   40,500      908,415
Cincinnati Bell, Inc. (c) (b)   134,900      553,090
CommScope, Inc. (c) (b)   31,500      989,730
Harris Corp.   75,700      3,142,307
Plantronics, Inc. (c)   25,800      573,018
Polycom, Inc. (b)   47,600      1,043,392
Powerwave Technologies, Inc. (c) (b)   67,100      611,952
Telephone & Data Systems, Inc.   56,200      2,326,680
Utstarcom, Inc. (c) (b)   57,600      448,704
        
           10,597,288
        
Computer Hardware (0.5%)           
National Instruments Corp. (c)   30,350      831,590
Western Digital Corp. (b)   122,500      2,426,725
        
           3,258,315
        
Computer Software & Services (5.2%)       
3COM Corp. (b)   214,000      1,095,680
Activision, Inc. (b)   160,400      1,825,352
Advent Software, Inc. (b)   8,800      317,416
Avocent Corp. (b)   29,000      761,250
Cadence Design Systems, Inc. (b)   159,300      2,731,995
CDW Corp. (c)   36,100      1,972,865
Cognizant Technology Solutions Corp. (b)   79,800      5,376,126
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Computer Software & Services (continued)
DST Systems, Inc. (b)   34,500    $ 2,052,750
F5 Networks, Inc. (b)   23,500      1,256,780
Gamestop Corp.(c) (b)   34,500      1,449,000
GTECH Holdings Corp.   69,900      2,431,122
Henry (Jack) & Associates, Inc.   45,200      888,632
Ingram Micro, Inc. (b)   63,500      1,151,255
Macrovision Corp. (b)   28,100      604,712
McAfee, Inc. (b)   91,100      2,210,997
McData Corp. (c) (b)   83,800      341,904
Mentor Graphics Corp. (c) (b)   43,400      563,332
Palm, Inc. (b)   53,000      853,300
RSA Security, Inc. (c) (b)   44,400      1,207,236
SRA International, Inc., Class A (c) (b)   20,500      545,915
Sybase, Inc. (c) (b)   49,900      968,060
Synopsys, Inc. (b)   78,800      1,479,076
Transaction Systems Architects, Inc. (b)   20,400      850,476
Wind River Systems, Inc. (c) (b)   41,000      364,900
        
           33,300,131
        
Construction (2.1%)           
Beazer Homes USA, Inc. (c)   23,500      1,077,945
Dycom Industries, Inc. (c) (b)   22,100      470,509
Florida Rock Industries, Inc.   27,700      1,375,859
Granite Construction, Inc. (c)   18,050      817,124
Hovnanian Enterprises, Inc. (b)   21,000      631,680
Jacobs Engineering Group, Inc. (b)   32,300      2,572,372
Martin Marietta Materials, Inc.   26,400      2,406,360
Ryland Group, Inc. (The)   26,500      1,154,605
Thor Industries, Inc. (c)   20,400      988,380
Toll Brothers, Inc. (b)   64,400      1,646,708
        
           13,141,542
        
Consumer & Commercial Services (2.2%)
Alliance Data Systems Corp. (b)   38,800      2,282,216
Career Education Corp. (b)   55,500      1,658,895
Corinthian Colleges, Inc. (c) (b)   47,100      676,356
Deluxe Corp. (c)   27,500      480,700
DeVry, Inc. (c) (b)   32,100      705,237
Dun & Bradstreet Corp. (b)   38,300      2,668,744
MoneyGram International, Inc.   46,800      1,588,860
Quanta Services, Inc. (c) (b)   64,600      1,119,518
Rent-A-Center, Inc. (c) (b)   37,900      942,194
Rollins, Inc.   16,200      318,168

 

4

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GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Consumer & Commercial Services (continued)
Sotheby’s Holdings, Inc. (c) (b)   25,100    $ 658,875
United Rentals, Inc. (c) (b)   37,200      1,189,656
        
           14,289,419
        
Consumer Products (1.5%)           
Blyth Industries, Inc. (c)   14,500      267,670
Church & Dwight, Inc.   35,350      1,287,447
Energizer Holdings, Inc. (b)   35,800      2,096,806
Furniture Brands International, Inc. (c)   29,800      621,032
Lancaster Colony Corp. (c)   13,700      540,739
Mohawk Industries Co. (b)   29,300      2,061,255
Scotts Miracle-Gro Co. (The)   27,000      1,142,640
Timberland Co., Class A (b)   30,100      785,610
Tupperware Corp.   33,500      659,615
        
           9,462,814
        
Containers Packaging (0.4%)           
Packaging Corp. of America (c)   32,900      724,458
Sonoco Products Co. (c)   54,100      1,712,265
        
           2,436,723
        
Data Processing (0.3%)           
Fidelity National Information Services, Inc.   51,300      1,816,020
        
Electronics (6.0%)           
Amphenol Corp., Class A   50,500      2,825,980
Arrow Electronics, Inc. (b)   66,900      2,154,180
Atmel Corp. (c) (b)   233,000      1,293,150
Avnet, Inc. (b)   80,100      1,603,602
Cabot Microelectronics Corp. (c) (b)   13,282      402,577
Credence Systems Corp. (c) (b)   54,700      191,450
Cree, Inc. (c) (b)   41,800      993,168
Cypress Semiconductor Corp. (c) (b)   81,800      1,189,372
DRS Technologies   23,900      1,165,125
Hubbell, Inc.   33,200      1,581,980
Imation Corp.   20,900      857,945
Integrated Device Technology, Inc. (b)   109,730      1,555,971
International Rectifier Corp. (b)   41,500      1,621,820
Intersil Corp. (c)   82,400      1,915,800
Kemet Corp. (c) (b)   47,500      437,950
Lam Research Corp. (b)   79,300      3,696,966
Lattice Semiconductor Corp. (c) (b)   62,200      384,396
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Electronics (continued)
MDU Resources Group, Inc.   65,700    $ 2,405,277
Micrel, Inc. (c) (b)   34,900      349,349
Microchip Technology, Inc.   120,900      4,056,195
Mine Safety Appliances Co. (c)   14,400      578,880
Newport Corp. (b)   21,900      353,028
Plexus Corp. (c) (b)   26,900      920,249
RF Micro Devices, Inc. (c) (b)   113,400      676,998
SPX Corp.   34,800      1,947,060
Thomas & Betts Corp. (b)   29,500      1,513,350
TriQuint Semiconductor, Inc. (b)   76,691      342,042
Vishay Intertechnology, Inc. (b)   101,050      1,589,517
        
           38,603,377
        
Financial Services (2.8%)           
AmeriCredit Corp. (b)   72,200      2,015,824
Bank of Hawaii Corp.   28,700      1,423,520
BISYS Group, Inc. (The) (b)   66,200      906,940
Eaton Vance Corp. (c)   70,800      1,767,168
Edwards (A.G.), Inc.   43,800      2,423,016
Investors Financial Services Corp.   35,800      1,607,420
Jefferies Group, Inc. (c)   55,200      1,635,576
PMI Group, Inc. (c)   51,900      2,313,702
Raymond James Financial, Inc.   47,625      1,441,609
SEI Investments Co.   34,800      1,701,024
Waddell & Reed Financial, Inc. (c)   48,000      986,880
        
           18,222,679
        
Food & Beverage (1.3%)           
Hormel Foods Corp.   40,000      1,485,600
J.M. Smucker Co.   34,267      1,531,735
OSI Restaurant Parnters, Inc.   38,800      1,342,480
PepsiAmericas, Inc.   33,400      738,474
Sensient Technologies Corp. (c)   25,800      539,478
Smithfield Foods, Inc. (b)   57,600      1,660,608
Tootsie Roll Industries, Inc. (c)   14,080      410,150
Universal Corp. (c)   15,600      580,632
        
           8,289,157
        
Gaming & Leisure (0.2%)           
Scientific Games Corp. (b)   35,800      1,275,196
        
Healthcare (6.1%)           
Apria Healthcare Group, Inc. (c) (b)   23,200      438,480
Beckman Coulter, Inc.   36,700      2,038,685
Cephalon, Inc. (b)   34,900      2,097,490

 

5

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GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Healthcare (continued)
Community Health Systems, Inc. (b)   53,400    $ 1,962,450
Covance, Inc. (b)   36,800      2,252,896
Cytyc Corp. (b)   63,200      1,602,752
Dentsply International, Inc.   45,600      2,763,360
Edwards Lifesciences Corp. (b)   32,500      1,476,475
Health Net, Inc. (b)   66,100      2,985,737
Henry Schein, Inc. (c) (b)   48,400      2,261,732
LifePoint Hospitals, Inc. (b)   33,800      1,085,994
Lincare Holdings, Inc. (b)   55,400      2,096,336
Omnicare, Inc.   69,000      3,271,980
Par Pharmaceutical Cos., Inc. (c) (b)   18,800      347,048
Perrigo Co. (c)   45,400      730,940
Sepracor, Inc. (b)   61,900      3,536,966
Steris Corp. (c)   39,800      909,828
Triad Hospitals, Inc. (b)   50,008      1,979,317
Universal Health Services, Inc. (c)   31,900      1,603,294
Varian Medical Systems, Inc. (b)   75,100      3,555,985
        
           38,997,745
        
Insurance (5.7%)           
American Financial Group, Inc.   25,700      1,102,530
AmerUs Group Co. (c)   21,200      1,241,260
Arthur J. Gallagher & Co. (c)   57,100      1,446,914
Brown & Brown, Inc. (c)   60,900      1,779,498
Everest Re Group Ltd.   36,600      3,168,462
Fidelity National Financial, Inc.   99,983      3,894,337
First American Financial Corp.   56,000      2,367,120
Hanover Insurance Group Inc.   29,000      1,376,340
HCC Insurance Holdings, Inc.   60,850      1,791,424
Horace Mann Educators Corp. (c)   23,500      398,325
Leucadia National Corp. (c)   90,100      2,630,019
Mercury General Corp. (c)   19,500      1,099,215
Ohio Casualty Corp. (c)   34,700      1,031,631
Old Republic International Corp.   129,537      2,768,206
Protective Life Corp.   38,200      1,780,884
Radian Group, Inc. (c)   46,400      2,866,592
Stancorp Financial Group, Inc.   30,000      1,527,300
Unitrin, Inc. (c)   24,800      1,081,032
W.R. Berkley Corp.   95,350      3,254,296
        
           36,605,385
        
Machinery (1.0%)           
AGCO Corp. (c) (b)   52,700      1,387,064
Graco, Inc.   37,550      1,726,549
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Machinery (continued)
Lincoln Electric Holdings, Inc.   25,000    $ 1,566,250
Tecumseh Products Co. (c) (b)   10,000      192,000
Zebra Technologies Corp., Class A (b)   38,500      1,315,160
        
           6,187,023
        
Manufacturing (3.6%)           
Ametek, Inc.   38,700      1,833,606
Brink’s Co. (The)   28,200      1,590,762
Carlisle Cos., Inc.   16,500      1,308,450
Crane Co.   27,700      1,152,320
Diebold, Inc.   39,500      1,604,490
Donaldson Co., Inc. (c)   37,500      1,270,125
Federal Signal Corp. (c)   26,400      399,696
Flowserve Corp. (c) (b)   30,800      1,752,520
Harsco Corp.   22,900      1,785,284
Hillenbrand Industry, Inc.   33,600      1,629,600
Nordson Corp. (c)   18,300      899,994
Pentair, Inc.   55,600      1,900,964
Roper Industries, Inc.   47,700      2,229,975
Teleflex, Inc. (c)   23,900      1,291,078
Trinity Industries, Inc. (c)   41,300      1,668,520
Varian, Inc. (b)   17,000      705,670
        
           23,023,054
        
Medical Products (1.3%)           
Advanced Medical Optics, Inc. (b)   39,786      2,017,150
Affymetrix, Inc. (c) (b)   36,900      944,640
Gen-Probe, Inc. (b)   28,200      1,522,236
Intuitive Surgical, Inc. (c) (b)   20,900      2,465,573
Techne Corp. (c) (b)   21,500      1,094,780
        
           8,044,379
        
Medical Services (0.8%)           
Charles River Laboratories International, Inc. (b)   41,900      1,541,920
Invitrogen Corp. (b)   30,800      2,034,956
Martek Biosciences Corp. (c) (b)   19,400      561,630
Medicis pharmaceutical Corp.   32,300      775,200
        
           4,913,706
        
Metals (1.0%)           
Commercial Metals Co.   66,300      1,703,910
Kennametal, Inc.   23,400      1,456,650
MSC Industrial Direct Co., Class A (c)   29,700      1,412,829

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Metals (continued)
Timken Co. (The)   46,000    $ 1,541,460
        
           6,114,849
        
Mining (2.4%)           
Arch Coal, Inc. (c)   80,600      3,415,022
Joy Global, Inc.   69,700      3,630,673
Peabody Energy Corp.   149,200      8,317,900
        
           15,363,595
        
Office Equipment & Supplies (0.5%)       
Herman Miller, Inc.   37,200      958,644
HNI Corp.   28,400      1,287,940
Reynolds & Reynolds Co.   31,600      969,172
        
           3,215,756
        
Oil & Gas (7.9%)           
Cameron International Corp. (b)   66,400      3,171,928
Denbury Resources, Inc. (c) (b)   65,400      2,071,218
ENSCO International, Inc.   86,700      3,989,934
FMC Technologies, Inc. (c) (b)   39,421      2,659,341
Forest Oil Corp. (c) (b)   32,800      1,087,648
Grant Prideco, Inc. (b)   73,800      3,302,550
Hanover Compressor Co. (c) (b)   52,623      988,260
Helmerich & Payne, Inc.   28,600      1,723,436
Newfield Exploration Co. (b)   72,500      3,548,150
Noble Energy, Inc.   99,800      4,676,628
Patterson-UTI Energy, Inc.   94,800      2,683,788
Pioneer Natural Resources Co.   74,200      3,443,622
Plains Exploration & Production Co. (b)   43,600      1,767,544
Pogo Producing Co. (c)   33,900      1,562,790
Pride International, Inc. (b)   91,300      2,851,299
Quicksilver Resources, Inc. (c) (b)   39,300      1,446,633
Smith International, Inc.   114,500      5,091,814
Southwestern Energy Co. (b)   94,500      2,944,620
Tidewater, Inc. (c)   35,200      1,731,840
        
           50,743,043
        
Paper & Forest Products (0.7%)           
Bowater, Inc.   33,400      759,850
Glatfelter (c)   24,200      384,054
Longview Fibre Co. (c)   28,000      534,520
Potlatch Corp.   22,898      864,400
Rayonier, Inc.   44,877      1,701,287
        
           4,244,111
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Publishing & Printing (1.2%)           
American Greetings Corp., Class A (c)   34,800    $ 731,148
Banta Corp. (c)   13,300      616,189
Belo Corp., Class A   50,000      780,000
Lee Enterprises, Inc. (c)   25,100      676,445
Media General, Inc. (c)   13,200      552,948
Reader’s Digest Association (c)   53,100      741,276
Scholastic Corp. (c) (b)   19,700      511,609
Valassis Communications, Inc. (c) (b)   26,100      615,699
Washington Post Co.   3,170      2,472,632
        
           7,697,946
        
Real Estate Investment Trusts (3.6%)       
AMB Property Corp.   48,300      2,441,565
Developers Diversified Realty Corp.   61,800      3,224,724
Highwood Properties, Inc.   32,500      1,175,850
Hospitality Properties Trust   39,400      1,730,448
Liberty Property Trust   48,800      2,156,960
Macerich Co. (The)   40,500      2,843,100
Mack-Cali Realty Corp.   36,600      1,680,672
New Plan Excel Realty Trust (c)   57,200      1,412,268
Regency Centers Corp.   39,700      2,467,355
United Dominion Realty Trust, Inc.   78,100      2,187,581
Weingarten Realty Investors   44,000      1,684,320
        
           23,004,843
        
Restaurants (0.9%)           
Applebee’s International, Inc.   40,750      783,215
Bob Evans Farms, Inc. (c)   19,500      585,195
Brinker International, Inc.   48,800      1,771,440
CBRL Group, Inc.   9,700      329,024
Cheesecake Factory, Inc. (The) (c) (b)   46,650      1,257,218
Ruby Tuesday, Inc. (c)   31,800      776,238
        
           5,502,330
        
Retail (6.8%)           
99 Cents Only Stores (c) (b)   26,300      275,098
Abercrombie & Fitch Co.   50,300      2,788,129
Aeropostale, Inc. (b)   32,000      924,480
American Eagle Outfitters Ltd. (c)   75,500      2,570,020
Anntaylor Stores Corp. (b)   42,300      1,834,974
Barnes & Noble, Inc.   31,100      1,135,150
BJ’s Wholesale Club, Inc. (b)   37,100      1,051,785
Borders Group, Inc.   36,600      675,636

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Retail (continued)           
Chico’s FAS, Inc. (c) (b)   102,600    $ 2,768,148
Claire’s Stores, Inc.   56,800      1,448,968
Copart, Inc. (b)   38,100      935,736
Dollar Tree Stores, Inc. (b)   60,850      1,612,525
Fastenal Co. (c)   71,200      2,868,648
Foot Locker, Inc.   87,200      2,135,528
Michael’s Stores, Inc.   74,500      3,072,380
O’Reilly Automotive, Inc. (c) (b)   62,200      1,940,018
Pacific Sunwear of California, Inc. (b)   42,400      760,232
Payless ShoeSource, Inc. (b)   37,600      1,021,592
PETsMART, Inc.   76,900      1,968,640
Pier 1 Imports, Inc. (c)   47,600      332,248
Polo Ralph Lauren Corp.   35,500      1,948,950
Regis Corp.   24,900      886,689
Ross Stores, Inc.   79,200      2,221,560
Ruddick Corp. (c)   18,900      463,239
Saks, Inc. (c)   80,100      1,295,217
Tech Data Corp. (b)   32,800      1,256,568
Urban Outfitters, Inc. (b)   60,400      1,056,396
Williams Sonoma, Inc.   66,300      2,257,515
        
           43,506,069
        
Schools (0.4%)           
ITT Educational Services, Inc. (b)   20,500      1,349,105
Laureate Education, Inc. (c) (b)   27,800      1,185,114
        
           2,534,219
        
Semiconductors (1.0%)           
Fairchild Semiconductor International, Inc. (b)   66,600      1,210,122
MEMC Electronic Materials, Inc. (b)   93,100      3,491,250
Semtech Corp. (c) (b)   39,900      576,555
Silicon Laboratories, Inc. (b)   27,100      952,565
        
           6,230,492
        
Shipping Transportation (1.8%)           
Alexander & Baldwin, Inc.   24,200      1,071,334
C.H. Robinson Worldwide, Inc.   97,900      5,218,070
GATX Corp. (c)   30,100      1,279,250
Overseas Shipholding Group, Inc.   17,600      1,041,040
Swift Transportation Co., Inc. (c) (b)   31,500      1,000,440
Werner Enterprises, Inc. (c)   28,450      576,682
YRC Worldwide, Inc. (b)   33,400      1,406,474
        
           11,593,290
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
Steel (0.6%)           
Reliance Steel & Aluminum Co.   18,400    $ 1,526,280
Steel Dynamics, Inc. (c)   25,100      1,650,074
Worthington Industries, Inc.   39,200      821,240
        
           3,997,594
        
Transportation (1.9%)           
Con-Way, Inc.   27,500      1,593,075
Expeditors International of Washington, Inc.   121,200      6,788,412
J.B. Hunt Transport Services, Inc.   67,600      1,683,916
Oshkosh Truck Corp.   40,300      1,915,056
        
           11,980,459
        
Utilities (7.5%)           
AGL Resources, Inc.   42,600      1,623,912
Alliant Energy Corp.   68,200      2,339,260
Aqua America, Inc. (c)   70,500      1,606,695
Aquila, Inc. (b)   204,700      861,787
Black Hills Corp. (c)   20,600      707,198
DPL, Inc. (c)   70,900      1,900,120
Duquesne Light Holdings, Inc. (c)   48,200      792,408
Energy East Corp.   80,900      1,935,937
Equitable Resources, Inc.   69,900      2,341,650
Great Plains Energy, Inc. (c)   47,200      1,314,992
Hawaiian Electric Industries, Inc. (c)   44,400      1,239,204
Idacorp, Inc. (c)   26,000      891,540
National Fuel Gas Co.   49,200      1,728,888
Northeast Utilities   84,100      1,738,347
NSTAR   58,500      1,673,100
Oklahoma Gas & Electric Co.   53,100      1,860,093
Oneok, Inc.   64,200      2,185,368
Pepco Holdings, Inc.   104,538      2,465,006
PNM, Inc.   37,650      939,744
Puget Energy, Inc.   63,300      1,359,684
Questar Corp.   49,000      3,944,009
Scana Corp.   63,400      2,445,972
Sierra Pacific Resources (b)   110,000      1,540,000
Vectren Corp.   41,700      1,136,325
Westar Energy, Inc.   47,600      1,001,980
Western Gas Resources, Inc.   32,100      1,921,185
WGL Holdings, Inc. (c)   26,700      772,965
Wisconsin Energy Corp.   64,100      2,583,230
WPS Resources Corp.   22,700      1,125,920
        
           47,976,519
        

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
Veterinary Services (0.2%)             
VCA Antech, Inc. (c) (b)     45,300    $ 1,446,429
          
Waste Disposal (0.7%)             
Republic Services, Inc.     69,400      2,799,596
Stericycle, Inc. (b)     25,800      1,679,580
          
             4,479,176
          
Total Common Stocks            617,322,483
          
CASH EQUIVALENTS (3.3%)             
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $21,216,981)   $ 21,207,969      21,207,969
          
Total Cash Equivalents            21,207,969
          
Shares or
Principal Amount		    Value  
                
SHORT TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING (24.5%)   
Pool of short-term securities
for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)		   $ 156,526,995    $ 156,526,995  
          
                
Total Short Term Securities Held as Collateral for Securities Lending      156,526,995  
          
Total Investments (Cost $675,953,710) (a) — 124.5%      795,057,447  
Liabilities in excess of other assets — (24.5%)            (156,257,476 )
          
NET ASSETS — 100.0%          $ 638,799,971  
          

 

 

(a) See Notes to Financial Statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) All of part of the security was on loan as of June 30, 2006.

 

At June 30, 2006, the Fund’s open futures contracts were as follows:

 

Number of
Contracts		      Long
Contract		      Expiration      Market Value
Covered by
Contracts		      Unrealized
Appreciation
at 06/30/06

51

      S&P Emini Mid 400 Future      09/15/06      $ 19,675,800      $ 505,369

 

See notes to financial statements.

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $654,745,741)

    $ 773,849,478

Repurchase agreements, at cost and value

      21,207,969
    

Total Investments

      795,057,447
    

Cash

      13,719,723

Cash collateral pledged for futures

      837,000

Interest and dividends receivable

      698,084

Receivable for capital shares issued

      2,075,740

Receivable for variation margin on futures contracts

      114,050

Prepaid expenses and other assets

      3,697
    

Total Assets

      812,505,741
    

Liabilities:

       

Payable to adviser

      1,056

Payable for investments purchased

      16,931,411

Payable for capital shares redeemed

      32,295

Payable for return of collateral received for securities on loan

      156,526,995

Accrued expenses and other payables:

       

Investment advisory fees

      80,478

Fund administration and transfer agent fees

      41,989

Distribution fees

      4,575

Administrative servicing fees

      44,184

Other

      42,787
    

Total Liabilities

      173,705,770
    

Net Assets

    $ 638,799,971
    

Represented by:

       

Capital

    $ 514,778,573

Accumulated net investment income (loss)

      215,911

Accumulated net realized gain (losses) from investment and futures transactions

      4,196,381

Net unrealized appreciation (depreciation) on investments and futures

      119,609,106
    

Net Assets

    $ 638,799,971
    

Net Assets:

       

Class I Shares

    $ 568,611,805

Class II Shares

      22,476,904

Class ID Shares

      47,711,262
    

Total

    $ 638,799,971
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      32,112,780

Class II Shares

      1,273,762

Class ID Shares

      2,694,870
    

Total

      36,081,412
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 17.71

Class II Shares

    $ 17.65

Class ID Shares

    $ 17.70

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 272,076  

Dividend income

      4,497,051  

Income from securities lending

      529,926  
    

Total Income

      5,299,053  
    

Expenses:

         

Investment advisory fees

      827,969  

Fund administration and transfer agent fees

      216,270  

Distribution fees Class II Shares

      28,853  

Administrative servicing fees
Class I Shares

      451,341  

Administrative servicing fees
Class II Shares

      8,633  

Trustee fees

      9,214  

Other

      74,362  
    

Total expenses before earnings credit

      1,616,642  

Earnings credit (Note 5)

      (1,625 )
    

Total Expenses

      1,615,017  
    

Net Investment Income (Loss)

      3,684,036  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      17,706,288  

Net realized gains (losses) on futures

      (743,331 )
    

Net realized gains (losses) on investment and futures transactions

      16,962,957  

Net change in unrealized appreciation/depreciation on investments and futures

      3,566,424  
    

Net realized/unrealized gains (losses) on investments and futures

      20,529,381  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 24,213,417  
    

 

See notes to financial statements.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
       (Unaudited)        

From Investment Activities:

                   

Operations:

                   

Net investment income (loss)

      $ 3,684,036     $ 5,165,605  

Net realized gains (losses) on investment and futures transactions

        16,962,957       38,479,997  

Net change in unrealized appreciation /depreciation on investments and futures

        3,566,424       19,342,831  
      
 

Change in net assets resulting from operations

        24,213,417       62,988,433  
      
 

Distributions to Class I shareholders from:

                   

Net investment income

        (3,242,916 )     (5,598,423 )

Net realized gains on investments

        (7,900,961 )     (33,105,906 )

Distributions to Class II shareholders from:

                   

Net investment income

        (108,173 )     (165,938 )

Net realized gains on investments

        (314,967 )     (1,232,085 )

Distributions to Class ID shareholders from:

                   

Net investment income

        (117,036 )(a)     —  

Net realized gains on investments

        (431,978 )(a)     —  
      
 

Change in net assets from shareholder distributions

        (12,116,031 )     (40,102,352 )
      
 

Change in net assets from capital transactions

        28,851,587       27,123,873  
      
 

Change in net assets

        40,948,973       50,009,954  

Net Assets:

                   

Beginning of period

        597,850,998       547,841,044  
      
 

End of period

      $ 638,799,971     $ 597,850,998  
      
 

Accumulated net investment income (loss)

      $ 215,911     $ —  
      
 

CAPITAL TRANSACTIONS:

                   

Class I Capital Transactions:

                   

Proceeds from shares issued

      $ 40,727,300     $ 79,176,649  

Dividends reinvested

        11,143,852       38,704,273  

Cost of shares redeemed

        (71,748,769 )     (96,085,488 )
      
 
         (19,877,617 )     21,795,434  
      
 

Class II Capital Transactions:

                   

Proceeds from shares issued

        6,049,180       10,439,484  

Dividends reinvested

        423,139       1,398,020  

Cost of shares redeemed

        (5,860,099 )     (6,509,065 )
      
 
         612,220       5,328,439  
      
 

Class ID Capital Transactions:

                   

Proceeds from shares issued

        47,567,972 (a)     —  

Dividends reinvested

        549,012 (a)     —  

Cost of shares redeemed

        — (a)     —  
      
 
         48,116,984       —  
      
 

Change in net assets from capital transactions

      $ 28,851,587     $ 27,123,873  
      
 

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT MID CAP INDEX FUND

 

Statements of Changes in Net Assets (continued)

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Share Transactions:

                

Issued

      2,214,971      4,629,046  

Reinvested

      641,083      2,232,632  

Redeemed

      (3,940,419 )    (5,715,331 )
      
  
       (1,084,365 )    1,146,347  
      
  

Class II Share Transactions:

                

Issued

      328,326      616,497  

Reinvested

      24,455      80,859  

Redeemed

      (322,276 )    (381,900 )
      
  
       30,505      315,456  
      
  

Class ID Share Transactions:

                

Issued

      2,663,043 (a)    —  

Reinvested

      31,827 (a)    —  
      
  
       2,694,870      —  
      
  

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

12

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT Mid Cap Index Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains
(Losses)		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average Net
Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                      

Year Ended December 31, 2001(c)

   $ 13.55   0.07   (0.25 )   (0.18 )   (0.07 )   (0.13 )   (0.20 )   $ 13.17   (1.30% )   $ 257,623   0.65%     0.53%     0.78%     0.40%     28.43%

Year Ended December 31, 2002

   $ 13.17   0.04   (2.05 )   (2.01 )   (0.04 )   (0.10 )   (0.14 )   $ 11.02   (15.30% )   $ 285,970   0.74%     0.37%     0.75%     0.36%     27.32%

Year Ended December 31, 2003

   $ 11.02   0.06   3.75     3.81     (0.06 )   (e )   (0.06 )   $ 14.77   34.65%     $ 432,589   0.74%     0.49%     (h )   (h )   11.58%

Year Ended December 31, 2004

   $ 14.77   0.09   2.23     2.32     (0.08 )   (0.40 )   (0.48 )   $ 16.61   15.73%     $ 532,474   0.60%     0.62%     (h )   (h )   15.90%

Year Ended December 31, 2005

   $ 16.61   0.16   1.82     1.98     (0.18 )   (1.05 )   (1.23 )   $ 17.36   12.10%     $ 576,339   0.55%     0.93%     (h )   (h )   19.32%

Six Months Ended June 30, 2006 (Unaudited)

   $ 17.36   0.11   0.59     0.70     (0.10 )   (0.25 )   (0.35 )   $ 17.71   4.08% (f)   $ 568,612   0.52% (g)   1.19% (g)   (h )   (h )   7.25%

Class II Shares

                                                                                      

Period Ended December 31, 2002(d)

   $ 13.64   0.02   (2.53 )   (2.51 )   (0.03 )   (0.10 )   (0.13 )   $ 11.00   (18.44% )(f)   $ 1,232   0.96% (g)   0.25% (g)   (h )   (h )   27.32%

Year Ended December 31, 2003

   $ 11.00   0.03   3.74     3.77     (0.04 )   (e )   (0.04 )   $ 14.73   34.30%     $ 8,049   0.98%     0.27%     (h )   (h )   11.58%

Year Ended December 31, 2004

   $ 14.73   0.07   2.22     2.29     (0.06 )   (0.40 )   (0.46 )   $ 16.56   15.50%     $ 15,367   0.78%     0.45%     (h )   (h )   15.90%

Year Ended December 31, 2005

   $ 16.56   0.13   1.81     1.94     (0.15 )   (1.05 )   (1.20 )   $ 17.30   11.90%     $ 21,512   0.72%     0.76%     (h )   (h )   19.32%

Six Months Ended June 30, 2006 (Unaudited)

   $ 17.30   0.10   0.59     0.69     (0.09 )   (0.25 )   (0.34 )   $ 17.65   4.01% (f)   $ 22,477   0.69% (g)   1.03% (g)   (h )   (h )   7.25%

Class ID Shares

                                                                                      

Period Ended June 30, 2006 (Unaudited)(i)

   $ 18.88   0.07   (0.93 )   (0.86 )   (0.07 )   (0.25 )   (0.32 )   $ 17.70   (4.52% )(f)   $ 47,711   0.31% (g)   2.15% (g)   (h )   (h )   7.25%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from May 6, 2002 (commencement of operations) through December 31, 2002.

 

(e) The amount is less than $0.005.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

(i) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Unaudited)

 

June 30, 2006

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”), Great West Life & Annuity Insurance Company and First Great West Life & Annuity Insurance Company have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT Mid Cap Index Fund (the “Fund”), (formerly “Dreyfus GVIT Mid Cap Index Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. Dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee,

 

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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

June 30, 2006

 

are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(e) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

June 30, 2006

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(f) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(g) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend up to 33 1/3% of the Fund’s total assets pursuant to agreements, requiring that the borrower deliver cash or securities as collateral with respect to each new loan of U.S. securities equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan of non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned, and thereafter requiring the borrower to mark-to-market the collateral on a daily basis and requiring the borrower to make up any shortfall of collateral. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. Collateral is marked-to-market daily to provide a level of collateral at least equal to the market value of securities loaned. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by

 

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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

June 30, 2006

 

the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in the judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    U.S. Bank N.A.    $ 24,995,194    5.10%    07/03/06
Commercial Paper    Aegis Finance LLC      13,936,467    5.29%    07/21/06
Funding Agreement — GIC    GE Life and Annuity      3,500,000    5.28%    07/14/06
Master Note — Floating    Citigroup Global Markets Inc.      15,000,000    5.38%    07/03/06
Medium Term Note — Floating    Alliance and Leister PLC      2,500,000    5.13%    07/10/06
Medium Term Note — Floating    Allstate Life Global Funding      2,000,000    5.33%    07/27/06
Medium Term Note — Floating    General Electric Capital Corp.      10,500,599    5.27%    09/08/06
Medium Term Note — Floating    ISLANDSBANKI HF Corp.      5,000,000    5.34%    07/24/06
Medium Term Note — Floating    Macquarie Bank Ltd.      14,998,624    5.30%    07/21/06
Medium Term Note — Floating    Tango Finance Corp.      1,999,414    5.39%    07/03/06
Medium Term Note — Floating    West Corp Federal Credit Union      1,000,000    5.19%    07/14/06
Repurchase Agreement    Bank of America Securities LLC      61,096,697    5.32%    07/03/06

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of
Collateral

        $154,730,127

    $156,526,995

 

(j) Distributions to Shareholders

 

Dividends from net investment income, if any, are declared and paid quarterly. Distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of each Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
       $ 688,975,202      $ 156,294,589      $ (50,212,344 )      $ 106,082,245

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

June 30, 2006

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. For the Equity Funds, the method for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of Fund Asset Management L.P., the Fund’s subadviser (the “subadviser”). The subadviser manages the Fund’s investments and has responsibility for making all investment decisions for the Fund. Prior to May 1, 2006, the Fund’s subadvisor was the Dreyfus Corporation.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

     Fee Schedule      Total
Fees		      Fees
Retained		      Paid to
Sub-adviser
    

$0 up to $1.5 billion

      0.22%      0.145%      0.075%
    

$1.5 billion up to $3 billion

      0.21%      0.150%      0.060%
    

$3 billion and more

      0.20%      0.150%      0.050%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

June 30, 2006

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of Class II shares of the Fund. These fees are based on an annual rate not to exceed 0.25% of the average daily net assets of the Class II shares of the Fund.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”) and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $448,407 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $55,418,271 and sales of $44,487,177.

 

For the six months ended June 30, 2006, the Fund had purchases of $494,275 of U.S. Government securities, which are included in the total purchases and sales in the sentence above.

 

5. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs are included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information (Unaudited)

 

June 30, 2006

 

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that, as is anticipated with index funds, the GVIT Mid Cap Index Fund underperformed its benchmark index, the S&P Midcap 400 Index, by 60 basis points for the one-year period. The Board considered that the Fund’s return was in line with the benchmark on a gross return basis. The Fund ranked in the second quartile of the Lipper Mid-Cap Core Funds category for the one year period ended September 30, 2005, beating the category median return by 5 basis points. The Board further considered that over the three-year period, the Fund ranked in the third quartile of its Lipper category and underperformed the category median by 9 basis points, while for the five-year period the Fund ranked in the third quartile and underperformed the category median by 37 basis points.

 

The Board also considered the Funds contractual advisory fee (including the subadvisory fee) and breakpoints place the Fund in the third quintile of its Lipper-constructed Expense Group and the Fund’s total expenses are at the median of its Expense Group. Finally, the Board reviewed and considered the adviser’s profitability with respect to this Fund and concluded that it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other
Directorships
Held by Trustee

or Nominee2

Charles E. Allen4

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

  

Trustee since

July 2000

   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

July 2000

   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

21

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other
Directorships
Held by Trustee

or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

  

Trustee since

July 2000

   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association—College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

  

Trustee since

September 1997

   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

22

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other
Directorships
Held by Trustee

or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

4 Mr. Allen owns a 51% interest in Graimark Realty Advisors Inc., a 67% owner of G/W Jefferson-St Jean LLC (“Jefferson-St”), a real estate development company. Until July 28, 2004, Jefferson-St had a construction loan, guaranteed by Mr. Allen, in the principal amount of $12.5 million (“Construction Loan”), from Bank One, NA, obtained in August, 2002. On July 1, 2004, Bank One Corporation merged with and into J.P. Morgan Chase & Co. (the “Merger”). Bank One Corporation was the parent company of Bank One, NA. J.P. Morgan Chase & Co. is the parent company of J.P. Morgan Investment Management, Inc., subadviser to two of the Funds of the Trust. On July 28, 2004, the Construction Loan was refinanced with an unaffiliated permanent lender. Neither Mr. Allen, nor the Trust’s management, believes that the Construction Loan, secured well in advance of the Merger, and refinanced within 28 days following the completion of the Merger, should result in Mr. Allen having a material business relationship with an investment adviser (or subadviser) or controlling person of an investment adviser (or subadviser) of the Trust.

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

23

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

  

Trustee since

July 2000

   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

  

Trustee since

February 2000

   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

  

Treasurer since

March 2001

   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

24

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

  

Secretary since

December 2002

   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

25

Table of Contents

 

Gartmore GVIT Global Technology and Communications Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
7    Financial Highlights
8    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGTC (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Global Technology and Communications Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Global Technology and Communications Fund                         

Class I

      Actual    $ 1,000.00      $ 950.60      $ 5.66      1.17%
       Hypothetical1    $ 1,000.00      $ 1,019.00      $ 5.87      1.17%

Class II

      Actual    $ 1,000.00      $ 950.50      $ 6.82      1.41%
       Hypothetical1    $ 1,000.00      $ 1,017.81      $ 7.08      1.41%

Class III

      Actual    $ 1,000.00      $ 951.00      $ 5.51      1.14%
       Hypothetical1    $ 1,000.00      $ 1,019.15      $ 5.72      1.14%

Class VI

      Actual    $ 1,000.00      $ 950.50      $ 6.00      1.24%
       Hypothetical1    $ 1,000.00      $ 1,018.65      $ 6.23      1.24%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Global Technology and Communications Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      97.3%
Cash Equivalents      5.9%
Other Investments*      20.2%
Liabilities in excess of other assets**      -23.4%
      
       100.0%
      

 

 

Top Holdings***       
Cisco Systems, Inc.      5.5%
Intel Corp.      4.6%
Google, Inc., Class A      4.1%
International Business Machines Corp.      3.8%
Yahoo, Inc.      2.8%
Hewlett Packard Co.      2.8%
Cognizant Technology Solutions Corp.      2.7%
Integrated Device Technology, Inc.      2.6%
Cypress Semiconductor Corp.      2.5%
WebEx Communications, Inc.      2.0%
Other Assets      66.6%
      
       100.0%
      
Top Industries       
Semiconductors      15.5%
Telecommunication Equipment      14.3%
Computer Hardware      12.1%
Computer Software      10.8%
Electronic Components      9.8%
E-Commerce & Services      9.5%
Computer Services      8.9%
Wireless Equipment      3.7%
Telecommunication Services      3.5%
Internet Security      2.9%
Other Assets      9.0%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (97.3%)           
Commercial Services (1.4%)           
Alliance Data Systems Corp. (b)   7,900    $      464,678
        
Computer Hardware (12.1%)           
Apple Computer, Inc. (b)   7,900      451,248
Dell, Inc. (b)   17,000      414,970
Emulex Corp. (b)   9,600      156,192
Hewlett Packard Co.   28,300      896,544
International Business Machines Corp.   15,700      1,206,074
Mobility Electronics, Inc. (b) (c)   35,900      260,634
Rackable Systems, Inc. (b) (c)   8,900      351,461
Sigma Designs, Inc. (b) (c)   14,800      139,564
        
           3,876,687
        
Computer Services (8.9%)           
Citrix Systems, Inc. (b)   13,000      521,820
Cognet Communications Group, Inc. (b)   18,900      177,093
Cognizant Technology Solutions Corp. (b)   12,900      869,073
Satyam Computer Services Ltd. ADR IN   10,400      344,656
The BISYS Group, Inc. (b)   21,800      298,660
WebEx Communications, Inc. (b) (c)   18,500      657,490
        
           2,868,792
        
Computer Software (10.8%)           
Cognos, Inc. ADR CA (b)   5,300      150,785
Electronic Arts, Inc. (b)   10,700      460,528
Hyperion Solutions Corp. (b)   23,000      634,800
Informatica Corp. (b) (c)   44,500      585,620
Mercury Interactive Corp. (b)   10,300      360,191
Neoware, Inc. (b) (c)   17,000      208,930
Oracle Corp. (b)   22,500      326,025
Rightnow Technologies, Inc. (b) (c)   27,000      450,360
Tibco Software, Inc. (b)   44,300      312,315
        
           3,489,554
        
Consulting Services (1.3%)           
Answerthink, Inc. (b)   104,500      421,135
        
E-Commerce & Services (9.5%)           
eBay, Inc. (b)   15,300      448,137
Google, Inc., Class A (b)   3,150      1,320,890
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
E-Commerce & Services (continued)       
WebSideStory, Inc. (b) (c)   30,000    $      366,000
Yahoo, Inc. (b)   27,400      904,200
        
           3,039,227
        
Electronic Components (9.8%)       
Intel Corp.   77,200      1,462,940
International DisplayWorks, Inc. (b) (c)   88,900      462,280
International Game Technologies   12,800      485,632
LSI Logic Corp. (b)   48,200      431,390
Micron Technology, Inc. (b)   19,900      299,694
        
           3,141,936
        
Internet Banking (1.0%)           
CheckFree Corp. (b)   6,300      312,228
        
Internet Security (2.9%)           
Symantec Corp. (b)   38,900      604,506
Vasco Data Security International, Inc. (b) (c)   39,200      327,320
        
           931,826
        
Marketing Services (0.9%)           
24/7 Real Media, Inc. (b)   32,300      283,594
        
Multimedia (1.0%)           
Time Warner, Inc.   19,200      332,160
        
Semiconductors (15.5%)           
Anadigics, Inc. (b)   47,500      319,200
ATI Technologies, Inc. (b)   19,700      287,620
Chartered Semiconductor ADR SG (b) (c)   35,500      308,850
Conexant Systems, Inc. (b)   159,200      398,000
Cypress Semiconductor Corp. (b)   55,000      799,700
Integrated Device Technology, Inc. (b)   58,500      829,530
Kemet Corp. (b) (c)   16,300      150,286
LTX Corp. (b)   65,500      459,155
M-Systems Flash Disk Pioneers Ltd. (b) (c)   15,600      462,228
Novellus Systems, Inc. (b)   13,700      338,390
Teradyne, Inc. (b)   11,000      153,230
Texas Instruments, Inc.   15,800      478,582
        
           4,984,771
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
Telecommunication Equipment (14.3%)       
Arris Group, Inc. (b)     36,300    $      476,256
CIENA Corp. (b)     76,800      369,408
Cisco Systems, Inc. (b)     90,700      1,771,371
Comtech Telecommunications Corp. (b) (c)     11,500      336,605
Comverse Technology, Inc. (b)     15,500      306,435
Finisar Corp. (b) (c)     76,700      250,809
Nortel Networks Corp. (b) (c)     145,800      326,592
Polycom, Inc. (b)     21,800      477,856
Tekelec (b) (c)     23,000      284,050
          
             4,599,382
          
Telecommunication Services (3.5%)       
Amdocs Ltd. (b)     12,900      472,140
Neustar, Inc. (b)     14,600      492,750
Vonage Holdings Corp. (b) (c)     19,990      171,714
          
             1,136,604
          
Wholesale Distribution (0.7%)       
Directed Electronics, Inc. (b) (c)     17,500      229,600
          
Wireless Equipment (3.7%)             
Motorola, Inc.     30,600      616,590
Qualcomm, Inc.     14,100      564,987
          
             1,181,577
          
Total Common Stocks            31,293,751
          
CASH EQUIVALENTS (5.9%)             
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $1,885,992)   $ 1,885,191      1,885,191
          
Total Cash Equivalents            1,885,191
          
Shares or
Principal Amount		    Value  
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (20.2%)   
Pool of short-term securities for Gartmore Variable Insurance Mutual Funds — note 2 (Securities Lending)   $ 6,494,468    $ 6,494,468  
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      6,494,468  
          
Total Investments
(Cost $40,340,493) (a) — 123.4%		      39,673,410  
Liabilities in excess of
other assets — (23.4%)		            (7,527,360 )
          
NET ASSETS — 100.0%          $ 32,146,050  
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Non-income producing securities.

 

(c) All or part of security was on loan as of June 30, 2006.

 

ADR American Depository Receipt

 

CA Canada

 

IN India

 

SG Singapore

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $38,455,302)

    $ 37,788,219  

Repurchase agreements, at cost and value

      1,885,191  
    

Total Investments

      39,673,410  
    

Foreign currencies, at value (cost $897,762)

      926,597  

Receivable for capital shares issued

      7,093  

Interest and dividends receivable

      16,745  

Receivable for investments sold

      1,400,968  

Prepaid expenses and other assets

      589  
    

Total Assets

      42,025,402  
    

Liabilities:

         

Payable for investments purchased

      3,268,595  

Payable for capital shares redeemed

      17,924  

Payable for return of collateral received for securities on loan

      6,494,468  

Accrued expenses and other payables:

         

Investment advisory fees

      78,185  

Fund administration and transfer agent fees

      1,769  

Distribution fees

      1,022  

Administrative servicing fees

      3,717  

Other

      13,672  
    

Total Liabilities

      9,879,352  
    

Net Assets

    $ 32,146,050  
    

Represented by:

         

Capital

    $ 43,888,418  

Accumulated net investment income (loss)

      (85,359 )

Accumulated net realized gains (losses) from investment and foreign currency transactions

      (11,018,761 )

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      (638,248 )
    

Net Assets

    $ 32,146,050  
    

Net Assets:

         

Class I Shares

    $ 12,335,886  

Class II Shares

      1,335,885  

Class III Shares

      14,858,330  

Class VI Shares

      3,615,949  
    

Total

    $ 32,146,050  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      3,368,982  

Class II Shares

      366,490  

Class III Shares

      4,026,075  

Class VI Shares

      989,594  
    

Total

      8,751,141  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 3.66  

Class II Shares

    $ 3.65  

Class III Shares

    $ 3.69  

Class VI Shares

    $ 3.65  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 33,852  

Dividend income

      69,893  

Income from securities lending

      29,196  
    

Total Income

      132,941  
    

Expenses:

         

Investment advisory fees

      163,735  

Fund administration and transfer agent fees

      14,141  

Distribution fees Class II Shares

      1,916  

Distribution fees Class VI Shares

      5,029  

Administrative servicing fees Class I Shares

      12,918  

Administrative servicing fees Class II Shares

      1,273  

Administrative servicing fees Class III Shares

      13,095  

Trustee fees

      676  

Other

      5,675  
    

Total expenses before earnings credit

      218,458  

Earnings credit (Note 6)

      (158 )
    

Total Expenses

      218,300  
    

Net Investment Income (Loss)

      (85,359 )
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      225,986  

Net realized gains (losses) on foreign currency transactions

      13  
    

Net realized gains (losses) on investment and foreign currency transactions

      225,999  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (1,750,697 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      (1,524,698 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (1,610,057 )
    

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ (85,359 )    $ (232,966 )

Net realized gains (losses) on investment and foreign currency transactions

        225,999        1,136,947  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (1,750,697 )      (2,337,769 )
      
  

Change in net assets resulting from operations

        (1,610,057 )      (1,433,788 )
      
  

Change in net assets from capital transactions

        (4,363,715 )      (8,347,945 )
      
  

Change in net assets

        (5,973,772 )      (9,781,733 )

Net Assets:

                    

Beginning of period

        38,119,822        47,901,555  
      
  

End of period

      $ 32,146,050      $ 38,119,822  
      
  

Accumulated net investment income (loss)

      $ (85,359 )    $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 2,366,275      $ 6,848,192  

Cost of shares redeemed

        (4,422,307 )      (11,375,754 )
      
  
         (2,056,032 )      (4,527,562 )
      
  

Class II Shares

                    

Proceeds from shares issued

        1,089        1,207  

Cost of shares redeemed

        (171,647 )      (729,698 )
      
  
         (170,558 )      (728,491 )
      
  

Class III Shares

                    

Proceeds from shares issued

        3,175,229        7,558,094  

Cost of shares redeemed

        (5,580,008 )      (11,494,153 )
      
  
         (2,404,779 )      (3,936,059 )
      
  

Class VI Shares

                    

Proceeds from shares issued

        1,789,304        2,152,609  

Cost of shares redeemed

        (1,521,650 )      (1,308,442 )
      
  
         267,654        844,167  
      
  

Change net assets from capital transactions

      $ (4,363,715 )    $ (8,347,945 )
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        582,038        1,935,433  

Redeemed

        (1,112,689 )      (3,239,381 )
      
  
         (530,651 )      (1,303,948 )
      
  

Class II Shares

                    

Issued

        —        220  

Redeemed

        (44,114 )      (212,413 )
      
  
         (44,114 )      (212,193 )

Class III Shares

                    

Issued

        790,656        2,078,810  

Redeemed

        (1,399,111 )      (3,250,224 )
      
  
         (608,455 )      (1,171,414 )
      
  

Class VI Shares

                    

Issued

        448,742        602,908  

Redeemed

        (385,468 )      (372,541 )
      
  
         63,274        230,367  
      
  

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Global Technology and Communications Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Return of
Capital		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                  

Year Ended December 31, 2001(c)

   $ 7.35   (0.03 )   (3.11 )   (3.14 )   —     —     $ 4.21   (42.72% )   $ 15,585   1.35%     (0.88% )   2.02%     (1.55% )   894.05%

Year Ended December 31, 2002

   $ 4.21   (0.03 )   (1.77 )   (1.80 )   (0.02 )   (0.02 )   $ 2.39   (42.78% )   $ 7,791   1.34%     (0.65% )   1.39%     (0.70% )   879.28%

Year Ended December 31, 2003

   $ 2.39   (0.03 )   1.35     1.32     —     —     $ 3.71   55.23%     $ 15,960   1.24%     (0.94% )    (h )      (h)   1045.37%

Year Ended December 31, 2004

   $ 3.71   (0.02 )   0.18     0.16     —     —     $ 3.87   4.31%     $ 20,144   1.30%     (0.69% )    (h )      (h)   728.29%

Year Ended December 31, 2005

   $ 3.87   (0.02 )   —     (0.02 )   —     —     $ 3.85   (0.52% )   $ 15,010   1.28%     (0.63% )    (h )      (h)   571.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 3.85   (0.01 )   (0.18 )   (0.19 )   —     —     $ 3.66   (4.94% )(f)   $ 12,336   1.17% (g)   (0.46% )(g)    (h )      (h)   152.20%

Class II Shares

                                                                                  

Period Ended December 31, 2003(d)

   $ 2.45   (0.01 )   1.28     1.27     —     —     $ 3.72   51.84% (f)   $ 2,128   1.49% (g)   (1.27% )(g)    (h )      (h)   1045.37%

Year Ended December 31, 2004

   $ 3.72   (0.05 )   0.20     0.15     —     —     $ 3.87   4.03%     $ 2,409   1.53%     (0.98% )    (h )      (h)   728.29%

Year Ended December 31, 2005

   $ 3.87   (0.04 )   0.01     (0.03 )   —     —     $ 3.84   (0.78% )   $ 1,575   1.53%     (0.89% )    (h )      (h)   571.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 3.84   (0.01 )   (0.18 )   (0.19 )   —     —     $ 3.65   (4.95% )(f)   $ 1,336   1.41% (g)   (0.69% )(g)    (h )      (h)   152.20%

Class III Shares

                                                                                  

Period Ended December 31, 2002(e)

   $ 3.29   (0.01 )   (0.85 )   (0.86 )   (0.02 )   (0.02 )   $ 2.41   (26.14% )(f)   $ 5,822   1.37% (g)   (3.49% )(g)   1.79% (g)   (3.91% )(g)   879.28%

Year Ended December 31, 2003

   $ 2.41   (0.02 )   1.35     1.33     —     —     $ 3.74   55.19%     $ 33,398   1.25%     (1.00% )    (h )      (h)   1045.37%

Year Ended December 31, 2004

   $ 3.74   (0.04 )   0.20     0.16     —     —     $ 3.90   4.28%     $ 22,656   1.28%     (0.73% )    (h )      (h)   728.29%

Year Ended December 31, 2005

   $ 3.90   (0.02 )   —     (0.02 )   —     —     $ 3.88   (0.51% )   $ 17,975   1.29%     (0.64% )    (h )      (h)   571.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 3.88   (0.01 )   (0.18 )   (0.19 )   —     —     $ 3.69   (4.90% )(f)   $ 14,858   1.14% (g)   (0.42% )(g)    (h )      (h)   152.20%

Class VI Shares

                                                                                  

Period Ended December 31, 2004(i)

   $ 3.59   (0.01 )   0.29     0.28     —     —     $ 3.87   7.80% (f)   $ 2,693   1.46% (g)   (0.44% )(g)    (h )      (h)   728.29%

Year Ended December 31, 2005

   $ 3.87   (0.02 )   (0.01 )   (0.03 )   —     —     $ 3.84   (0.78% )   $ 3,559   1.39%     (0.73% )    (h )      (h)   571.34%

Six Months Ended June 30, 2006 (Unaudited)

   $ 3.84   (0.01 )   (0.18 )   (0.19 )   —     —     $ 3.65   (4.95% )(f)   $ 3,616   1.24% (g)   (0.52% )(g)    (h )      (h)   152.20%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from March 28, 2003 (commencement of operations) through December 31, 2003.

 

(e) For the period from May 2, 2002 (commencement of operations) through December 31, 2002.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

(i) For the period from April 28, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Global Technology and Communications Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 400,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      497,731    5.29%    07/21/06
Funding Agreement — GIC    GE Life and Annuity      400,000    5.28%    07/14/06
Master Note — Floating    CDC Financial Product Inc.      500,000    5.41%    07/03/06
Medium Term Note — Floating    Beta Finance Inc.      1,250,000    5.37%    07/03/06
Medium Term Note — Floating    Unicredito Italiano Bank (IRE) PLC      800,000    5.16%    07/10/06
Repurchase Agreement    Bank of America Securities LLC      2,646,737    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral
$6,432,975    $ 6,494,468

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
  
       $ 41,285,256      $ 1,337,872      $ (2,949,718 )      $ (1,611,846 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule    Fees

$0 up to $500 million

    0.88%

$500 million up to $2 billion

    0.83%

$2 billion and more

    0.78%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the Goldman Sachs Technology Composite Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.23% for all classes until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, there were no cumulative potential reimbursements for all classes of shares of the Fund.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II and Class VI shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II and Class VI shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $24,861 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III and Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III and Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III and Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is designed to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III and Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $26,009.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $54,434,447 and sales of $57,995,632.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the Goldman Sachs Technology Index Composite, for the one-, three-, and five-year periods ended September 30, 2005 and ranked in the bottom half of the Fund’s Lipper peer group for all periods. The Board discussed with management the disappointing performance of the Fund. The Board considered that Chip Zhu had become the sole portfolio manager of the Fund on January 4, 2005 and, after the first weeks of transitioning the Fund’s portfolio, the Fund had shown improved performance, and had outperformed its benchmark.

 

Next the Board reviewed the Fund’s contractual advisory fee and break points and considered that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed peer group. The Fund’s total expenses placed the Fund above the median of its Lipper Expense Group. The Board also considered, however, that the Fund had implemented a performance-based fee structure effective January 1, 2006 and reduced the base management fee by 10 basis points as of that date. Finally, the Board considered the adviser’s profitability with respect to this Fund and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust. Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

20

Table of Contents

 

Gartmore GVIT Global Health Sciences Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGHS (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Global Health Sciences Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Global Health Sciences Fund                                

Class I

      Actual    $ 1,000.00      $ 953.60      $ 5.76      1.19%
       Hypothetical1    $ 1,000.00      $ 1,018.90      $ 5.97      1.19%

Class II

      Actual    $ 1,000.00      $ 952.30      $ 6.92      1.43%
       Hypothetical1    $ 1,000.00      $ 1,017.71      $ 7.18      1.43%

Class III

      Actual    $ 1,000.00      $ 953.70      $ 5.76      1.19%
       Hypothetical1    $ 1,000.00      $ 1,018.90      $ 5.97      1.19%

Class VI

      Actual    $ 1,000.00      $ 951.60      $ 6.82      1.41%
       Hypothetical1    $ 1,000.00      $ 1,017.81      $ 7.08      1.41%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Global Health Sciences Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      93.9%
Cash Equivalents      6.2%
Other Investments*      10.1%
Liabilities in excess of other assets**      -10.2%
      
       100.0%
      

 

 

Top Holdings***       
Johnson & Johnson      8.1%
Wyeth      6.2%
Abbott Laboratories      5.9%
Merck & Co., Inc.      5.5%
Pfizer, Inc.      5.3%
Medtronic, Inc.      4.8%
Cardinal Health, Inc.      4.5%
UnitedHealth Group, Inc.      4.3%
Roche Holding AG – CH      3.9%
Gilead Sciences, Inc.      3.4%
Other Assets      48.1%
      
       100.0%
      
Top Industries       
Drugs      37.9%
Medical Products      24.4%
Medical Products & Services      10.3%
Therapeutics      5.8%
Medical Services      5.0%
Insurance      4.3%
Optical Supplies      2.4%
Health Care Services      1.8%
Human Resources      1.3%
Drug Delivery Systems      0.7%
Other Assets      6.1%
      
       100.0%
      

 

* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares or
Principal Amount		    Value
            
COMMON STOCKS (93.9%)       
Drug Delivery Systems (0.7%)       
Conor Medsystems, Inc. (b) (c)   15,449    $ 426,238
        
Drugs (37.9%)           
Abbott Laboratories   78,170      3,408,993
Allergan, Inc.   6,038      647,636
AstraZeneca PLC ADR—UK   14,750      882,345
Merck & Co., Inc.   86,756      3,160,521
Novartis AG ADR—CH   30,560      1,647,795
Pfizer, Inc.   130,442      3,061,474
Roche Holding AG—CH   13,781      2,274,689
Sanofi-Aventis ADR—UK   36,285      1,767,080
Schering-Plough Corp.   74,158      1,411,227
Wyeth   80,555      3,577,447
        
           21,839,207
        
Health Care Services (1.8%)       
AMN Healthcare Services, Inc. (b)   16,966      344,410
WebMD Health Corp., Class A (b) (c)   14,426      682,350
        
           1,026,760
        
Human Resources (1.3%)           
Cross Country Healthcare, Inc. (b) (c)   41,208      749,574
        
Insurance (4.3%)           
UnitedHealth Group, Inc.   55,429      2,482,111
        
Medical Products (24.4%)           
Applera Corp.—Celera Genomics Group (b)   11,220      145,299
Bard (C.R.), Inc.   23,608      1,729,522
Baxter International, Inc.   40,170      1,476,649
Bristol—Myers Squibb Co.   65,084      1,683,072
Illumina Inc (b)   19,930      591,124
Johnson & Johnson   77,598      4,649,672
Medtronic, Inc.   58,837      2,760,632
Northstar Neuroscience, Inc. (b) (c)   42,468      440,818
NxStage Medical, Inc. (b) (c)   41,126      359,030
Spectranetics Corp. (b) (c)   23,723      254,311
        
           14,090,129
        
    Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
Medical Products & Services (10.3%)       
Cardinal Health, Inc.     39,916    $ 2,567,797
Covance, Inc. (b)     15,459      946,400
DJ Orthopedics, Inc. (b) (c)     7,295      268,675
Gentiva Health Services, Inc. (b)     35,540      569,706
OSI Pharmaceuticals, Inc. (b) (c)     18,290      602,838
Pharmaceutical Product Development, Inc.     27,560      967,907
          
             5,923,323
          
Medical Services (5.0%)             
Manor Care, Inc.     39,562      1,856,249
McKesson Corp.     15,155      716,528
Sun Healthcare Group, Inc. (b) (c)     34,297      298,041
          
             2,870,818
          
Optical Supplies (2.4%)             
Alcon, Inc.     13,848      1,364,720
          
Therapeutics (5.8%)             
Genentech, Inc. (b)     17,073      1,396,571
Gilead Sciences, Inc. (b)     32,928      1,948,021
          
             3,344,592
          
Total Common Stocks            54,117,472
          
CASH EQUIVALENTS (6.2%)       
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $3,551,860)   $ 3,550,351      3,550,351
          
Total Cash Equivalents            3,550,351
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (10.1%)
Pool of short-term securities for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)   $ 5,849,530      5,849,530
          

 

3

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value  
              
Total Short-Term Securities Held as Collateral for Securities on Loan    $ 5,849,530  
        
Total Investments
(Cost $63,499,051) (a) — 110.2%		      63,517,353  
Liabilities in excess of
other assets — (10.2%)		      (5,860,744 )
        
NET ASSETS — 100.0%    $ 57,656,609  
        

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation ) of securities.

 

(b) Non-income producing securities.

 

(c) All of part of the security was on loan as of June 30, 2006.

 

ADR American Depository Receipt

 

CH Switzerland

 

UK United Kingdom

 

4

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $59,948,700)

    $ 59,967,002  

Repurchase agreements, at cost and value

      3,550,351  
    

Total Investments

      63,517,353  
    

Cash

      2,320,769  

Interest and dividends receivable

      79,240  

Receivable for capital shares issued

      3,533  

Prepaid expenses and other assets

      2,558  
    

Total Assets

      65,923,453  
    

Liabilities:

         

Payable for investments purchased

      2,162,349  

Payable for capital shares redeemed

      101,606  

Payable for return of collateral received for securities on loan

      5,849,530  

Accrued expenses and other payables:

         

Investment advisory fees

      138,233  

Fund administration and transfer agent fees

      3,865  

Distribution fees

      2,671  

Administrative servicing fees

      8,511  

Other

      79  
    

Total Liabilities

      8,266,844  
    

Net Assets

    $ 57,656,609  
    

Represented by:

         

Capital

    $ 58,489,503  

Accumulated net investment income (loss)

      59,238  

Accumulated net realized gains (losses) from investment and foreign currency transactions

      (910,434 )

Net unrealized appreciation (depreciation) on investments

      18,302  
    

Net Assets

    $ 57,656,609  
    

Net Assets:

         

Class I Shares

    $ 6,530,449  

Class II Shares

      2,309,954  

Class III Shares

      38,186,368  

Class VI Shares

      10,629,838  
    

Total

    $ 57,656,609  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      662,519  

Class II Shares

      236,260  

Class III Shares

      3,866,607  

Class VI Shares

      1,079,728  
    

Total

      5,845,114  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 9.86  

Class II Shares

    $ 9.78  

Class III Shares

    $ 9.88  

Class VI Shares

    $ 9.84  

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 46,372  

Dividend income

      362,755  

Income from securities lending

      48,407  
    

Total Income

      457,534  
    

Expenses:

         

Investment advisory fees

      288,334  

Fund administration and transfer agent fees

      23,328  

Distribution fees Class II Shares

      3,099  

Distribution fees Class VI Shares

      13,540  

Administrative servicing fees Class I Shares

      6,375  

Administrative servicing fees Class II Shares

      2,085  

Administrative servicing fees Class III Shares

      39,234  

Administrative servicing fees Class VI Shares

      8,165  

Trustee fees

      1,144  

Other

      11,375  
    

Total expenses before earnings credit

      396,679  

Earnings credt (Note 6)

      (413 )
    

Total Expenses

      396,266  
    

Net Investment Income (Loss)

      61,268  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      408,597  

Net realized gains (losses) on foreign currency transactions

      (135,736 )
    

Net realized gains (losses) on investment and foreign currency transactions

      272,861  

Net change in unrealized appreciation/depreciation on investments

      (3,359,246 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      (3,086,385 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (3,025,117 )
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 61,268      $ (171,456 )

Net realized gains (losses) on investment and foreign currency transactions

        272,861        5,720,024  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (3,359,246 )      (361,551 )
      
  

Change in net assets resulting from operations

        (3,025,117 )      5,187,017  
      
  

Distributions to Class I shareholders from:

                    

Net realized gains on investments

        —        (914,527 )

Distributions to Class II shareholders from:

                    

Net realized gains on investments

        —        (290,661 )

Distributions to Class III shareholders from:

                    

Net realized gains on investments

        —        (5,019,544 )

Distributions to Class VI shareholders from:

                    

Net realized gain on investment

        —        (1,070,723 )
      
  

Change in net assets from shareholder distributions

        —        (7,295,455 )
      
  

Change in net assets from capital transactions

        (5,093,348 )      12,061,047  
      
  

Change in net assets

        (8,118,465 )      9,952,609  

Net Assets:

                    

Beginning of period

        65,775,074        55,822,465  
      
  

End of period

      $ 57,656,609      $ 65,775,074  
      
  

Accumulated net investment income (loss)

      $ 59,238      $ (2,030 )
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 932,802      $ 6,678,056  

Dividends reinvested

        —        914,527  

Cost of shares redeemed

        (1,832,907 )      (7,596,357 )
      
  
         (900,105 )      (3,774 )
      
  

Class II Shares

                    

Proceeds from shares issued

        616        2,206  

Dividends reinvested

        —        290,661  

Cost of shares redeemed

        (139,938 )      (860,694 )
      
  
         (139,322 )      (567,827 )
      
  

Class III Shares

                    

Proceeds from shares issued

        4,809,816        17,975,705  

Dividends reinvested

        —        5,019,540  

Cost of shares redeemed

        (9,781,465 )      (16,113,669 )
      
  
         (4,971,649 )      6,881,576  
      
  

Class VI Shares

                    

Proceeds from shares issued

        3,004,386        6,539,874  

Dividends reinvested

        —        1,070,723  

Cost of shares redeemed

        (2,086,658 )      (1,859,525 )
      
  
         917,728        5,751,072  
      
  

Change net assets from capital transactions

      $ (5,093,348 )    $ 12,061,047  
      
  

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND

 

Statements of Changes in Net Assets (continued)

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Shares

                

Issued

      89,760      615,138  

Reinvested

      —      87,155  

Redeemed

      (176,298 )    (692,995 )
      
  
       (86,538 )    9,298  
      
  

Class II Shares

                

Issued

      —      137  

Reinvested

      —      27,908  

Redeemed

      (13,663 )    (79,268 )
      
  
       (13,663 )    (51,223 )
      
  

Class III Shares

                

Issued

      454,362      1,641,409  

Reinvested

      —      478,035  

Redeemed

      (946,762 )    (1,469,052 )
      
  
       (492,400 )    650,392  
      
  

Class VI Shares

                

Issued

      287,577      593,542  

Reinvested

      —      102,298  

Redeemed

      (203,097 )    (165,802 )
      
  
       84,480      530,038  
      
  

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Global Health Sciences Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets (a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average Net
Assets (a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                            

Period Ended December 27, 2001(c)(d)

   $ 9.83   (0.03 )   —   0.39     0.36     (0.02 )   —     (0.02 )   $ 10.17   3.67% (g)   $ 2,549   1.24% (h)   (0.32% )(h)   5.51% (h)   (4.59% )(h)   892.96%

Period Ended December 31, 2002(e)

   $ 9.51   (0.02 )   0.01   (1.31 )   (1.32 )   —     —     —     $ 8.19   (13.88% )(g)   $ 370   1.22% (h)   (0.25% )(h)   (i )   (i )   764.93%

Year Ended December 31, 2003

   $ 8.19   (0.02 )   0.01   3.01     3.00     —     (1.23 )   (1.23 )   $ 9.96   36.69%     $ 4,434   1.24%     (0.36% )   (i )   (i )   542.89%

Year Ended December 31, 2004

   $ 9.96   (0.03 )   0.01   0.80     0.78     —     (0.05 )   (0.05 )   $ 10.69   7.86%     $ 7,910   1.26%     (0.28% )   (i )   (i )   424.94%

Year Ended December 31, 2005

   $ 10.69   (0.03 )   —   0.92     0.89     —     (1.24 )   (1.24 )   $ 10.34   8.44%     $ 7,747   1.26%     (0.22% )   (i )   (i )   366.90%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.34   0.01     —   (0.49 )   (0.48 )   —     —     —     $ 9.86   (4.64% )(g)   $ 6,530   1.19% (h)   0.23% (h)   (i )   (i )   155.06%

Class II Shares

                                                                                            

Period Ended December 31, 2003(f)

   $ 8.72   (0.01 )   0.01   2.46     2.46     —     (1.23 )   (1.23 )   $ 9.95   28.27% (g)   $ 2,232   1.49% (h)   (0.59% )(h)   (i )   (i )   542.89%

Year Ended December 31, 2004

   $ 9.95   (0.06 )   0.01   0.80     0.75     —     (0.05 )   (0.05 )   $ 10.65   7.56%     $ 3,208   1.50%     (0.54% )   (i )   (i )   424.94%

Year Ended December 31, 2005

   $ 10.65   (0.05 )   —   0.91     0.86     —     (1.24 )   (1.24 )   $ 10.27   8.19%     $ 2,567   1.51%     (0.47% )   (i )   (i )   366.90%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.27   —     —   (0.49 )   (0.49 )   —     —     —     $ 9.78   (4.77% )(g)   $ 2,310   1.43% (h)   0.00% (h)   (i )   (i )   155.06%

Class III Shares

                                                                                            

Period Ended December 31, 2001(d)

   $ 10.17   —     —   (0.03 )   (0.03 )   —     —     —     $ 10.14   (0.30% )(g)   $ 2,540   1.35% (h)   (1.13% )(h)   1.35% (h)   (1.13% )(h)   892.96%

Year Ended December 31, 2002

   $ 10.14   (0.03 )   0.01   (1.92 )   (1.94 )   —     —     —     $ 8.20   19.13%     $ 11,652   1.23%     (0.37% )   1.24%     (0.38% )   764.93%

Year Ended December 31, 2003

   $ 8.20   (0.03 )   0.01   3.03     3.01     —     (1.23 )   (1.23 )   $ 9.98   36.77%     $ 27,026   1.22%     (0.39% )   (i )   (i )   542.89%

Year Ended December 31, 2004

   $ 9.98   (0.03 )   0.01   0.80     0.78     —     (0.05 )   (0.05 )   $ 10.71   7.84%     $ 39,723   1.26%     (0.29% )   (i )   (i )   424.94%

Year Ended December 31, 2005

   $ 10.71   (0.02 )   —   0.91     0.89     —     (1.24 )   (1.24 )   $ 10.36   8.42%     $ 45,169   1.25%     (0.24% )   (i )   (i )   366.90%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.36   0.01     —   (0.49 )   (0.48 )   —     —     —     $ 9.88   (4.63% )(g)   $ 38,186   1.19% (h)   0.23% (h)   (i )   (i )   155.06%

Class VI Shares

                                                                                            

Period Ended December 31, 2004(j)

   $ 10.70   (0.02 )   0.01   0.02     0.01     —     —     —     $ 10.71   0.09% (g)   $ 4,981   1.35% (h)   (0.36% )(h)   (i )   (i )   424.94%

Year Ended December 31, 2005

   $ 10.71   (0.03 )   —   0.90     0.87     —     (1.24 )   (1.24 )   $ 10.34   8.23%     $ 10,292   1.42%     (0.43% )   (i )   (i )   366.90%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.34   —     —   (0.50 )   (0.50 )   —     —     —     $ 9.84   (4.84% )(g)   $ 10,630   1.41% (h)   0.04% (h)   (i )   (i )   155.06%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) Class I shares were exchanged into Class III shares effective December 28, 2001.

 

(e) For the period from May 6, 2002 (recommencement of sales to the public) through December 31, 2002.

 

(f) For the period from March 28, 2003 (commencement of operations) through December 31, 2003.

 

(g) Not annualized.

 

(h) Annualized.

 

(i) There were no fee reductions during the period.

 

(j) For the period from April 28, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Global Health Sciences Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Commercial Paper    Aegis Finance LLC    $ 497,731    5.29%    07/21/06
Master Note — Floating    CDC Financial Product Inc.      1,000,000    5.41%    07/03/06
Master Note — Floating    Citigroup Global Markets Inc.      1,000,000    5.38%    07/03/06
Medium Term Note — Floating    Beta Finance Inc.      2,500,000    5.37%    07/03/06
Repurchase Agreement    Bank of America Securities LLC      851,799    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

$5,843,244

    $ 5,849,530

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
    Unrealized
Appreciation
    Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
  
$64,194,992    $ 1,900,225    $ (2,577,864 )   $ (677,639 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule    Fees

$0 up to $500 million

    0.90%

$500 million up to $2 billion

    0.85%

$2 billion and more

    0.80%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the Goldman Sachs Healthcare Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance    Change in Fees

+/-1 percentage point

    +/-0.02%

+/-2 percentage point

    +/-0.04%

+/-3 percentage point

    +/-0.06%

+/-4 percentage point

    +/-0.08%

+/-5 percentage point

    +/-0.10%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II and Class VI shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II and Class VI shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $48,208 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III and Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III and Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

separate account held the Class III and Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is designed to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III and Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $14,253.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $96,836,835 and sales of $105,197,120.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to approve the investment advisory agreements for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that for the one- and three- year periods ending September 30, 2005, the Fund outperformed its benchmark, the Goldman Sachs Healthcare Index by 54 basis points and 399 basis points, respectively. The Board then discussed with management the Fund’s performance and distribution. Management explained that this is a very volatile sector in which to manage money and, in management’s view, the portfolio manager has made the appropriate defensive moves during this time period.

 

Next, the Board considered that the contractual advisory fee (including the subadvisory fee) and breakpoints for this Fund placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group and the Fund’s total expenses were 14 basis points above the median for the Lipper Expense Group. The Board noted, however, that the Fund had implemented a performance-based fee structure effective January 1, 2006, and, the base management fee was reduced by 10 basis points immediately upon implementation. Finally, the Board considered that the adviser had reported a loss for investment management services to this Fund during the twelve-month period ended September 30, 2005.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

   Trustee since December 2004   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

   Trustee since December 2004   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

   Trustee since December 2004   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

18

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

Table of Contents

 

Gartmore GVIT Nationwide Leaders Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GNL (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Nationwide Leaders Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses

Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Nationwide Leaders Fund                                

Class I

      Actual    $ 1,000.00      $ 1,048.90      $ 5.69      1.12%
       Hypothetical1    $ 1,000.00      $ 1,019.25      $ 5.62      1.12%

Class III

      Actual    $ 1,000.00      $ 1,049.70      $ 5.49      1.08%
       Hypothetical1    $ 1,000.00      $ 1,019.44      $ 5.42      1.08%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Nationwide Leaders Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      99.6%
Cash Equivalents      0.4%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Top Holdings*       
Sherwin-Williams Co. (The)      6.9%
3M Co.      6.5%
Phelps Dodge Corp.      6.0%
Northern Trust Corp.      5.5%
Abbott Laboratories      4.8%
TJX Companies, Inc.      4.8%
Burlington Northern Santa Fe Corp.      4.7%
Alcoa, Inc.      4.6%
Barclays PLC - ADR - GB      4.6%
Franklin Resources, Inc.      4.5%
Other Assets      47.1%
      
       100.0%
      

 

 

Top Industries       
Metals      14.2%
Electronics      9.3%
Financial Services      8.4%
Banking      7.9%
Healthcare      7.7%
Coating & Paint      6.9%
Banks      5.5%
Apparel & Accessories      4.8%
Transportation Services      4.7%
Retail      4.3%
Other Assets      26.3%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE LEADERS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares or
Principal Amount		   Value
           
COMMON STOCKS (99.6%)      
Airlines (2.7%)          
U.S. Airways Group Inc. (b)   12,400   $      626,696
       
Apparel & Accessories (4.8%)      
TJX Companies, Inc.   48,300     1,104,138
       
Banking (7.9%)      
Barclays PLC — ADR — GB   23,100     1,057,518
New York Community Bancorp, Inc.   45,200     746,252
       
          1,803,770
       
Banks (5.5%)      
Northern Trust Corp.   22,800     1,260,840
       
Beer, Wine, & Distilled Beverages (3.3%)
Brown-Forman Corp.   10,600     759,914
       
Coating & Paint (6.9%)      
Sherwin-Williams Co. (The)   33,100     1,571,588
       
Computer Software & Services (2.5%)      
Microsoft Corp.   24,500     570,850
       
Electric & Electronic Equipment (4.0%)      
Hubbell, Inc.   19,020     906,303
       
Electronics (9.3%)      
3M Co.   18,600     1,502,322
Amphenol Corp., Class A   11,400     637,944
       
          2,140,266
       
Energy (2.1%)      
Valero Energy   7,400     492,248
       
Financial Services (8.4%)      
Franklin Resources, Inc.   11,900     1,033,039
Morgan Stanley   14,300     903,903
       
          1,936,942
       
Healthcare (7.7%)      
Abbott Laboratories   25,500     1,112,055
UnitedHealth Group, Inc.   14,900     667,222
       
          1,779,277
       
Machinery (3.0%)      
Deere & Co.   8,200     684,618
       
Metals (14.2%)      
Alcan, Inc.   17,400     816,756
Alcoa, Inc.   32,800     1,061,408
Phelps Dodge Corp.   16,800     1,380,288
       
          3,258,452
       
    Shares or
Principal Amount		    Value  
              
COMMON STOCKS (continued)         
Railroads (3.6%)         
Norfolk Southern Corp.   15,700    $ 835,554  
        
Retail (4.3%)         
Federated Department Stores, Inc.   27,100      991,860  
        
Semiconductors (2.0%)         
Texas Instruments, Inc.   14,800      448,292  
        
Tobacco (2.7%)         
Altria Group, Inc.   8,500      624,155  
        
Transportation Services (4.7%)         
Burlington Northern Santa Fe Corp.   13,710      1,086,518  
        
Total Common Stocks          22,882,281  
        
CASH EQUIVALENTS (0.4%)         
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $81,714)   81,679      81,679  
        
Total Cash Equivalents          81,679  
        
Total Investments
(Cost $22,977,805) (a) — 100.0%		      22,963,960  
Liabilities in excess of other assets — 0.0%          (5,096 )
        
NET ASSETS — 100.0%        $ 22,958,864  
        

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

ADR American Depository Receipt

 

GB United Kingdom

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE LEADERS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $22,896,126)

    $ 22,882,281  

Repurchase agreements, at cost and value

      81,679  
    

Total Investments

      22,963,960  
    

Interest and dividends receivable

      27,896  

Receivable for capital shares issued

      2,985  

Receivable for investments sold

      1,134,802  

Prepaid expenses and other assets

      298  
    

Total Assets

      24,129,941  
    

Liabilities:

         

Payable for investments purchased

      1,121,811  

Payable for capital shares redeemed

      183  

Accrued expenses and other payables:

         

Investment advisory fees

      45,097  

Fund administration and transfer agent fees

      1,282  

Administrative servicing fees

      741  

Other

      1,963  
    

Total Liabilities

      1,171,077  
    

Net Assets

    $ 22,958,864  
    

Represented by:

         

Capital

    $ 21,663,644  

Accumulated net investment income (loss)

      21,624  

Accumulated net realized gains (losses) from investment transactions

      1,287,441  

Net unrealized appreciation (depreciation) on investments

      (13,845 )
    

Net Assets

    $ 22,958,864  
    

Net Assets:

         

Class I Shares

    $ 1,961,985  

Class III Shares

      20,996,879  
    

Total

    $ 22,958,864  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      146,484  

Class III Shares

      1,564,901  
    

Total

      1,711,385  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 13.39  

Class III Shares

    $ 13.42  

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 24,916  

Dividend income

      294,038  
    

Total Income

      318,954  
    

Expenses:

         

Investment advisory fees

      88,741  

Fund administration and transfer agent fees

      8,713  

Administrative servicing fees Class I Shares

      1,276  

Administrative servicing fees Class III Shares

      13,726  

Trustee fees

      383  

Other

      6,950  
    

Total expenses before earnings credit

      119,789  

Earnings credit (Note 6)

      (50 )
    

Total Expenses

      119,739  
    

Net Investment Income (Loss)

      199,215  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      1,358,883  

Net change in unrealized appreciation/depreciation on investments

      (440,522 )
    

Net realized/unrealized gains (losses) on investments

      918,361  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 1,117,576  
    

 

See notes to financial statements.

 

4

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT NATIONWIDE LEADERS FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

From Investment Activities:

                 

Operations:

                 

Net investment income (loss)

    $ 199,215     $ 228,367  

Net realized gains (losses) on investment transactions

      1,358,883       2,248,197  

Net change in unrealized appreciation/depreciation on investments

      (440,522 )     (404,371 )
    
 

Change in net assets resulting from operations

      1,117,576       2,072,193  
    
 

Distributions to Class I shareholders from:

                 

Net investment income

      (12,346 )     (17,905 )

Net realized gains on investments

      (3,800 )     (225,335 )

Distributions to Class III shareholders from:

                 

Net investment income

      (165,245 )     (229,432 )

Net realized gains on investments

      (39,502 )     (2,871,236 )
    
 

Change in net assets from shareholder distributions

      (220,893 )     (3,343,908 )
    
 

Change in net assets from capital transactions

      294,509       12,495,504  
    
 

Change in net assets

      1,191,192       11,223,789  

Net Assets:

                 

Beginning of period

      21,767,672       10,543,883  
    
 

End of period

    $ 22,958,864     $ 21,767,672  
    
 

Accumulated net investment income (loss)

    $ 21,624     $ —  
    
 

CAPITAL TRANSACTIONS:

                 

Class I Shares

                 

Proceeds from shares issued

    $ 914,355     $ 2,014,916  

Dividends reinvested

      16,146       243,240  

Cost of shares redeemed

      (541,096 )     (1,583,396 )
    
 
       389,405       674,760  
    
 

Class III Shares

                 

Proceeds from shares issued

      3,365,099       13,944,314  

Dividends reinvested

      204,747       3,100,665  

Cost of shares redeemed

      (3,664,742 )     (5,224,235 )
    
 
       (94,896 )     11,820,744  
    
 

Change net assets from capital transactions

    $ 294,509     $ 12,495,504  
    
 

SHARE TRANSACTIONS:

                 

Class I Shares

                 

Issued

      69,419       144,264  

Reinvested

      1,219       18,632  

Redeemed

      (40,248 )     (114,057 )
    
 
       30,390       48,839  
    
 

Class III Shares

                 

Issued

      252,573       1,010,443  

Reinvested

      15,387       237,418  

Redeemed

      (273,598 )     (374,328 )
    
 
       (5,638 )     873,533  
    
 

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Nationwide Leaders Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                          

Period Ended December 31, 2002(c)

   $ 11.20   0.03   0.02   (1.75 )   (1.70 )   (0.06 )   —     (0.06 )   $ 9.44   (15.17% )(e)   $ 247   1.12% (f)   1.03% (f)   (g )   (g )   105.28%

Year Ended December 31, 2003

   $ 9.44   0.01   0.01   2.37     2.39     (0.02 )   —     (0.02 )   $ 11.81   25.38%     $ 530   1.14%     0.05%     (g )   (g )   244.94%

Year Ended December 31, 2004

   $ 11.81   0.06   0.01   2.15     2.22     (0.05 )   (0.20 )   (0.25 )   $ 13.78   18.79%     $ 927   1.19%     0.55%     (g )   (g )   259.37%

Year Ended December 31, 2005

   $ 13.78   0.15   —   1.21     1.36     (0.17 )   (2.08 )   (2.25 )   $ 12.89   10.31%     $ 1,496   1.16%     1.18%     (g )   (g )   483.17%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.89   0.09   —   0.54     0.63     (0.10 )   (0.03 )   (0.13 )   $ 13.39   4.89% (e)   $ 1,962   1.12% (f)   1.52% (f)   (g )   (g )   252.47%

Class III Shares

                                                                                          

Period Ended December 31, 2001(d)

   $ 10.00   —   —   0.08     0.08     —     —     —     $ 10.08   0.80% (e)   $ 1,008   1.25% (f)   (0.16% )(f)   20.55% (f)   (19.46% )(f)   0.00%

Year Ended December 31, 2002

   $ 10.08   0.04   0.02   (0.64 )   (0.58 )   (0.06 )   —     (0.06 )   $ 9.44   (5.78% )   $ 8,463   1.15%     0.80%     1.16%     0.79%     105.28%

Year Ended December 31, 2003

   $ 9.44   0.01   0.01   2.39     2.41     (0.02 )   —     (0.02 )   $ 11.83   25.59%     $ 8,801   1.13%     0.16%     (g )   (g )   244.94%

Year Ended December 31, 2004

   $ 11.83   0.06   0.01   2.15     2.22     (0.05 )   (0.20 )   (0.25 )   $ 13.80   18.77%     $ 9,617   1.17%     0.48%     (g )   (g )   259.37%

Year Ended December 31, 2005

   $ 13.80   0.16   —   1.20     1.36     (0.17 )   (2.08 )   (2.25 )   $ 12.91   10.30%     $ 20,271   1.16%     1.26%     (g )   (g )   483.17%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.91   0.10   —   0.54     0.64     (0.10 )   (0.03 )   (0.13 )   $ 13.42   4.97% (e)   $ 20,997   1.08% (f)   1.62% (f)   (g )   (g )   252.47%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) For the period from May 9, 2002 (recommencement of operations) through December 31, 2002.

 

(d) For the period from December 18, 2001 (commencement of operations) through December 31, 2001. Registration of shares effective with the Securities and Exchange Commission on December 31, 2001. On the effective date, the net asset value was $10.08 per share.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Nationwide Leaders Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(d) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,”

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(e) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(f) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(g) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(h) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(i) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(j) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
Depreciation
        Net Unrealized
Appreciation
(Depreciation)*
  
       $ 23,167,977      $ 307,150      $ (511,167 )      $ (204,017 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(k) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative service fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on the Fund’s average daily net assets and the following schedule:

 

Fee Schedule    Fees

Up to $500 million

    0.80%

$500 million up to $2 billion

    0.70%

$2 billion or more

    0.65%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the S&P 500 Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance    Change in Fees

+/-1 percentage point

    +/-0.02%

+/-2 percentage point

    +/-0.04%

+/-3 percentage point

    +/-0.06%

+/-4 percentage point

    +/-0.08%

+/-5 percentage point

    +/-0.10%

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.15% for all classes until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, depending on the fund (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, there were no cumulative potential reimbursements for all classes of shares of the Fund.

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $15,444 in Administrative Services Fees from the Fund.

 

As of June 30, 2006, the adviser or affiliates of the advisers directly held 7% of the shares outstanding of the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading in Class III shares. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $119.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $55,845,680 and sales of $54,380,707.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the S&P 500 Index, for the one- and three-year period ended September 30, 2005 by 1,053 and 183 basis points, respectively. The Board also considered that the Fund ranked in the top quartile of its Lipper Multi-Cap Core Funds category for the one-year period and ranked in the second quartile for the three-year period. Moreover, the Board considered that the Fund outperformed the median of its Lipper category by 833 basis points for the one-year period.

 

The Board then reviewed the Fund’s contractual advisory fee and breakpoints and noted that the contractual advisory fee placed the Fund in the fourth quintile of its Lipper-constructed Expense Group, while the Fund’s total expenses placed it in the fourth quintile of its Lipper Expense Group. The Board noted, however, that the Fund’s base advisory fee was reduced by 10 basis points upon implementation of a performance-based fee structure on January 1, 2006. The Board then discussed with management the Fund’s relatively high expense ratio. Management explained this was partly a function of the Fund’s low asset level and partly a function of the higher advisory fee management charges for this concentrated Fund. Management proposed to implement an expense cap of 115 basis points and the Board concluded this was reasonable. Finally the Board considered the adviser’s profitability on this Fund, and determined that it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreement for the Fund for an annual period which commenced on May 1, 2006.

 

14

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		  

Other

Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

16

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000 Conshohocken,
PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken,
PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken,
PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

18

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road, Suite 1000 Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

19

Table of Contents

 

Gartmore GVIT Emerging Markets Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
7    Statement of Assets and Liabilities
7    Statement of Operations
8    Statements of Changes in Net Assets
10    Financial Highlights
11    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GEM (8/06)

Table of Contents

`

 

Shareholder

Expense Example

Gartmore GVIT Emerging Markets Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Emerging Markets Fund                                
                                        

Class I

      Actual    $ 1,000.00      $ 1,074.30      $ 6.69      1.30%
       Hypothetical1    $ 1,000.00      $ 1,018.35      $ 6.53      1.30%

Class II

      Actual    $ 1,000.00      $ 1,072.50      $ 7.96      1.55%
       Hypothetical1    $ 1,000.00      $ 1,017.11      $ 7.78      1.55%

Class III

      Actual    $ 1,000.00      $ 1,073.50      $ 6.68      1.30%
       Hypothetical1    $ 1,000.00      $ 1,018.35      $ 6.53      1.30%

Class VI

      Actual    $ 1,000.00      $ 1,073.80      $ 7.20      1.40%
       Hypothetical1    $ 1,000.00      $ 1,017.86      $ 7.03      1.40%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Emerging Markets Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      90.5%
Participation Notes      5.5%
Cash Equivalents      2.1%
Rights      0.0%
Other Investments*      3.5%
Liabilities in excess of other assets**      -1.6%
      
       100.0%
      

 

 

Top Holdings***       
Hana Financial Group, Inc.      2.9%
Gazprom ADR      2.6%
Companhia Vale do Rio Doce, Class A      2.5%
Petroleo Brasileiro SA ADR      2.3%
Lojas Renner SA      2.0%
Bharti Airtel Ltd.      2.0%
Samsung Electronics      1.9%
America Movil SA de CV ADR      1.8%
Samsung Electronics Co., Ltd. GDR      1.7%
Petroleo Brasileiro SA ADR      1.6%
Other Assets      78.7%
      
       100.0%
      
Top Industries       
Oil & Gas      14.3%
Banking      11.1%
Telecommunications      8.4%
Electronics      7.5%
Retail      5.7%
Financial Services      5.4%
Steel      4.6%
Metals & Mining      3.8%
Building Materials      2.8%
Mining      2.7%
Other Assets      33.7%
      
       100.0%
      

 

Top Countries       
Korea      16.7%
Brazil      15.1%
Taiwan      11.6%
South Africa      8.7%
Hong Kong      7.2%
Russia      6.4%
Mexico      6.2%
India      5.6%
China      3.0%
Malaysia      2.9%
Other Assets      16.6%
      
       100.0%
      
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares    Value
            
COMMON STOCKS (90.5%)           
ARGENTINA (1.4%)           
Steel (1.4%)           
Ternium SA ADR (b)   149,400    $ 3,610,998
        
BRAZIL (15.1%)           
Banking (1.9%)           
Banco Bradesco SA   82,200      2,564,667
Unibanco GDR   33,500      2,224,065
        
           4,788,732
        
Brewery (1.0%)           
Ambev Cia Bebid PREF   6,474,000      2,671,079
        
           2,671,079
        
Insurance (0.7%)           
Porto Seguro SA   108,100      1,847,949
        
Metals & Mining (2.5%)           
Companhia Vale do Rio Doce, Class A   324,172      6,605,057
        
Oil & Gas (3.9%)           
Petroleo Brasileiro SA ADR   74,719      5,965,565
Petroleo Brasileiro SA ADR   48,000      4,286,880
        
           10,252,445
        
Residential (1.0%)           
Rossi Residencial SA   266,800      2,526,982
        
Retail (2.0%)           
Lojas Renner SA   96,500      5,127,287
        
Steel (1.4%)           
Usinas Siderurgicas de Minais Gerais SA   102,800      3,688,052
        
Telecommunications (0.7%)           
Tele Norte Leste Participacoes SA ADR   136,600      1,741,650
        
           39,249,233
        
CZECH REPUBLIC (1.7%)           
Television (1.7%)           
Central European Media Enterprises Ltd. (b)   67,200      4,246,368
        
CHINA (3.0%)           
Building Products (0.9%)           
Anhui Conch Cement Co.
Ltd. (c) (d)		   1,448,000      2,367,333
        
    Shares    Value
            
COMMON STOCKS (continued)       
CHINA (continued)           
Oil & Gas (2.1%)           
CNOOC Ltd . (c)   3,200,000    $ 2,570,543
PetroChina Co. Ltd. (c)   2,734,000      2,950,844
        
           5,521,387
        
           7,888,720
        
HONG KONG (7.2%)           
Auto Parts & Equipment (1.1%)       
Dongfeng Motor Corp. (b) (c) (d)   6,198,000      2,902,752
        
Diversified Operations (1.3%)       
China Resources Enterprise Ltd. (c) (d)   1,696,000      3,466,386
        
Insurance (0.9%)           
China Life Insurance Co. Ltd. (c)   1,500,000      2,376,229
        
Oil & Gas (1.3%)           
China Petroleum & Chemical Corp. (c)   6,020,000      3,451,831
        
Shipping (1.3%)           
Cosco Pacific Ltd. (c) (d)   1,462,000      3,237,973
        
Telecommunications (1.3%)       
China Mobile (Hong Kong) Ltd. (c) (d)   584,000      3,339,786
        
           18,774,957
        
HUNGARY (0.4%)           
Oil & Gas (0.4%)           
MOL Magyar Olaj-es Gazipari Rt. (c)   11,300      1,162,484
        
INDIA (0.1%)           
Beverages (0.1%)           
McDowell & Co. Ltd.
GDR (b) (c)		   72,900      338,256
        
INDONESIA (1.4%)           
Banking (1.4%)           
PT Bank International Indonesia TBK (c)   180,961,600      3,618,777
        
ISREAL (1.1%)           
Banking (1.1%)           
Bank Leumi Le-Israel (c)   768,400      2,798,332
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares    Value
            
COMMON STOCKS (continued)       
KAZAKAHSTAN (0.7%)           
Mining (0.7%)           
Kazakhgold Group Ltd. GDR (b) (d)   90,200    $ 1,817,530
        
KOREA (16.7%)           
Banking (2.7%)           
Industrial Bank of Korea (c)   186,100      3,130,897
Kookmin Bank ADR   45,900      3,812,454
        
           6,943,351
        
Construction (1.1%)           
Hanjin Heavy Industries & Construction Co. Ltd. (c)   30,400      814,394
Hyundai Development Co. (c)   48,600      2,101,474
        
           2,915,868
        
Electronics (3.8%)           
KH Vatec Co. Ltd. (b) (c)   42,487      702,062
Samsung Electronics (c)   7,827      4,969,694
Samsung Electronics Co. Ltd. GDR   17,712      4,299,588
        
           9,971,344
        
Financial Services (2.9%)           
Hana Financial Group, Inc. (c)   163,989      7,695,423
        
Investment Company (0.5%)           
Macquarie Korea Infrastructure GDR (b)   172,900      1,217,597
        
Lighting Products (0.9%)           
Kumho Electric, Inc. (c)   51,523      2,323,672
        
Metals (0.9%)           
Korea Zinc Co. Ltd. (c)   30,300      2,376,014
        
Oil & Gas (1.6%)           
SK Corp. (c)   64,570      4,153,508
        
Retail (1.2%)           
Lotte Shopping Co. Ltd. (b)   171,206      3,283,731
        
Tobacco (1.1%)           
KT&G Corp. (c)   47,888      2,796,706
        
           43,677,214
        
LEBANON (1.4%)           
Telecommunications (1.4%)           
Investcom LLC GDR (b) (d)   192,500      3,692,150
        
    Shares    Value
            
COMMON STOCKS (continued)       
MALAYSIA (2.9%)           
Agriculture (1.5%)           
IOI Corporation Berhad (c)   1,015,300    $ 3,956,239
        
Foreign Banking (1.4%)           
Bumiputra Commerce (c)   2,250,800      3,641,441
        
           7,597,680
        
MEXICO (6.2%)           
Building Materials (1.4%)           
Cemex SA ADR   64,000      3,646,080
        
Financial Services (1.2%)           
Grupo Financiero Banorte SA de CV   1,294,876      3,004,565
        
Retail (1.1%)           
Wal-Mart de Mexico
SA de CV		   1,067,460      2,985,441
        
Steel (0.7%)           
Industrias CH SA (b)   721,000      1,832,000
        
Telecommunications (1.8%)           
America Movil SA de CV ADR   144,351      4,801,114
        
           16,269,200
        
PERU (1.3%)           
Metals & Mining (1.3%)           
Compania de Minas Buenaventura S.A.U. ADR   120,800      3,295,424
        
RUSSIA (6.4%)           
Automobile Manufacturers (0.8%)       
JSC Severstal-Avto (c)   103,906      1,985,918
        
Oil & Gas (2.6%)           
Gazprom ADR (c)   160,549      6,751,128
        
Retail (0.7%)           
Pyaterochka Holding NV GDR (b) (d)   116,238      1,929,551
        
Steel (1.1%)           
Mechel Steel Group OAO ADR   132,300      2,962,197
        
Telecommunications (0.0%)           
Mobile TeleSystems   2,550      75,072
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares    Value
            
COMMON STOCKS (continued)       
Utilities (1.2%)           
RAO Unified Energy System GDR   43,400    $ 3,033,660
        
           16,737,526
        
SOUTH AFRICA (8.7%)           
Banking (1.6%)           
Absa Group Ltd. (c)   306,165      4,273,556
        
Brewery (1.0%)           
SABMiller PLC (c)   138,300      2,489,473
        
Diversified Operations (1.1%)           
Barloworld Ltd. (c)   166,157      2,806,457
        
Mining (1.1%)           
Harmony Gold Mining Co. Ltd. (b) (c)   184,537      2,985,225
        
Oil & Gas (1.6%)           
Sasol Ltd. (c)   106,631      4,102,770
        
Retail (0.7%)           
Truworths International
Ltd. (c)		   581,900      1,747,758
        
Telecommunications (1.6%)           
MTN Group Ltd. (c)   581,076      4,282,534
        
           22,687,773
        
TAIWAN (11.6%)           
Banking (0.7%)           
TA Chong Bank Ltd. (b) (c)   6,572,748      1,789,747
        
Building Products (1.0%)           
Taiwan Cement Corp. (c)   3,431,300      2,527,103
        
Chemicals (0.8%)           
Taiwan Fertilizer Co. Ltd. (c)   1,317,000      2,191,289
        
Circuit Boards (0.8%)           
Unimicron Technology Corp. (c)   1,600,000      2,084,780
        
Computers (1.3%)           
Asustek Computer, Inc. (c)   1,023,000      2,513,037
Hon Hai Precision Industry Co. Ltd. (c)   138,000      853,251
        
           3,366,288
        
Electronics (3.7%)           
Au Optronics Corp. (c)   1,734,310      2,459,341
    Shares    Value
            
COMMON STOCKS (continued)       
TAIWAN (continued)           
Electronics (continued)           
Delta Electronics, Inc. (c)   1,387,450    $ 3,940,245
MediaTek, Inc. (c)   342,000      3,170,168
        
           9,569,754
        
Financial Services (1.4%)           
Shin Kong Financial Holding Co. Ltd. (c)   3,320,000      3,657,010
        
Semiconductors (1.4%)           
Vanguard International Semiconductor Corp. (c)   5,289,000      3,565,725
        
Telecommunications (0.5%)           
Inventec Appliance Corp. (b) (c)   389,000      1,476,461
        
           30,228,157
        
THAILAND (2.4%)           
Banking (0.7%)           
Phatra Securities Public Co. Ltd. (c)   1,538,000      1,767,865
        
Mining (0.9%)           
Banpu Public Co. Ltd.   657,400      2,228,738
        
Oil & Gas (0.8%)           
Thai Oil Public Co. Ltd.   1,270,500      2,126,514
        
           6,123,117
        
TURKEY (0.8%)           
Banking (0.8%)           
Denizbank AS (b) (c)   30,061      265,351
Turkiye Vakiflar Bankasi   425,547      1,667,757
        
           1,933,108
        
Total Common Stocks          235,747,004
        
PARTICIPATION NOTES (5.5%)       
INDIA (5.5%)           
Automotive (0.8%)           
Tata Motors Ltd.
0.00%, 09/14/07 (c)		   118,000      2,037,860
        
Banking (0.2%)           
ICICI Bank Ltd.
0.00%, 05/10/10 (c)		   60,379      640,017
        
Building Materials (1.4%)           
India Cements Ltd.
0.00%, 01/06/11 (b) (c)		   1,050,097      3,580,831
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares    Value
            
PARTICIPATION NOTES (continued)       
INDIA (continued)           
Petrochemicals (1.1%)           
Reliance Industries Ltd.
0.00%, 03/09/09 (c)		   125,903      2,899,546
        
Telecommunication Services (2.0%)       
Bharti Airtel Ltd.
0.00%, 04/27/07 (c)		   628,177    $ 5,049,240
        
Total Participation Notes          14,207,494
        
RIGHTS (0.0%)           
Brewery (0.0%)           
Cia De Bebidas PREF (e)   2,963      0
        
Total Rights          0
        
CASH EQUIVALENTS (2.1%)       
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $5,392,592)   5,390,301      5,390,301
        
Total Cash Equivalents          5,390,301
        
    Shares    Value  
              
SHORT TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (3.5%)   
Pool of short-term securities for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)   9,158,798    $ 9,158,798  
        
Total Short Term Securities Held
as Collateral for Securities on Loan		      9,158,798  
        
Total Investments
(Cost $251,845,404) (a) — 101.6%		      264,503,597  
Liabilities in excess of
other assets — (1.6%)		          (4,191,728 )
        
NET ASSETS — 100.0%        $ 260,311,869  
        

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair Valued Security.

 

(d) All of part of the security was on loan as of June 30, 2006.

 

(e) Security has been deemed illiquid. The pricing committee has deemed the security to have zero value based upon procedures adopted by the Board of Trustees.

 

ADR American Depositary Receipt

 

GDR Global Depositary Receipt

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		     

Market

Value

      Unrealized
Appreciation/
(Depreciation)		  
Long Contracts:                                    

Hong Kong Dollar

      07/03/06      $ 1,059,352      $ 1,059,832      $ 480  

Hong Kong Dollar

      07/03/06        1,291,247        1,291,633        386  
Total Long Contracts             $ 2,350,599      $ 2,351,465      $ 866  
Short Contracts:                                    

Turkish Lira

      07/03/06      $ (481,358 )    $ (478,035 )    $ 3,323  

South African Rand

      07/03/06        (219,752 )      (222,683 )      (2,931 )

South African Rand

      07/05/06        (438,433 )      (447,374 )      (8,941 )

South African Rand

      07/06/06        (383,514 )      (383,240 )      274  
Total Short Contracts             $ (1,523,057 )    $ (1,531,332 )    $ (8,275 )

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $246,455,103)

    $ 259,113,296

Repurchase agreements, at cost and value

      5,390,301
    

Total Investments

      264,503,597
    

Cash

      281,661

Foreign currencies, at value (cost $2,021,408)

      2,040,498

Interest and dividends receivable

      590,809

Receivable for capital shares issued

      996,214

Receivable for investments sold

      5,685,377

Reclaims receivable

      2,562

Prepaid expenses and other assets

      3,553
    

Total Assets

      274,104,271
    

Liabilities:

       

Payable for investments purchased

      3,608,805

Payable for capital shares redeemed

      171,476

Unrealized depreciation on forward foreign currency contracts

      7,409

Payable for return of collateral received for securities on loan

      9,158,798

Accrued expenses and other payables:

       

Investment advisory fees

      791,656

Fund administration and transfer agent fees

      19,785

Distribution fees

      11,274

Administrative servicing fees

      7,655

Other

      15,544
    

Total Liabilities

      13,792,402
    

Net Assets

    $ 260,311,869
    

Represented by:

       

Capital

    $ 208,829,786

Accumulated net investment income (loss)

      612,636

Accumulated net realized gains (losses) from investment and foreign currency transactions

      38,179,214

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      12,690,233
    

Net Assets

    $ 260,311,869
    

Net Assets:

       

Class I Shares

    $ 36,211,227

Class II Shares

      7,660,135

Class III Shares

      168,371,329

Class VI Shares

      48,069,178
    

Total

    $ 260,311,869
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      2,624,127

Class II Shares

      557,844

Class III Shares

      12,208,198

Class VI Shares

      3,486,008
    

Total

      18,876,177
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 13.80

Class II Shares

    $ 13.73

Class III Shares

    $ 13.79

Class VI Shares

    $ 13.79

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 115,786  

Dividend income (net of foreign withholding tax of $183,641)

      3,687,669  

Income from securities lending

      58,891  
    

Total Income

      3,862,346  
    

Expenses:

         

Investment advisory fees

      1,506,669  

Fund administration and transfer agent fees

      104,892  

Distribution fees Class II Shares

      10,716  

Distribution fees Class VI Shares

      61,522  

Administrative servicing fees
Class I Shares

      28,309  

Administrative servicing fees
Class II Shares

      6,304  

Administrative servicing fees
Class III Shares

      138,135  

Trustee fees

      5,071  

Other

      26,204  
    

Total expenses before earnings credit

      1,887,822  

Earnings credit (Note 7)

      (38 )
    

Total Expenses

      1,887,784  
    

Net Investment Income (Loss)

      1,974,562  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      38,559,086  

Net realized gains (losses) on foreign currency transactions

      (210,496 )
    

Net realized gains (losses) on investment and foreign currency transactions

      38,348,590  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (26,145,317 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      12,203,273  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 14,177,835  
    

 

See notes to financial statements.

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statements of Changes in Net Assets

 

     Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
     (Unaudited)         

From Investment Activities:

                  

Operations:

                  

Net investment income (loss)

    $ 1,974,562      $ 1,150,654  

Net realized gains (losses) on investment and foreign currency transactions

      38,348,590        18,889,983  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (26,145,317 )      23,959,697  
    
  

Change in net assets resulting from operations

      14,177,835        44,000,334  
    
  

Distributions to Class I shareholders from:

                  

Net investment income

      (189,254 )      (149,021 )

Net realized gains on investments

      (439,001 )      (2,473,842 )

Distributions to Class II shareholders from:

                  

Net investment income

      (30,315 )      (32,376 )

Net realized gains on investments

      (94,779 )      (689,216 )

Distributions to Class III shareholders from:

                  

Net investment income

      (913,779 )      (550,229 )

Net realized gains on investments

      (2,057,003 )      (11,874,439 )

Distributions to Class VI shareholders from:

                  

Net investment income

      (218,883 )      (111,644 )

Net realized gain on investment

      (584,008 )      (2,814,109 )
    
  

Change in net assets from shareholder distributions

      (4,527,022 )      (18,694,876 )
    
  

Change in net assets from capital transactions

      24,682,345        96,510,130  
    
  

Change in net assets

      34,333,158        121,815,588  

Net Assets:

                  

Beginning of period

      225,978,711        104,163,123  
    
  

End of period

    $ 260,311,869      $ 225,978,711  
    
  

Accumulated net investment income (loss)

    $ 612,636      $ (9,695 )
    
  

CAPITAL TRANSACTIONS:

                  

Class I Shares

                  

Proceeds from shares issued

    $ 17,344,960      $ 21,867,808  

Dividends reinvested

      628,254        2,622,858  

Cost of shares redeemed

      (14,029,166 )      (18,427,851 )
    
  
       3,944,048        6,062,815  
    
  

Class II Shares

                  

Proceeds from shares issued

      2,897        43,903  

Dividends reinvested

      125,093        721,590  

Cost of shares redeemed

      (1,086,049 )      (2,266,981 )
    
  
       (958,059 )      (1,501,488 )
    
  

Class III Shares

                  

Proceeds from shares issued

      51,010,735        75,081,047  

Dividends reinvested

      2,970,775        12,424,647  

Cost of shares redeemed

      (43,819,991 )      (19,307,911 )
    
  
       10,161,519        68,197,783  
    
  

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT EMERGING MARKETS FUND

 

Statements of Changes in Net Assets (continued)

 

     Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
     (Unaudited)         

Class VI Shares

                  

Proceeds from shares issued

    $ 23,815,899      $ 25,803,740  

Dividends reinvested

      802,889        2,925,748  

Cost of shares redeemed

      (13,083,951 )      (4,978,468 )
    
  
       11,534,837        23,751,020  
    
  

Change in net assets from capital transactions

    $ 24,682,345      $ 96,510,130  
    
  

SHARE TRANSACTIONS:

                  

Class I Shares

                  

Issued

      1,187,075        1,823,654  

Reinvested

      47,356        205,203  

Redeemed

      (925,445 )      (1,586,213 )
    
  
       308,986        442,644  
    
  

Class II Shares

                  

Issued

      44        3,314  

Reinvested

      9,505        56,852  

Redeemed

      (76,963 )      (193,108 )
    
  
       (67,414 )      (132,942 )
    
  

Class III Shares

                  

Issued

      3,455,736        6,072,330  

Reinvested

      223,921        966,301  

Redeemed

      (3,060,128 )      (1,625,529 )
    
  
       619,529        5,413,102  
    
  

Class VI Shares

                  

Issued

      1,603,308        2,116,971  

Reinvested

      60,625        227,218  

Redeemed

      (931,543 )      (409,016 )
    
  
       732,390        1,935,173  
    
  

 

See notes to financial statements.

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Emerging Markets Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets
at End
of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		    

Ratio of
Expenses

(Prior to
Reimbursements)
to Average
Net Assets(a)

     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                          

Year Ended December 31, 2001(c)

   $ 7.51   0.06   —   (0.45 )   (0.39 )   (0.04 )   —     (0.04 )   $ 7.08   (5.18% )   $ 15,974   1.70%     0.57%     2.39%     (0.12% )   140.18%

Year Ended December 31, 2002

   $ 7.08   0.05   0.01   (1.14 )   (1.08 )   (0.01 )   —     (0.01 )   $ 5.99   (15.23% )   $ 10,005   1.43%     0.63%     (h )   (h )   219.84%

Year Ended December 31, 2003

   $ 5.99   0.09   0.01   3.80     3.90     (0.05 )   —     (0.05 )   $ 9.84   65.26%     $ 16,993   1.39%     1.17%     (h )   (h )   133.49%

Year Ended December 31, 2004

   $ 9.84   0.13   0.01   1.89     2.03     (0.11 )   (0.93 )   (1.04 )   $ 10.83   20.74%     $ 20,280   1.47%     1.08%     (h )   (h )   151.18%

Year Ended December 31, 2005

   $ 10.83   0.10   —   3.38     3.48     (0.07 )   (1.16 )   (1.23 )   $ 13.08   32.64%     $ 30,292   1.46%     0.89%     (h )   (h )   132.22%

Six Months Ended June 30, 2006 (Unaudited)

   $ 13.08   0.10   —   0.86     0.96     (0.07 )   (0.17 )   (0.24 )   $ 13.80   7.43% (f)   $ 36,211   1.30% (g)   1.38% (g)   (h )   (h )   73.60%

Class II Shares

                                                                                          

Period Ended December 31, 2002(d)

   $ 7.71   0.01   0.01   (1.73 )   (1.71 )   (0.01 )         (0.01 )   $ 5.99   (22.23% )(f)   $ 454   1.71% (g)   0.44% (g)   (h )   (h )   219.84%

Year Ended December 31, 2003

   $ 5.99   0.04   0.01   3.81     3.86     (0.03 )   —     (0.03 )   $ 9.82   64.66%     $ 6,360   1.66%     0.35%     (h )   (h )   133.49%

Year Ended December 31, 2004

   $ 9.82   0.11   0.01   1.87     1.99     (0.09 )   (0.93 )   (1.02 )   $ 10.79   20.44%     $ 8,178   1.72%     0.87%     (h )   (h )   151.18%

Year Ended December 31, 2005

   $ 10.79   0.07   —   3.37     3.44     (0.05 )   (1.16 )   (1.21 )   $ 13.02   32.33%     $ 8,141   1.71%     0.61%     (h )   (h )   132.22%

Six Months Ended June 30, 2006 (Unaudited)

   $ 13.02   0.08   —   0.85     0.93     (0.05 )   (0.17 )   (0.22 )   $ 13.73   7.25% (f)   $ 7,660   1.55% (g)   1.15% (g)   (h )   (h )   73.60%

Class III Shares

                                                                                          

Period Ended December 31, 2002(e)

   $ 7.90   0.01   0.01   (1.91 )   (1.89 )   (0.02 )   —     (0.02 )   $ 5.99   (23.99% )(f)   $ 11,435   1.39% (g)   0.61% (g)   (h )   (h )   219.84%

Year Ended December 31, 2003

   $ 5.99   0.06   0.01   3.82     3.89     (0.04 )   —     (0.04 )   $ 9.84   65.22%     $ 46,902   1.42%     0.89%     (h )   (h )   133.49%

Year Ended December 31, 2004

   $ 9.84   0.12   0.01   1.90     2.03     (0.11 )   (0.93 )   (1.04 )   $ 10.83   20.76%     $ 66,844   1.48%     1.08%     (h )   (h )   151.18%

Year Ended December 31, 2005

   $ 10.83   0.08   —   3.40     3.48     (0.07 )   (1.16 )   (1.23 )   $ 13.08   32.65%     $ 151,546   1.45%     0.75%     (h )   (h )   132.22%

Six Months Ended June 30, 2006 (Unaudited)

   $ 13.08   0.10   —   0.85     0.95     (0.07 )   (0.17 )   (0.24 )   $ 13.79   7.35% (f)   $ 168,371   1.30% (g)   1.41% (g)   (h )   (h )   73.60%

Class VI Shares

                                                                                          

Period Ended December 31, 2004(i)

   $ 10.11   0.05   0.01   1.62     1.68     (0.10 )   (0.86 )   (0.96 )   $ 10.83   16.70% (f)   $ 8,862   1.68% (g)   0.97% (g)   (h )   (h )   151.18%

Year Ended December 31, 2005

   $ 10.83   0.07   —   3.40     3.47     (0.07 )   (1.16 )   (1.23 )   $ 13.07   32.49%     $ 36,000   1.55%     0.59%     (h )   (h )   132.22%

Six Months Ended June 30, 2006 (Unaudited)

   $ 13.07   0.09   —   0.86     0.95     (0.06 )   (0.17 )   (0.23 )   $ 13.79   7.38% (f)   $ 48,069   1.40% (g)   1.30% (g)   (h )   (h )   73.60%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from March 4, 2002 (commencement of operations) through December 31, 2002.

 

(e) For the period from May 2, 2002 (commencement of operations) through December 31, 2002.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

(i) For the period from April 28, 2004 (commencement of operations) December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Emerging Markets Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

    Issuer Name
    Value
    Maturity Rate
     Maturity Date
Bank Note — Floating Rate    Bankof America    $ 300,000    5.31 %   07/03/06
Commercial Paper    Aegis Finance LLC      995,462    5.29 %   07/21/06
Master Note — Floating    CDC Financial Product Inc.      250,000    5.41 %   07/03/06
Master Note — Floating    Citigroup Global Markets Inc.      1,000,000    5.38 %   07/03/06
Medium Term Note — Floating    Unicredito Italiano Bank (IRE) PLC      1,100,000    5.16 %   07/10/06
Repurchase Agreement    Bank of America Securities LLC      5,513,336    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

        $8,919,233

    $ 9,158,798

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of Securities

   

Unrealized Appreciation

   

Unrealized Depreciation

   

Net Unrealized Appreciation
(Depreciation)*

$252,371,728

    $26,082,008    $(13,950,139)    $12,131,869

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Global Asset Management Trust (“GGAMT”) manages the investment of the assets and supervises the daily business affairs of the Fund. GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GGAMT provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GGAMT advises. Gartmore Global Partners (the “subadviser”), an affiliate of GGAMT, manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays the Fund’s adviser an investment advisory fee based on the Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, the adviser pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GGAMT and the subadviser is as follows for the six months ended June 30, 2006:

 

     Fee Schedule     

Total

Fees

      Fees
Retained		      Paid to
Sub-adviser
    

Up to $500 million

      1.05%      0.525%      0.525%
    

Next $1.5 billion

      1.00%      0.500%      0.500%
    

Next $2 billion or more

      0.95%      0.475%      0.475%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the MSCI Emerging Markets Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

GGAMT and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.40% for all classes until at least May 1, 2007.

 

GGAMT may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GGAMT, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GGAMT is not permitted.

 

As of the six months ended June 30, 2006, there were no cumulative potential reimbursements for all classes of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GGAMT.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II and Class VI shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II and Class VI shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $178,425 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III and Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III and Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III and Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is designed to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III and Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $77,854.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $225,280,174 and sales of $201,868,470.

 

6. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging market instruments that are subject to certain additional credit and market risks. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

7. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the MSCI Emerging Markets Index, for the one-, three-, and five-year periods ended September 30, 2005. The Board also considered that the Fund ranked in the top quartile of the Lipper Emerging Markets Funds category for the three-year period, and had underperformed the median of the category by 274 basis points for the one-year period. The Board discussed with management the Fund’s performance history, noting that the Fund had been under close review for the past year. The Board considered management’s efforts to reduce the Fund’s performance volatility and management’s ongoing internal discussions with respect to adding personnel to the management team for the Fund. The Board also noted that the Fund’s absolute performance has been good. The Board directed the Performance Committee to continue to closely monitor the performance of the Fund.

 

Next, the Board reviewed and considered the Fund’s contractual advisory fee (including the subadvisory fee) and breakpoints and noted the contractual advisory fee placed the Fund in the third quintile of the Fund’s Lipper-constructed Expense Group.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

The Board also considered that the Fund’s total expenses placed the Fund below the median for the Fund’s Lipper Expense Group. Moreover, the Board noted that, effective January 1, 2006, the Fund implemented a performance-based fee structure, which resulted in a 10 basis point reduction in the base management fee immediately upon implementation of the new fee structure.

 

Additionally, the Board noted that Gartmore manages a single institutional account in a similar style to that of the Fund of which Gartmore receives a lower management fee. Gartmore explained that the reason for this is that Gartmore serves as a subadvisor on this Fund and therefore has no management responsibilities beyond pure asset management. The Board considered the fee structure and the additional services and responsibilities for serving as investment adviser to the Fund. Finally, the Board reviewed the adviser’s profitability with respect to managing the Fund and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Board approve a new Subadvisory agreement with newly-unaffiliated GGP, in reliance upon the Manager of Managers Exemptive order the Funds have obtained from the SEC to take effect immediately upon the closing of the U.K. Sale to ensure continued provision of Subadvisory services by GGP to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale: (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of affiliated GGP at this time; (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies used by affiliated GGP now; and (3) the Subadvisory fees paid to unaffiliated GGP will be the same as those currently paid to affiliated GGP. At the time the Board selected and approved the adviser to the Fund, Board considered, among other factors, the advisory fee compared to a peer group of funds, the extent to which economies of scale would be realized as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of Fund shareholders. Since the adviser will pay the sub-adviser from the fees paid by the Fund to the adviser, and since the fees and expenses for the Fund will not change as a result of the change to the sub-adviser, the Board did not further consider these factors. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the continuation of affiliated GGP’s subadvisory agreement with new unaffiliated GGP, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92  

Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

24

Table of Contents

 

Gartmore GVIT International Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
6    Statement of Assets and Liabilities
6    Statement of Operations
7    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIG (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT International Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30,
2006
      Expenses
Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT International Growth Fund                                

Class I

      Actual    $ 1,000.00      $ 1,102.70      $ 6.26      1.20%
       Hypothetical1    $ 1,000.00      $ 1,018.85      $ 6.02      1.20%

Class III

      Actual    $ 1,000.00      $ 1,102.80      $ 6.05      1.16%
       Hypothetical1    $ 1,000.00      $ 1,019.05      $ 5.82      1.16%

 

 

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT International Growth Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      96.0%
Cash Equivalents      4.3%
Liabilities in excess of other assets      -0.3%
      
       100.0%
      

 

 

 

Top Holdings*       
Lloyds TSB Group PLC      2.2%
Canon, Inc.      2.1%
Societe Generale      2.1%
Mizuho Financial Group, Inc.      2.1%
Puma AG      2.0%
Pennon Group PLC      2.0%
UniCredito Italiano SPA      2.0%
Suncor Energy, Inc.      2.0%
Suzuki Motor Corp.      2.0%
Rolls-Royce Group PLC      2.0%
Other Assets      79.5%
      
       100.0%
      
Top Industries       
Financial Services      11.1%
Banking      10.6%
Oil & Gas      8.8%
Mining      5.6%
Automotive      4.8%
Pharmaceuticals      4.6%
Electronics      3.9%
Retail      3.1%
Insurance      3.1%
Metals      2.8%
Other Assets      41.6%
      
       100.0%
      

 

 

 

Top Countries       
United Kingdom      26.5%
Japan      22.1%
France      10.8%
Germany      6.7%
Canada      6.5%
Italy      4.3%
Norway      3.3%
South Korea      2.5%
Australia      1.9%
Argentina      1.8%
Other Assets      13.6%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares or
Principal Amount		    Value
            
COMMON STOCKS (96.0%)       
ARGENTINA (1.8%)           
Steel (1.8%)           
Tenaris SA (c)   60,410    $   1,212,427
        
AUSTRALIA (1.9%)           
Pharmaceuticals (1.9%)           
CSL Ltd. (c)   32,080      1,278,968
        
BRAZIL (0.5%)           
Banking (0.5%)           
Banco Bradesco SA ADR   10,900      338,881
        
CANADA (6.5%)           
Aluminum (1.6%)           
Alcan, Inc.   22,650      1,063,191
        
Mining (2.9%)           
Hudbay Minerals, Inc. (b)   82,100      1,044,642
Inco Ltd.   14,719      969,982
        
           2,014,624
        
Oil & Gas (2.0%)           
Suncor Energy, Inc.   16,891      1,367,323
        
           4,445,138
        
FINLAND (0.9%)           
Telecommunications (0.9%)       
Nokia Oyj (c)   31,700      642,572
        
FRANCE (10.8%)           
Banking (3.3%)       
BNP Paribas SA (c)   8,440      806,976
Societe Generale (c)   9,800      1,438,731
        
           2,245,707
        
Diversified Operations (1.7%)       
LVMH Moet Hennessy SA (c)   11,393      1,129,104
        
Engineering (1.4%)       
Alstom SA (b) (c)   10,410      951,463
        
Food Products & Services (1.5%)       
Groupe Danone (c)   8,340      1,058,912
        
Oil & Gas (1.9%)       
Total SA (c)   19,400      1,274,275
        
Utilities (1.0%)       
Suez SA (c)   16,880      700,912
        
           7,360,373
        
    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
GERMANY (6.7%)           
Automotive (1.0%)           
Bayerische Motoren Werke AG (c)   13,300    $ 663,189
        
Consumer Goods (2.0%)           
Puma AG (c)   3,660      1,421,922
        
Electric (1.0%)           
E.ON AG (c)   5,800      666,490
        
Machinery (1.7%)           
MAN AG (c)   16,500      1,194,080
        
Pharmaceuticals (1.0%)           
Merck KGAA (b) (c)   7,200      654,418
        
           4,600,099
        
IRELAND (1.7%)           
Beverages (1.7%)           
C&C Group PLC (c)   136,900      1,187,942
        
ITALY (4.3%)           
Banking (4.3%)           
Capitalia SpA (c)   118,400      969,718
Mediobanca SpA (c)   31,750      621,019
UniCredito Italiano SpA (c)   175,450      1,372,053
        
           2,962,790
        
JAPAN (22.1%)           
Automotive (3.8%)           
Suzuki Motor Corp. (c)   61,200      1,324,593
Toyota Motor Corp. (c)   23,300      1,217,971
        
           2,542,564
        
Chemicals (1.2%)           
Shin-Etsu Chemical Co. Ltd. (c)   15,500      843,202
        
Electronics (2.1%)           
Canon, Inc. (c)   29,400      1,441,125
        
Financial Services (8.2%)           
Credit Saison Co. Ltd. (c)   26,300      1,246,339
Mitsubishi UFJ Financial Group, Inc. (c)   87      1,219,774
Mizuho Financial Group, Inc. (c)   162      1,374,139
Orix Corp. (c)   2,680      654,066
Sumitomo Mitsui Financial Group, Inc. (c)   100      1,059,168
        
           5,553,486
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Real Estate (1.8%)           
Mitsui Fudosan Co. Ltd. (c)   55,000    $   1,195,516
        
Retail (1.6%)           
Citizen Watch Co. Ltd. (c)   122,600      1,109,648
        
Textile Products (1.9%)           
Toray Industries, Inc. (c)   150,000      1,301,981
        
Tobacco (1.5%)           
Japan Tobacco, Inc. (c)   287      1,048,305
        
           15,035,827
        
MEXICO (0.7%)           
Financial Services (0.7%)           
Grupo Financiero Banorte SA de CV   214,900      498,643
        
NORWAY (3.3%)           
Oil & Gas (3.3%)           
Norsk Hydro ASA (c)   42,600      1,130,336
Statoil ASA (c)   40,450      1,153,550
        
           2,283,886
        
SOUTH AFRICA (1.6%)           
Oil & Gas (1.6%)           
Sasol Ltd. (c)   28,100      1,081,185
        
SOUTH KOREA (2.5%)           
Banking (0.7%)           
Kookmin Bank ADR   5,750      477,595
        
Electronics (1.8%)           
Hynix Semiconductor, Inc. (b) (c)   18,220      589,105
Samsung Electronics Co. Ltd. GDR (c)   2,040      641,580
        
           1,230,685
        
           1,708,280
        
SPAIN (1.2%)           
Telecommunications (1.2%)       
Telefonica SA (c)   48,400      804,443
        
SWEDEN (1.6%)           
Metal Processors & Fabrication (1.6%)
Assa Abloy AB, Class B (c)   63,100      1,061,515
        
    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SWITZERLAND (1.4%)           
Engineering (1.4%)
ABB Ltd. (c)   74,700    $ 970,184
        
UNITED KINGDOM (26.5%)           
Aerospace & Defense (2.0%)
Rolls-Royce Group PLC (c)   173,170        1,324,314
Rolls-Royce Group PLC, B Shares   10,734,176      20,046
        
           1,344,360
        
Apparel Manufacturers (1.4%)       
Burberry Group PLC (c)   130,100      1,033,311
        
Banking (1.5%)       
Barclays PLC (c)   87,400      990,684
        
Building & Construction (1.2%)       
CRH PLC (c)   24,900      811,190
        
Electricity—Generation (1.3%)       
Scottish Power PLC (c)   81,400      876,756
        
Financial Services (2.2%)       
Lloyds TSB Group PLC (c)   154,170      1,510,098
        
Insurance (3.1%)       
Legal & General Group PLC (c)   378,150      894,976
Prudential PLC (c)   107,200      1,212,079
        
           2,107,055
        
Metals (2.9%)       
Corus Group PLC (c)   153,816      1,294,860
Vedanta Resources PLC (c)   26,740      678,110
        
           1,972,970
        
Mining (2.7%)           
Antofagasta PLC (c)   151,500      1,172,776
Xstrata PLC (c)   17,800      677,435
        
           1,850,211
        
Pharmaceuticals (1.7%)           
AstraZeneca PLC (c)   19,250      1,157,400
        
Retail (1.5%)           
DSG International PLC (c)   289,600      1,021,585
        
Transportation (1.2%)           
British Airways PLC (b) (c)   131,530      833,149
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL GROWTH FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value  
COMMON STOCKS (continued)         
UNITED KINGDOM (continued)         
Utilities (1.8%)               
International Power PLC (c)     235,910    $ 1,238,902  
Water & Sewerage Services (2.0%)         
Pennon Group PLC (c)     55,739      1,373,863  
          
             18,121,534  
          
Total Common Stocks            65,594,687  
          
CASH EQUIVALENTS (4.3%)         
Investments in repurchase agreements   $ 2,958,060      2,958,060  
(Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $2,959,317)               
          
Total Cash Equivalents            2,958,060  
          
Total Investments
(Cost $64,535,863) (a) — 100.3%		      68,552,747  
Liabilities in excess of
other assets — (0.3%)		      (203,910 )
          
NET ASSETS — 100.0%          $ 68,348,837  
          

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair Valued Security.

 

ADR American Depositary Receipt

 

GDR Global Depositary Receipt

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency     

Delivery

Date

     

Contract

Value

     

Market

Value

     

Unrealized

Appreciation/

(Depreciation)

  
Short Contracts:                                    

Japanese Yen

      07/03/06      $ (288,976 )    $ (293,960 )    $ (4,984 )

Swiss Franc

      07/03/06        (612,952 )      (625,914 )      (12,962 )
Total Short Contracts             $ (901,928 )    $ (919,874 )    $ (17,946 )
Long Contracts:                                    

Euro

      07/03/06      $ 815,121      $ 831,494      $ 16,373  

British Sterling Pound

      07/03/06        822,538        838,046        15,508  
Total Long Contracts             $ 1,637,659      $ 1,669,540      $ 31,881  

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $61,577,803)

    $ 65,594,687  

Repurchase agreements, at cost and value

      2,958,060  
    

Total Investments

      68,552,747  
    

Foreign currencies, at value (cost $161,181)

      159,667  

Interest and dividends receivable

      40,684  

Receivable for capital shares issued

      144,553  

Receivable for investments sold

      2,697,566  

Unrealized appreciation on forward foreign currency contracts

      13,935  

Receivable for variation margin on futures contracts

      580  

Reclaims receivable

      18,084  

Prepaid expenses and other assets

      1,424  
    

Total Assets

      71,629,240  
    

Liabilities:

         

Payable to custodian

      14,208  

Payable for investments purchased

      3,060,538  

Payable for capital chares redeemed

      38,869  

Accrued expenses and other payables:

         

Investment advisory fees

      157,157  

Fund administration and transfer agent fees

      6,261  

Administrative servicing fees

      2,991  

Other

      379  
    

Total Liabilities

      3,280,403  
    

Net Assets

    $ 68,348,837  
    

Represented by:

         

Capital

    $ 58,127,815  

Accumulated net investment income (loss)

      (382,918 )

Accumulated net realized gains (losses) from investment and foreign currency transactions

      6,584,649  

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      4,019,291  
    

Net Assets

    $ 68,348,837  
    

Net Assets:

         

Class I Shares

    $ 10,532,999  

Class III Shares

      57,815,838  
    

Total

    $ 68,348,837  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      1,052,036  

Class III Shares

      5,769,348  
    

Total

      6,821,384  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 10.01  

Class III Shares

    $ 10.02  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 19,445  

Dividend income (net of foreign withholding tax of $66,123)

      781,227  

Income from securities lending

      12,397  
    

Total Income

      813,069  
    

Expenses:

         

Investment advisory fees

      285,539  

Fund administration and transfer agent fees

      29,086  

Administrative servicing fees
Class I Shares

      7,095  

Administrative servicing fees
Class III Shares

      38,958  

Trustee fees

      1,080  

Other

      8,114  
    

Total expenses before earnings credit

      369,872  

Earnings credt (Note 6)

      (19 )
    

Total Expenses

      369,853  
    

Net Investment Income (Loss)

      443,216  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      6,641,111  

Net realized gains (losses) on foreign currency transactions

      6,290  
    

Net realized gains (losses) on investment and foreign currency transactions

      6,647,401  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (2,768,866 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      3,878,535  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 4,321,751  
    

 

See notes to financial statements.

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL GROWTH FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 443,216      $ 144,160  

Net realized gains (losses) on investment and foreign currency transactions

        6,647,401        2,395,838  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (2,768,866 )      4,984,509  
      
  

Change in net assets resulting from operations

        4,321,751        7,524,507  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (95,996 )      (47,136 )

Net realized gains on investments

        (20,316 )      (14,114 )

Distributions to Class III shareholders from:

                    

Net investment income

        (663,102 )      (198,962 )

Net realized gains on investments

        (139,839 )      (83,756 )
      
  

Change in net assets from shareholder distributions

        (919,253 )      (343,968 )
      
  

Change in net assets from capital transactions

        20,997,711        21,098,128  
      
  

Change in net assets

        24,400,209        28,278,667  

Net Assets:

                    

Beginning of period

        43,948,628        15,669,961  
      
  

End of period

      $ 68,348,837      $ 43,948,628  
      
  

Accumulated net investment income (loss)

      $ (382,918 )    $ (67,036 )
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 6,778,573      $ 4,142,481  

Dividends reinvested

        116,310        61,250  

Cost of shares redeemed

        (3,274,737 )      (2,694,730 )
      
  
         3,620,146        1,509,001  
      
  

Class III Shares

                    

Proceeds from shares issued

        27,303,067        23,658,363  

Dividends reinvested

        802,936        282,717  

Cost of shares redeemed

        (10,728,438 )      (4,351,953 )
      
  
         17,377,565        19,589,127  
      
  

Change in net assets from capital transactions

      $ 20,997,711      $ 21,098,128  
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        685,011        522,043  

Reinvested

        11,875        7,530  

Redeemed

        (329,223 )      (354,599 )
      
  
         367,663        174,974  
      
  

Class III Shares

                    

Issued

        2,714,331        2,939,595  

Reinvested

        81,924        33,696  

Redeemed

        (1,111,138 )      (566,719 )
      
  
         1,685,117        2,406,572  
      
  

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT International Growth Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
   

Net Asset

Value,

Beginning

of Period

  

Net

Investment

Income

(Loss)

    

Redemption

Fees

  

Net

Realized

and

Unrealized

Gains

(Losses) on

Investments

    

Total from

Investment

Activities

    

Net

Investment

Income

    

Net

Realized

Gains

    

Total

Distributions

    

Net Asset

Value, End

of Period

   Total Return     Net Assets at
End of Period
(000s)		  

Ratio of

Expenses

to Average

Net Assets

    

Ratio of

Net

Investment

Income

(Loss) to

Average

Net Assets

    

Ratio of

Expenses

(Prior to

Reimbursements)

to Average

Net Assets(a)

    

Ratio of Net

Investment

Income (Loss)

(Prior to

Reimbursements)

to Average
Net Assets(a)

    

Portfolio

Turnover(b)

Class I Shares

                                                                                            

Year Ended December 31, 2001(c)

   $ 8.62   0.01     —   (2.47 )   (2.46 )   (0.02 )         (0.02 )   $ 6.14   (28.65% )   $ 9,448   1.58%     0.05%     2.69%     (1.06% )   245.96%

Year Ended December 31, 2002

   $ 6.14   0.01     0.01   (1.50 )   (1.48 )   —     —     —     $ 4.66   (24.10% )   $ 6,859   1.29%     0.53%     1.33%     0.49%     257.38%

Year Ended December 31, 2003

   $ 4.66   0.07     —   1.59     1.66     —     —     —     $ 6.32   35.62%     $ 3,678   1.25%     0.83%     (g )   (g )   331.02%

Year Ended December 31, 2004

   $ 6.32   0.07     —   0.83     0.90     (0.06 )   —     (0.06 )   $ 7.16   14.19%     $ 3,647   1.33%     0.98%     (g )   (g )   262.03%

Year Ended December 31, 2005

   $ 7.16   0.07     —   2.08     2.15     (0.08 )   (0.02 )   (0.10 )   $ 9.21   30.21%     $ 6,302   1.34%     0.94%     (g )   (g )   215.52%

Six Months Ended June 30, 2006 (Unaudited)

   $ 9.21   0.08     —   0.86     0.94     (0.12 )   (0.02 )   (0.14 )   $ 10.01   10.27% (e)   $ 10,533   1.20% (f)   1.27% (f)   (g )   (g )   100.59%

Class III Shares

                                                                                            

Period Ended December 31, 2002(d)

   $ 5.95   (0.01 )   0.01   (1.28 )   (1.28 )   —     —     —     $ 4.67   (21.51% )(e)   $ 2,232   1.32% (f)   0.08% (f)   (g )   (g )   257.38%

Year Ended December 31, 2003

   $ 4.67   0.02     —   1.63     1.65     —     —     —     $ 6.32   35.33%     $ 6,912   1.33%     0.24%     (g )   (g )   331.02%

Year Ended December 31, 2004

   $ 6.32   0.05     —   0.86     0.91     (0.06 )   —     (0.06 )   $ 7.17   14.35%     $ 12,023   1.35%     0.98%     (g )   (g )   262.03%

Year Ended December 31, 2005

   $ 7.17   0.06     —   2.09     2.15     (0.08 )   (0.02 )   (0.10 )   $ 9.22   30.17%     $ 37,647   1.33%     0.54%     (g )   (g )   215.52%

Six Months Ended June 30, 2006 (Unaudited)

   $ 9.22   0.07     —   0.87     0.94     (0.12 )   (0.02 )   (0.14 )   $ 10.02   10.28% (e)   $ 57,816   1.16% (f)   1.41% (f)   (g )   (g )   100.59%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) The existing shares of the Fund were designated Class I shares as of May 1, 2001.

 

(d) For the period from May 2, 2002 (commencement of operations) through December 31, 2002.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT International Growth Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with

the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

  

Unrealized
Appreciation

  

Unrealized
Depreciation

  

Net Unrealized
Appreciation
(Depreciation)*

$65,191,100

   $5,739,355   $(2,377,708)   $3,361,647

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Global Asset Management Trust (“GGAMT”) manages the investment of the assets and supervises the daily business affairs of the Fund. GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GGAMT provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GGAMT advises. Gartmore Global Partners (the “subadviser”), an affiliate of GGAMT, manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays GGAMT an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GGAMT pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GGAMT and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule

      Total
Fees
      Fees
Retained
      Paid to
Sub-adviser
  

Up to $500 million

      0.90 %    0.450 %    0.450 %

$500 million up to $2 billion

      0.85 %    0.425 %    0.425 %

$2 billion or more

      0.80 %    0.400 %    0.400 %

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the MSCI All Country World ex U.S. Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance

    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

GGAMT and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.25% for all classes until at least May 1, 2007.

 

GGAMT may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GGAMT, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GGAMT is not permitted.

 

As of the six months ended June 30, 2006, there were no cumulative potential reimbursements for all classes of the Fund.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $47,740 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is designed to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $27,263.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $80,715,712 and sales of $62,551,947.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the MSCI All Country World ex U.S. Index, for the one-year period ended September 30, 2005 while underperforming the benchmark for the three- and five-year periods. The Board also considered that the Fund ranked in the top quartile of the Lipper International Multi-Cap Core Funds category for the one- and three-year periods and outperformed the median of this Lipper category by 896 basis points over the one-year period. The Board then discussed with management the challenges to asset growth for the Fund despite its good performance. Management explained that Fund had just reached the five year mark for its Morningstar rating and the level of volatility in its performance had affected this Morningstar rating. Therefore, management had been working with the portfolio manager in seeking to reduce the Fund’s volatility.

 

Next, the Board reviewed the Fund’s contractual advisory fee and breakpoints and considered that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group. The Fund’s total expenses placed the Fund below the median of the Lipper Expense Group. Moreover, the Board considered that the Fund had implemented a

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

performance-based fee structure effective January 1, 2006 and reduced the base management fee by 10 basis points on that date. Finally, the Board reviewed the adviser’s profitability in light of all of these factors and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Board approve a new Subadvisory agreement with newly-unaffiliated GGP, in reliance upon the Manager of Managers Exemptive order the Funds have obtained from the SEC to take effect immediately upon the closing of the U.K. Sale to ensure continued provision of Subadvisory services by GGP to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale: (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of affiliated GGP at this time; (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies used by affiliated GGP now; and (3) the Subadvisory fees paid to unaffiliated GGP will be the same as those currently paid to affiliated GGP. At the time the Board selected and approved the adviser to the Fund, Board considered, among other factors, the advisory fee compared to a peer group of funds, the extent to which economies of scale would be realized as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of Fund shareholders. Since the adviser will pay the sub-adviser from the fees paid by the Fund to the adviser, and since the fees and expenses for the Fund will not change as a result of the change to the sub-adviser, the Board did not further consider these factors. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the continuation of affiliated GGP’s subadvisory agreement with new unaffiliated GGP, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

18

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

19

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

21

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

22

Table of Contents

GVIT International Value Fund

(formerly Dreyfus GVIT International Value Fund)

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
8    Statement of Assets and Liabilities
8    Statement of Operations
9    Statements of Changes in Net Assets
11    Financial Highlights
12    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIV (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT International Value Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
     

Ending
Account Value,
June 30,

2006

     

Expenses

Paid

During Period*

     

Annualized

Expense Ratio*

GVIT International Value Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,094.90      $ 5.25      1.01%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.07      1.01%

Class II

      Actual    $ 1,000.00      $ 1,093.90      $ 6.54      1.26%
       Hypothetical1    $ 1,000.00      $ 1,018.55      $ 6.33      1.26%

Class III

      Actual    $ 1,000.00      $ 1,095.80      $ 5.25      1.01%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.07      1.01%

Class IV

      Actual    $ 1,000.00      $ 1,095.60      $ 5.25      1.01%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.07      1.01%

Class VI

      Actual    $ 1,000.00      $ 1,094.30      $ 6.54      1.26%
       Hypothetical1    $ 1,000.00      $ 1,018.55      $ 6.33      1.26%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT International Value Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      95.1%
Cash Equivalents      2.8%
Other Investments*      14.3%
Liabilities in excess of other assets**      -12.2 %
      
       100.0%
      

 

 

Top Holdings***       
GlaxoSmithKline PLC      1.9%
Nestle SA      1.6%
Deutsche Post AG      1.6%
Total SA      1.6%
Royal Bank of Scotland Group PLC      1.6%
France Telecom SA      1.5%
Siemens AG      1.5%
Fuji Photo Film Co. Ltd.      1.5%
Nippon Express Co. Ltd.      1.5%
Sumitomo Mitsui Financial Group, Inc.      1.5%
Other Assets      84.2%
      
       100.0%
      
Top Industries       
Banking      20.7%
Oil & Gas      9.0%
Food & Beverages      6.5%
Telecommunications      6.3%
Insurance      4.4%
Pharmaceuticals      4.0%
Transportation      3.1%
Electronics      3.0%
Chemicals      2.5%
Financial Services      2.3%
Other Assets      38.2%
      
       100.0%
      

 

Top Countries       
Japan      25.9%
United Kingdom      19.1%
France      10.0%
Germany      8.9%
Switzerland      6.8%
Netherlands      4.4%
Italy      4.2%
Australia      2.8%
Singapore      2.4%
Spain      2.4%
Other Assets      13.1%
      
       100.0%
      

 

* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (95.1%)       
AUSTRALIA (2.8%)           
Airlines (0.1%)           
Qantas Airways Ltd. (d)   115,500    $ 253,794
        
Banking (0.7%)           
National Australia Bank Ltd. (d)   81,488      2,119,758
        
Containers (0.7%)           
Amcor Ltd. (d)   426,434      2,114,197
        
Food & Beverage (0.4%)           
Coca-Cola Amatil Ltd. (d)   227,740      1,199,207
        
Gambling (0.6%)           
Tabcorp Holdings Ltd. (d) (c)   158,110      1,784,274
        
Insurance (0.3%)           
Insurance Australia Group,
Ltd. (d)		   181,020      719,144
        
           8,190,374
        
BRAZIL (0.6%)           
Oil & Gas (0.6%)           
Petroleo Brasileiro SA ADR   19,530      1,744,224
        
FINLAND (1.2%)           
Paper Products (0.9%)           
M-Real Oyj B Shares (d)   190,230      941,220
UPM-Kymmene Oyj (d)   79,719      1,712,774
        
           2,653,994
        
Telecommunications (0.3%)       
Nokia Oyj (d)   34,300      695,275
Nokia Oyj ADR   3,786      76,704
        
           771,979
        
           3,425,973
        
FRANCE (10.0%)           
Audio & Video Products (0.5%)       
Thomson (b) (d) (c)   89,470      1,478,280
        
Auto Parts & Equipment (1.5%)       
PSA Peugeot Citroen (d) (c)   28,290      1,756,788
Valeo SA (d) (c)   71,141      2,531,809
        
           4,288,597
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
FRANCE (continued)           
Banking (1.9%)           
Banque Nationale de Paris
SA (d) (c)		   28,840    $ 2,757,486
Credit Agricole SA (d)   68,800      2,610,660
        
           5,368,146
        
Building Products (0.3%)       
Lafarge SA (d) (c)   6,880      862,273
        
Food & Beverage (1.0%)           
Carrefour SA (d) (c)   51,010      2,987,320
        
Medical (1.1%)           
Sanofi-Synthelabo SA (d) (c)   33,080      3,222,629
        
Multimedia (0.3%)           
Lagardere SCA (d)   12,020      885,913
        
Oil & Gas (1.9%)           
Total SA (d)   70,320      4,618,918
TotalFinaElf SA ADR   11,082      726,093
        
           5,345,011
        
Telecommunications (1.5%)
France Telecom
SA (d) (c)		   208,170      4,441,220
        
           28,879,389
        
GERMANY (8.9%)           
Airlines (0.0%)           
Deutsche Lufthansa AG (d)   6,182      113,859
        
Automotive (0.4%)           
Volkswagen AG (d)   16,370      1,145,080
        
Banking (1.0%)           
Deutsche Bank AG (d)   25,485      2,862,457
        
Distribution & Wholesale (0.1%)       
Medion AG (d) (c)   15,200      195,692
        
Diversified (1.5%)           
Siemens AG (d)   50,720      4,406,732
        
Electric & Gas (0.5%)           
E.On AG (d)   13,247      1,522,241
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
GERMANY (continued)           
Insurance (1.5%)           
Allianz AG (d)   11,590    $ 1,823,654
Hannover Rueckversicherung AG (b) (d) (c)   72,260      2,525,971
        
           4,349,625
        
Retail (0.6%)           
Metro Ag (d)   30,420      1,723,061
        
Semiconductors (0.9%)           
Infineon Technologies
AG (b) (d)		   221,850      2,465,687
        
Telecommunications (0.8%)       
Deutsche Telecom AG (d)   149,120      2,393,005
        
Transportation (1.6%)           
Deutsche Post AG (d)   173,900      4,670,229
        
           25,847,668
        
GREECE (0.6%)           
Electric Utility (0.6%)           
Public Power Corp. (d)   71,820      1,698,865
        
HONG KONG (0.9%)           
Banking (0.7%)           
Bank of East Asia Ltd. (d)   252,409      1,039,737
BOC Hong Kong Holdings
Ltd. (d)		   498,000      975,049
        
           2,014,786
        
Diversified Operations (0.2%)       
Citic Pacific Ltd. (d) (c)   194,400      573,609
        
           2,588,395
        
IRELAND (1.3%)           
Banking (1.3%)           
Bank of Ireland (d)   218,855      3,889,913
        
ITALY (4.2%)           
Banking (1.1%)           
UniCredito Italiano SPA (d)   410,170      3,207,607
        
Electric Utility (0.4%)           
Enel SPA (d) (c)   134,770      1,159,304
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
ITALY (continued)           
Insurance (0.6%)           
Unipol SPA (d) (c)   550,980    $     1,773,468
        
Oil & Gas (1.3%)           
Eni SPA (d)   109,760      3,223,608
Saras SPA (b)   88,500      567,047
        
           3,790,655
        
Television (0.8%)           
Mediaset SPA (d)   194,990      2,297,049
        
           12,228,083
        
JAPAN (25.9%)           
Advertising (1.1%)           
Dentsu, Inc. (d) (c)   1,112      3,077,652
        
Appliances (0.5%)           
Rinnai Corp. (d) (c)   55,000      1,459,540
        
Automotive (1.2%)           
Hino Motors Ltd. (d) (c)   447,300      2,604,505
Toyoda Gosei (d) (c)   48,500      974,623
        
           3,579,128
        
Banking (3.9%)           
Mitsubishi Tokyo Financial Group, Inc. (d)   191      2,677,894
Mitsui Trust Holdings, Inc. (d)   45,500      545,149
Shinsei Bank Ltd. (d)   345,000      2,186,917
Sumitomo Mitsui Financial Group, Inc. (d)   382      4,046,021
The 77 Bank Ltd. (d) (c)   222,700      1,547,578
        
           11,003,559
        
Building & Construction (1.5%)       
JS Group Corp. (d)   84,400      1,774,629
Sekisui House Ltd. (d)   192,900      2,647,544
        
           4,422,173
        
Chemicals (0.9%)           
Sekisui Chemical Co. Ltd. (d) (c)   300,100      2,593,240
        
Computers (0.7%)           
TDK Corp. (d)   26,500      2,009,619
        
Cosmetics & Toiletries (1.0%)       
Kao Corp. (d)   111,200      2,911,229
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Drugstores (0.5%)           
Matsumotokiyoshi Co.
Ltd. (d) (c)		   61,637    $     1,564,494
        
Electronic Components (0.7%)       
Mabuchi Motor Co. Ltd. (d) (c)   25,600      1,530,415
Minebea Co. Ltd. (d)   113,300      617,957
        
           2,148,372
        
Electronics (2.1%)           
Funai Electric Co. Ltd. (d) (c)   21,300      2,064,919
Rohm Co. Ltd. (d)   45,800      4,099,515
        
           6,164,434
        
Finance (0.2%)           
Orix Corp. (d)   1,810      441,739
        
Financial Services (2.3%)           
Aiful Corp. (d)   44,616      2,380,614
Shohkoh Fund & Co. Ltd. (d) (c)   5,216      1,188,220
Takefuji Corp. (d)   50,780      3,027,276
        
           6,596,110
        
Food (0.4%)           
Ajinomoto Co., Inc. (d)   98,800      1,095,325
        
Office Automation & Equipment (1.6%)
Canon, Inc. (d) (c)   40,812      2,000,517
Ricoh Co. Ltd. (d)   133,500      2,619,305
        
           4,619,822
        
Oil Comp-Integrated (1.1%)       
Nissan Motor Co. Ltd. (d)   289,400      3,160,708
        
Paper & Pulp (0.4%)           
Nippon Paper Group, Inc. (d) (c)   277      1,132,974
        
Pharmaceuticals (0.8%)           
Astellas Pharma, Inc. (d)   59,100      2,172,882
        
Photographic Products (1.5%)       
Fuji Photo Film Co. Ltd. (d)   128,300      4,307,922
        
Retail (1.0%)           
Aeon Co. Ltd. (d)   128,900      2,832,349
        
Telecommunications (0.6%)       
KDDI Corp. (d)   280      1,723,521
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
JAPAN (continued)           
Textile Products (0.4%)           
Kuraray Co. Ltd. (d) (c)   109,100    $     1,221,395
        
Transportation (1.5%)           
Nippon Express Co. Ltd. (d) (c)   777,700      4,208,563
        
           74,446,750
        
KOREA (1.2%)           
Telecommunications (0.8%)       
KT Corp. SP ADR   61,400      1,317,030
SK Telecom Co. Ltd. ADR   49,070      1,149,219
        
           2,466,249
        
Utilities (0.4%)           
Korea Electric Power Corp. ADR   58,900      1,116,744
        
           3,582,993
        
MEXICO (1.0%)           
Food & Beverage (0.5%)       
Coca-Cola Femsa SA de CV ADR   45,300      1,337,256
        
Telecommunications (0.5%)       
Telefonos de Mexico SA de CV ADR   76,252      1,588,329
        
           2,925,585
        
NETHERLANDS (4.4%)           
Banking (1.8%)           
ABN AMRO Holding NV (d)   97,206      2,661,769
Fortis NV (d)   75,320      2,568,142
        
           5,229,911
        
Electronics (0.9%)           
Koninklijke (Royal) Philips Electronics NV (d)   83,450      2,599,419
Koninklijke (Royal) Philips Electronics NV ADR   5,950      185,283
        
           2,784,702
        
Food & Beverage (0.8%)       
Heineken NV (d)   54,451      2,306,848
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
NETHERLANDS (continued)           
Insurance (0.8%)           
Aegon NV (d)   131,559    $     2,245,615
        
Printing & Publishing (0.1%)       
Wolters Kluwer NV (d)   7,180      169,476
        
           12,736,552
        
SINGAPORE (2.4%)           
Banking (2.4%)           
DBS Group Holdings Ltd. (d)   356,640      4,075,725
United Overseas Bank Ltd. (d)   295,200      2,907,218
        
           6,982,943
        
SOUTH AFRICA (0.4%)           
Banking (0.4%)           
Nedcor Ltd. (d)   65,799      1,035,008
        
SPAIN (2.4%)           
Banking (0.5%)           
Banco Santander Central Hispano SA (d)   106,212      1,551,834
        
Gas & Electric Utility (0.6%)       
Gas Natural SGD, SA (d) (c)   55,550      1,696,226
        
Oil & Gas (1.2%)           
Repsol YPF SA   81,860      2,344,032
Repsol YPF SA ADR   39,870      1,118,752
        
           3,462,784
        
Power Conversion & Supply Equipment (0.1%)       
Gamesa Corporacion Tecnologica, SA (d) (c)   8,960      191,749
        
           6,902,593
        
SWEDEN (0.5%)           
Paper & Related Products (0.5%)       
Svenska Cellusoa AB (d)   33,850      1,398,001
        
SWITZERLAND (6.8%)           
Banking (1.1%)           
United Bank of Switzerland AG (d)   29,340      3,212,628
        
Chemicals (1.6%)           
Ciba Specialty Chemicals
AG (d)		   58,648      3,270,421
Clariant AG (d)   84,570      1,197,703
        
           4,468,124
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SWITZERLAND (continued)           
Food & Beverage (1.6%)       
Nestle SA (d) (c)   15,103    $     4,736,306
        
Insurance (1.2%)           
Swiss Re (d) (c)   50,077      3,494,836
        
Pharmaceuticals (1.3%)           
Novartis AG (d) (c)   67,740      3,656,737
        
           19,568,631
        
TAIWAN (0.5%)           
Semiconductor Components (0.5%)       
United Microelectronics Corp. ADR   502,834      1,563,814
        
UNITED KINGDOM (19.1%)       
Aerospace (0.8%)           
Smiths Industries PLC (d)   135,700      2,233,456
        
Auto Parts & Equipment (0.4%)       
GKN PLC (d)   205,740      1,036,769
        
Banking (3.9%)           
Barclays PLC (d)   105,891      1,200,281
HBOS PLC (d)   147,520      2,559,793
HSBC Holdings PLC (d)   174,231      3,065,295
Royal Bank of Scotland Group PLC (d)   137,091      4,499,528
        
           11,324,897
        
Business Services (0.6%)           
Rentokil Initial PLC (d)   591,720      1,705,338
        
Construction Materials (0.2%)       
Travis Perkins PLC (d)   16,080      449,368
        
Food & Beverage (2.2%)       
Cadbury Schweppes PLC (d)   7,800      75,104
Diageo PLC (d)   78,263      1,314,384
Sainsbury (J) PLC (d)   194,102      1,198,620
Unilever PLC (d)   169,007      3,794,289
        
           6,382,397
        
Mining (1.2%)           
Anglo American PLC (d)   84,061      3,429,129
        
Oil & Gas (4.0%)           
BP PLC (d)   350,501      4,063,531
Centrica PLC (d)   545,130      2,870,237
Royal Dutch Shell PLC (d)   16,060      539,723

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
UNITED KINGDOM (continued)       
Oil & Gas (Continued)       
Royal Dutch Shell PLC — A Shares (d) (c)     126,272    $     4,242,214
          
             11,715,705
          
Pharmaceuticals (1.9%)             
GlaxoSmithKline PLC (d)     193,144      5,389,513
          
Publishing (1.5%)             
Reed International PLC (d)     256,530      2,585,540
Trinity Mirror PLC (d)     192,680      1,736,619
          
             4,322,159
          
Retail (0.6%)             
Boots Group PLC (d)     59,650      847,841
Debenhams PLC (b)     306,210      1,064,428
          
             1,912,269
          
Telecommunications (1.8%)       
BT Group PLC (d)     255,665      1,129,411
Vodafone Group PLC (d)     1,944,440      4,138,001
          
             5,267,412
          
             55,168,412
          
Total Common Stocks            274,804,166
          
CASH EQUIVALENTS (2.8%)       
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $8,033,316)   $ 8,029,904      8,029,904
          
Total Cash Equivalents            8,029,904
          
Shares or
Principal Amount		    Value  
                
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (4.3%)   
Pool of short-term securities for Gartmore Variable Insurance Trust — Note 2 (Securities Lending)   $ 41,300,939    $   41,300,939  
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      41,300,939  
          
Total Investments
(Cost $297,300,073) (a) — 112.2%		      324,135,009  
Liabilities in excess of
other assets — (12.2)%		      (35,271,157 )
          
NET ASSETS — 100.0%    $ 288,863,852  
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Represents non-income producing securities.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

(d) Fair Value Security.

 

ADR American Depository Receipt

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation/
(Depreciation)		  
Short Contract:                                    

Hong Kong Dollar

      07/03/06      $ (137,642 )    $ (137,694 )    $ (52 )
Total Short Contracts             $ (137,642 )    $ (137,694 )    $ (52 )
Long Contracts:                                    

Australian Dollar

      07/03/06      $ 122,887      $ 122,695      $ (192 )

Japanese Yen

      07/03/06        245,866        249,637        3,771  
Total Long Contracts             $ 368,753      $ 372,332      $ 3,579  

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INTERNATIONAL VALUE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $289,270,169)

    $ 316,105,105  

Repurchase agreements, at cost and value

      8,029,904  
    

Total Investments

      324,135,009  
    

Foreign currencies, at value (cost $4,995,744)

      5,039,667  

Interest and dividends receivable

      514,314  

Receivable for capital shares issued

      327,481  

Receivable for investments sold

      1,696,188  

Unrealized appreciation on forward foreign currency contracts

      3,527  

Reclaims receivable

      203,150  

Prepaid expenses and other assets

      3,047  
    

Total Assets

      331,922,383  
    

Liabilities:

         

Payable for investments purchased

      1,330,344  

Payable for capital shares redeemed

      181,556  

Payable for return of collateral received for securities on loan

      41,300,939  

Accrued expenses and other payables:

         

Investment advisory fees

      173,290  

Fund administration and transfer agent fees

      22,186  

Distribution fees

      15,793  

Administrative servicing fees

      32,745  

Other

      1,678  
    

Total Liabilities

      43,058,531  
    

Net Assets

    $ 288,863,852  
    

Represented by:

         

Capital

    $ 254,389,027  

Accumulated net investment income (loss)

      (530,014 )

Accumulated net realized gains (losses) from investment and foreign currency transactions

      8,118,071  

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      26,886,768  
    

Net Assets

    $ 288,863,852  
    

Net Assets:

         

Class I Shares

    $ 4,064,811  

Class II Shares

      2,786,595  

Class III Shares

      136,156,485  

Class IV Shares

      66,902,824  

Class VI Shares

      78,953,137  
    

Total

    $ 288,863,852  
    

Shares outstanding (unlimited number of
shares authorized):

         

Class I Shares

      244,276  

Class II Shares

      168,131  

Class III Shares

      8,204,596  

Class IV Shares

      4,021,067  

Class VI Shares

      4,762,926  
    

Total

      17,400,996  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 16.64  

Class II Shares

    $ 16.57  

Class III Shares

    $ 16.60  

Class IV Shares

    $ 16.64  

Class VI Shares

    $ 16.58  

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 170,349  

Dividend income (net of foreign withholding tax of $330,778)

      5,239,778  

Income from securities lending

      181,379  
    

Total Income

      5,591,506  
    

Expenses:

         

Investment advisory fees

      989,782  

Fund administration and transfer agent fees

      104,918  

Distribution fees Class II Shares

      3,535  

Distribution fees Class VI Shares

      73,573  

Administrative servicing fees Class I Shares

      3,194  

Administrative servicing fees Class II Shares

      2,125  

Administrative servicing fees Class III Shares

      98,213  

Administrative servicing fees Class IV Shares

      50,247  

Administrative servicing fees Class VI Shares

      44,555  

Trustee fees

      4,376  

Other

      37,540  
    

Total expenses before earnings credit

      1,412,058  

Earnings credit (Note 7)

      (338 )
    

Total Expenses

      1,411,720  
    

Net Investment Income (Loss)

      4,179,786  
    

REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      16,143,880  

Net realized gains (losses) on foreign currency transactions

      285,841  
    

Net realized gains (losses) on investment and foreign currency transactions

      16,429,721  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      1,329,788  
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      17,759,509  
    

CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS

    $ 21,939,295  
    

 

See notes to financial statements.

 

8

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 4,179,786      $ 3,251,170  

Net realized gains (losses) on investment and foreign currency transactions

        16,429,721        20,214,592  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        1,329,788        1,142,033  
      
  

Change in net assets resulting from operations

        21,939,295        24,607,795  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (72,460 )      (74,676 )

Net realized gains on investments

        (266,274 )      (217,911 )

Distributions to Class II shareholders from:

                    

Net investment income

        (45,734 )      (34,685 )

Net realized gains on investments

        (183,372 )      (101,702 )

Distributions to Class III shareholders from:

                    

Net investment income

        (2,331,664 )      (1,417,497 )

Net realized gains on investments

        (8,950,356 )      (3,745,271 )

Distributions to Class IV shareholders from:

                    

Net investment income

        (1,177,842 )      (818,783 )

Net realized gain on investment

        (4,384,367 )      (2,306,987 )

Distributions to Class VI shareholders from:

                    

Net investment income

        (1,187,644 )      (397,391 )

Net realized gain on investment

        (5,073,827 )      (1,258,216 )
      
  

Change in net assets from shareholder distributions

        (23,673,540 )      (10,373,119 )
      
  

Change in net assets from capital transactions

        57,732,229        52,903,938  
      
  

Change in net assets

        55,997,984        67,138,614  

Net Assets:

                    

Beginning of period

        232,865,868        165,727,254  
      
  

End of period

      $ 288,863,852      $ 232,865,868  
      
  

Accumulated net investment income (loss)

      $ (530,014 )    $ 105,544  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 2,454      $ 2,480,848  

Dividends reinvested

        338,734        292,587  

Cost of shares redeemed

        (685,762 )      (4,897,928 )
      
  
         (344,574 )      (2,124,493 )
      
  

Class II Shares

                    

Proceeds from shares issued

        567        108,851  

Dividends reinvested

        229,107        136,387  

Cost of shares redeemed

        (319,158 )      (946,022 )
      
  
         (89,484 )      (700,784 )
      
  

Class III Shares

                    

Proceeds from shares issued

        23,687,391        57,578,590  

Dividends reinvested

        11,282,013        5,162,763  

Cost of shares redeemed

        (14,585,097 )      (22,850,548 )
      
  
         20,384,307        39,890,805  
      
  

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL VALUE FUND

 

Statements of Changes in Net Assets (continued)

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

Class IV Shares

                    

Proceeds from shares issued

      $ 421,278      $ 1,068,265  

Dividends reinvested

        5,562,361        3,125,766  

Cost of shares redeemed

        (6,314,369 )      (15,750,152 )
      
  
         (330,730 )      (11,556,121 )
      
  

Class VI Shares

                    

Proceeds from shares issued

        36,058,767        34,500,352  

Dividends reinvested

        6,261,467        1,655,605  

Cost of shares redeemed

        (4,207,524 )      (8,761,426 )
      
  
         38,112,710        27,394,531  
      
  

Change in net assets from capital transactions

      $ 57,732,229      $ 52,903,938  
      
  

SHARE TRANSACTIONS:

                    

Class I Shares

                    

Issued

        93        159,617  

Reinvested

        20,914        19,711  

Redeemed

        (38,714 )      (318,142 )
      
  
         (17,707 )      (138,814 )
      
  

Class II Shares

                    

Issued

        —        6,814  

Reinvested

        14,209        9,203  

Redeemed

        (18,528 )      (60,296 )
      
  
         (4,319 )      (44,279 )
      
  

Class III Shares

                    

Issued

        1,323,395        3,716,743  

Reinvested

        698,886        347,890  

Redeemed

        (831,505 )      (1,491,197 )
      
  
         1,190,776        2,573,436  
      
  

Class IV Shares

                    

Issued

        22,970        68,171  

Reinvested

        343,555        210,303  

Redeemed

        (357,566 )      (1,012,262 )
      
  
         8,959        (733,788 )
      
  

Class VI Shares

                    

Issued

        2,023,147        2,211,094  

Reinvested

        389,031        111,747  

Redeemed

        (241,010 )      (573,999 )
      
  
         2,171,168        1,748,842  
      
  

 

See notes to financial statements.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT International Value Fund

 

        Investment Activities
     Distributions
                   Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		    

Ratio of

Net
Investment
Income

(Loss) to
Average
Net Assets

     Portfolio
Turnover(a)

Class I Shares

                                                                              

Period Ended December 31, 2003(b)

   $ 9.25   0.02   0.09   3.90     4.01     —     —     —     $ 13.26   45.08% (d)   $ 542   1.20% (e)   0.56% (e)   91.20%

Year Ended December 31, 2004

   $ 13.26   0.18   0.01   2.46     2.65     (0.33 )   —     (0.33 )   $ 15.58   20.29%     $ 6,247   0.86%     1.33%     42.68%

Year Ended December 31, 2005

   $ 15.58   0.35   —   1.43     1.78     (0.21 )   (0.55 )   (0.76 )   $ 16.60   12.09%     $ 4,349   0.91%     1.92%     48.94%

Six Months Ended June 30, 2006 (Unaudited)

   $ 16.60   0.28   —   1.25     1.53     (0.31 )   (1.18 )   (1.49 )   $ 16.64   9.49% (d)   $ 4,065   1.01% (e)   3.09% (e)   25.87%

Class II Shares

                                                                              

Period Ended December 31, 2003(b)

   $ 9.25   0.01   0.09   3.87     3.97     —     —     —     $ 13.22   44.64% (d)   $ 1,523   1.45% (e)   0.20% (e)   91.20%

Year Ended December 31, 2004

   $ 13.22   0.14   0.01   2.46     2.61     (0.30 )   —     (0.30 )   $ 15.53   20.00%     $ 3,368   1.10%     1.69%     42.68%

Year Ended December 31, 2005

   $ 15.53   0.23   —   1.51     1.74     (0.18 )   (0.55 )   (0.73 )   $ 16.54   11.79%     $ 2,852   1.17%     1.40%     48.94%

Six Months Ended June 30, 2006 (Unaudited)

   $ 16.54   0.26   —   1.24     1.50     (0.29 )   (1.18 )   (1.47 )   $ 16.57   9.39% (d)   $ 2,787   1.26% (e)   2.87% (e)   25.87%

Class III Shares

                                                                              

Period Ended December 31, 2003(b)

   $ 9.25   0.05   0.09   3.84     3.98     —     —     —     $ 13.23   44.75% (d)   $ 9,620   1.13% (e)   1.30% (e)   91.20%

Year Ended December 31, 2004

   $ 13.23   0.18   0.01   2.45     2.64     (0.33 )   —     (0.33 )   $ 15.54   20.26%     $ 69,043   0.86%     1.42%     42.68%

Year Ended December 31, 2005

   $ 15.54   0.24   —   1.54     1.78     (0.21 )   (0.55 )   (0.76 )   $ 16.56   12.05%     $ 116,151   0.93%     1.64%     48.94%

Six Months Ended June 30, 2006 (Unaudited)

   $ 16.56   0.28   —   1.25     1.53     (0.31 )   (1.18 )   (1.49 )   $ 16.60   9.58% (d)   $ 136,156   1.01% (e)   3.22% (e)   25.87%

Class IV Shares(c)

                                                                              

Year Ended December 31, 2001

   $ 14.14   0.12   —   (1.67 )   (1.55 )   (0.17 )   (1.22 )   (1.39 )   $ 11.20   (12.20% )   $ 68,746   1.08%     1.04%     36.00%

Year Ended December 31, 2002

   $ 11.20   0.18   —   (1.41 )   (1.23 )   (0.12 )   —     (0.12 )   $ 9.85   (11.10% )   $ 59,335   1.00%     1.63%     35.00%

Year Ended December 31, 2003

   $ 9.85   0.18   0.09   3.41     3.68     (0.27 )   —     (0.27 )   $ 13.26   38.52%     $ 77,347   1.12%     1.62%     91.20%

Year Ended December 31, 2004

   $ 13.26   0.22   0.01   2.39     2.62     (0.31 )   —     (0.31 )   $ 15.57   20.04%     $ 73,953   1.00%     1.56%     42.68%

Year Ended December 31, 2005

   $ 15.57   0.25   —   1.52     1.77     (0.19 )   (0.55 )   (0.74 )   $ 16.60   11.97%     $ 66,597   1.03%     1.56%     48.94%

Six Months Ended June 30, 2006 (Unaudited)

   $ 16.60   0.28   —   1.25     1.53     (0.31 )   (1.18 )   (1.49 )   $ 16.64   9.56% (d)   $ 66,903   1.01% (e)   3.13% (e)   25.87%

Class VI Shares

                                                                              

Period Ended December 31, 2004(f)

   $ 13.63   0.13   0.01   1.95     2.09     (0.17 )   —     (0.17 )   $ 15.55   15.45% (d)   $ 13,117   1.11% (e)   0.63% (e)   42.68%

Year Ended December 31, 2005

   $ 15.55   0.20   —   1.55     1.75     (0.19 )   (0.55 )   (0.74 )   $ 16.56   11.80%     $ 42,916   1.19%     1.41%     48.94%

Six Months Ended June 30, 2006 (Unaudited)

   $ 16.56   0.25   —   1.26     1.51     (0.31 )   (1.18 )   (1.49 )   $ 16.58   9.43% (d)   $ 78,953   1.26% (e)   3.12% (e)   25.87%

 

(a) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(b) For the period from April 28, 2003 (commencement of operations) through December 31, 2003.

 

(c) The GVIT International Value Fund retained the history of the Market Street International Fund and the existing shares of the Fund were designated Class IV shares.

 

(d) Not annualized.

 

(e) Annualized.

 

(f) For the period from April 28, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT International Value Fund (the “Fund”), (formerly “Dreyfus GVIT International Value Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

    Issuer Name
    Value
    Maturity Rate
     Maturity Date
Bank Note — Floating Rate    Bank of America    $ 2,500,000    5.31 %   07/03/06
Bank Note — Floating Rate    U.S. Bank N.A.      1,999,616    5.10 %   07/03/06
Commercial Paper    Aegis Finance LLC      4,977,310    5.29 %   07/21/06
Funding Agreement — GIC    GE Life and Annuity      1,000,000    5.28 %   07/14/06
Master Note — Floating    CDC Financial Product Inc.      1,000,000    5.41 %   07/03/06
Master Note — Floating    Citigroup Global Markets Inc.      10,500,000    5.38 %   07/03/06
Medium Term Note — Floating    Beta Finance Inc.      4,000,000    5.37 %   07/03/06
Medium Term Note — Floating    Dorada Finance Inc.      2,500,000    5.37 %   07/03/06
Medium Term Note — Floating    General Electric Capital Corp.      3,000,171    5.27 %   09/08/06
Medium Term Note — Floating    ISLANDSBANKI HF Corp.      1,000,000    5.34 %   07/24/06
Medium Term Note — Floating    Tango Finance Corp.      997,316    5.39 %   07/03/06
Repurchase Agreement    Bank of America Securities LLC      7,826,527    5.32 %   07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following value on loan:

 

Value of Loaned Securities

    Value of Collateral

        $39,656,767        

    $ 41,300,939

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of

Securities

  

Unrealized

Appreciation

  

Unrealized

Depreciation

  

Net Unrealized

Appreciation

(Depreciation)*

$299,107,227

   $32,983,348   $(7,955,566)   $25,027,782

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the The Boston Company (“TBC”), an affiliate of the Dreyfus Corporation, the Fund’s subadviser (the “subadviser”). The subadviser manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GMF pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total Fees      Fees
Retained		      Paid to
Sub-adviser

Up to $500 million

    0.75%      0.375%      0.375%

$500 million up to $2 billion

    0.70%      0.400%      0.300%

$2 billion or more

    0.65%      0.350%      0.300%

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares and Class VI shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares and Class VI shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $198,173 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III and Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III or Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III or Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III or Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $54,587.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $97,961,789 and sales of $65,955,620.

 

6. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging market instruments that are subject to certain additional credit and market risks. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

7. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credits) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund underperformed its benchmark, the MSCI EAFE Index for the one-year period ended September 30, 2005 and ranked in the fourth quartile of the Lipper International Value Funds category for the one-year period. The Board noted that the Fund ranked in the third quartile of the Lipper International Value Funds category for the three-year period, and in the second quartile for the five-year period. The Board discussed with management the Fund’s disappointing performance. Management explained that the Fund’s underweighting in Japanese securities had been the primary reason for the most recent underperformance.

 

Next the Board discussed with the Fund’s CCO and management, the compliance oversight questions raised in connection with Dreyfus’ recent implementation of a “dual employee” arrangement with its affiliated company, TBC, whereby portfolio management employees of TBC provide portfolio management services to the Fund on behalf of Dreyfus. The Board considered that although Dreyfus and TBC are affiliated companies, under certain circumstances their management structures, supervisory chains of command and internal resources may be distinct. Therefore, the Board concluded that it

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

would be in the best interests of the Fund and its shareholders to terminate the subadvisory agreement with Dreyfus and hire TBC directly as the Fund’s subadviser, effective on May 1, 2006, as permitted under the Fund’s exemptive order (which permits the Fund’s investment adviser to hire and fire unaffiliated subadvisers with Board approval). However, management noted that they had been meeting regularly with the portfolio management team, will continue to monitor the performance of the Fund, and may make recommendations to the Board in the future.

 

Next, the Board reviewed the Fund’s contractual advisory fee (including the subadvisory fee) and breakpoints and considered that the contractual advisory fee placed the Fund in the first quintile of the Fund’s Lipper-constructed Expense Group. Moreover, the Board considered that the Fund’s total expenses were the lowest in its Lipper Expense Group. Finally, the Board considered the adviser’s profitability in light of all of these factors and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

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Gartmore GVIT Investor Destinations Aggressive Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIDA (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Investor Destinations Aggressive Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

              Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*2
      Annualized
Expense Ratio*2
GVIT Investor Destinations Aggressive Fund                                  

Class II

      Actual      $ 1,000.00      $ 1,051.70      $ 2.85      0.56%
       Hypothetical 1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

Class VI

      Actual      $ 1,000.00      $ 1,052.60      $ 2.85      0.56%
       Hypothetical 1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

2 Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund prospectus.

 

1

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Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Investor Destinations Aggressive Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Mutual Funds      100.0%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Top Holdings       
Gartmore S&P 500 Index Fund, Institutional Class      29.4%
Gartmore International Index Fund, Institutional Class      28.8%
Gartmore Mid Cap Market Index Fund, Institutional Class      14.6%
Gartmore Small Cap Index Fund, Institutional Class      10.0%
JP Morgan Equity Index Fund      9.9%
Gartmore Bond Index Fund, Institutional Class      5.0%
GVIT International Index Fund, ID Class      1.2%
GVIT S&P 500 Index Fund, ID Class      0.7%
GVIT Mid Cap Index Fund, ID Class      0.4%
      
       100.0%
      

 

Asset Allocation Detail       
Equity Funds      95.0%
Fixed Income Funds      5.0%
      
       100.0%
      

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS AGGRESSIVE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares    Value  
MUTUAL FUNDS (100.0%)             
Equity Funds (95.0%)             
GVIT International Index Fund, ID Class (b)   803,042    $ 7,669,049  
GVIT Mid Cap Index Fund, ID Class (b)   140,155      2,480,744  
GVIT S&P 500 Index Fund, ID Class (b)   517,493      4,584,988  
Gartmore International Index Fund, Institutional Class (b)   18,821,021      185,763,474  
Gartmore Mid Cap Market Index Fund, Institutional Class (b)   6,135,125      94,235,517  
Gartmore S&P 500 Index Fund, Institutional Class (b)   17,421,400      189,370,614  
Gartmore Small Cap Index Fund, Institutional Class (b)   5,013,803      64,477,507  
JP Morgan Equity Index Fund   2,212,956      63,954,428  
        
           612,536,321  
        
Fixed Income Funds (5.0%)             
Gartmore Bond Index Fund, Institutional Class (b)   3,074,948      32,348,453  
        
Total Mutual Funds          644,884,774  
        
Total Investments (Cost $579,924,773) (a) — 100.0%      644,884,774  
Liabilities in excess of other assets — (0.0%)          (238,003 )
        
NET ASSETS — 100.0%        $ 644,646,771  
        

 

 

(a) See notes to financial Statements for unrealized appreciation (depreciation) of securities.

 

(b) Investment in affiliate.

 

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GARTMORE GVIT INVESTOR DESTINATIONS AGGRESSIVE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments in affiliated securities, at value (cost $521,694,396)

    $ 580,930,346

Investments, at value (cost $58,230,377)

      63,954,428
    

Total Investments

      644,884,774
    

Interest and dividends receivable

      389,296

Receivable for capital shares issued

      25,727

Receivable for investments sold

      3,024,672

Prepaid expenses and other assets

      7,708
    

Total Assets

      648,332,177
    

Liabilities:

       

Payable for investments purchased

      1,963,795

Payable for capital shares redeemed

      1,475,899

Accrued expenses and other payables:

       

Investment advisory fees

      67,356

Distribution fees

      129,532

Administrative servicing fees

      24,405

Other

      24,419
    

Total Liabilities

      3,685,406
    

Net Assets

    $ 644,646,771
    

Represented by:

       

Capital

    $ 570,710,170

Accumulated net investment income (loss)

      28,331

Accumulated net realized gains (losses) from investment transactions

      8,948,269

Net unrealized appreciation (depreciation) on investments

      64,960,001
    

Net Assets

    $ 644,646,771
    

Net Assets:

       

Class II Shares

    $ 637,591,610

Class VI Shares

      7,055,161
    

Total

    $ 644,646,771
    

Shares outstanding (unlimited number of shares authorized):

       

Class II Shares

      51,793,694

Class VI Shares

      574,233
    

Total

      52,367,927
    

Net asset value and offering price per share:*

       

Class II Shares

    $ 12.31

Class VI Shares

    $ 12.29

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Dividend income from affiliates

    $ 5,212,852  

Dividend income

      773,929  
    

Total Income

      5,986,781  
    

Expenses:

         

Investment advisory fees

      409,050  

Distribution Fees Class II

      776,971  

Distribution Fees Class VI

      9,672  

Administrative servicing fees
Class II Shares

      455,496  

Administrative servicing fees Class VI Shares

      5,894  

Trustee fees

      11,159  

Other

      84,059  
    

Total expenses before earnings credit

      1,752,301  
    

Earnings credit (Note 6)

      (283 )
    

Total Expenses

      1,752,018  
    

Net Investment Income (Loss)

      4,234,763  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Realized gains (losses) on investment transactions with affiliates

      8,961,976  

Realized gains distributions from underlying funds

      14,894  
    

Net realized gains (losses) on investment transactions

      8,976,870  

Net change in unrealized appreciation/depreciation on investments

      17,084,260  
    

Net realized/unrealized gains (losses) on investments

      26,061,130  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 30,295,893  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS AGGRESSIVE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 4,234,763      $ 9,513,712  

Net realized gains (losses) on investment transactions

        8,976,870        15,706,802  

Net change in unrealized appreciation/depreciation on investments

        17,084,260        16,185,898  
      
  

Change in net assets resulting from operations

        30,295,893        41,406,412  
      
  

Distributions to Class II Shareholders from:

                    

Net investment income

        (4,456,823 )      (9,274,904 )

Net realized gains on investments

        (9,376,448 )      (10,008,234 )

Distributions to Class VI Shareholders from:

                    

Net investment income

        (66,047 )      (81,895 )

Net realized gains on investments

        (110,753 )      (90,264 )
      
  

Change in net assets from shareholder distributions

        (14,010,071 )      (19,455,297 )
      
  

Change in net assets from capital transactions

        43,214,554        230,657,745  
      
  

Change in net assets

        59,500,376        252,608,860  

Net Assets:

                    

Beginning of period

        585,146,395        332,537,535  
      
  

End of period

      $ 644,646,771      $ 585,146,395  
      
  

Accumulated net investment income (loss)

      $ 28,331      $ 316,438  
      
  

CAPITAL TRANSACTIONS:

                    

Class II Shares

                    

Proceeds from shares issued

      $ 49,946,451      $ 229,501,873  

Dividends reinvested

        13,833,259        19,283,086  

Cost of shares redeemed

        (19,993,297 )      (24,858,434 )
      
  
         43,786,413        223,926,525  
      
  

Class VI Shares

                    

Proceeds from shares issued

        3,352,052        6,924,731  

Dividends reinvested

        176,800        172,159  

Cost of shares redeemed

        (4,100,711 )      (365,670 )
      
  
         (571,859 )      6,731,220  
      
  

Change in net assets from capital transactions

      $ 43,214,554      $ 230,657,745  
      
  

SHARE TRANSACTIONS:

                    

Class II Shares

                    

Issued

        3,972,163        19,960,163  

Reinvested

        1,143,665        1,646,096  

Redeemed

        (1,595,299 )      (2,158,836 )
      
  
         3,520,529        19,447,423  
      
  

Class VI Shares

                    

Issued

        270,331        588,182  

Reinvested

        14,597        14,467  

Redeemed

        (321,459 )      (30,125 )
      
  
         (36,531 )      572,524  
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Investor Destinations Aggressive Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                      

Period Ended December 31, 2001(c)

   $ 10.00   0.02   0.11     0.13     (0.02 )   —       (0.02 )   $ 10.11   1.31% (e)   $ 506   0.61% (f)   4.36% (f)   24.83% (f)   (19.86% )(f)   10.90%

Year Ended December 31, 2002

   $ 10.11   0.09   (1.96 )   (1.87 )   (0.09 )   —       (0.09 )   $ 8.15   (18.50% )   $ 19,493   0.56%     1.41%     (g )   (g )   111.74%

Year Ended December 31, 2003

   $ 8.15   0.12   2.46     2.58     (0.12 )   (0.12 )   (0.24 )   $ 10.49   31.87%     $ 94,500   0.55%     1.60%     (g )   (g )   49.13%

Year Ended December 31, 2004(d)

   $ 10.49   0.17   1.28     1.45     (0.17 )   (0.25 )   (0.42 )   $ 11.52   14.03%     $ 332,097   0.56%     2.13%     (g )   (g )   18.26%

Year Ended December 31, 2005

   $ 11.52   0.22   0.68     0.90     (0.22 )   (0.23 )   (0.45 )   $ 11.97   7.93%     $ 577,843   0.56%     2.04%     (g )   (g )   9.12%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.97   0.09   0.52     0.61     (0.09 )   (0.18 )   (0.27 )   $ 12.31   5.17% (e)   $ 637,592   0.56% (f)   1.42% (f)   (g )   (g )   5.81%

Class VI Shares

                                                                                      

Period Ended December 31, 2004(h)

   $ 10.52   0.17   1.15     1.32     (0.17 )   (0.15 )   (0.32 )   $ 11.52   12.58% (e)   $ 440   0.41% (f)   3.59% (f)   (g )   (g )   18.26%

Year Ended December 31, 2005

   $ 11.52   0.23   0.68     0.91     (0.24 )   (0.23 )   (0.47 )   $ 11.96   7.95%     $ 7,303   0.51%     3.82%     (g )   (g )   9.12%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.96   0.10   0.51     0.61     (0.10 )   (0.18 )   (0.28 )   $ 12.29   5.26% (e)   $ 7,055   0.56% (f)   1.47% (f)   (g )   (g )   5.81%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from December 12, 2001 (commencement of operations) through December 31, 2001.

 

(d) On April 30, 2004, the existing share Class of the Fund was renamed Class II Shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

(h) For the period from April 30, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Investor Destinations Aggressive Fund (the “Fund”).

 

The Fund is constructed as a “fund of funds,” which means that the Fund pursues its investment objective by allocating the Fund’s investments primarily among other affiliated mutual funds (the “Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Shares of the Underlying Funds in which the Trust’s Fund invests are valued at their respective net asset values as reported by the Underlying Funds. The securities in the Underlying Funds generally are valued as of the close of business of the regular session of trading on the New York Stock Exchange (usually at 4 p.m. Eastern time). The Underlying Funds generally value securities and assets at current market value.

 

The following policies, (b) through (i), represent the accounting policies applicable to the Underlying Funds.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
$579,994,699   $ 66,573,383   $ (1,683,308 )   $ 64,890,075

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.13% based on the Fund’s average daily net assets.

 

Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Funds for expenses associated with the distribution of the shares of the Funds. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of each class of shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $472,291 in Administrative Services Fees from the Fund.

 

Because the Fund invests primarily in other affiliated funds, the Fund is a shareholder of those Underlying Funds. The Underlying Funds do not charge the Fund any sales charge for buying or selling shares. However, the Fund indirectly pays a portion of the operating expenses, including management fees of the Underlying Funds and short-term investments the Fund holds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how the Fund’s assets are spread among the underlying investments.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $1,224.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $70,495,320 and sales of $36,819,213.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its composite benchmark by 528 basis points for the one-year period ended September 30, 2005, and by 304 basis points for the three-year period. The Board noted however, that the Fund ranked in the third quartile of the Lipper Global Multi-Cap Core Funds category for the one-year period and in the second quartile for the three-year period. The Board and management discussed the comparability of the Fund to other funds in its Lipper peer group, and noted that certain of the funds in the peer group are actively-managed products.

 

Next, the board reviewed the contractual advisory fee for the Fund which placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group. Moreover, the Board considered that the Fund’s total expenses placed the Fund above the median of its Lipper Expense Group by 32 basis points. The Board discussed with management the reasons for this expense disparity. Management explained that the Fund share class used in the Lipper report was a share class with distribution expenses (Rule 12b-1 and administrative services fees) which are not found in most of the Fund’s peers in the

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

Lipper reports either because Lipper had selected a share class without a Rule 12b-1 fee, or the actively managed underlying funds had higher fees and distribution expenses may have been paid by the advisers of these other funds from profits. Without these fees, the Fund’s expenses are at the median of the Lipper Expense group. The Board was satisfied with management’s explanation of the expense disparity.

 

As the Fund is a “fund-of-funds” that invests its assets in one or more underlying funds (as well as a Nationwide insurance contract) the Fund bears its proportionate share of the operating expenses (including advisory fees) of each underlying fund in which the Fund invest. Therefore, as shareholders of the Fund, you indirectly bear a proportionate share of these underlying fund expenses. The Board considered whether the Fund’s payment of its proportionate share of the advisory fees of the underlying funds are for advisory services that are “in addition to” those advisory and subadvisory services your Fund receives from its adviser and subadviser, Fund Asset Management (“FAM”). The Board considered management’s reports that there was no layering of fees and noted the additional services management provides to the Fund that are in addition to the advisory services that are provided to the underlying funds. Finally, the Board considered the adviser’s profitability in connection with managing this Fund and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

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Gartmore GVIT Investor Destinations Moderately Aggressive Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIDMA (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Investor Destinations Moderately Aggressive Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*2
      Annualized
Expense Ratio*2
GVIT Investor Destinations Moderately Conservative Fund                                       

Class II

      Actual    $ 1,000.00      $ 1,041.80      $ 2.84      0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

Class VI

      Actual    $ 1,000.00      $ 1,041.70      $ 2.83      0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

2 Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund prospectus.

 

1

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Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Investor Destinations Moderately Aggressive Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Mutual Funds      97.4%
Fixed Contract      2.6%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Top Holdings       
Gartmore International Index Fund, Institutional Class      24.5%
Gartmore S&P 500 Index Fund, Institutional Class      23.4%
Gartmore Bond Index Fund, Institutional Class      15.0%
Gartmore Mid Cap Market Index Fund, Institutional Class      13.7%
JP Morgan Equity Index Fund      9.1%
Gartmore Small Cap Index Fund, Institutional Class      5.0%
Nationwide Fixed Contract, 3.50%      2.6%
GVIT S&P 500 Index Fund, ID Class      2.5%
Gartmore Enhanced Income Fund, Institutional Class      2.4%
GVIT Mid Cap Index Fund, ID Class      1.3%
Other Assets      0.5%
      
       100.0%
      
Asset Allocation Detail       
Equity Funds      80.0%
Fixed Income Funds      17.4%
Fixed Contract      2.6%
      
       100.0%
      

 

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GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares    Value
MUTUAL FUNDS (97.4%)         
Equity Funds (80.0%)         
GVIT International Index Fund, ID Class (b)   803,042    $       7,669,049
GVIT Mid Cap Index Fund, ID Class (b)   1,061,096    18,781,403
GVIT S&P 500 Index Fund, ID Class (b)   4,221,093    37,398,883
Gartmore International Index Fund, Institutional Class (b)   36,986,570    365,057,448
Gartmore Mid Cap Market Index Fund, Institutional Class (b)   13,336,881    204,854,496
Gartmore S&P 500 Index Fund, Institutional Class (b)   32,074,411    348,648,844
Gartmore Small Cap Index Fund, Institutional Class (b)   5,796,680    74,545,300
JP Morgan Equity Index Fund   4,697,902    135,769,370
        
         1,192,724,793
        
Fixed Income Funds (17.4%)     
Gartmore Bond Index Fund, Institutional Class (b)   21,328,971    224,380,770
Gartmore Enhanced Income Fund, Institutional Class (b)   3,948,436    35,891,284
        
         260,272,054
        
Total Mutual Funds        1,452,996,847
        
Principal Amount    Value  
FIXED CONTRACT (2.6%)               
Nationwide Fixed Contract, 3.50% (b) (c)   $ 38,772,060    $ 38,772,060  
          
Total Fixed Contract            38,772,060  
          
Total Investments
(Cost $1,369,316,645) (a) — 100.0%		      1,491,768,907  
Liabilities in excess of other assets — (0.0%)            (590,331 )
          
NET ASSETS — 100.0%          $ 1,491,178,576  
          

 

 

(a) See Notes to Financial Statements for unrealized appreciation (depreciation) of securities.

 

(b) Investment in affiliate.

 

(c) The Nationwide Fixed Contract rate changes quarterly. The security is restricted and as the affiliated counterparty is required by contract to redeem within five days upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees.

 

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GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments in affiliates, at value
(cost $1,247,235,355)

    $ 1,355,999,538

Investments, at value (cost $122,081,290)

      135,769,369
    

Total Investments

      1,491,768,907
    

Interest and dividends receivable

      1,460,404

Receivable for capital shares issued

      4,305,008

Receivable for investments sold

      3,332,522

Prepaid expenses and other assets

      15,911
    

Total Assets

      1,500,882,752
    

Liabilities:

       

Payable for investments purchased

      9,091,054

Payable for capital shares redeemed

      2,949

Accrued expenses and other payables:

       

Investment advisory fees

      153,682

Distribution fees

      295,546

Administrative servicing fees

      102,701

Other

      58,244
    

Total Liabilities

      9,704,176
    

Net Assets

    $ 1,491,178,576
    

Represented by:

       

Capital

    $ 1,354,244,044

Accumulated net investment income (loss)

      200,704

Accumulated net realized gains (losses) from investment transactions

      14,281,566

Net unrealized appreciation (depreciation) on investments

      122,452,262
    

Net Assets

    $ 1,491,178,576
    

Net Assets:

       

Class II Shares

    $ 1,483,167,844

Class VI Shares

      8,010,732
    

Total

    $ 1,491,178,576
    

Shares outstanding (unlimited number of shares authorized):

       

Class II Shares

      122,860,693

Class VI Shares

      665,162
    

Total

      123,525,855
    

Net asset value and offering price per share:*

       

Class II Shares

    $ 12.07

Class VI Shares

    $ 12.04

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income from affiliates

    $ 505,577  

Dividend income from affiliates

      13,281,821  

Dividend income

      1,616,932  
    

Total Income

      15,404,330  
    

Expenses:

         

Investment advisory fees

      878,385  

Distribution Fees Class II

      1,678,861  

Distribution Fees Class VI

      10,358  

Administrative servicing fees
Class II Shares

      988,506  

Administrative servicing fees
Class VI Shares

      6,252  

Trustee fees

      23,273  

Other

      172,978  
    

Total expenses before earnings credit

      3,758,613  

Earnings credit (Note 6)

      (2 )
    

Total Expenses

      3,758,611  
    

Net Investment Income (Loss)

      11,645,719  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Realized gains (losses) on investment transactions with affiliates

      14,759,877  

Realized gains distributions from underlying funds

      171,031  
    

Net realized gains (losses) on investment transactions

      14,930,908  
    

Net change in unrealized appreciation/depreciation on investments

      23,671,282  
    

Net realized/unrealized gains (losses) on investments

      38,602,190  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 50,247,909  
    

 

See notes to financial statements.

 

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GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND

 

Statements of Changes in Net Assets

     Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
     (Unaudited)        

From Investment Activities:

                 

Operations:

                 

Net investment income (loss)

    $ 11,645,719     $ 21,730,107  

Net realized gains (losses) on investment transactions

      14,930,908       32,358,584  

Net change in unrealized appreciation/depreciation on investments

      23,671,282       21,712,416  
    
 

Change in net assets resulting from operations

      50,247,909       75,801,107  
    
 

Distributions to Class II Shareholders from

                 

Net investment income

      (12,160,847 )     (21,230,457 )

Net realized gains on investments

      (18,562,857 )     (22,011,477 )

Distributions to Class VI Shareholders from:

                 

Net investment income

      (75,425 )     (122,729 )

Net realized gains on investments

      (101,698 )     (124,368 )
    
 

Change in net assets from shareholder distributions

      (30,900,827 )     (43,489,031 )
    
 

Change in net assets from capital transactions

      262,158,302       440,365,885  
    
 

Change in net assets

      281,505,384       472,677,961  

Net Assets:

                 

Beginning of period

      1,209,673,192       736,995,231  
    
 

End of period

    $ 1,491,178,576     $ 1,209,673,192  
    
 

Accumulated net investment income (loss)

    $ 200,704     $ 791,257  
    
 

CAPITAL TRANSACTIONS:

                 

Class II Shares

                 

Proceeds from shares issued

    $ 258,098,928     $ 435,840,304  

Dividends reinvested

      30,723,594       43,241,870  

Cost of shares redeemed

      (26,987,736 )     (43,389,400 )
    
 
       261,834,786       435,692,774  
    
 

Class VI Shares

                 

Proceeds from shares issued

      1,922,044       5,334,070  

Dividends reinvested

      177,122       247,097  

Cost of shares redeemed

      (1,775,650 )     (908,056 )
    
 
       323,516       4,673,111  
    
 

Change in net assets from capital transactions

    $ 262,158,302     $ 440,365,885  
    
 

SHARE TRANSACTIONS:

                 

Class II Shares

                 

Issued

      20,991,889       37,794,353  

Reinvested

      2,577,818       3,715,195  

Redeemed

      (2,186,986 )     (3,761,566 )
    
 
       21,382,721       37,747,982  
    
 

Class VI Shares

                 

Issued

      155,748       459,055  

Reinvested

      14,876       21,190  

Redeemed

      (146,028 )     (78,798 )
    
 
       24,596       401,447  
    
 

 

See notes to financial statements.

 

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Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Investor Destinations Moderately Aggressive Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                      

Period Ended December 31, 2001(c)

   $ 10.00   0.02   0.09     0.11     (0.02 )   —     (0.02 )   $ 10.09   1.12% (e)   $ 505   0.61% (f)   4.56% (f)   24.85% (f)   (19.68% )(f)   11.10%

Year Ended December 31, 2002

   $ 10.09   0.12   (1.59 )   (1.47 )   (0.12 )   (0.01 )   (0.13 )   $ 8.49   (14.59% )   $ 71,962   0.56%     1.89%     (g )   (g )   43.38%

Year Ended December 31, 2003

   $ 8.49   0.14   2.10     2.24     (0.13 )   —     (0.13 )   $ 10.60   26.64%     $ 290,666   0.56%     1.73%     (g )   (g )   22.22%

Year Ended December 31, 2004(d)

   $ 10.60   0.19   1.08     1.27     (0.19 )   (0.16 )   (0.35 )   $ 11.52   12.09%     $ 734,244   0.55%     2.11%     (g )   (g )   11.44%

Year Ended December 31, 2005

   $ 11.52   0.24   0.57     0.81     (0.24 )   (0.24 )   (0.48 )   $ 11.85   7.07%     $ 1,202,098   0.57%     2.23%     (g )   (g )   7.53%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.85   0.11   0.38     0.49     (0.11 )   (0.16 )   (0.27 )   $ 12.07   4.18% (e)   $ 1,483,168   0.56% (f)   1.79% (f)   (g )   (g )   3.30%

Class VI Shares

                                                                                      

Period Ended December 31, 2004(h)

   $ 10.63   0.17   0.98     1.15     (0.17 )   (0.10 )   (0.27 )   $ 11.51   10.92% (e)   $ 2,751   0.41% (f)   4.26% (f)   (g )   (g )   11.44%

Year Ended December 31, 2005

   $ 11.51   0.25   0.57     0.82     (0.26 )   (0.24 )   (0.50 )   $ 11.83   7.16%     $ 7,575   0.48%     2.59%     (g )   (g )   7.53%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.83   0.11   0.37     0.48     (0.11 )   (0.16 )   (0.27 )   $ 12.04   4.17% (e)   $ 8,011   0.56% (f)   1.69% (f)   (g )   (g )   3.30%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from December 12, 2001 (commencement of operations) through December 31, 2001.

 

(d) On April 30, 2004, the existing share Class of the Fund was renamed Class II Shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

(h) For the period from April 30, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Investor Destinations Moderately Aggressive Fund (the “Fund”).

 

The Fund is constructed as a “fund of funds,” which means that the Fund pursues its investment objective by allocating the Fund’s investments primarily among other affiliated mutual funds (the “Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities including the Nationwide Contract. The Nationwide Contract is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (“Nationwide”). This contract has a stable principal value and will pay the Fund a fixed rate of interest. The fixed interest rate must be at least 3.50% (on an annual basis), but may be higher and is currently adjusted on a quarterly basis. Nationwide will calculate the interest rate in the same way that it calculates guaranteed interest rates for similar contracts. Because the contract is guaranteed by Nationwide, assuming no default, the Fund receives no more or less than the guaranteed amount and will not directly participate in the actual experience of the assets underlying the contract. Although under certain market conditions the Fund’s performance may be hurt by its investment in the Nationwide Contract, the portfolio management team believes that the relatively stable nature of the Nationwide Contract should reduce the Fund’s volatility and overall risk, especially when the bond and stock markets decline simultaneously. The Fund’s target allocation range is 0-10%.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Shares of the Underlying Funds in which the Trust’s Fund invests are valued at their respective net asset values as reported by the Underlying Funds. The securities in the Underlying Funds generally are valued as of the close of business of the regular session of trading on the New York Stock Exchange (usually at 4 p.m. Eastern time). The Underlying Funds generally value securities and assets at current market value. Under most circumstances, the fixed interest contract is valued at par value each day, which is deemed to be fair value. The par value is calculated each day by the summation of the

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

following factors: prior day’s par value; prior day’s interest accrued (par multiplied by guaranteed fixed rate); and current day net purchase or redemption.

 

The following policies, (b) through (i), represent the accounting policies applicable to the Underlying Funds.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

8

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
$1,370,166,133   $ 131,733,342   $ (10,130,548 )   $ 121,602,794

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.13% based on the Fund’s average daily net assets.

 

Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Funds for expenses associated with the distribution of the shares of the Funds. GDSI is majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of each class of shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $1,014,990 in Administrative Services Fees from the Fund.

 

Because the Fund invests primarily in other affiliated funds, the Fund is a shareholder of those Underlying Funds. The Underlying Funds and the Nationwide Contract do not charge the Fund any sales charge for buying or selling shares. However, the Fund indirectly pays a portion of the operating expenses, including management fees of the Underlying Funds and short-term investments the Fund holds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how the Fund’s assets are spread among the underlying investments.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $542.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $279,111,641 and sales of $43,924,665.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its composite benchmark by 434 basis points over the one-year period ended September 30, 2005 and by 232 basis points over the three-year period. The Board also considered that the Fund’s performance placed it in the second quartile of the Lipper Global Flexible Funds category for both the one- and three-year periods, and noted that the Fund beat its category median by 12 basis points and 48 basis points, respectively, over those periods.

 

Next, the Board reviewed the Fund’s contractual advisory fee which placed the Fund in the fourth quintile of its Lipper-constructed Expense Group. The Board also considered that the Fund’s total expenses placed the fund above the median of its Lipper Expense Group by 32 basis points. The Board discussed with management the reasons for this expense disparity. Management explained that the Fund share class used in the Lipper report was a share class with distribution expenses (Rule 12b-1 and administrative services fees) which are not found in most of the Fund’s peers in the Lipper reports either because Lipper had selected a share class without a Rule 12b-1 fee, or the actively managed underlying funds had higher fees and

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

distribution expenses may have been paid by the advisers of these other funds from profits. Without these fees, the Fund’s expenses are at the median of the Lipper Expense group. The Board was satisfied with management’s explanation of the expense disparity.

 

As the Fund is a “fund-of-funds” that invests its assets in one or more underlying funds (as well as a Nationwide insurance contract) the Fund bears its proportionate share of the operating expenses (including advisory fees) of each underlying fund in which the Fund invest. Therefore, as shareholders of the Fund, you indirectly bear a proportionate share of these underlying fund expenses. The Board considered whether the Fund’s payment of its proportionate share of the advisory fees of the underlying funds are for advisory services that are “in addition to” those advisory and subadvisory services your Fund receives from its adviser and subadviser, Fund Asset Management (“FAM”). The Board considered management’s reports that there was no layering of fees and noted the additional services management provides to the Fund that are in addition to the advisory services that are provided to the underlying funds. Finally, the Board reviewed the adviser’s profitability in light of all of these factors, and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

Table of Contents

 

Gartmore GVIT Investor Destinations Moderate Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIDM (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Investor Destinations Moderate Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1,
2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*2
      Annualized
Expense Ratio*2
GVIT Investor Destinations Moderate Fund                                       

Class II

      Actual    $ 1,000.00      $ 1,029.20      $ 2.77      0.55%
       Hypothetical1    $ 1,000.00      $ 1,022.07      $ 2.76      0.55%

Class VI

      Actual    $ 1,000.00      $ 1,029.10      $ 2.82      0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%
                                        

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

2 Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund prospectus.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Investor Destinations Moderate Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation
Mutual Funds      92.2%
Fixed Contract      7.8%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Asset Allocation Detail
Equity Funds      59.9%
Fixed Income Funds      32.3%
Fixed Contract      7.8%
      
       100.0%
      
Top Holdings
Gartmore S&P 500 Index Fund, Institutional Class      27.5%
Gartmore Bond Index Fund, Institutional Class      25.1%
Gartmore International Index Fund, Institutional Class      14.6%
Gartmore Mid Cap Market Index Fund, Institutional Class      9.0%
Nationwide Fixed Contract, 3.50%      7.8%
Gartmore Enhanced Income Fund, Institutional Class      7.2%
Gartmore Small Cap Index Fund, Institutional Class      5.0%
GVIT S&P 500 Index Fund, ID Class      2.5%
GVIT Mid Cap Index Fund, ID Class      0.9%
GVIT International Index Fund, ID Class      0.4%
      
       100.0%
      

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS MODERATE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

 

Shares    Value
MUTUAL FUNDS (92.2%)         
Equity Funds (59.9%)         
GVIT International Index Fund, ID Class (b)   803,042    $       7,669,049
GVIT Mid Cap Index Fund, ID Class (b)   1,082,478    19,159,853
GVIT S&P 500 Index Fund, ID Class (b)   5,658,517    50,134,464
Gartmore International Index Fund, Institutional Class (b)   29,942,331    295,530,808
Gartmore Mid Cap Market Index Fund, Institutional
Class (b)		   11,912,330    182,973,384
Gartmore S&P 500 Index Fund, Institutional Class (b)   51,174,356    556,265,249
Gartmore Small Cap Index Fund, Institutional Class (b)   7,858,991    101,066,619
        
         1,212,799,426
        
Fixed Income Funds (32.3%)     
Gartmore Bond Index Fund, Institutional Class (b)   48,194,593    507,007,118
Gartmore Enhanced Income Fund, Institutional Class (b)   16,028,058    145,695,045
        
         652,702,163
        
Total Mutual Funds        1,865,501,589
        
Principal Amount   Value  
FIXED CONTRACT (7.8%)              
Nationwide Fixed Contract, 3.50% (b) (c)   $ 157,982,292   $ 157,982,292  
         
Total Fixed Contract           157,982,292  
         
Total Investments
(Cost $1,888,532,888) (a) — 100.0%		     2,023,483,881  
Liabilities in excess of other assets — (0.0%)           (741,497 )
         
NET ASSETS — 100.0%         $ 2,022,742,384  
         

 

 

(a) See Notes to Statement of Investments for unrealized appreciation (depreciation) of securities.

 

(b) Investment in affiliate.

 

(c) The Nationwide Fixed Contract rate changes quarterly. The security is restricted and as the affiliated counterparty is required by contract to redeem within five days upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees.

 

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GARTMORE GVIT INVESTOR DESTINATIONS MODERATE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments in affiliated securities, at value (cost $1,888,532,888)

    $ 2,023,483,881

Interest and dividends receivable

      2,167,520

Receivable for capital shares issued

      5,811,327

Receivable for investments sold

      3,526,685

Prepaid expenses and other assets

      21,747
    

Total Assets

      2,035,011,160
    

Liabilities:

       

Payable for investments purchased

      11,316,895

Payable for capital shares redeemed

      172,622

Accrued expenses and other payables:

       

Investment advisory fees

      209,033

Distribution fees

      401,991

Administrative servicing fees

      81,583

Other

      86,652
    

Total Liabilities

      12,268,776
    

Net Assets

    $ 2,022,742,384
    

Represented by:

       

Capital

    $ 1,872,070,780

Accumulated net investment income (loss)

      318,461

Accumulated net realized gains (losses) from investment transactions

      15,402,150

Net unrealized appreciation (depreciation) on investments

      134,950,993
    

Net Assets

    $ 2,022,742,384
    

Net Assets:

       

Class II Shares

    $ 2,004,987,736

Class VI Shares

      17,754,648
    

Total

    $ 2,022,742,384
    

Shares outstanding (unlimited number of shares authorized):

       

Class II Shares

      174,211,685

Class VI Shares

      1,546,232
    

Total

      175,757,917
    

Net asset value and offering price per share:*

       

Class II Shares

    $ 11.51

Class VI Shares

    $ 11.48

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income from affiliates

    $ 2,034,291  

Dividend income from affiliates

      21,927,174  
    

Total Income

      23,961,465  
    

Expenses:

         

Investment advisory fees

      1,175,564  

Distribution Fees Class II

      2,239,801  

Distribution Fees Class VI

      20,921  

Administrative servicing fees
Class II Shares

      1,300,145  

Administrative servicing fees
Class VI Shares

      12,602  

Trustee fees

      30,669  

Other

      228,076  
    

Total expenses before earnings credit

      5,007,778  

Earnings credit (Note 6)

      (604 )
    

Total Expenses

      5,007,174  
    

Net Investment Income (Loss)

      18,954,291  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Realized gains (losses) on investment transactions with affiliates

      17,498,948  

Realized gains distributions from underlying funds

      171,731  
    

Net realized gains (losses) on investment transactions

      17,670,679  

Net change in unrealized appreciation/depreciation on investments

      9,786,643  
    

Net realized/unrealized gains (losses) on investments

      27,457,322  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 46,411,613  
    

 

See notes to financial statements.

 

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GARTMORE GVIT INVESTOR DESTINATIONS MODERATE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 18,954,291      $ 32,042,155  

Net realized gains (losses) on investment transactions

        17,670,679        30,278,077  

Net change in unrealized appreciation/depreciation on investments

        9,786,643        13,980,124  
      
  

Change in net assets resulting from operations

        46,411,613        76,300,356  
      
  

Distributions to Class II Shareholders from:

                    

Net investment income

        (18,455,543 )      (31,722,167 )

Net realized gains on investments

        (18,140,929 )      (24,058,008 )

Distributions to Class VI Shareholders from:

                    

Net investment income

        (180,287 )      (322,592 )

Net realized gains on investments

        (162,221 )      (233,387 )
      
  

Change in net assets from shareholder distributions

        (36,938,980 )      (56,336,154 )
      
  

Change in net assets from capital transactions

        401,395,298        464,410,031  
      
  

Change in net assets

        410,867,931        484,374,233  

Net Assets:

                    

Beginning of period

        1,611,874,453        1,127,500,220  
      
  

End of period

      $ 2,022,742,384      $ 1,611,874,453  
      
  

Accumulated net investment income (loss)

      $ 318,461      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class II Shares

                    

Proceeds from shares issued

      $ 398,761,174      $ 461,597,186  

Dividends reinvested

        36,596,460        55,779,957  

Cost of shares redeemed

        (35,763,027 )      (59,202,326 )
      
  
         399,594,607        458,174,817  
      
  

Class VI Shares

                    

Proceeds from shares issued

        3,540,262        9,543,333  

Dividends reinvested

        342,508        555,977  

Cost of shares redeemed

        (2,082,079 )      (3,864,096 )
      
  
         1,800,691        6,235,214  
      
  

Change in net assets from capital transactions

      $ 401,395,298      $ 464,410,031  
      
  

SHARE TRANSACTIONS:

                    

Class II Shares

                    

Issued

        34,066,545        40,972,573  

Reinvested

        3,204,978        4,959,099  

Redeemed

        (3,057,896 )      (5,260,000 )
      
  
         34,213,627        40,671,672  
      
  

Class VI Shares

                    

Issued

        304,285        851,248  

Reinvested

        30,040        49,465  

Redeemed

        (177,988 )      (345,516 )
      
  
         156,337        555,197  
      
  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Investor Destinations Moderate Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                      

Period Ended December 31, 2001(c)

   $ 10.00   0.02   0.06     0.08     (0.02 )   —     (0.02 )   $ 10.06   0.84% (e)   $ 504   0.61% (f)   4.42% (f)   24.86% (f)   (19.83% )(f)   0.74%

Year Ended December 31, 2002

   $ 10.06   0.15   (1.11 )   (0.96 )   (0.15 )   (0.01 )   (0.16 )   $ 8.94   (9.60% )   $ 165,555   0.56%     2.41%     (g )   (g )   21.58%

Year Ended December 31, 2003

   $ 8.94   0.17   1.60     1.77     (0.17 )   —     (0.17 )   $ 10.54   20.05%     $ 566,916   0.56%     2.01%     (g )   (g )   9.90%

Year Ended December 31, 2004(d)

   $ 10.54   0.21   0.78     0.99     (0.21 )   (0.06 )   (0.27 )   $ 11.26   9.54%     $ 1,118,116   0.56%     2.19%     (g )   (g )   5.54%

Year Ended December 31, 2005

   $ 11.26   0.26   0.33     0.59     (0.26 )   (0.19 )   (0.45 )   $ 11.40   5.34%     $ 1,596,055   0.56%     2.41%     (g )   (g )   4.20%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.40   0.11   0.22     0.33     (0.11 )   (0.11 )   (0.22 )   $ 11.51   2.92% (e)   $ 2,004,988   0.55% (f)   2.10% (f)   (g )   (g )   3.16%

Class VI Shares

                                                                                      

Period Ended December 31, 2004(h)

   $ 10.54   0.19   0.72     0.91     (0.19 )   (0.02 )   (0.21 )   $ 11.24   8.72% (e)   $ 9,384   0.41% (f)   3.84% (f)   (g )   (g )   5.54%

Year Ended December 31, 2005

   $ 11.24   0.27   0.33     0.60     (0.27 )   (0.19 )   (0.46 )   $ 11.38   5.50%     $ 15,820   0.47%     2.56%     (g )   (g )   4.20%

Six Months Ended June 30, 2006 (Unaudited)

   $ 11.38   0.12   0.21     0.33     (0.12 )   (0.11 )   (0.23 )   $ 11.48   2.91% (e)   $ 17,755   0.56% (f)   2.07% (f)   (g )   (g )   3.16%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from December 12, 2001 (commencement of operations) through December 31, 2001.

 

(d) On April 30, 2004, the existing share Class of the Fund was renamed Class II Shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

(h) For the period from April 30, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Investor Destinations Moderate Fund (the “Fund”).

 

The Fund is constructed as a “fund of funds,” which means that the Fund pursues its investment objective by allocating the Fund’s investments primarily among other affiliated mutual funds (the “Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities including the Nationwide Contract. The Nationwide Contract is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (“Nationwide”). This contract has a stable principal value and will pay the Fund a fixed rate of interest. The fixed interest rate must be at least 3.50% (on an annual basis), but may be higher and is currently adjusted on a quarterly basis. Nationwide will calculate the interest rate in the same way that it calculates guaranteed interest rates for similar contracts. Because the contract is guaranteed by Nationwide, assuming no default, the Fund receives no more or less than the guaranteed amount and will not directly participate in the actual experience of the assets underlying the contract. Although under certain market conditions the Fund’s performance may be hurt by its investment in the Nationwide Contract, the portfolio management team believes that the relatively stable nature of the Nationwide Contract should reduce the Fund’s volatility and overall risk, especially when the bond and stock markets decline simultaneously. The Fund’s target allocation range is 5-15%.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Shares of the Underlying Funds in which the Trust’s Fund invests are valued at their respective net asset values as reported by the Underlying Funds. The securities in the Underlying Funds generally are valued as of the close of business of the regular session of trading on the New York Stock Exchange (usually at 4 p.m. Eastern time). The Underlying Funds generally value securities and assets at current market value. Under most circumstances, the fixed interest contract is valued at par value each day, which is deemed to be fair value. The par value is calculated each day by the summation of the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

following factors: prior day’s par value; prior day’s interest accrued (par multiplied by guaranteed fixed rate); and current day net purchase or redemption.

 

The following policies, (b) through (i), represent the accounting policies applicable to the Underlying Funds.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of future contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

    Unrealized
Appreciation
    Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*

$1,891,249,229

    $155,845,816    $(23,611,164)   $132,234,652

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.13% based on the Fund’s average daily net assets.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Funds for expenses associated with the distribution of the shares of the Funds. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of each class of shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $1,358,635 in Administrative Services Fees from the Fund.

 

Because the Fund invests primarily in other affiliated funds, the Fund is a shareholder of those Underlying Funds. The Underlying Funds and the Nationwide Contract do not charge the Fund any sales charge for buying or selling shares. However, the Fund indirectly pays a portion of the operating expenses, including management fees of the Underlying Funds and short-term investments the Fund holds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how the Fund’s assets are spread among the underlying investments.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $2,062.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $400,175,843 and sales of $53,250,443.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its composite benchmark by 256 basis points for the one-year period ended September 30, 2005 and by 140 basis points for the trailing three-year period. The Board also considered that the Fund ranked in the second quartile of the Lipper Balanced Funds category for both the one- and three-year periods, beating the category median by 167 basis points and 118 basis points, respectively. The Board discussed with management the small number of peer funds in the report and the comparability of the Fund to others in its peer group since some of these funds are actively-managed.

 

Next, the Board reviewed the Fund’s contractual advisory fee and considered the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group, while the Fund’s total expenses are above the median of its Lipper Expense Group by 41 basis points. The Board discussed with management the reasons for this expense disparity. Management explained that the Fund share class used in the Lipper report was a share class with distribution expenses (Rule 12b-1 and administrative services fees) which are not found in most of the Fund’s peers in the Lipper reports either because

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Lipper had selected a share class without a Rule 12b-1 fee, or the actively managed underlying funds had higher fees and distribution expenses may have been paid by the advisers of these other funds from profits. Management noted that, without inclusion of these distribution fees, the Fund’s expenses are only 2 basis points above the median of its Lipper Expense Group. The Board was satisfied with management’s explanation of the expense disparity.

 

As the Fund is a “fund-of-funds” that invests its assets in one or more underlying funds (as well as a Nationwide insurance contract) the Fund bears its proportionate share of the operating expenses (including advisory fees) of each underlying fund in which the Fund invest. Therefore, as shareholders of the Fund, you indirectly bear a proportionate share of these underlying fund expenses. The Board considered whether the Fund’s payment of its proportionate share of the advisory fees of the underlying funds are for advisory services that are “in addition to” those advisory and subadvisory services your Fund receives from its adviser and subadviser, Fund Asset Management (“FAM”). The Board considered management’s reports that there was no layering of fees and noted the additional services management provides to the Fund that are in addition to the advisory services that are provided to the underlying funds. Finally, the Board reviewed the adviser’s profitability in light of all of these factors, and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92  

Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

Table of Contents

 

Gartmore GVIT Investor Destinations Moderately Conservative Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIDMC (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Investor Destinations Moderately Conservative Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period*2
      Annualized
Expense Ratio*2
GVIT Investor Destinations Moderately Conservative Fund                                       

Class II

      Actual    $ 1,000.00      $ 1,018.60      $ 2.80      0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

Class VI

      Actual    $ 1,000.00      $ 1,018.40      $ 2.80      0.56%
       Hypothetical1    $ 1,000.00      $ 1,022.02      $ 2.81      0.56%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

2 Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund prospectus.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Investor Destinations Moderately Conservative Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Mutual Funds      86.8%
Fixed Contract      13.2%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Top Holdings       
Gartmore Bond Index Fund, Institutional Class      35.0%
Gartmore S&P 500 Index Fund, Institutional Class      18.4%
Nationwide Fixed Contract, 3.50%      13.2%
Gartmore Enhanced Income Fund, Institutional Class      11.8%
Gartmore Mid Cap Market Index Fund, Institutional Class      9.1%
Gartmore International Index Fund, Institutional Class      8.7%
GVIT S&P 500 Index Fund, ID Class      1.6%
GVIT International Index Fund, ID Class      1.3%
GVIT Mid Cap Index Fund, ID Class      0.9%
      
       100.0%
      
Asset Allocation Detail       
Fixed Income Funds      46.9%
Equity Funds      39.9%
Fixed Contract      13.2%
      
       100.0%
      

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares    Value
            
MUTUAL FUNDS (86.8%)           
Equity Funds (39.9%)           
GVIT International Index Fund, ID Class (b)   803,042    $ 7,669,049
GVIT Mid Cap Index Fund, ID Class (b)   303,707      5,375,618
GVIT S&P 500 Index Fund, ID Class (b)   1,042,262      9,234,445
Gartmore International Index Fund, Institutional Class (b)   5,054,841      49,891,285
Gartmore Mid Cap Market Index Fund, Institutional
Class (b)		   3,397,442      52,184,716
Gartmore S&P 500 Index Fund, Institutional Class (b)   9,741,143      105,886,220
        
           230,241,333
        
Fixed Income Funds (46.9%)       
Gartmore Bond Index Fund, Institutional Class (b)   19,214,115      202,132,493
Gartmore Enhanced Income Fund, Institutional Class (b)   7,499,626      68,171,603
        
           270,304,096
        
Total Mutual Funds          500,545,429
        
Principal Amount    Value  
FIXED CONTRACT (13.2%)               
Nationwide Fixed Contract, 3.50% (b) (c)   $ 75,957,015    $ 75,957,015  
          
Total Fixed Contract            75,957,015  
          
Total Investments
(Cost $555,662,576) (a) — 100.0%		      576,502,444  
Liabilities in excess of other assets — (0.0%)            (200,943 )
          
NET ASSETS — 100.0%          $ 576,301,501  
          

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Investment in affiliate.

 

(c) The Nationwide Fixed Contract rate changes quarterly. The security is restricted and as the affiliated counterparty is required by contract to redeem within five days upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments in affiliated securities, at value (cost $555,662,576)

    $ 576,502,444

Interest and dividends receivable

      906,811

Receivable for capital shares issued

      7,972,772

Prepaid expenses and other assets

      6,525
    

Total Assets

      585,388,552
    

Liabilities:

       

Payable for investments purchased

      8,870,709

Payable for capital shares redeemed

      1,173

Accrued expenses and other payables:

       

Investment advisory fees

      60,467

Distribution fees

      116,283

Administrative servicing fees

      26,652

Other

      11,767
    

Total Liabilities

      9,087,051
    

Net Assets

    $ 576,301,501
    

Represented by:

       

Capital

    $ 545,439,803

Accumulated net investment income (loss)

      149,482

Accumulated net realized gains (losses) from investment transactions

      9,872,348

Net unrealized appreciation (depreciation) on investments

      20,839,868
    

Net Assets

    $ 576,301,501
    

Net Assets:

       

Class II Shares

    $ 572,207,987

Class VI Shares

      4,093,514
    

Total

    $ 576,301,501
    

Shares outstanding (unlimited number of shares authorized):

       

Class II Shares

      52,848,005

Class VI Shares

      378,812
    

Total

      53,226,817
    

Net asset value and offering price per share:*

       

Class II Shares

    $ 10.83

Class VI Shares

    $ 10.81

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income from affiliates

    $ 1,026,212  

Dividend income from affiliates

      7,275,162  
    

Total Income

      8,301,374  
    

Expenses:

         

Investment advisory fees

      357,319  

Distribution Fees Class II

      681,943  

Distribution Fees Class VI

      5,215  

Administrative servicing fees
Class II Shares

      401,643  

Administrative servicing fees
Class VI Shares

      3,129  

Trustee fees

      11,348  

Other

      81,325  
    

Total expenses before earnings credit

      1,541,922  

Earnings credit (Note 6)

      (2 )
    

Total Expenses

      1,541,920  
    

Net Investment Income (Loss)

      6,759,454  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Realized gains (losses) on investment transactions with affiliates

      10,543,843  

Realized gains distributions from underlying funds

      35,218  
    

Net realized gains (losses) on investment transactions

      10,579,061  

Net change in unrealized appreciation/depreciation on investments

      (7,930,326 )
    

Net realized/unrealized gains (losses) on investments

      2,648,735  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 9,408,189  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 6,759,454      $ 12,773,673  

Net realized gains (losses) on investment transactions

        10,579,061        12,711,017  

Net change in unrealized appreciation/depreciation on investments

        (7,930,326 )      (2,994,473 )
      
  

Change in net assets resulting from operations

        9,408,189        22,490,217  
      
  

Distributions to Class II Shareholders from

                    

Net investment income

        (6,559,517 )      (12,666,533 )

Net realized gains on investments

        (7,615,982 )      (8,952,770 )

Distributions to Class VI Shareholders from:

                    

Net investment income

        (50,455 )      (107,725 )

Net realized gains on investments

        (54,581 )      (59,047 )
      
  

Change in net assets from shareholder distributions

        (14,280,535 )      (21,786,075 )
      
  

Change in net assets from capital transactions

        51,482,830        103,201,873  
      
  

Change in net assets

        46,610,484        103,906,015  

Net Assets:

                    

Beginning of period

        529,691,017        425,785,002  
      
  

End of period

      $ 576,301,501      $ 529,691,017  
      
  

Accumulated net investment income (loss)

      $ 149,482      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class II Shares

                    

Proceeds from shares issued

      $ 83,233,250      $ 137,854,059  

Dividends reinvested

        14,175,495        21,619,257  

Cost of shares redeemed

        (45,773,055 )      (59,772,596 )
      
  
         51,635,690        99,700,720  
      
  

Class VI Shares

                    

Proceeds from shares issued

        1,320,594        8,328,684  

Dividends reinvested

        105,036        166,772  

Cost of shares redeemed

        (1,578,490 )      (4,994,303 )
      
  
         (152,860 )      3,501,153  
      
  

Change in net assets from capital transactions

      $ 51,482,830      $ 103,201,873  
      
  

SHARE TRANSACTIONS:

                    

Class II Shares

                    

Issued

        7,536,173        12,685,140  

Reinvested

        1,314,176        1,990,073  

Redeemed

        (4,152,713 )      (5,480,678 )
      
  
         4,697,636        9,194,535  
      
  

Class VI Shares

                    

Issued

        119,854        767,804  

Reinvested

        9,749        15,333  

Redeemed

        (142,145 )      (457,741 )
      
  
         (12,542 )      325,396  
      
  

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Investor Destinations Moderately Conservative Fund

 

        Investment Activities:
     Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                      

Period Ended December 31, 2001(c)

   $ 10.00   0.03   0.04     0.07     (0.03 )   —     (0.03 )   $ 10.04   0.65% (e)   $ 503   0.61% (f)   4.56% (f)   24.88% (f)   (19.71% )(f)   0.60%

Year Ended December 31, 2002

   $ 10.04   0.18   (0.60 )   (0.42 )   (0.18 )   (0.01 )   (0.19 )   $ 9.43   (4.15% )   $ 95,669   0.56%     2.96%      (g )      (g)   35.19%

Year Ended December 31, 2003

   $ 9.43   0.21   1.07     1.28     (0.21 )   (0.02 )   (0.23 )   $ 10.48   13.70%     $ 258,529   0.56%     2.32%      (g )      (g)   12.61%

Year Ended December 31, 2004(d)

   $ 10.48   0.23   0.50     0.73     (0.23 )   (0.07 )   (0.30 )   $ 10.91   7.16%     $ 425,066   0.56%     2.35%      (g )      (g)   7.18%

Year Ended December 31, 2005

   $ 10.91   0.28   0.20     0.48     (0.28 )   (0.20 )   (0.48 )   $ 10.91   4.49%     $ 525,426   0.56%     2.66%      (g )      (g)   11.32%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.91   0.13   0.07     0.20     (0.13 )   (0.15 )   (0.28 )   $ 10.83   1.86% (e)   $ 572,208   0.56% (f)   2.46% (f)    (g )      (g)   10.27%

Class VI Shares

                                                                                      

Period Ended December 31, 2004(h)

   $ 10.44   0.20   0.49     0.69     (0.20 )   (0.03 )   (0.23 )   $ 10.90   6.67% (e)   $ 719   0.41% (f)   3.37% (f)    (g )      (g)   7.18%

Year Ended December 31, 2005

   $ 10.90   0.30   0.20     0.50     (0.30 )   (0.20 )   (0.50 )   $ 10.90   4.65%     $ 4,265   0.48%     2.65%      (g )      (g)   11.32%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.90   0.14   0.06     0.20     (0.14 )   (0.15 )   (0.29 )   $ 10.81   1.84% (e)   $ 4,094   0.56% (f)   2.44% (f)    (g )      (g)   10.27%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from December 12, 2001 (commencement of operations) through December 31, 2001.

 

(d) On April 30, 2004, the existing share Class of the Fund was renamed Class II Shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

(h) For the period from April 30, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Investor Destinations Moderately Conservative Fund (the “Fund”).

 

The Fund is constructed as a “fund of funds,” which means that the Fund pursues its investment objective by allocating the Fund’s investments primarily among other affiliated mutual funds (the “Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities including the Nationwide Contract. The Nationwide Contract is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (“Nationwide”). This contract has a stable principal value and will pay the Fund a fixed rate of interest. The fixed interest rate must be at least 3.50% (on an annual basis), but may be higher and is currently adjusted on a quarterly basis. Nationwide will calculate the interest rate in the same way that it calculates guaranteed interest rates for similar contracts. Because the contract is guaranteed by Nationwide, assuming no default, the Fund receives no more or less than the guaranteed amount and will not directly participate in the actual experience of the assets underlying the contract. Although under certain market conditions the Fund’s performance may be hurt by its investment in the Nationwide Contract, the portfolio management team believes that the relatively stable nature of the Nationwide Contract should reduce the Fund’s volatility and overall risk, especially when the bond and stock markets decline simultaneously. The Fund’s target allocation range is 10-20%.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Shares of the Underlying Funds in which the Trust’s Fund invests are valued at their respective net asset values as reported by the Underlying Funds. The securities in the Underlying Funds generally are valued as of the close of business of the regular session of trading on the New York Stock Exchange (usually at 4 p.m. Eastern time). The Underlying Funds generally value securities and assets at current market value. Under most circumstances, the fixed interest contract is valued at par value each day, which is deemed to be fair value. The par value is calculated each day by the summation of the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

following factors: prior day’s par value; prior day’s interest accrued (par multiplied by guaranteed fixed rate); and current day net purchase or redemption.

 

The following policies, (b) through (i), represent the accounting policies applicable to the Underlying Funds.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
    

Net Unrealized

Appreciation

(Depreciation)*

$556,957,990   $ 30,172,296   $ (10,627,842 )   $ 19,544,454

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.13% based on the Fund’s average daily net assets.

 

Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Funds for expenses associated with the distribution of the shares of the Funds. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of each class of shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $412,502 in Administrative Services Fees from the Fund.

 

Because the Fund invests primarily in other affiliated funds, the Fund is a shareholder of those Underlying Funds. The Underlying Funds and the Nationwide Contract do not charge the Fund any sales charge for buying or selling shares. However, the Fund indirectly pays a portion of the operating expenses, including management fees of the Underlying Funds and short-term investments the Fund holds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how the Fund’s assets are spread among the underlying investments.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had no contributions to capital due to collection of redemption fees.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $84,144,386 and sales of $49,798,686.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its composite benchmark by 161 basis points over the one-year period ended September 5, 2005 and by 79 basis points over the trailing three-year period. The Board considered that the Fund ranked in the second quartile of the Lipper Income Funds category for the one-year period, and beat the category median by 27 basis points, The Board also considered that the Fund ranked in the third quartile and underperformed its category median by 230 basis points over the three-year period.

 

Next, the Board reviewed the Fund’s contractual advisory fee and considered the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed expense group. Moreover, the Board considered that the Fund’s total expenses were above the median of the Fund’s lipper Expense Group by 24 basis points. The Board discussed with management the reasons for this expense disparity. Management explained that the Fund share class used in the Lipper report was a share class with distribution expenses (Rule 12b-1 and administrative services fees) which are not found in most of the Fund’s peers in the Lipper reports either because Lipper had selected a share class without a Rule 12b-1 fee, or the actively

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

managed underlying funds had higher fees and distribution expenses may have been paid by the advisers of these other funds from profits. Without these fees, the Fund’s expenses are at the median of the Lipper Expense group. The Board was satisfied with management’s explanation of the expense disparity.

 

As the Fund is a “fund-of-funds” that invests its assets in one or more underlying funds (as well as a Nationwide insurance contract) the Fund bears its proportionate share of the operating expenses (including advisory fees) of each underlying fund in which the Fund invest. Therefore, as shareholders of the Fund, you indirectly bear a proportionate share of these underlying fund expenses. The Board considered whether the Fund’s payment of its proportionate share of the advisory fees of the underlying funds are for advisory services that are “in addition to” those advisory and subadvisory services your Fund receives from its adviser and subadviser, Fund Asset Management (“FAM”). The Board considered management’s reports that there was no layering of fees and noted the additional services management provides to the Fund that are in addition to the advisory services that are provided to the underlying funds. Finally, the Board reviewed the adviser’s profitability in light of all of these factors and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

14

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

16

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

Table of Contents

 

Gartmore GVIT Investor Destinations Conservative Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
6    Financial Highlights
7    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIDC (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Investor Destinations Conservative Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

           Beginning
Account Value,
January 1, 2006
    Ending
Account Value,
June 30, 2006
    Expenses
Paid
During Period*2
    Annualized
Expense Ratio*2
GVIT Investor Destinations Conservative Fund                                

Class II

      Actual   $ 1,000.00    $ 1,012.30    $ 2.79    0.56%
       Hypothetical1   $ 1,000.00    $ 1,022.02    $ 2.81    0.56%

Class VI

      Actual   $ 1,000.00    $ 1,012.00    $ 2.79    0.56%
       Hypothetical1   $ 1,000.00    $ 1,022.02    $ 2.81    0.56%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

2 Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund prospectus.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Investor Destinations Conservative Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation
Mutual Funds      85.1%
Fixed Contract      14.9%
Liabilities in excess of other assets      0.0%
      
       100.0%
      

 

 

Top Holdings
Gartmore Bond Index Fund, Institutional Class      40.1%
Gartmore Enhanced Income Fund, Institutional Class      20.1%
Nationwide Fixed Contract, 3.50%      14.9%
Gartmore S&P 500 Index Fund, Institutional Class      8.9%
Gartmore GVIT Money Market Fund, ID Class      5.0%
Gartmore Mid Cap Market Index Fund, Institutional Class      4.4%
Gartmore International Index Fund, Institutional Class      2.5%
GVIT International Index Fund, ID Class      2.5%
GVIT S&P 500 Index Fund, ID Class      1.0%
GVIT Mid Cap Index Fund, ID Class      0.6%
      
       100.0%
      

 

Asset Allocation Detail
Fixed Income Funds      60.1%
Equity Funds      20.0%
Money Market Fund      5.0%
Fixed Contract      14.9%
      
       100.0%
      

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS CONSERVATIVE FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares    Value
MUTUAL FUNDS (85.1%)           
Equity Funds (20.0%)           
GVIT International Index Fund, ID Class (b)   803,042    $ 7,669,049
GVIT Mid Cap Index Fund, ID Class (b)   107,380      1,900,620
GVIT S&P 500 Index Fund, ID Class (b)   360,657      3,195,425
Gartmore International Index Fund, Institutional Class (b)   784,487      7,742,882
Gartmore Mid Cap Market Index Fund, Institutional Class (b)   879,643      13,511,311
Gartmore S&P 500 Index Fund, Institutional Class (b)   2,541,714      27,628,436
        
           61,647,723
        
Fixed Income Funds (60.1%)       
Gartmore Bond Index Fund, Institutional Class (b)   11,755,448      123,667,315
Gartmore Enhanced Income Fund, Institutional Class (b)   6,837,668      62,154,402
        
           185,821,717
        
Money Market Funds (5.0%)       
Gartmore GVIT Money Market Fund, ID Class (b)   15,470,722      15,470,722
        
           15,470,722
        
Total Mutual Funds          262,940,162
        
Principal Amount    Value  
FIXED CONTRACT (14.9%)               
Nationwide Fixed Contract, 3.50% (b) (c)   $ 45,930,320    $ 45,930,320  
          
Total Fixed Contract            45,930,320  
          
Total Investments
(Cost $309,572,843) (a) — 100.0%		      308,870,482  
Liabilities in excess of other assets — (0.0%)            (127,801 )
          
NET ASSETS — 100.0%          $ 308,742,681  
          

 

 

(a) See notes to financial statements for unrealized appreciation (depreciation) of securities.

 

(b) Investment in affiliate.

 

(c) The Nationwide Fixed Contract rate changes quarterly. The security is restricted and as the affiliated counterparty is required by contract to redeem within five days upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT INVESTOR DESTINATIONS CONSERVATIVE FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments in affiliated securities, at value (cost $309,572,843)

    $ 308,870,482  

Interest and dividends receivable

      636,523  

Receivable for capital shares issued

      310,498  

Receivable for investments sold

      17,355,596  

Prepaid expenses and other assets

      4,386  
    

Total Assets

      327,177,485  
    

Liabilities:

         

Payable for investments purchased

      631,867  

Payable for capital shares redeemed

      17,666,094  

Accrued expenses and other payables:

         

Investment advisory fees

      33,681  

Distribution fees

      64,772  

Administrative servicing fees

      22,256  

Other

      16,134  
    

Total Liabilities

      18,434,804  
    

Net Assets

    $ 308,742,681  
    

Represented by:

         

Capital

    $ 306,237,874  

Accumulated net investment income (loss)

      120,513  

Accumulated net realized gains (losses) from investment transactions

      3,086,655  

Net unrealized appreciation (depreciation) on investments

      (702,361 )
    

Net Assets

    $ 308,742,681  
    

Net Assets:

         

Class II Shares

    $ 302,914,066  

Class VI Shares

      5,828,615  
    

Total

    $ 308,742,681  
    

Shares outstanding (unlimited number of shares authorized):

         

Class II Shares

      29,813,335  

Class VI Shares

      574,852  
    

Total

      30,388,187  
    

Net asset value and offering price per share:*

         

Class II Shares

    $ 10.16  

Class VI Shares

    $ 10.14  

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income from affiliates

    $ 894,533  

Dividend income from affiliates

      4,198,737  
    

Total Income

      5,093,270  
    

Expenses:

         

Investment advisory fees

      194,646  

Distribution Fees Class II

      368,261  

Distribution Fees Class VI

      6,063  

Administrative servicing fees
Class II Shares

      218,923  

Administrative servicing fees
Class VI Shares

      3,628  

Trustee fees

      5,035  

Other

      39,608  
    

Total expenses before earnings credit

      836,164  

Earnings credit (Note 6)

      (1 )
    

Total Expenses

      836,163  
    

Net Investment Income (Loss)

      4,257,107  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Realized gains (losses) on investment transactions with affiliates

      4,310,708  

Realized gains distributions from underlying funds

      17,864  
    

Net realized gains (losses) on investment transactions

      4,328,572  

Net change in unrealized appreciation/depreciation on investments

      (4,715,681 )
    

Net realized/unrealized gains (losses) on investments

      (387,109 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 3,869,998  
    

 

See notes to financial statements.

 

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GARTMORE GVIT INVESTOR DESTINATIONS CONSERVATIVE FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 4,257,107      $ 7,755,784  

Net realized gains (losses) on investment transactions

        4,328,572        6,580,232  

Net change in unrealized appreciation/depreciation on investments

        (4,715,681 )      (5,118,290 )
      
  

Change in net assets resulting from operations

        3,869,998        9,217,726  
      
  

Distributions to Class II Shareholders from

                    

Net investment income

        (4,067,505 )      (7,651,860 )

Net realized gains on investments

        (3,126,505 )      (6,036,605 )

Distributions to Class VI Shareholders from:

                    

Net investment income

        (69,891 )      (103,122 )

Net realized gains on investments

        (56,609 )      (80,678 )
      
  

Change in net assets from shareholder distributions

        (7,320,510 )      (13,872,265 )
      
  

Change in net assets from capital transactions

        27,217,232        31,898,976  
      
  

Change in net assets

        23,766,720        27,244,437  

Net Assets:

                    

Beginning of period

        284,975,961        257,731,524  
      
  

End of period

      $ 308,742,681      $ 284,975,961  
      
  

Accumulated net investment income (loss)

      $ 120,513      $ 802  
      
  

CAPITAL TRANSACTIONS:

                    

Class II Shares

                    

Proceeds from shares issued

      $ 76,768,468      $ 106,708,885  

Dividends reinvested

        7,193,980        13,688,459  

Cost of shares redeemed

        (58,007,271 )      (91,750,457 )
      
  
         25,955,177        28,646,887  
      
  

Class VI Shares

                    

Proceeds from shares issued

        3,119,850        4,776,266  

Dividends reinvested

        126,499        183,800  

Cost of shares redeemed

        (1,984,294 )      (1,707,977 )
      
  
         1,262,055        3,252,089  
      
  

Change in net assets from capital transactions

      $ 27,217,232      $ 31,898,976  
      
  

SHARE TRANSACTIONS:

                    

Class II Shares

                    

Issued

        7,442,136        10,236,570  

Reinvested

        708,325        1,325,239  

Redeemed

        (5,631,835 )      (8,785,180 )
      
  
         2,518,626        2,776,629  
      
  

Class VI Shares

                    

Issued

        301,713        460,054  

Reinvested

        12,492        17,817  

Redeemed

        (192,183 )      (164,264 )
      
  
         122,022        313,607  
      
  

 

See notes to financial statements.

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Investor Destinations Conservative Fund

 

        Investment Activities:
   Distributions
               Ratios/Supplemental Data:
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		   Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                    

Period Ended December 31, 2001(c)

   $ 10.00   0.02   0.01     0.03   (0.02 )   —     (0.02 )   $ 10.01   0.34% (e)   $ 502   0.61% (f)   4.39% (f)   24.89% (f)   (19.89% )(f)   0.40%

Year Ended December 31, 2002

   $ 10.01   0.21   (0.18 )   0.03   (0.21 )   —     (0.21 )   $ 9.83   0.40%     $ 90,358   0.56%     3.30%     (g )   (g )   28.70%

Year Ended December 31, 2003

   $ 9.83   0.24   0.53     0.77   (0.24 )   (0.04 )   (0.28 )   $ 10.32   7.91%     $ 90,624   0.56%     2.55%     (g )   (g )   24.84%

Year Ended December 31, 2004(d)

   $ 10.32   0.24   0.23     0.47   (0.24 )   (0.10 )   (0.34 )   $ 10.45   4.65%     $ 256,277   0.56%     2.39%     (g )   (g )   15.34%

Year Ended December 31, 2005

   $ 10.45   0.29   0.05     0.34   (0.29 )   (0.23 )   (0.52 )   $ 10.27   3.31%     $ 280,331   0.57%     2.79%     (g )   (g )   30.49%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.27   0.13   (0.01 )   0.12   (0.13 )   (0.10 )   (0.23 )   $ 10.16   1.23% (e)   $ 302,914   0.56% (f)   2.84% (f)   (g )   (g )   27.61%

Class VI Shares

                                                                                    

Period Ended December 31, 2004(h)

   $ 10.26   0.21   0.25     0.46   (0.21 )   (0.06 )   (0.27 )   $ 10.45   4.48% (e)   $ 1,454   0.41% (f)   3.00% (f)   (g )   (g )   15.34%

Year Ended December 31, 2005

   $ 10.45   0.31   0.04     0.35   (0.31 )   (0.23 )   (0.54 )   $ 10.26   3.39%     $ 4,645   0.47%     2.95%     (g )   (g )   30.49%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.26   0.14   (0.02 )   0.12   (0.14 )   (0.10 )   (0.24 )   $ 10.14   1.20% (e)   $ 5,829   0.56% (f)   2.82% (f)   (g )   (g )   27.61%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from December 12, 2001 (commencement of operations) through December 31, 2001.

 

(d) On April 30, 2004, the existing share Class of the Fund was renamed Class II Shares.

 

(e) Not annualized.

 

(f) Annualized.

 

(g) There were no fee reductions during the period.

 

(h) For the period from April 30, 2004 (commencement of operations) through December 31, 2004.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Investor Destinations Conservative Fund (the “Fund”).

 

The Fund is constructed as a “fund of funds,” which means that the Fund pursues its investment objective by allocating the Fund’s investments primarily among other affiliated mutual funds (the “Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities including the Nationwide Contract. The Nationwide Contract is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (“Nationwide”). This contract has a stable principal value and will pay the Fund a fixed rate of interest. The fixed interest rate must be at least 3.50% (on an annual basis), but may be higher and is currently adjusted on a quarterly basis. Nationwide will calculate the interest rate in the same way that it calculates guaranteed interest rates for similar contracts. Because the contract is guaranteed by Nationwide, assuming no default, the Fund receives no more or less than the guaranteed amount and will not directly participate in the actual experience of the assets underlying the contract. Although under certain market conditions the Fund’s performance may be hurt by its investment in the Nationwide Contract, the portfolio management team believes that the relatively stable nature of the Nationwide Contract should reduce the Fund’s volatility and overall risk, especially when the bond and stock markets decline simultaneously. The Fund’s target allocation range is 20-30%.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Shares of the Underlying Funds in which the Trust’s Fund invests are valued at their respective net asset values as reported by the Underlying Funds. The securities in the Underlying Funds generally are valued as of the close of business of the regular session of trading on the New York Stock Exchange (usually at 4 p.m. Eastern time). The Underlying Funds generally value securities and assets at current market value. Under most circumstances, the fixed interest contract is valued at par value each day, which is deemed to be fair value. The par value is calculated each day by the summation of the

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

following factors: prior day’s par value; prior day’s interest accrued (par multiplied by guaranteed fixed rate); and current day net purchase or redemption.

 

The following policies, (b) through (i), represent the accounting policies applicable to the Underlying Funds.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Mortgage Dollar Rolls

 

The Fund may enter into mortgage “dollar rolls” in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon, and maturity) securities on a specified future date. Mortgage dollar rolls may be implemented in the “to be” announced (“TBA”) market and are referred to as TBA’s on the Statement of Investments of the Fund. During the roll period, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by fee income or the difference between the current sales price and the lower forward price for the future purchase. Mortgage dollar rolls are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Board of Trustees.

 

(i) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(j) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
  

Net Unrealized

Appreciation

(Depreciation)*

$311,877,935   $3,751,668   $(6,759,121)   $(3,007,453)

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GMF an investment advisory fee of 0.13% based on the Fund’s average daily net assets.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Funds for expenses associated with the distribution of the shares of the Funds. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of each class of shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $224,709 in Administrative Services Fees from the Fund.

 

Because the Fund invests primarily in other affiliated funds, the Fund is a shareholder of those Underlying Funds. The Underlying Funds and the Nationwide Contract do not charge the Fund any sales charge for buying or selling shares. However, the Fund indirectly pays a portion of the operating expenses, including management fees of the Underlying Funds and short-term investments the Fund holds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how the Fund’s assets are spread among the underlying investments.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $1,602.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $101,951,811 and sales of $66,701,491.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of each Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering each Funds’ investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about each Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreements (and, where applicable, the sub-advisory agreements) for the Funds, the Board considered among others, the following specific factors with respect to each Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew each Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its composite benchmark for the one- and three-year periods ended September 30, 2005. The Board also considered that the Fund ranked in the fourth quartile of the Lipper Income Funds category for the one- and three-year periods. The Board discussed with management the comparability of the Fund to others in its peer group since some of the funds in the peer group are actively-managed products.

 

Next, the Board reviewed the contractual advisory fee and noted that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group. Moreover the Fund’s total expenses placed it above the median of the Lipper Expense Group by 29 basis points. The Board discussed with management the reasons for this expense disparity. Management explained that the Fund share class used in the Lipper report was a share class with distribution expenses (Rule 12b-1 and administrative services fees) which are not found in most of the Fund’s peers in the Lipper reports either because Lipper had selected a share class without a Rule 12b-1 fee, or the actively managed underlying funds had higher fees and distribution expenses may have been paid by the advisers of these other funds from profits. Without these fees, the Fund’s expenses are at the median of the Lipper Expense group. The Board was satisfied with management’s explanation of the expense disparity.

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

As the Fund is a “fund-of-funds” that invests its assets in one or more underlying funds (as well as a Nationwide insurance contract) the Fund bears its proportionate share of the operating expenses (including advisory fees) of each underlying fund in which the Fund invest. Therefore, as shareholders of the Fund, you indirectly bear a proportionate share of these underlying fund expenses. The Board considered whether the Fund’s payment of its proportionate share of the advisory fees of the underlying funds are for advisory services that are “in addition to” those advisory and subadvisory services your Fund receives from its adviser and subadviser, Fund Asset Management (“FAM”). The Board considered management’s reports that there was no layering of fees and noted the additional services management provides to the Fund that are in addition to the advisory services that are provided to the underlying funds. Finally, the Board reviewed the adviser’s profitability in light of all of these factors and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 1, 2000 through December 2003.   92  

Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

15

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

16

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

17

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

18

Table of Contents

 

Gartmore GVIT Developing Markets Fund

SemiannualReport

 

LOGO 

[LOGO]

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
7    Statement of Assets and Liabilities
7    Statement of Operations
8    Statements of Changes in Net Assets
9    Financial Highlights
10    Notes to Financial Statements

 

Commentary provided by Gartmore Global Investments, investment adviser to Gartmore Variable Insurance Trust. All opinions and estimates included in this report constitute Gartmore Global Investments’ judgment as of the date of this report and are subject to change without notice.

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GDM (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Developing Markets Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

           

Beginning

Account Value,

January 1, 2006

     

Ending

Account Value,

June 30,
2006

     

Expenses

Paid

During Period*

     

Annualized

Expense Ratio*

Developing Markets Fund                                       

Class II

      Actual    $ 1,000.00      $ 1,062.10      $ 8.28      1.62%
       Hypothetical1    $ 1,000.00      $ 1,016.77      $ 8.13      1.62%

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Developing Markets Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

 

Asset Allocation       
Common Stocks      91.3%
Participation Notes      5.4%
Cash Equivalents      2.7%
Foreign Bond      0.0%
Other assets in excess of liabilities      0.6%
      
       100.0%
      

 

 

Top Holdings*       
Samsung Electronics      3.6%
Hana Financial Group, Inc.      2.8%
Gazprom ADR      2.6%
Companhia Vale do Rio Doce, Class A      2.4%
Petroleo Brasileiro SA ADR      2.2%
Bharti Airtel Ltd.      1.9%
Lojas Renner SA      1.8%
America Movil SA de CV ADR      1.8%
Absa Group Ltd.      1.6%
Investcom LLC GDR      1.6%
Other Assets      77.7%
      
       100.0%
      

 

Top Industries       
Oil & Gas      14.2%
Banking      12.2%
Telecommunications      7.9%
Electronics      7.7%
Retail      5.5%
Financial Services      5.4%
Steel      4.8%
Metals & Mining      3.7%
Mining      2.7%
Building Products      2.5%
Other Assets      33.4%
      
       100.0%
      

 

Top Countries       
Korea      16.5%
Brazil      14.7%
Taiwan      12.3%
South Africa      8.5%
Russia      7.5%
Mexico      6.2%
Hong Kong      5.5%
China      4.3%
Malaysia      2.9%
Thailand      2.4%
Other Assets      19.2%
      
       100.0%
      
* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (91.3%)       
ARGENTINA (1.5%)           
Steel (1.5%)           
Ternium SA-Sponsored ADR (b)   174,500    $ 4,217,665
        
BERMUDA (1.5%)           
Television (1.5%)           
Central European Media Enterprises Ltd. (b)   69,800      4,410,662
        
BRAZIL (14.7%)           
Banking (1.9%)           
Banco Bradesco SA   85,600      2,670,748
Unibanco GDR   43,400      2,881,326
        
           5,552,074
        
Brewery (1.0%)           
Ambev Cia Bebid PREF   7,217,300      2,977,753
Cia De Bebidas PREF   3,304      0
        
           2,977,753
        
Insurance (0.8%)           
Porto Seguro SA   133,400      2,280,447
        
Metals & Mining (2.4%)       
Companhia Vale do Rio Doce, Class A   338,834      6,903,798
        
Oil & Gas (3.7%)           
Petroleo Brasileiro SA   186,800      4,159,933
Petroleo Brasileiro SA ADR   71,434      6,379,770
        
           10,539,703
        
Residential (1.0%)           
Rossi Residencial SA   309,000      2,926,677
        
Retail (1.8%)           
Lojas Renner SA   99,600      5,291,998
        
Steel (1.4%)           
Usinas Siderurgicas de Minais Gerais SA   110,100      3,949,947
        
Telecommunications (0.7%)       
Tele Norte Leste Participacoes SA ADR   148,400      1,892,100
        
           42,314,497
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
CHINA (4.3%)           
Building Products (1.0%)       
Anhui Conch Cement Co., Ltd. (c)   1,842,000    $ 3,011,483
        
Oil & Gas (2.2%)           
CNOOC Ltd . (c)   3,500,000      2,811,531
PetroChina Co., Ltd. (c)   3,004,000      3,242,259
        
           6,053,790
        
Shipping (1.1%)           
Cosco Pacific Ltd. (c)   1,490,000      3,299,986
        
           12,365,259
        
HONG KONG (5.5%)           
Auto Parts & Equipment (1.1%)       
Dongfeng Motor Corp. (b) (c)   6,952,000      3,255,878
        
Diversified Operations (1.3%)       
China Resources Enterprise Ltd. (c)   1,886,000      3,854,719
        
Insurance (0.8%)       
China Life Insurance Co., Ltd. (c)   1,500,000      2,376,229
        
Oil & Gas (1.3%)       
China Petroleum & Chemical Corp. (c)   6,726,000      3,856,649
        
Telecommunications (1.0%)       
China Mobile (Hong Kong) Ltd. (c)   524,000      2,996,657
        
           16,340,132
        
HUNGARY (0.5%)       
Oil & Gas (0.5%)       
MOL Magyar Olaj-es Gazipari Rt. (c)   13,300      1,368,234
        
INDIA (0.2%)       
Beverages (0.2%)       
McDowell & Co., Ltd. GDR (b)   95,700      444,048
        
INDONESIA (1.4%)       
Banking (1.4%)       
PT Bank Internasional Indonesia TBK (c)   198,145,300      3,962,408
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
ISRAEL (1.1%)       
Banking (1.1%)       
Bank Leumi Le-Israel (c)   849,400    $ 3,093,315
        
KAZAKHSTAN (0.7%)       
Mining (0.7%)       
Kazakhgold Group Ltd. GDR (b)   97,100      1,956,565
        
KOREA (16.5%)       
Banking (2.5%)       
Industrial Bank of Korea (c)   198,000      3,331,100
Kookmin Bank ADR   47,900      3,978,574
        
           7,309,674
        
Construction (1.2%)       
Hanjin Heavy Industries & Construction Co., Ltd. (c)   33,500      897,441
Hyundai Development Co. (c)   59,600      2,577,116
        
           3,474,557
        
Electronics (3.8%)       
KH Vatec Co., Ltd. (b) (c)   52,088      860,711
Samsung Electronics (c)   16,090      10,216,220
Samsung Electronics Co., Ltd. GDR   2      486
        
           11,077,417
        
Financial Services (2.7%)       
Hana Financial Group, Inc. (c)   169,391      7,948,920
        
Investment Company (0.6%)       
Macquarie Korea Infrastructure GDR (b)   235,200      1,656,325
        
Lighting Products (1.0%)       
Kumho Electric, Inc. (c)   62,506      2,819,002
        
Metals (0.9%)       
Korea Zinc Co., Ltd. (c)   32,500      2,548,529
        
Oil & Gas (1.5%)       
SK Corp. (c)   66,490      4,277,013
        
Retail (1.2%)       
Lotte Shopping Co., Ltd. (b)   182,951      3,509,000
        
Tobacco (1.1%)       
KT&G Corp. (c)   54,421      3,178,240
        
           47,798,677
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
LEBANON (1.6%)           
Telecommunications (1.6%)       
Investcom LLC GDR (b)   242,500    $ 4,651,150
        
MALAYSIA (2.9%)       
Agriculture (1.4%)       
IOI Corporation Berhad (c)   1,013,500      3,949,225
        
Foreign Banking (1.5%)       
Bumiputra Commerce Holdings Bhd (c)   2,668,500      4,317,214
        
           8,266,439
        
MEXICO (6.2%)       
Building Materials (1.4%)       
Cemex SA ADR   70,400      4,010,688
        
Financial Services (1.3%)       
Grupo Financiero Banorte SA de CV   1,576,634      3,658,342
        
Retail (1.1%)       
Wal-Mart de Mexico SA de CV   1,148,500      3,212,091
        
Steel (0.6%)       
Industrias CH SA (b)   644,400      1,637,366
        
Telecommunications (1.8%)       
America Movil SA de CV ADR   155,400      5,168,604
        
           17,687,091
        
PERU (1.3%)       
Metals & Mining (1.3%)       
Compania de Minas Buenaventura S.A.U. ADR   132,100      3,603,688
        
RUSSIA (7.5%)       
Automobile Manufacturers (0.9%)       
JSC Severstal-Avto (c)   132,080      2,524,398
        
Oil & Gas (2.6%)       
Gazprom ADR (c)   177,400      7,459,670
        
Retail (0.8%)       
Pyaterochka Holding NV GDR (b)   133,986      2,224,168
        
Steel (1.3%)       
Mechel Steel Group OAO ADR   171,100      3,830,929
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
RUSSIA (continued)       
Telecommunications (0.7%)       
Mobile Telesystems ADR   72,000    $ 2,119,680
        
Utilities (1.2%)       
RAO Unified Energy System GDR   47,800      3,341,220
        
           21,500,065
        
SOUTH AFRICA (8.5%)       
Banking (1.7%)       
Absa Group Ltd. (c)   337,198      4,706,725
        
Brewery (1.0%)       
SABMiller PLC (c)   159,100      2,863,884
        
Diversified Operations (1.0%)       
Barloworld Ltd. (c)   178,564      3,016,016
        
Mining (1.2%)       
Harmony Gold Mining Co., Ltd. (b) (c)   204,620      3,310,105
        
Oil & Gas (1.5%)       
Sasol Ltd. (c)   111,900      4,305,502
        
Retail (0.6%)       
Truworths International Ltd. (c)   573,400      1,722,228
        
Telecommunications (1.5%)       
MTN Group Ltd. (c)   604,163      4,452,685
        
           24,377,145
        
TAIWAN (12.3%)       
Banking (0.7%)       
TA Chong Bank Ltd. (b)(c)   7,381,972      2,010,097
        
Building Products (1.5%)       
Taiwan Cement Corp. (c)   5,906,950      4,350,384
        
Chemicals (0.9%)       
Taiwan Fertilizer Co., Ltd. (c)   1,521,000      2,530,714
        
Circuit Boards (0.8%)       
Unimicron Technology Corp. (c)   1,700,000      2,215,078
        
Computers (1.4%)       
Asustek Computer, Inc. (c)   1,240,000      3,046,105
Hon Hai Precision Industry Co., Ltd. (c)   160,000      989,277
        
           4,035,382
        
Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
TAIWAN (continued)       
Electronics (3.9%)       
Au Optronics Corp. (c)     2,206,830    $ 3,129,398
Delta Electronics, Inc. (c)     1,525,000      4,330,877
MediaTek, Inc. (c)     411,000      3,809,764
          
             11,270,039
          
Financial Services (1.4%)       
Shin Kong Financial Holding Co., Ltd. (c)     3,573,000      3,935,692
          
Semiconductors (1.1%)       
Vanguard International Semiconductor Corp. (c)     4,877,000      3,287,964
          
Telecommunications (0.6%)       
Inventec Appliance Corp. (b) (c)     424,000      1,609,304
          
             35,244,654
          
THAILAND (2.4%)       
Banking (0.7%)       
Phatra Securities Public Co., Ltd. (c)     1,638,200      1,883,040
          
Mining (0.8%)       
Banpu Public Co. Ltd.     713,300      2,418,252
          
Oil & Gas (0.9%)       
Thai Oil Public Co., Ltd.     1,517,000      2,539,097
          
             6,840,389
          
TURKEY (0.7%)       
Banking (0.7%)       
Denizbank AS (b) (c)     29,270      258,369
Turkiye Vakiflar Bankasi     453,643      1,777,868
          
             2,036,237
          
Total Common Stocks            262,478,320
          
FOREIGN BOND (0.0%)       
BRAZIL (0.0%)       
Metals & Mining (0.0%)       
Comp Vale DO Rio Doce, 0.00%, 09/29/49 (d)   $ 20,000      0
          
Total Foreign Bond            0
          

 

5

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
              
PARTICIPATION NOTES (5.4%)       
INDIA (5.4%)       
Automotive (0.9%)       
Tata Motors Ltd.   $ 145,200    $ 2,507,604
          
Banking (0.2%)       
ICICI Bank Ltd.     61,749      654,539
          
Building Materials (1.3%)       
India Cements Ltd. (b)     1,078,318      3,677,065
          
Petrochemicals (1.1%)             
Reliance Industries Ltd.     136,366      3,140,509
          
Telecommunication Services (1.9%)       
Bharti Airtel Ltd. (b) (c)     676,600      5,438,979
          
Total Participation Notes      15,418,696
          
Shares or
Principal Amount		    Value
              
CASH EQUIVALENTS (2.7%)       
Investments in repurchase agreements (collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $7,803,148)   $ 7,799,833    $ 7,799,833
          
Total Cash Equivalents      7,799,833
          
Total Investments
(Cost $277,353,060) (a) — 99.4%		      285,696,849
Other assets in excess of
liabilities — 0.6%		      1,693,913
          
NET ASSETS — 100.0%    $ 287,390,762
          

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair Valued Security.

 

(d) Security has been deemed illiquid. The pricing committee has deemed the security to have zero value based upon procedures adopted by the Board of Trustees.

 

ADR American Depositary Receipt

 

GDR Global Depositary Receipt

 

PREF Preferred Stock

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation
(Depreciation)		  
Short Contracts:                                    

Turkish Lira

      07/03/06      $ (468,684 )    $ (465,448 )    $ 3,236  

South African Rand

      07/03/06        (272,985 )      (276,627 )      (3,642 )

South African Rand

      07/05/06        (309,085 )      (316,224 )      (7,141 )

South African Rand

      07/06/06        (544,644 )      (555,750 )      (11,107 )

South African Rand

      07/06/06        (476,407 )      (476,067 )      340  
Total Short Contracts:             $ (2,071,605 )    $ (2,090,117 )    $ (18,314 )
Long Contract:                                    

Hong Kong Dollar

      07/03/06      $ 1,059,352      $ 1,059,832      $ 480  

Hong Kong Dollar

      07/03/06        1,291,247        1,291,633        386  
Total Long Contracts:             $ 2,350,599      $ 2,351,465      $ 866  

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $269,553,227)

    $ 277,897,016

Repurchase agreements, at cost and value

      7,799,833
    

Total Investments

      285,696,849
    

Cash

      91,115

Foreign currencies, at value (cost $1,599,859)

      1,609,682

Interest and dividends receivable

      730,351

Receivable for capital shares issued

      375,285

Receivable for investments sold

      6,191,044

Reclaims receivable

      3,677

Prepaid expenses and other assets

      171,629
    

Total Assets

      294,869,632
    

Liabilities:

       

Payable for capital shares redeemed

      2,254

Payable for investments purchased

      5,812,692

Unrealized depreciation on forward foreign currency contracts

      17,448

Accrued expenses and other payables:

       

Investment advisory fees

      987,023

Fund administration and transfer agent fees

      24,325

Distribution fees

      61,285

Administrative servicing fees

      554,653

Other

      19,190
    

Total Liabilities

      7,478,870
    

Net Assets

    $ 287,390,762
    

Represented by:

       

Capital

    $ 236,226,085

Accumulated net investment income (loss)

      584,377

Accumulated net realized gains (losses) from investment and foreign currency transactions

      42,217,002

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      8,363,298
    

Net Assets

    $ 287,390,762
    

Net Assets:

       

Class II Shares

    $ 287,390,762
    

Shares outstanding (unlimited number of shares authorized):

       

Class II Shares

      23,168,917
    

Net asset value and offering price per share:*

       

Class II Shares

    $ 12.40

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 199,669  

Dividend income (net of foreign withholding tax of $313,452)

      4,768,761  
    

Total Income

      4,968,430  
    

Expenses:

         

Investment advisory fees

      1,930,185  

Fund administration and transfer agent fees

      133,839  

Distribution fees Class II Shares

      459,566  

Administrative servicing fees
Class II Shares

      414,710  

Trustee fees

      6,608  

Other

      52,890  
    

Total expenses before earnings credit

      2,997,798  

Earnings credit (Note 6)

      (13 )
    

Total Expenses

      2,997,785  
    

Net Investment Income (Loss)

      1,970,645  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      56,427,499  

Net realized gains (losses) on foreign currency transactions

      (235,360 )
    

Net realized gains (losses) on investment and foreign currency transactions

      56,192,139  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (44,268,729 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      11,923,410  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 13,894,055  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT DEVELOPING MARKETS FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 1,970,645      $ 1,111,404  

Net realized gains (losses) on investment and foreign currency transactions

        56,192,139        30,881,690  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (44,268,729 )      27,644,222  
      
  

Change in net assets resulting from operations

        13,894,055        59,637,316  
      
  

Distributions to Class II shareholders from:

                    

Net investment income

        (1,351,035 )      (1,197,279 )

Net realized gains on investments

        (27,353,923 )      (29,349,917 )
      
  

Change in net assets from shareholder distributions

        (28,704,958 )      (30,547,196 )
      
  

Change in net assets from capital transactions

        (10,849,938 )      89,063,147  
      
  

Change in net assets

        (25,660,841 )      118,153,267  

Net Assets:

                    

Beginning of period

        313,051,603        194,898,336  
      
  

End of period

      $ 287,390,762      $ 313,051,603  
      
  

Accumulated net investment income (loss)

      $ 584,377      $ (35,233 )
      
  

CAPITAL TRANSACTIONS:

                    

Class II Shares

                    

Proceeds from shares issued

      $ 117,308,358      $ 193,005,165  

Dividends reinvested

        28,704,936        30,547,170  

Cost of shares redeemed

        (156,863,232 )      (134,489,188 )
      
  

Change in net assets from capital transactions

      $ (10,849,938 )    $ 89,063,147  
      
  

SHARE TRANSACTIONS:

                    

Class II Shares

                    

Issued

        7,892,516        16,020,981  

Reinvested

        2,440,077        2,877,677  

Redeemed

        (11,163,674 )      (11,368,242 )
      
  
         (831,081 )      7,530,416  
      
  

 

See notes to financial statements.

 

8

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Developing Markets Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover

Class II Shares

                                                                                      

Year Ended December 31, 2001

   $ 7.76   0.08   (0.62 )   (0.54 )   —     —     —     $ 7.22   (6.96% )   $ 100,899   1.59%     1.19%     1.67%     1.11%     118.00%

Year Ended December 31, 2002

   $ 7.22   0.03   (0.73 )   (0.70 )   (0.01 )   —     (0.01 )   $ 6.51   (9.68% )   $ 75,321   1.60%     0.44%     1.68%     0.36%     97.00%

Year Ended December 31, 2003(b)

   $ 6.51   0.06   3.83     3.89     (0.01 )   —     (0.01 )   $ 10.39   59.70%     $ 165,601   1.64%     0.75%     1.80%     0.60%     167.45%

Year Ended December 31, 2004

   $ 10.39   0.07   1.90     1.97     (0.06 )   (0.47 )   (0.53 )   $ 11.83   19.78%     $ 194,898   1.78%     0.69%     (c )   (c )   167.98%

Year Ended December 31, 2005

   $ 11.83   0.07   3.17     3.24     (0.07 )   (1.96 )   (2.03 )   $ 13.04   31.52%     $ 313,052   1.77%     0.49%     (c )   (c )   157.77%

Six Months Ended June 30, 2006 (Unaudited)

   $ 13.04   0.09   0.65     0.74     (0.06 )   (1.32 )   (1.38 )   $ 12.40   6.21% (d)   $ 287,391   1.62% (e)   1.07% (e)   (c )   (c )   83.38%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Upon reorganization on June 23, 2003, the existing shares of the Fund were designated Class II shares.

 

(c) There were no fee reductions during the period.

 

(d) Not annualized.

 

(e) Annualized.

 

See notes to financial statements.

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, the separate accounts of American Skandia Life Insurance Corporation, Peoples Benefit Life Insurance Company, a subsidiary of Aegon, Canada Life Assurance Company, Transamerica Financial Life Insurance Company, Fortis Benefits, and First Great West Life & Annuity Insurance Company have purchased shares of the Gartmore GVIT Developing Markets Fund (the “Fund”). The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Fund.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis. In determining fair value prices, the Trust utilizes data furnished by an independent pricing service (and that data draws upon, among other information, the market values of foreign investments). The fair value prices of portfolio securities generally will be used when it is determined that the use of these prices will have a material impact on the net asset value of the Fund. When the Fund uses fair value pricing, the values assigned to the Fund’s foreign investments may not be the quoted or published prices of the investments on their primary markets or exchanges.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend up to 33 1/3% of the Fund’s total assets pursuant to agreements, requiring that the borrower deliver cash or securities as collateral with respect to each new loan of U.S. securities equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan of non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned, and thereafter requiring the borrower to mark-to-market the collateral on a daily basis and requiring the borrower to make up any shortfall of collateral. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. Collateral is marked-to-market daily to provide a level of collateral at least equal to the market value of securities loaned. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in the judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

       Tax Cost of
Securities
      Unrealized
Appreciation
      Unrealized
  Depreciation  
        Net Unrealized
Appreciation
(Depreciation)*
       $ 279,900,082      $ 24,403,330      $ (18,606,563 )      $ 5,796,767

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Global Asset Management Trust (“GGAMT”) manages the investment of the assets and supervises the daily business affairs of the Fund. GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GGAMT provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GGAMT advises. Gartmore Global Partners (the “subadviser”), an affiliate of GGAMT, manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund.

 

Under the terms of the Investment Advisory Agreement, the Fund pays the Fund’s adviser an investment advisory fee based on the Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, the adviser pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GGAMT and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total
Fees		      Fees
Retained		      Paid to
Sub-adviser

Up to $500 million

    1.05%      0.525%      0.525%

$500 million up to $2 billion

    1.00%      0.500%      0.500%

$2 billion or more

    0.95%      0.475%      0.475%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the MSCI Emerging Markets Free Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance

    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

GGAMT and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.40% until at least May 1, 2007. GGAMT may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GGAMT, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GGAMT is not permitted.

 

As of the six months ended June 30, 2006, the cumulative potential reimbursements for all classes of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GGAMT, would be:

 

Amount
Fiscal Year
2003

      Amount
Fiscal Year
2004
      Amount
Fiscal Year
2005
      Six Months
Ended
June 30, 2006

$5,714

      $ 0      $ 0      $ 0

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $289,549,704 and sales of $313,087,820.

 

5. Portfolio Investment Risks

 

Credit and Market Risk The Fund invests in emerging market instruments that are subject to certain additional credit and market risks. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs are included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Funds’ annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

  1. the Fund’s advisory fee and ancillary benefits;

 

  2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

  3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

  4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

  5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board considered that the GVIT Developing Markets Fund underperformed its benchmark, the MSCI Emerging Markets Index, for the one-, three-, and five-year periods ended September 30, 2005 by 405, 151 and 295 basis points, respectively, and the Fund underperformed the median of the Lipper Emerging Markets Funds category by 288 basis points over the one-year period. The Board noted the Fund’s continuing underperformance and discussed with management the additional steps being taken to address the Fund’s ongoing performance issues including action to reduce performance volatility and the addition of personnel to the portfolio management team for this Fund. The Performance Committee of the Board was directed to continue to closely monitor performance of the Fund.

 

Next the Board reviewed and considered the contractual advisory (and subadvisory) fee and breakpoints for this Fund. The Board noted that the contractual advisory fee placed the Fund in the third quintile of the Lipper-constructed Expense Group. However, the Board noted that the Fund has implemented a performance based fee, effective January 1, 2006, at which time the base management fee has been reduced by 10 basis points. The Trustees considered the total expenses for the Fund and compared total expenses to the Lipper Expense Group. The Trustees considered that the total expense ration placed the Fund above the median for the funds in the Lipper Expense Group, and noted that the total expenses were above the median due to distribution expenses. Although the advisory fee and total expenses were above the median for the Lipper Expense Group, the Board concluded that the implementation of the performance based fee, effective January 1, 2006, would reduce the advisory fee and total expenses for 2007, and would result in a lower advisory fee and total expenses in future years if the Fund did not deliver expected performance. Finally, the Board considered the adviser’s profitability and concluded it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and sub-advisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen4

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association—College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

4 Mr. Allen owns a 51% interest in Graimark Realty Advisors Inc., a 67% owner of G/W Jefferson-St Jean LLC (“Jefferson-St”), a real estate development company. Until July 28, 2004, Jefferson-St had a construction loan, guaranteed by Mr. Allen, in the principal amount of $12.5 million (“Construction Loan”), from Bank One, NA, obtained in August, 2002. On July 1, 2004, Bank One Corporation merged with and into J.P. Morgan Chase & Co. (the “Merger”). Bank One Corporation was the parent company of Bank One, NA. J.P. Morgan Chase & Co. is the parent company of J.P. Morgan Investment Management, Inc., subadviser to two of the Funds of the Trust. On July 28, 2004, the Construction Loan was refinanced with an unaffiliated permanent lender. Neither Mr. Allen, nor the Trust’s management, believes that the Construction Loan, secured well in advance of the Merger, and refinanced within 28 days following the completion of the Merger, should result in Mr. Allen having a material business relationship with an investment adviser (or subadviser) or controlling person of an investment adviser (or subadviser) of the Trust.

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”)3, Gartmore Investor Services, Inc. (“GISI”)3, Gartmore Morley Capital Management, Inc. (“GMCM”)3, Gartmore Morley Financial Services, Inc. (“GMFS”)3, NorthPointe Capital, LLC (“NorthPointe”)3, Gartmore Global Asset Management Trust (“GGAMT”)3, Gartmore Global Investments, Inc. (“GGI”)3, Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.3, as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company3.   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI3, GMFCT3, and GSA3.   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI3, GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

22

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Gartmore GVIT U.S. Growth Leaders Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
4    Statement of Assets and Liabilities
4    Statement of Operations
5    Statements of Changes in Net Assets
7    Financial Highlights
8    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GUSGL (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT U.S. Growth Leaders Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT U.S. Growth Leaders Fund                                       

Class I

    Actual      $ 1,000.00      $ 961.30      $ 5.59      1.15%
     Hypothetical 1    $ 1,000.00      $ 1,019.10      $ 5.77      1.15%

Class II

    Actual      $ 1,000.00      $ 959.30      $ 6.90      1.42%
     Hypothetical 1    $ 1,000.00      $ 1,017.76      $ 7.13      1.42%

Class III

    Actual      $ 1,000.00      $ 960.60      $ 5.59      1.15%
     Hypothetical 1    $ 1,000.00      $ 1,019.10      $ 5.77      1.15%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT U.S. Growth Leaders Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      94.5%
Cash Equivalents      5.9%
Other Investments*      6.4%
Liabilities in excess of other assets**      -6.8%
      
       100.0%
      

 

 

Top Holdings***     
Halliburton Co.    5.4%
Emerson Electric Co.    4.6%
Praxair, Inc.    4.2%
Gilead Sciences, Inc.    4.1%
Rockwell Collins, Inc.    4.0%
Goldman Sachs Group, Inc.    3.9%
Google, Inc.    3.5%
Starwood Hotels & Resorts Worldwide, Inc.    3.4%
Republic Services, Inc.    3.4%
F5 Networks, Inc.    3.4%
Other Assets    60.1%
    
     100.0%
    
Top Industries     
Computer Software & Services    19.9%
Financial Services    11.2%
Oil & Gas    8.2%
Aerospace & Defense    6.9%
Pharmaceuticals    6.9%
Retail    6.6%
Hotels & Motels    6.3%
Medical    6.0%
Semiconductors    5.3%
Electronics    4.6%
Other Assets    18.1%
    
     100.0%
    
* Includes value of collateral received from securities lending.
** Includes value of collateral owed from securities lending.
*** For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT U.S. GROWTH LEADERS FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or

Principal Amount

    Value
            
COMMON STOCKS (94.5%)       
Aerospace & Defense (6.9%)       
Boeing Co. (The)   24,220    $ 1,983,860
Rockwell Collins, Inc.   47,920      2,677,291
        
           4,661,151
        
Agricultural Services (2.5%)       
Archer-Daniels-Midland Co.   41,100      1,696,608
        
Chemicals (4.2%)           
Praxair, Inc.   52,760      2,849,040
        
Computer Software & Services (19.9%)       
BEA Systems, Inc. (b)   141,300      1,849,617
Cisco Systems, Inc. (b)   84,750      1,655,168
Citrix Systems, Inc. (b)   50,450      2,025,063
eBay, Inc. (b)   44,960      1,316,878
F5 Networks, Inc. (b) (c)   42,650      2,280,922
Google, Inc. (b)   5,670      2,377,600
Red Hat, Inc. (b)   80,690      1,888,146
        
           13,393,394
        
Electronics (4.6%)           
Emerson Electric Co.   36,590      3,066,608
        
Financial Services (11.2%)       
AmeriCredit Corp. (b)   72,980      2,037,602
E*TRADE Financial Corp. (b)   61,760      1,409,363
Goldman Sachs Group, Inc.   17,580      2,644,558
SLM Corp.   28,150      1,489,698
        
           7,581,221
        
Gaming & Leisure (2.5%)           
Penn National Gaming , Inc. (b)   43,270      1,678,011
        
Hotels & Motels (6.3%)       
Starwood Hotels & Resorts Worldwide, Inc.   37,970      2,291,110
Station Casinos, Inc. (c)   29,100      1,981,128
        
           4,272,238
        
Medical (6.0%)           
Baxter International, Inc.   54,350      1,997,906
Covance, Inc. (b)   33,450      2,047,809
        
           4,045,715
        
Oil & Gas (8.2%)           
Halliburton Co.   48,910      3,629,611
Tesoro Corp.   25,670      1,908,821
        
           5,538,432
        
Pharmaceuticals (6.9%)           
Gilead Sciences, Inc. (b)   46,900      2,774,604
Schering-Plough Corp.   98,650      1,877,310
        
           4,651,914
        

Shares or

Principal Amount

    Value  
                
COMMON STOCKS (continued)         
Retail (6.6%)               
Abercrombie & Fitch Co., Class A     39,820    $ 2,207,223  
Coach, Inc. (b)     75,790      2,266,121  
          
             4,473,344  
          
Semiconductors (5.3%)               
Freescale Semiconductor, Inc. (b)     54,500      1,602,300  
Marvel Technology Group Ltd. (b)     44,150      1,957,170  
          
             3,559,470  
          
Waste Disposal (3.4%)               
Republic Services, Inc.     56,650      2,285,261  
          
Total Common Stocks            63,752,407  
          
CASH EQUIVALENTS (5.9%)         
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $3,951,144)   $ 3,949,442      3,949,442  
          
Total Cash Equivalents            3,949,442  
          
SHORT-TERM SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (6.4%)   
Pool of short-term securities for Gartmore Variable Insurance Trust Funds — Note 2 (Securities Lending)     4,290,850      4,290,850  
          
Total Short-Term Securities Held
as Collateral for Securities on Loan		      4,290,850  
          
Total Investments
(Cost $71,894,602) (a) — 106.8%		      71,992,699  
Liabilities in excess of
other assets — (6.8%)		      (4,556,735 )
          
NET ASSETS — 100.0%    $ 67,435,964  
          

 

(a) See notes to financial statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) All or part of the security was on loan as of June 30, 2006.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT U.S. GROWTH LEADERS FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $67,945,160)

    $ 68,043,257

Repurchase agreements, at cost and value

      3,949,442
    

Total Investments

      71,992,699
    

Interest and dividends receivable

      24,821

Receivable for capital shares issued

      97,517

Receivable for investments sold

      5,036,438

Prepaid expenses and other assets

      901
    

Total Assets

      77,152,376
    

Liabilities:

       

Payable for capital shares redeemed

      12,625

Payable for investments purchased

      5,211,746

Payable for return of collateral received for securities on loan

      4,290,850

Accrued expenses and other payables:

       

Investment advisory fees

      182,030

Fund administration and transfer agent fees

      4,615

Distribution fees

      4,333

Administrative servicing fees

      4,862

Other

      5,351
    

Total Liabilities

      9,716,412
    

Net Assets

    $ 67,435,964
    

Represented by:

       

Capital

    $ 66,944,463

Accumulated net investment income (loss)

      243,845

Accumulated net realized gains (losses) from investments

      149,559

Net unrealized appreciation (depreciation) on investments

      98,097
    

Net Assets

    $ 67,435,964
    

Net Assets:

       

Class I Shares

    $ 11,973,816

Class II Shares

      21,406,578

Class III Shares

      34,055,570
    

Total

    $ 67,435,964
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      1,175,440

Class II Shares

      2,112,368

Class III Shares

      3,323,591
    

Total

      6,611,399
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 10.19

Class II Shares

    $ 10.13

Class III Shares

    $ 10.25

 

*         Not subject to a front-end sales charge.

       

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 490,057  

Dividend income

      216,477  

Income from securities lending

      3,098  
    

Total Income

      709,632  
    

Expenses:

         

Investment advisory fees

      346,238  

Fund administration and transfer agent fees

      26,031  

Distribution fees Class II Shares

      27,042  

Administrative servicing fees Class I Shares

      8,788  

Administrative servicing fees
Class II Shares

      17,902  

Administrative servicing fees
Class III Shares

      28,749  

Trustee fees

      1,304  

Other

      9,912  
    

Total expenses before earnings credit

      465,966  

Earnings credit (Note 6)

      (179 )
    

Total Expenses

      465,787  
    

Net Investment Income (Loss)

      243,845  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      729,852  

Net change in unrealized appreciation/depreciation on investments

      (3,962,660 )
    

Net realized/unrealized gains (losses) on investments

      (3,232,808 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (2,988,963 )
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT U.S. GROWTH LEADERS FUND

 

Statements of Changes in Net Assets

 

      

Six Months Ended

June 30, 2006

     

Year Ended

December 31, 2005

  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 243,845      $ (221,108 )

Net realized gains (losses) on investment transactions

        729,852        6,990,468  

Net change in unrealized appreciation/depreciation on investments

        (3,962,660 )      (410,731 )
      
  

Change in net assets resulting from operations

        (2,988,963 )      6,358,629  
      
  

Distributions to Class I shareholders from:

                    

Net realized gains on investments

        (205,376 )      (1,571,409 )

Distributions to Class II shareholders from:

                    

Net realized gains on investments

        (373,444 )      (2,858,984 )

Distributions to Class III shareholders from:

                    

Net realized gains on investments

        (590,833 )      (5,955,110 )
      
  

Change in net assets from shareholder distributions

        (1,169,653 )      (10,385,503 )
      
  

Change in net assets from capital transactions

        4,188,937        21,312,303  
      
  

Change in net assets

        30,321        17,285,429  

Net Assets:

                    

Beginning of period

        67,405,643        50,120,214  
      
  

End of period

      $ 67,435,964      $ 67,405,643  
      
  

Accumulated net investment income (loss)

      $ 243,845      $ —  
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 3,249,554      $ 6,497,974  

Dividends reinvested

        205,375        1,571,407  

Cost of shares redeemed

        (1,538,224 )      (2,954,315 )
      
  
         1,916,705        5,115,066  
      
  

Class II Shares

                    

Proceeds from shares issued

        4,540,412        8,229,963  

Dividends reinvested

        373,442        2,858,981  

Cost of shares redeemed

        (1,205,065 )      (1,533,299 )
      
  
         3,708,789        9,555,645  
      
  

Class III Shares

                    

Proceeds from shares issued

        6,167,713        9,713,182  

Dividends reinvested

        590,831        5,955,105  

Cost of shares redeemed

        (8,195,101 )      (9,026,695 )
      
  
         (1,436,557 )      6,641,592  
      
  

Change in net assets from capital transactions

      $ 4,188,937      $ 21,312,303  
      
  

 

5

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT U.S. GROWTH LEADERS FUND

 

Statements of Changes in Net Assets (Continued)

 

      

Six Months Ended

June 30, 2006

     

Year Ended

December 31, 2005

  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Shares

                

Issued

      295,706      564,383  

Reinvested

      20,314      145,366  

Redeemed

      (139,368 )    (261,906 )
      
  
       176,652      447,843  
      
  

Class II Shares

                

Issued

      412,855      725,460  

Reinvested

      37,158      265,327  

Redeemed

      (110,452 )    (135,024 )
      
  
       339,561      855,763  
      
  

Class III Shares

                

Issued

      550,790      849,981  

Reinvested

      58,153      547,996  

Redeemed

      (744,044 )    (793,889 )
      
  
       (135,101 )    604,088  
      
  

 

See notes to financial statements.

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

Gartmore GVIT U.S. Growth Leaders Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		     Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		   Total Return     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		    

Ratio of
Expenses

(Prior to
Reimbursements)
to Average

Net Assets(a)

     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                      

Period Ended December 31, 2002(c)

   $ 8.64   (0.02 )   0.01   (1.07 )   (1.08 )   —     —     $ 7.56   (12.50% )(f)   $ 476   1.16% (g)   (0.56% )(g)     (h)      (h)   754.41%

Year Ended December 31, 2003

   $ 7.56   (0.02 )   0.01   3.95     3.94     (0.76 )   (0.76 )   $ 10.74   52.14%     $ 6,199   1.19%     (0.50% )     (h)      (h)   580.71%

Year Ended December 31, 2004

   $ 10.74   (0.08 )   —   1.36     1.28     (0.46 )   (0.46 )   $ 11.56   12.41%     $ 6,369   1.29%     (0.77% )     (h)      (h)   520.00%

Year Ended December 31, 2005

   $ 11.56   (0.02 )   —   1.32     1.30     (2.06 )   (2.06 )   $ 10.80   11.96%     $ 10,783   1.17%     (0.39% )     (h)      (h)   447.55%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.80   0.04     —   (0.47 )   (0.43 )   (0.18 )   (0.18 )   $ 10.19   (3.87 )%(f)   $ 11,974   1.15% (g)   0.80% (g)     (h)      (h)   159.03%

Class II Shares

                                                                                      

Period Ended December 31, 2003(d)

   $ 8.17   (0.02 )   0.01   3.36     3.35     (0.76 )   (0.76 )   $ 10.76   41.02% (f)   $ 4,101   1.43% (g)   (0.66% )(g)     (h)      (h)   580.71%

Year Ended December 31, 2004

   $ 10.76   (0.08 )   —   1.33     1.25     (0.46 )   (0.46 )   $ 11.55   12.10%     $ 10,593   1.53%     (1.03% )     (h)      (h)   520.00%

Year Ended December 31, 2005

   $ 11.55   (0.04 )   —   1.31     1.27     (2.06 )   (2.06 )   $ 10.76   11.70%     $ 19,067   1.41%     (0.63% )     (h)      (h)   447.55%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.76   0.03     —   (0.48 )   (0.45 )   (0.18 )   (0.18 )   $ 10.13   (4.07 )%(f)   $ 21,407   1.42% (g)   0.56% (g)     (h)      (h)   159.03%

Class III Shares

                                                                                      

Period Ended December 31, 2001(e)

   $ 10.00   —     —   (0.08 )   (0.08 )   —     —     $ 9.92   (0.80% )(f)   $ 2,976   1.25% (g)   (0.40% )(g)   7.56% (g)   (6.71% )(g)   9.71%

Year Ended December 31, 2002

   $ 9.92   (0.05 )   0.01   (2.30 )   (2.34 )   —     —     $ 7.58   (23.59% )   $ 6,501   1.10%     (0.64% )     (h)      (h)   754.41%

Year Ended December 31, 2003

   $ 7.58   (0.03 )   0.01   3.99     3.97     (0.76 )   (0.76 )   $ 10.79   52.39%     $ 54,959   1.19%     (0.50% )     (h)      (h)   580.71%

Year Ended December 31, 2004

   $ 10.79   (0.11 )   —   1.40     1.29     (0.46 )   (0.46 )   $ 11.62   12.45%     $ 33,158   1.29%     (0.77% )     (h)      (h)   520.00%

Year Ended December 31, 2005

   $ 11.62   (0.03 )   —   1.33     1.30     (2.06 )   (2.06 )   $ 10.86   11.99%     $ 37,556   1.17%     (0.38% )     (h)      (h)   447.55%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.86   0.05     —   (0.48 )   (0.43 )   (0.18 )   (0.18 )   $ 10.25   (3.94% )(f)   $ 34,056   1.15% (g)   0.81% (g)     (h)      (h)   159.03%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from June 3, 2002 (commencement of operations) through December 31, 2002.

 

(d) For the period from March 21, 2003 (commencement of operations) through December 31, 2003.

 

(e) For the period from December 18, 2001 (commencement of operations) through December 31, 2001. Registration of shares effective with the Securities and Exchange Commission on December 28, 2001. On the effective date, the net asset value was $9.92 per share.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT U.S. Growth Leaders Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 331/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers.

 

The cash collateral received by the Fund was pooled and, at June 30, 2006, was invested in the following:

 

Security Type

   

Issuer Name

    Value
    Maturity Rate
    Maturity Date
Bank Note — Floating Rate    Bank of America    $ 500,000    5.31%    07/03/06
Commercial Paper    Aegis Finance LLC      99,546    5.29%    07/21/06
Repurchase Agreement    Bank of America Securities LLC      3,691,304    5.32%    07/03/06

 

Information on the investment of cash collateral is shown in the Statement of Investments.

 

As of June 30, 2006, the Fund had securities with the following market value on loan:

 

    Value of Loaned Securities
   Value of Collateral
    
    $4,262,050   $ 4,290,850    

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code,

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of Securities

   

Unrealized

Appreciation

   

Unrealized

Depreciation

   

Net Unrealized
Appreciation
(Depreciation)*

$71,894,602    $2,633,165    $(2,535,068)    $98,097

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Gartmore Global Investments, Inc. (“GGI”), a holding company. GGI is a majority-owned subsidiary of Gartmore Global Asset Management Trust (“GGAMT”). GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. Under the terms of the Investment Advisory Agreement, the Fund pays GMF a base investment advisory fee that can vary depending on the Fund’s performance relative to the Fund’s benchmark, the S&P 500 Index, as follows:

 

Fee Schedule*

    Fees

Up to $500 million

    0.90%

$500 million up to $2 billion

    0.80%

$2 billion or more

    0.75%

 

* The U.S. Growth Leaders Fund pays GMF a base management fee (as shown above) which may be adjusted upward or downward depending on the Fund’s performance relative to the Fund’s benchmark, the S&P 500 Index. Thus, if the Fund outperforms the Fund’s benchmark by 12% or more over a 36-month period, the Fund will pay higher management fees. Conversely, if the Fund underperforms the Fund’s benchmark by 12% or more over a 36 month period, the Fund will pay lower management fees. No adjustment will take place if the under or overperformance is less than 12% and GMF will receive the applicable base fee. The base rate and the performance rate are applied separately. The base rate (as may be reduced by any applicable base advisory fee breakpoints) is applied to the Fund’s average net assets over the current quarter, while the performance adjustment percentage is applied to the Fund’s average net assets over the rolling 36-month performance period. The corresponding dollar values then are added to arrive at the overall GMF advisory fee for the current period. The base fee is either increased or decreased by the following amounts at each breakpoint:

 

Fee Schedule

    Fee Adjustment

Up to $500 million

    +/-0.22%

$500 million up to $2 billion

    +/-0.18%

$2 billion or more

    +/-0.16%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

On September 21, 2004, the Enforcement Staff of the Commission’s Fort Worth District Office (the “Staff”) contacted GMF. The Staff asserted that the methodology used to calculate the performance fee for the Fund did not comply with the requirements of Rule 205-2 under the Investment Advisers Act of 1940 (the “Advisers Act”). Appropriate remedial actions have been taken, and an offer of settlement has been submitted to the Securities and Exchange Commission for its consideration. Management has forgone the performance fee bonus adjustment or paying a performance fee penalty during the period of the SEC investigation. Upon final resolution of the SEC investigation, management will resume collecting a performance bonus or paying a performance penalty on the Fund’s performance for each successive period.

 

GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) limiting operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 1.15% for all classes until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the six months ended June 30, 2006, there were no cumulative potential reimbursements for all classes of shares of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $54,203 in Administrative Services Fees from the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $8,128.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $113,255,759 and sales of $110,600,106.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

1. the Fund’s advisory fee and ancillary benefits;

 

2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that for the one- and three-year periods ended September 30, 2005, the Fund had outperformed its benchmark, the S&P 500 Index, by 1,047 and 898 basis points, respectively. The Board also considered that the Fund ranked in the first quartile of the Lipper Multi-Cap Growth Funds category for both periods.

 

The Board then discussed with management the distribution of the Fund and the pending resolution of the investigation by the SEC into the Fund’s performance fee structure. Management explained that while the Fund continues to maintain its performance-based fee structure, management has foregone the performance fee bonus adjustment during the period of the SEC investigation. Upon final resolution of the SEC investigation, management will resume collecting a performance bonus or paying a performance penalty on the Fund’s performance for each successive period.

 

Next, the Board reviewed the Fund’s contractual advisory fee and breakpoints and considered the performance-based fee structure of the advisory fee. The Board noted that the contractual advisory fee placed the Fund in the fifth quintile of its Lipper-constructed Expense Group, but within the range of contractual advisory fees of the Lipper Expense Group. The Board considered that the Fund’s total expenses were above the median of the Fund’s Lipper Expense Group by 43 basis points. Management explained to the Board that the Fund’s higher expenses are attributable to a higher management fee as

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

well as a higher distribution cost. Management also noted that there were not many concentrated funds in the insurance space, so it was difficult for Lipper to construct an appropriate Expense Group of peers, which affected the expense comparisons. Finally, the Board considered the adviser’s profitability in light of all of the above, and determined it was not excessive.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory agreement for the Fund for an annual period which commenced on May 1, 2006.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

17

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

18

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

21

Table of Contents

 

Gartmore GVIT Global Utilities Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
5    Statement of Assets and Liabilities
5    Statement of Operations
6    Statements of Changes in Net Assets
8    Financial Highlights
9    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGU (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Global Utilities Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
January 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Global Utilities Fund                                       

Class I

      Actual    $ 1,000.00      $ 1,115.50      $ 5.56      1.06%
       Hypothetical1    $ 1,000.00      $ 1,019.54      $ 5.32      1.06%

Class II

      Actual    $ 1,000.00      $ 1,113.90      $ 6.71      1.28%
       Hypothetical1    $ 1,000.00      $ 1,018.45      $ 6.43      1.28%

Class III

      Actual    $ 1,000.00      $ 1,115.40      $ 5.30      1.01%
       Hypothetical1    $ 1,000.00      $ 1,019.79      $ 5.07      1.01%

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Global Utilities Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      96.2%
Cash Equivalents      3.1%
Other assets in excess of liabilities      0.7%
      
       100.0%
      
Top Industries       
Telecommunications      51.3%
Electric Utility      19.6%
Gas & Electric Utility      14.3%
Water Utility      7.9%
Oil & Gas Utility      1.3%
Building & Construction      0.6%
Gas Utility      0.5%
Electric      0.5%
Oil & Gas      0.2%
Other Assets      3.8%
      
       100.0%
      
Top Holdings*       
Vodafone Group PLC      8.0%
AT&T Inc.      6.4%
Verizon Communications, Inc.      6.0%
Telefonica SA      5.5%
BellSouth Corp.      5.3%
Sprint Nextel Corp.      4.0%
Suez SA      3.7%
E. ON AG      3.6%
Deutsche Telekom AG      3.0%
International Power PLC      2.5%
Other Assets      52.0%
      
       100.0%
      
Top Countries       
United States      31.7%
United Kingdom      22.0%
Spain      11.2%
Germany      8.0%
Japan      6.5%
France      5.2%
Italy      4.1%
Norway      1.8%
Greece      1.7%
Finland      1.3%
Other Assets      6.5%
      
       100.0%
      

 

* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL UTILITIES FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (96.2%)           
AUSTRIA (1.2%)           
Telecommunications (1.2%)           
Telekom Austria AG (c)   23,470    $ 522,482
        
BELGIUM (0.4%)           
Electric Utility (0.2%)           
Elia System Operator SA (c)   2,660      103,049
        
Telecommunications (0.2%)           
Mobistar SA (c)   790      62,607
        
           165,656
        
FINLAND (1.3%)           
Oil & Gas Utility (1.3%)           
Fortum Oyj (c)   21,835      557,776
        
FRANCE (5.2%)           
Building & Construction (0.6%)       
Bouygues SA (c)   4,590      235,664
        
Electric (0.5%)           
Electricite De France (c)   3,770      199,000
        
Telecommunications (0.4%)           
France Telecom SA (c)   7,872      167,946
        
Water Utility (3.7%)           
Suez SA (c)   37,120      1,541,342
        
           2,143,952
        
GERMANY (8.0%)           
Gas & Electric Utility (5.0%)           
E. ON AG (c)   13,360      1,535,226
RWE AG (c)   6,812      565,692
        
           2,100,918
        
Telecommunications (3.0%)           
Deutsche Telekom AG (c)   78,197      1,254,867
        
           3,355,785
        
GREECE (1.7%)           
Telecommunications (1.7%)           
Cosmote Mobile Telecommunications SA (c)   22,200      501,237
Hellenic Telecommunications Organization SA (b) (c)   10,381      228,632
        
           729,869
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
HONG KONG (0.2%)           
Electric Utility (0.2%)           
CLP Holdings Ltd. (c)   12,000    $ 70,219
        
ITALY (4.1%)           
Electric Utility (1.8%)           
Enel SPA (c)   88,020      757,156
        
Oil & Gas (0.2%)           
Snam Rete Gas SPA (c)   14,475      63,596
        
Telecommunications (2.1%)           
Telecom Italia SPA (c)   324,898      904,108
        
           1,724,860
        
JAPAN (6.5%)           
Electric Utility (2.4%)           
Chubu Electric Power Co., Inc. (c)   8,400      226,927
Kansai Electric Power Co., Inc. (c)   7,200      161,140
Kyushu Electric Power Co., Inc. (c)   5,900      137,220
Tohoku Electric Power Co., Inc. (c)   5,400      118,428
Tokyo Electric Power Co., Inc. (c)   13,700      378,594
        
           1,022,309
        
Gas Utility (0.5%)           
Osaka Gas Co. Ltd. (c)   33,000      106,135
Tokyo Gas Co. Ltd. (c)   25,000      117,840
        
           223,975
        
Telecommunications (3.6%)           
KDDI Corp. (c)   61      375,481
Nippon Telegraph & Telephone Corp. (c)   118      576,245
NTT DoCoMo, Inc. (c)   395      578,002
        
           1,529,728
        
           2,776,012
        
MEXICO (0.9%)           
Telecommunications (0.9%)           
America Movil SA de CV   11,840      393,798
        
NORWAY (1.8%)           
Telecommunications (1.8%)           
Telenor ASA (c)   64,400      778,386
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL UTILITIES FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SPAIN (11.2%)           
Electric Utility (3.0%)           
Iberdrola SA (c)   25,780    $ 887,106
Red Electrica de Espana (c)   11,310      390,263
        
           1,277,369
        
Gas & Electric Utility (2.7%)           
Endesa SA (c)   28,200      979,693
Union Fenosa SA (c)   3,467      134,223
        
           1,113,916
        
Telecommunications (5.5%)           
Telefonica SA (c)   139,510      2,318,758
        
           4,710,043
        
UNITED KINGDOM (22.0%)           
Electric Utility (8.4%)           
International Power PLC (c)   198,340      1,041,600
National Grid PLC (c)   51,425      555,589
Scottish & Southern Energy PLC (c)   45,762      973,148
Scottish Power PLC (c)   90,972      979,856
        
           3,550,193
        
Gas & Electric Utility (1.4%)           
Centrica PLC (c)   106,990      563,327
        
Telecommunications (8.0%)           
Vodafone Group PLC (c)   1,583,080      3,368,983
        
Water Utility (4.2%)           
AWG PLC (c)   26,231      579,986
Northumbrian Water Group PLC (c)   102,678      464,903
Pennon Group PLC (c)   30,110      742,156
        
           1,787,045
        
           9,269,548
        
UNITED STATES (31.7%)           
Electric Utility (3.5%)           
AES Corp. (b)   30,680      566,046
DPL, Inc.   8,610      230,748
Edison International   6,266      244,374
PPL Corp.   13,464      434,887
        
           1,476,055
        
Shares or
Principal Amount		    Value
              
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Gas & Electric Utility (5.2%)             
Exelon Corp.     13,915    $ 790,789
FirstEnergy Corp.     6,640      359,954
PG&E Corp.     8,660      340,165
TXU Corp.     10,350      618,827
Wisconsin Energy Corp.     2,380      95,914
          
             2,205,649
          
Telecommunications (23.0%)             
ALLTEL Corp.     8,900      568,087
AT&T Inc.     96,843      2,700,952
BellSouth Corp.     61,544      2,227,893
Sprint Nextel Corp.     84,171      1,682,578
Verizon Communications, Inc.     75,680      2,534,523
          
             9,714,033
          
             13,395,737
          
Total Common Stocks            40,594,123
          
CASH EQUIVALENTS (3.1%)             
Investments in repurchase agreements (colleteralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $1,323,210)   $ 1,322,640      1,322,640
          
Total Cash Equivalents            1,322,640
          
Total Investments
(Cost $39,090,209) (a) — 99.3%		      41,916,763
Other assets in excess of liabilities — 0.7%      290,788
          
NET ASSETS — 100.0%    $ 42,207,551
          

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair Valued Security.

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL UTILITIES FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

       

Investments, at value (cost $37,767,569)

    $ 40,594,123

Repurchase agreements, at cost and value

      1,322,640
    

Total Investments

      41,916,763
    

Foreign currency, at value (cost $6,295)

      6,296

Interest and dividends receivable

      142,952

Receivable for capital shares issued

      202,488

Reclaims receivable

      20,967

Prepaid expenses and other assets

      2,514
    

Total Assets

      42,291,980
    

Liabilities:

       

Payable to custodian

      5,988

Payable for capital shares redeemed

      4,478

Accrued expenses and other payables:

       

Investment advisory fees

      66,025

Fund administration and transfer agent fees

      4,198

Distribution fees

      194

Administrative servicing fees

      3,475

Other

      71
    

Total Liabilities

      84,429
    

Net Assets

    $ 42,207,551
    

Represented by:

       

Capital

    $ 37,396,708

Accumulated net investment income (loss)

      286,386

Accumulated net realized gains (losses) from investment and foreign currency transactions

      1,698,316

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      2,826,141
    

Net Assets

    $ 42,207,551
    

Net Assets:

       

Class I Shares

    $ 4,591,709

Class II Shares

      959,270

Class III Shares

      36,656,572
    

Total

    $ 42,207,551
    

Shares outstanding (unlimited number of shares authorized):

       

Class I Shares

      413,264

Class II Shares

      86,080

Class III Shares

      3,290,276
    

Total

      3,789,620
    

Net asset value and offering price per share:*

       

Class I Shares

    $ 11.11

Class II Shares

    $ 11.14

Class III Shares

    $ 11.14

 

* Not subject to a front-end sales charge.

 

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

       

Interest income

    $ 9,322

Dividend income (net of foreign withholding tax of $89,886)

      846,648
    

Total Income

      855,970
    

Expenses:

       

Investment advisory fees

      133,130

Fund administration and transfer agent fees

      20,385

Distribution fees Class II Shares

      1,178

Administrative servicing fees Class I Shares

      4,182

Administrative servicing fees Class II Shares

      775

Administrative servicing fees Class III Shares

      23,556

Trustee fees

      660

Other

      10,324
    

Total Expenses

      194,190
    

Net Investment Income (Loss)

      661,780
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

       

Net realized gains (losses) on investment transactions

      2,020,478

Net realized gains (losses) on foreign currency transactions

      8,545
    

Net realized gains (losses) on investment and foreign currency transactions

      2,029,023

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      1,728,396
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      3,757,419
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 4,419,199
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL UTILITIES FUND

 

Statements of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

From Investment Activities:

                    

Operations:

                    

Net investment income (loss)

      $ 661,780      $ 829,339  

Net realized gains (losses) on investment and foreign currency transactions

        2,029,023        4,465,246  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        1,728,396        (2,671,779 )
      
  

Change in net assets resulting from operations

        4,419,199        2,622,806  
      
  

Distributions to Class I shareholders from:

                    

Net investment income

        (40,637 )      (107,515 )

Net realized gains on investments

        (37,686 )      (666,112 )

Distributions to Class II shareholders from:

                    

Net investment income

        (7,689 )      (16,842 )

Net realized gains on investments

        (8,005 )      (127,171 )

Distributions to Class III shareholders from:

                    

Net investment income

        (326,326 )      (767,979 )

Net realized gains on investments

        (298,933 )      (4,867,573 )
      
  

Change in net assets from shareholder distributions

        (719,276 )      (6,553,192 )
      
  

Change in net assets from capital transactions

        (907,483 )      6,120,037  
      
  

Change in net assets

        2,792,440        2,189,651  

Net Assets:

                    

Beginning of period

        39,415,111        37,225,460  
      
  

End of period

      $ 42,207,551      $ 39,415,111  
      
  

Accumulated net investment income (loss)

      $ 286,386      $ (742 )
      
  

CAPITAL TRANSACTIONS:

                    

Class I Shares

                    

Proceeds from shares issued

      $ 1,034,746      $ 4,005,419  

Dividends reinvested

        78,323        773,626  

Cost of shares redeemed

        (1,542,161 )      (4,396,497 )
      
  
         (429,092 )      382,548  
      
  

Class II Shares

                    

Proceeds from shares issued

        39        181  

Dividends reinvested

        15,694        144,013  

Cost of shares redeemed

        (45,107 )      (225,117 )
      
  
         (29,374 )      (80,923 )
      
  

Class III Shares

                    

Proceeds from shares issued

        6,800,208        14,946,239  

Dividends reinvested

        625,257        5,635,550  

Cost of shares redeemed

        (7,874,482 )      (14,763,377 )
      
  
         (449,017 )      5,818,412  
      
  

Change in net assets from capital transactions

      $ (907,483 )    $ 6,120,037  
      
  

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL UTILITIES FUND

 

Statements of Changes in Net Assets (Continued)

 

       Six Months Ended
June 30, 2006
     Year Ended
December 31, 2005
  
       (Unaudited)        

SHARE TRANSACTIONS:

               

Class I Shares

               

Issued

      94,498     350,987  

Reinvested

      7,241     73,715  

Redeemed

      (142,691 )   (386,185 )
      
 
       (40,952 )   38,517  
      
 

Class II Shares

               

Issued

      — (a)   — (a)

Reinvested

      1,447     13,719  

Redeemed

      (4,126 )   (19,667 )
      
 
       (2,679 )   (5,948 )
      
 

Class III Shares

               

Issued

      619,192     1,305,948  

Reinvested

      57,693     535,608  

Redeemed

      (724,463 )   (1,294,226 )
      
 
       (47,578 )   547,330  
      
 

 

(a) Amount is less than 1 share.

 

See notes to financial statements.

 

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Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

Gartmore GVIT Global Utilities Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net
Asset
Value,
End of
Period		   Total
Return		     Net
Assets
at End
of
Period
(000s)		   Ratio of
Expenses
to
Average
Net
Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                          

Period Ended December 31, 2002(c)

   $ 8.38   0.08   0.01   (0.96 )   (0.87 )   (0.09 )   —     (0.09 )   $ 7.42   (10.36% )(f)   $ 169   1.20% (g)   1.83% (g)     (h)     (h)   153.83%

Year Ended December 31, 2003

   $ 7.42   0.06   0.01   1.71     1.78     (0.04 )   —     (0.04 )   $ 9.16   24.05%     $ 1,104   1.11%     1.28%       (h)     (h)   116.62%

Year Ended December 31, 2004

   $ 9.16   0.13   —   2.60     2.73     (0.13 )   (0.50 )   (0.63 )   $ 11.26   29.97%     $ 4,679   1.08%     1.78%       (h)     (h)   358.63%

Year Ended December 31, 2005

   $ 11.26   0.22   —   0.48     0.70     (0.24 )   (1.59 )   (1.83 )   $ 10.13   6.39%     $ 4,602   1.12%     1.92%       (h)     (h)   234.81%

Six Months Ended June 30, 2006 (Unaudited)

   $ 10.13   0.18   —   0.99     1.17     (0.10 )   (0.09 )   (0.19 )   $ 11.11   11.55% (f)   $ 4,592   1.06% (g)   3.31% (g)     (h)     (h)   48.93%

Class II Shares

                                                                                          

Period Ended December 31, 2003(d)

   $ 7.08   0.03   0.01   2.09     2.13     (0.03 )   —     (0.03 )   $ 9.18   30.16% (f)   $ 1,092   1.36% (g)   0.76% (g)     (h)     (h)   116.62%

Year Ended December 31, 2004

   $ 9.18   0.18   —   2.53     2.71     (0.11 )   (0.50 )   (0.61 )   $ 11.28   29.56%     $ 1,069   1.33%     1.58%       (h)     (h)   358.63%

Year Ended December 31, 2005

   $ 11.28   0.20   —   0.48     0.68     (0.21 )   (1.59 )   (1.80 )   $ 10.16   6.19%     $ 902   1.37%     1.68%       (h)     (h)   234.81%

Six Months Ended June 30, 2006
(Unaudited)

   $ 10.16   0.17   —   0.99     1.16     (0.09 )   (0.09 )   (0.18 )   $ 11.14   11.39% (f)   $ 959   1.28% (g)   3.15% (g)     (h)     (h)   48.93%

Class III Shares

                                                                                          

Period Ended December 31, 2001(e)

   $ 10.00   —   —   0.01     0.01     —     —     —     $ 10.01   0.10% (f)   $ 3,002   1.15% (g)   (0.12% )(g)   8.45% (g)   (7.42% )(g)   0.00%

Year Ended December 31, 2002

   $ 10.01   0.12   0.01   (2.62 )   (2.49 )   (0.09 )   —     (0.09 )   $ 7.43   (24.85% )   $ 3,571   1.10%     1.79%     1.11%     1.78%     153.83%

Year Ended December 31, 2003

   $ 7.43   0.10   0.01   1.68     1.79     (0.04 )   —     (0.04 )   $ 9.18   24.17%     $ 7,054   1.04%     1.39%       (h)     (h)   116.62%

Year Ended December 31, 2004

   $ 9.18   0.14   —   2.60     2.74     (0.14 )   (0.50 )   (0.64 )   $ 11.28   29.95%     $ 31,478   1.05%     1.73%       (h)     (h)   358.63%

Year Ended December 31, 2005

   $ 11.28   0.22   —   0.49     0.71     (0.24 )   (1.59 )   (1.83 )   $ 10.16   6.48%     $ 33,911   1.10%     1.96%       (h)     (h)   234.81%

Six Months Ended June 30, 2006
(Unaudited)

   $ 10.16   0.17   —   1.00     1.17     (0.10 )   (0.09 )   (0.19 )   $ 11.14   11.54% (f)   $ 36,657   1.01% (g)   3.34% (g)     (h)     (h)   48.93%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(c) For the period from May 10, 2002 (commencement of operations) through December 31, 2002.
(d) For the period from March 28, 2003 (commencement of operations) through December 31, 2003.
(e) For the period from December 18, 2001 (commencement of operations) through December 31, 2001. Registration of shares effective with the Securities and Exchange Commission on December 28, 2001. On the effective date, the net asset value was $10.01 per share.
(f) Not annualized.
(g) Annualized.
(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Global Utilities Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of Securities

   

Unrealized
Appreciation

   

Unrealized
Depreciation

   

Net Unrealized
Appreciation
(Depreciation)*

$39,090,209    $4,153,305    $(1,326,752)    $2,826,553

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Global Asset Management Trust (“GGAMT”) manages the investment of the assets and supervises the daily business affairs of the Fund. GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GGAMT provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GGAMT advises. Gartmore Global Partners (the “subadviser”), an affiliate of GGAMT, manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays GGAMT an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GGAMT pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GGAMT and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule

      Total
Fees
      Fees
Retained
      Paid to
Sub-adviser
  

Up to $500 million

      0.70 %    0.350 %    0.350 %

$500 million up to $2 billion

      0.65 %    0.325 %    0.325 %

Over $2 billion

      0.60 %    0.300 %    0.300 %

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the Global Utilities Composite Index, which is comprised of 60% MSCI World Telecommunication Services Index and 40% MSCI World Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance

    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $25,421 in Administrative Services Fees from the Fund.

 

As of June 30, 2006, the adviser or affiliates of the adviser directly held 10% of the shares outstanding of the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $1,653.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $18,762,971 and sales of $21,226,042.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

1. the Fund’s advisory fee and ancillary benefits;

 

2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the MSCI World Utilities Index (40%)/MSCI World Telecom Index (60%), by 1,071 basis points for the one-year period ended September 30, 2005 and by 290 basis points for the three-year period. The Board also considered that the Fund ranked in the third quartile of the Lipper Utilities Fund category for the one-year period and ranked in the second quartile for the three-year period. The Board then discussed with management the performance and distribution of the Fund.

 

Next, the Board reviewed the Fund’s contractual advisory fee (including the subadvisory fee) and breakpoints and considered that the contractual advisory fee placed the Fund in the fourth quintile of the Fund’s Lipper-constructed Expense Group. The Board also noted that the Fund’s total expenses were above the median of the Fund’s Lipper Expense Group by 2 basis points. The Board considered, however, that this Fund implemented a performance-based fee structure on January 1, 2006, and the base management fee was reduced by 10 basis points on that date. Finally, the Board considered the adviser’s profit margin in managing the Fund in light of all of the above, and determined it was not excessive.

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and subadvisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Board approve a new Subadvisory agreement with newly-unaffiliated GGP, in reliance upon the Manager of Managers Exemptive order the Funds have obtained from the SEC to take effect immediately upon the closing of the U.K. Sale to ensure continued provision of Subadvisory services by GGP to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale: (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of affiliated GGP at this time; (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies used by affiliated GGP now; and (3) the Subadvisory fees paid to unaffiliated GGP will be the same as those currently paid to affiliated GGP. At the time the Board selected and approved the adviser to the Fund, Board considered, among other factors, the advisory fee compared to a peer group of funds, the extent to which economies of scale would be realized as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of Fund shareholders. Since the adviser will pay the sub-adviser from the fees paid by the Fund to the adviser, and since the fees and expenses for the Fund will not change as a result of the change to the sub-adviser, the Board did not further consider these factors. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the continuation of affiliated GGP’s subadvisory agreement with new unaffiliated GGP, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association – College Retirement Equity Fund.   92   None

Douglas F. Kridler

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

* Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President – Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

22

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Gartmore GVIT Global Financial Services Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
6    Statement of Assets and Liabilities
6    Statement of Operations
7    Statements of Changes in Net Assets
9    Financial Highlights
10    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GGFS (8/06)

Table of Contents

 

Shareholder

Expense Example

Gartmore GVIT Global Financial Services Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, January 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

           

Beginning

Account Value,
January 1, 2006

      Ending
Account Value,
June 30, 2006
      Expenses Paid
During Period*
      Annualized
Expense Ratio*
Gartmore GVIT Global Financial Services Fund                                

Class I

      Actual    $ 1,000.00      $ 1,071.30      $ 6.11      1.19%
       Hypothetical1    $ 1,000.00      $ 1,018.90      $ 5.97      1.19%

Class II

      Actual    $ 1,000.00      $ 1,070.20      $ 7.39      1.44%
       Hypothetical1    $ 1,000.00      $ 1,017.66      $ 7.23      1.44%

Class III

      Actual    $ 1,000.00      $ 1,070.50      $ 6.01      1.17%
       Hypothetical1    $ 1,000.00      $ 1,019.00      $ 5.87      1.17%

 

 

 

* Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period). The expense ratio presented represents a six-month, annualized ratio in accordance with SEC guidelines. The expenses reported above do not include the effect of additional expenses imposed by variable annuity contracts.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

Gartmore GVIT Global Financial Services Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      96.6%
Cash Equivalents      4.3%
Other assets in excess of liabilities      -0.9%
      
       100.0%
      

 

 

Top Holdings*       
Bank of America Corp.      4.0%
Citigroup, Inc.      3.6%
HSBC Holdings PLC      3.3%
Royal Bank of Scotland Group PLC      3.0%
UBS AG      3.0%
BNP Paribas SA      3.0%
Mizuho Financial Group, Inc.      3.0%
Wachovia Corp.      2.9%
UniCredito Italiano SpA      2.6%
Mitsubishi UFJ Financial Group, Inc.      2.3%
Other Assets      69.3%
      
       100.0%
      
Top Industries       
Banking      40.5%
Financial Services      31.9%
Insurance      17.2%
Real Estate Investment Trusts      2.8%
Real Estate      2.2%
Property Trust      1.2%
Paper Products      0.8%
Other Assets      3.4%
      
       100.0%
      

 

 

Top Countries       
United States      48.8%
Japan      9.5%
United Kingdom      8.9%
Australia      4.8%
France      3.9%
Germany      3.8%
Netherlands      3.3%
Switzerland      3.0%
Italy      2.6%
Ireland      2.2%
Other Assets      9.2%
      
       100.0%
      

 

* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

    Shares or
Principal Amount		    Value
            
COMMON STOCKS (96.6%)       
AUSTRALIA (4.8%)       
Banking (2.9%)       
Australia & New Zealand Banking Group Ltd. (c)   29,770    $ 588,423
Commonwealth Bank of Australia (c)   12,040      396,522
        
           984,945
        
Insurance (0.7%)           
Promina Group Ltd. (c)   58,600      244,279
        
Property Trust (1.2%)           
Westfield Group (c)   32,000      411,865
        
           1,641,089
        
CANADA (1.8%)       
Financial Services (1.8%)       
Manulife Financial Corp.   18,650      591,085
        
FRANCE (3.9%)       
Banking (3.0%)       
BNP Paribas SA (c)   10,610      1,014,456
        
Financial Services (0.9%)           
Credit Agricole SA (c)   7,860      298,253
        
           1,312,709
        
GERMANY (3.8%)       
Banking (1.3%)       
Commerzbank AG (c)   11,990      434,099
        
Financial Services (0.5%)           
Hypo Real Estate Holding AG (c)   2,800      169,524
        
Insurance (2.0%)           
Allianz AG (c)   4,270      671,873
        
           1,275,496
        
GREECE (1.2%)       
Banking (1.2%)       
Alpha Bank AE (c)   15,550      387,923
        
HONG KONG (0.6%)       
Financial Services (0.6%)       
Hang Lung Group Ltd. (c)   87,420      189,235
        
    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
IRELAND (2.2%)       
Banking (2.2%)       
Anglo Irish Bank Corp. PLC (c)   23,260    $ 362,422
Bank of Ireland (c)   20,710      368,098
        
           730,520
        
ITALY (2.6%)       
Banking (2.6%)       
UniCredito Italiano SpA (c)   113,104      884,495
        
JAPAN (9.5%)       
Banking (3.3%)       
Mitsubishi UFJ Financial Group, Inc. (c)   56      785,141
Sumitomo Mitsui Financial Group, Inc. (c)   23      243,609
Suruga Bank Ltd. (c)   5,000      67,715
        
           1,096,465
        
Financial Services (4.0%)           
Daiwa Securities Group, Inc. (c)   14,000      166,850
Mizuho Financial Group, Inc. (c)   117      992,435
Orix Corp. (c)   700      170,838
        
           1,330,123
        
Real Estate (2.2%)           
Mitsubishi Estate Co. Ltd. (c)   13,000      276,706
Mitsui Fudosan Co. Ltd. (c)   8,000      173,893
Sumitomo Realty & Development Co. Ltd. (c)   12,000      296,154
        
           746,753
        
           3,173,341
        
NETHERLANDS (3.3%)       
Financial Services (1.0%)       
Fortis NV (c)   9,550      325,621
        
Insurance (2.3%)           
ING Groep NV (c)   19,760      775,640
        
           1,101,261
        

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
SPAIN (2.2%)       
Banking (2.2%)       
Banco Bilbao Vizcaya Argentaria SA (c)   35,430    $ 728,969
        
SWITZERLAND (3.0%)       
Financial Services (3.0%)       
UBS AG (c)   9,270      1,015,033
        
UNITED KINGDOM (8.9%)       
Banking (8.9%)       
Barclays PLC (c)   36,430      412,936
HBOS PLC (c)   11,510      199,724
HSBC Holdings PLC (c)   62,370      1,097,292
Lloyds TSB Group PLC (c)   25,310      247,912
Royal Bank of Scotland Group PLC (c)   30,950      1,015,825
        
           2,973,689
        
UNITED STATES (48.8%)       
Banking (12.9%)       
Bank of America Corp.   28,140      1,353,534
Colonial BancGroup, Inc.   15,920      408,826
Hudson City Bancorp, Inc.   22,000      293,260
SunTrust Banks, Inc.   6,450      491,877
Synovus Financial Corp.   4,900      131,222
U.S. Bancorp   16,650      514,152
Wachovia Corp.   17,860      965,869
Zions Bancorp   2,060      160,556
        
           4,319,296
        
Financial Services (20.1%)           
Accredited Home Lenders Holding Co. (b)   2,100      100,401
American Express Co.   2,150      114,423
AmeriCredit Corp. (b)   11,780      328,898
Capital One Financial Corp.   5,900      504,155
Chicago Mercantile Exchange   860      422,389
Citigroup, Inc.   25,150      1,213,235
Clayton Holdings, Inc. (b)   2,390      31,190
E*TRADE Financial Corp. (b)   7,240      165,217
Fannie Mae   3,240      155,844
Goldman Sachs Group, Inc.   5,140      773,210
    Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)       
UNITED STATES (continued)       
Financial Services (continued)       
Greenhill & Co., Inc.   4,200    $ 255,192
J.P. Morgan Chase & Co.   15,610      655,620
Lehman Brothers Holdings, Inc.   4,720      307,508
Moody’s Corp.   2,400      130,704
SLM Corp.   4,720      249,782
State Street Corp.   4,000      232,360
T. Rowe Price Group, Inc.   4,200      158,802
Thomas Weisel Partners Group, Inc. (b)   8,220      156,262
United PanAm Financial Corp. (b)   8,370      254,448
Washington Mutual, Inc.   6,900      314,502
Wright Express Corp. (b)   6,200      178,188
        
           6,702,330
        
Insurance (12.2%)           
AFLAC, Inc.   4,470      207,185
Allstate Corp.   4,830      264,346
American International Group, Inc.   10,050      593,452
Assurant, Inc.   11,110      537,724
Endurance Specialty Holdings Ltd.   10,940      350,080
Genworth Financial, Inc., Class A   7,060      245,970
Lincoln National Corp.   4,600      259,624
Metlife, Inc.   3,980      203,816
PartnerRe Ltd.   2,500      160,125
Progressive Corp. (The)   16,770      431,157
Prudential Financial, Inc.   4,200      326,340
St. Paul Travelers Cos.   7,150      318,747
United Fire & Casualty Co.   6,310      190,120
        
           4,088,686
        
Paper Products (0.8%)           
Potlatch Corp.   6,786      256,172
        
Real Estate Investment Trusts (2.8%)       
General Growth Properties, Inc.   3,000      135,180
New Century Financial Corp.   2,210      101,108
ProLogis   5,180      269,982

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

    Shares or
Principal Amount		    Value  
                
COMMON STOCKS (continued)         
UNITED STATES (continued)         
Real Estate Investment Trusts (continued)  
Redwood Trust, Inc.     5,410    $ 264,170  
Ventas, Inc.     4,530      153,476  
          
             923,916  
          
             16,290,400  
          
Total Common Stocks      32,295,245  
          
CASH EQUIVALENTS (4.3%)         
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $1,449,020)   $ 1,448,396      1,448,396  
          
Total Cash Equivalents      1,448,396  
          
Total Investments
(Cost $32,297,966) (a) — 100.9%		      33,743,641  
Liabilities in excess of
other assets — (0.9%)		      (316,856 )
          
NET ASSETS — 100.0%          $ 33,426,785  
          

 

 

(a) See notes to financial statements for tax and unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair valued security.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $30,849,570)

    $ 32,295,245  

Repurchase agreements, at cost and value

      1,448,396  
    

Total Investments

      33,743,641  
    

Foreign currencies, at value (cost $16,020)

      16,218  

Interest and dividends receivable

      46,504  

Receivable for capital shares issued

      27,213  

Receivable for investments sold

      882,778  

Reclaims receivable

      13,605  

Prepaid expenses and other assets

      473  
    

Total Assets

      34,730,432  
    

Liabilities:

         

Payable to custodian

      18,812  

Payable for capital shares redeemed

      399,526  

Payable for investments purchased

      800,284  

Unrealized depreciation on forward foreign currency contracts

      4,490  

Accrued expenses and other payables:

         

Investment advisory fees

      75,027  

Fund administration and transfer agent fees

      1,887  

Distribution fees

      354  

Administrative servicing fees

      3,257  

Other

      10  
    

Total Liabilities

      1,303,647  
    

Net Assets

    $ 33,426,785  
    

Represented by:

         

Capital

    $ 29,307,904  

Accumulated net investment income (loss)

      (220,758 )

Accumulated net realized gains (losses) from investment and foreign currency transactions

      2,893,350  

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies

      1,446,289  
    

Net Assets

    $ 33,426,785  
    

Net Assets:

         

Class I Shares

    $ 7,237,739  

Class II Shares

      1,749,972  

Class III Shares

      24,439,074  
    

Total

    $ 33,426,785  
    

Shares outstanding (unlimited number of shares authorized):

         

Class I Shares

      546,852  

Class II Shares

      132,601  

Class III Shares

      1,845,702  
    

Total

      2,525,155  
    

Net asset value and offering price per share:*

         

Class I Shares

    $ 13.24  

Class II Shares

    $ 13.20  

Class III Shares

    $ 13.24  

 

* Not subject to a front-end sales charge.

Statement of Operations

For the six months ended June 30, 2006 (Unaudited)

 

Investment Income:

         

Interest income

    $ 15,305  

Dividend income (net of foreign withholding tax of $30,426)

      487,566  
    

Total Income

      502,871  
    

Expenses:

         

Investment advisory fees

      144,369  

Fund administration and transfer agent fees

      16,457  

Distribution fees Class II Shares

      2,189  

Administrative servicing fees Class I Shares

      4,914  

Administrative servicing fees Class II Shares

      1,303  

Administrative servicing fees Class III Shares

      15,045  

Trustee fees

      565  

Other

      6,180  
    

Total expenses before earnings credit

      191,022  

Earnings credit (Note 6)

      (2 )
    

Total Expenses

      191,020  
    

Net Investment Income (Loss)

      311,851  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      3,083,206  

Net realized gains (losses) on foreign currency transactions

      10,009  
    

Net realized gains (losses) on investment and foreign currency transactions

      3,093,215  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (1,355,610 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      1,737,605  
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 2,049,456  
    

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Changes in Net Assets

 

       Six Months Ended
June 30, 2006
        Year Ended
December 31, 2005
  
       (Unaudited)           

From Investment Activities:

                      

Operations:

                      

Net investment income (loss)

      $ 311,851        $ 284,157  

Net realized gains (losses) on investment and foreign currency transactions

        3,093,215          2,410,937  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (1,355,610 )        (500,989 )
      
    

Change in net assets resulting from operations

        2,049,456          2,194,105  
      
    

Distributions to Class I shareholders from:

                      

Net investment income

        (92,180 )        (74,845 )

Net realized gains on investments

        (76,898 )        (493,113 )

Distributions to Class II shareholders from:

                      

Net investment income

        (21,119 )        (29,857 )

Net realized gains on investments

        (18,311 )        (161,050 )

Distributions to Class III shareholders from:

                      

Net investment income

        (324,034 )        (323,915 )

Net realized gains on investments

        (253,070 )        (1,878,073 )
      
    

Change in net assets from shareholder distributions

        (785,612 )        (2,960,853 )
      
    

Change in net assets from capital transactions

        3,320,341          4,086,038  
      
    

Change in net assets

        4,584,185          3,319,290  

Net Assets:

                      

Beginning of period

        28,842,600          25,523,310  
      
    

End of period

      $ 33,426,785        $ 28,842,600  
      
    

Accumulated net investment income (loss)

      $ (220,758 )      $ (95,276 )
      
    

CAPITAL TRANSACTIONS:

                      

Class I Shares

                      

Proceeds from shares issued

      $ 1,966,109        $ 3,305,266  

Dividends reinvested

        169,077          567,957  

Cost of shares redeemed

        (915,357 )        (1,906,576 )
      
    
         1,219,829          1,966,647  
      
    

Class II Shares

                      

Proceeds from shares issued

        128          196  

Dividends reinvested

        39,430          190,907  

Cost of shares redeemed

        (50,788 )        (361,011 )
      
    
         (11,230 )        (169,908 )
      
    

Class III Shares

                      

Proceeds from shares issued

        9,673,751          8,227,215  

Dividends reinvested

        577,102          2,201,984  

Cost of shares redeemed

        (8,139,111 )        (8,139,900 )
      
    
         2,111,742          2,289,299  
      
    

Change in net assets from capital transactions

      $ 3,320,341        $ 4,086,038  
      
    

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND

 

Statement of Changes in Net Assets (Continued)

 

       Six Months Ended
June 30, 2006
      Year Ended
December 31, 2005
  
       (Unaudited)         

SHARE TRANSACTIONS:

                

Class I Shares

                

Issued

      144,530      252,815  

Reinvested

      12,904      45,191  

Redeemed

      (68,609 )    (152,719 )
      
  
       88,825      145,287  
      
  

Class II Shares

                

Issued

      — (a)    — (a)

Reinvested

      3,015      15,326  

Redeemed

      (3,842 )    (28,739 )
      
  
       (827 )    (13,413 )
      
  

Class III Shares

                

Issued

      723,106      635,243  

Reinvested

      43,963      175,497  

Redeemed

      (607,667 )    (655,199 )
      
  
       159,402      155,541  
      
  

 

(a) Amount is less than 1 share.

 

See notes to financial statements.

 

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Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

Gartmore GVIT Global Financial Services Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Redemption
Fees		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net
Asset
Value,
End of
Period		   Total
Return		     Net
Assets at
End of
Period
(000s)		   Ratio of
Expenses
to
Average
Net
Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average Net
Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average Net
Assets(a)		     Portfolio
Turnover(b)

Class I Shares

                                                                                          

Period Ended December 31, 2002(c)

   $ 10.23   —   0.01   (1.27 )   (1.26 )   (0.01 )   —     (0.01 )   $ 8.96   (12.26% )(f)   $ 218   1.37% (g)   0.30% (g)     (h)      (h)   211.21%

Year Ended December 31, 2003

   $ 8.96   0.10   0.01   3.58     3.69     (0.05 )   (1.21 )   (1.26 )   $ 11.39   41.45%     $ 3,121   1.27%     1.47%       (h)      (h)   261.68%

Year Ended December 31, 2004

   $ 11.39   0.17   0.01   2.19     2.37     (0.17 )   (0.77 )   (0.94 )   $ 12.82   20.99%     $ 4,011   1.27%     1.19%       (h)      (h)   127.69%

Year Ended December 31, 2005

   $ 12.82   0.19   —   1.18     1.37     (0.25 )   (1.28 )   (1.53 )   $ 12.66   11.15%     $ 5,799   1.34%     1.24%       (h)      (h)   217.57%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.66   0.14   —   0.76     0.90     (0.18 )   (0.14 )   (0.32 )   $ 13.24   7.13% (f)   $ 7,238   1.19% (g)   1.96% (g)     (h)      (h)   129.76%

Class II Shares

                                                                                          

Period Ended December 31, 2003(d)

   $ 8.46   0.04   0.01   4.11     4.16     (0.04 )   (1.21 )   (1.25 )   $ 11.37   49.51% (f)   $ 913   1.51% (g)   1.20% (g)     (h)      (h)   261.68%

Year Ended December 31, 2004

   $ 11.37   0.11   0.01   2.22     2.34     (0.14 )   (0.77 )   (0.91 )   $ 12.80   20.76%     $ 1,879   1.52%     1.00%       (h)      (h)   127.69%

Year Ended December 31, 2005

   $ 12.80   0.14   —   1.18     1.32     (0.22 )   (1.28 )   (1.50 )   $ 12.62   10.79%     $ 1,685   1.59%     1.08%       (h)      (h)   217.57%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.62   0.11   —   0.77     0.88     (0.16 )   (0.14 )   (0.30 )   $ 13.20   7.02% (f)   $ 1,750   1.44% (g)   1.67% (g)     (h)      (h)   129.76%

Class III Shares

                                                                                          

Period Ended December 31, 2001(e)

   $ 10.00   —   —   0.13     0.13     —     —     —     $ 10.13   1.32% (f)   $ 3,041   1.35% (g)   0.33% (g)   8.56% (g)   (6.88% )(g)   0.00%

Year Ended December 31, 2002

   $ 10.13   0.04   0.01   (1.21 )   (1.16 )   (0.01 )   —     (0.01 )   $ 8.96   (11.41% )   $ 6,009   1.31%     0.66%       (h)      (h)   211.21%

Year Ended December 31, 2003

   $ 8.96   0.13   0.01   3.55     3.69     (0.05 )   (1.21 )   (1.26 )   $ 11.39   41.46%     $ 11,634   1.22%     1.57%       (h)      (h)   261.68%

Year Ended December 31, 2004

   $ 11.39   0.14   0.01   2.23     2.38     (0.17 )   (0.77 )   (0.94 )   $ 12.83   21.13%     $ 19,634   1.24%     1.28%       (h)      (h)   127.69%

Year Ended December 31, 2005

   $ 12.83   0.20   —   1.17     1.37     (0.25 )   (1.28 )   (1.53 )   $ 12.67   11.17%     $ 21,359   1.29%     1.36%       (h)      (h)   217.57%

Six Months Ended June 30, 2006 (Unaudited)

   $ 12.67   0.13   —   0.76     0.89     (0.18 )   (0.14 )   (0.32 )   $ 13.24   7.05% (f)   $ 24,439   1.17% (g)   1.96% (g)     (h)      (h)   129.76%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.

 

(c) For the period from May 10, 2002 (commencement of operations) through December 31, 2002.

 

(d) For the period from March 28, 2003 (commencement of operations) through December 31, 2003.

 

(e) For the period from December 18, 2001 (commencement of operations) through December 31, 2001. Registration of shares effective with the Securities and Exchange Commission on December 28, 2001. On the effective date, the net asset value was $10.13 per share.

 

(f) Not annualized.

 

(g) Annualized.

 

(h) There were no fee reductions during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of October 30, 1997, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the Gartmore GVIT Global Financial Services Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Debt (including defaulted issues) and other fixed income securities (other than short-term obligations) are valued at the last quoted bid price and/or by using a combination of daily quotes and matrix evaluations provided by an independent pricing service, the use of which has been approved by the Trust’s Board of Trustees. Short-term debt securities, such as commercial paper and U.S. Treasury Bills having a remaining maturity of 60 days or less at the time of purchase, are considered to be “short-term” and are valued at amortized cost which approximates market value.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee,

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Short Sales

 

The Fund is authorized to engage in short-selling of portfolio securities which obligates the Fund to replace any security that the Fund has borrowed by purchasing the security at current market value sometime in the future. The Fund will incur a loss if the

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund generally will realize a gain if the price of the security declines between these dates. Until the Fund replaces the borrowed security, the Fund will maintain a segregated account with cash, U.S. Government securities and/or securities held long to sufficiently cover the Fund’s short position on a daily basis. Dividends declared on securities sold short are recorded as an expense on the ex-dividend date and paid to the counterparty on the dividend pay date. The collateral for securities sold short includes the deposits with brokers and securities held long as shown in the Statement of Investments for the Fund.

 

(i) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(j) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(k) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(l) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

As of June 30, 2006, the tax cost of securities and breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of Securities

  

Unrealized

Appreciation

  

Unrealized
Depreciation

  

Net Unrealized

Appreciation

(Depreciation)*

$32,393,165   $1,834,310   $(388,636)   $1,445,674

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(m) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Global Asset Management Trust (“GGAMT”) manages the investment of the assets and supervises the daily business affairs of the Fund. GGAMT is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GGAMT provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GGAMT advises. Gartmore Global Partners (the “subadviser”), an affiliate of GGAMT, manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund.

 

Under the terms of the Investment Advisory Agreement, the Fund pays GGAMT an investment advisory fee based on that Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreement, GGAMT pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GGAMT and the subadviser is as follows for the six months ended June 30, 2006:

 

Fee Schedule    Total
Fees		      Fees
Retained		      Paid to
Sub-adviser

Up to $500 million

    0.90%      0.450%      0.450%

$500 million up to $2 billion

    0.85%      0.425%      0.425%

$2 billion and more

    0.80%      0.400%      0.400%

 

Beginning January 1, 2007, the Fund’s base management fee (as adjusted for any applicable breakpoints) may increase or decrease proportionately depending on how the Fund performs relative to its benchmark, the MSCI World Financials Index. This performance fee is intended to reward or penalize the investment adviser for outperforming or underperforming the Fund’s benchmark.

 

The calculation of the total management fee is done in two separate steps. First, the Fund calculates a base fee (to be paid at the end of each quarter). The base fee rate results in an annual fee, calculated and accrued daily. The fee rate is applied to the Fund’s average net assets over that quarter. Second, a performance adjustment percentage is applied to the Fund’s average net assets over the 12-month rolling performance period. The performance adjustment amount is then added to (or subtracted from, as applicable) the base fee to arrive at the Fund’s total advisory fee for the most recently completed quarterly sub-period and that total fee is paid at the end of that most recently completed quarter.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

The performance fee calculation applies to all of the Fund’s share classes equally, based on the performance of the Class III shares during the performance period. The table below shows the performance adjustment rate applicable to each Fund’s base fee.

 

Out or Underperformance

    Change in Fees

+/- 1 percentage point

    +/- 0.02%

+/- 2 percentage point

    +/- 0.04%

+/- 3 percentage point

    +/- 0.06%

+/- 4 percentage point

    +/- 0.08%

+/- 5 percentage point

    +/- 0.10%

 

The first such payment or penalty, if any, will be made at the end of March 2007 for the Fund (15 months after implementation of the performance-based fees on January 1, 2006). Thereafter, the performance adjusted advisory fee will be paid quarterly.

 

Under this performance fee arrangement, the investment adviser can receive a performance fee increase even if the Fund experiences negative performance that still exceeds its benchmark by more than the relevant percentage amount shown above.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares of the Fund at an annual rate not to exceed 0.25%.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the six months ended June 30, 2006, Nationwide Financial Services received $20,019 in Administrative Services Fees from the Fund.

 

As of June 30, 2006, the adviser or affiliates of the adviser directly held 16% of the shares outstanding of the Fund.

 

4. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $43,594,819 and sales of $41,484,059.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class III shares that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class III shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class III shares on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class III shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the six months ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $4,902.

 

5. Investment Transactions

 

For the six months ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $43,594,819 and sales of $41,484,059.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information

 

June 30, 2006 (Unaudited)

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year. In the Lipper reports, Lipper selected an expense group consisting of the Fund and a representative sample of comparable funds (an “Expense Group”). The Lipper report also contained comparisons of total return performance. For purposes of the Lipper report, a “Performance Group” was used by Lipper to compare the total return performance of the Fund against that of similar funds, and the Performance Group may have been comprised of the same funds as the Fund’s Expense Group. The Lipper ranking methodology ranks the Fund based upon expense and performance comparisons. The highest/best performing funds are ranked in the first quintile, with the lowest performing funds ranked in the fifth quintile. The funds with the lowest expenses are ranked in the first quintile and the funds with the highest expenses are ranked in the fifth quintile. Therefore, the highest expense is defined as being in the 5th quintile while the highest performance is defined as being in the 1st quartile.

 

In considering whether to renew the investment advisory agreement (and, where applicable, the sub-advisory agreement) for the Fund, the Board considered among others, the following specific factors with respect to the Fund:

 

1. the Fund’s advisory fee and ancillary benefits;

 

2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

3. the Fund’s total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

4. the performance of the Fund compared to its benchmark and its peer group of funds; and

 

5. the profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

The Board reviewed the Fund’s performance and considered that the Fund outperformed its benchmark, the MSCI World/Financials Index, by 4 basis points for the one-year period ended September 30, 2005 and by 335 basis points for the three-year period. The Board considered that the Fund ranked in the second quartile of the Lipper Specialty/Miscellaneous Funds category for the one-year period, and ranked in the first quartile for the three-year period. The Board discussed with management the performance and distribution of this Fund.

 

Next, the Board reviewed the Fund’s contractual advisory fee (including the subadvisory fee) and breakpoints and noted that the contractual advisory fee placed the Fund in the fifth quintile of its Lipper-constructed Expense Group. The Board also considered the Fund’s total expenses placed the Fund above the median of its Lipper Expense Group by 24 basis points. Management explained that the Fund’s higher expense ratio relative to its peers was primarily due to a higher management fee. However, the Board considered that the management fee was reduced by 10 basis points on January 1, 2006, in conjunction with the implementation of a performance-based fee structure for this Fund. Finally, the Board considered the adviser’s profitability in light of all of the above and determined it was not excessive.

 

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Supplemental Information (Continued)

 

June 30, 2006 (Unaudited)

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to continue the investment advisory (and subadvisory) agreements for the Fund for an annual period which commenced on May 1, 2006.

 

On May 25, 2006, Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively, “Nationwide”), the parent companies of Gartmore Global Asset Management Trust (“GGAMT”) and GGAMT’s investment advisory subsidiaries, Gartmore Mutual Fund Capital Trust (“GMFCT”) and Gartmore Morley Capital Management, Inc. (“GMCM”), each of which, along with GGAMT, serves as an investment adviser to various series of the Gartmore Variable Insurance Trust (the “Funds”), announced that Nationwide entered into a definitive agreement for the sale of Gartmore Group Limited (“GGL”), including certain of GGL’s subsidiaries based in the United Kingdom (the “U.K. Sale”). GGL’s U.K. investment advisory subsidiaries includes Gartmore Global Partners (“GGP”), the Fund’s current sub-adviser. Management informed the Board that, pending regulatory approval in the U.K. and other such appropriate jurisdiction, the U.K. Sale is expected to close during the third quarter of 2006, at which time a change in control of GGP will occur that will cause GGP’s current subadvisory agreement with the Fund to terminate. Management recommended that the Fund’s adviser assume responsibility for the day-to-day management of the Fund immediately upon the closing of the U.K. Sale to ensure continued provision of investment management services to the Fund. The Board considered management’s representation that upon the closing of the U.K. Sale (1) the Fund will be managed by the same portfolio managers who manage the Fund’s assets at this time; however, they will now do so on behalf of the adviser; and (2) that the Fund will be managed in the same way, utilizing the same investment objective and strategies currently used by GGP. Consequently, at its Regular Quarterly Meeting on June 14, 2006, the Board approved the assumption by the adviser of day-to-day management of this Fund, effective immediately upon the closing of the U.K. Sale which as of the date of printing of this report, had not yet occurred.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Charles E. Allen

 

c/o Gartmore Global

Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA

19428

 

1948

  

Trustee since

July 2000

   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global

Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA

19428

 

1947

  

Trustee since

July 2000

   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global

Investments, Inc.

1200 River Road,

Suite 1000

Conshohocken, PA

19428

 

1940

  

Trustee since

1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Name, Address and Year

of Birth

  

Position(s)

Held with the

Trust

and Length of

Time Served1

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Portfolios in

the Gartmore

Fund Complex

Overseen by

Trustee

  

Other

Directorships

Held by Trustee

or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

23

Table of Contents

 

American Funds GVIT Asset Allocation Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
2    Statement of Assets and Liabilities
2    Statement of Operations
3    Statements of Changes in Net Assets
4    Financial Highlights
5    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-AGAA (8/06)

Table of Contents

 

Shareholder

Expense Example

American Funds GVIT Asset Allocation Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, May 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
May 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period
    Annualized
Expense Ratio
American Funds GVIT Asset Allocation Fund                              

Class II

      Actual    $ 1,000.00      $ 973.10      $ 2.84a    0.58%a
       Hypothetical1    $ 1,000.00      $ 1,021.92      $ 2.91b    0.58%b

Class VII

      Actual    $ 1,000.00      $ 972.80      $ 5.58a    1.14%a
       Hypothetical1    $ 1,000.00      $ 1,019.15      $ 5.72b    1.14%b

 

 

1 Represents the hypothetical 5% return before expenses.

 

a Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

b Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT ASSET ALLOCATION FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments in Portfolio (cost $19,067,516)

    $ 19,056,971  

Receivable for capital shares issued

      414,792  
    

Total Assets

      19,471,763  
    

Liabilities:

         

Payable for capital shares redeemed

      18  

Accrued expenses and other payables:

         

Fund administration and transfer agent fees

      1,312  

Master feeder service provider fee

      880  

Distribution fees

      2,199  

Administrative servicing fees

      2,156  

Trustee fees

      52  

Other

      2,047  
    

Total Liabilities

      8,664  
    

Net Assets

    $ 19,463,099  
    

Represented by:

         

Capital

    $ 19,306,296  

Accumulated net investment income (loss)

      169,015  

Accumulated net realized gains (losses) from investment

      (1,667 )

Net unrealized appreciation (depreciation) on investments

      (10,545 )
    

Net Assets

    $ 19,463,099  
    

Net Assets:

         

Class II Shares

      19,462,125  

Class VII Shares

      974  
    

Total

    $ 19,463,099  
    

Shares outstanding (unlimited number of shares authorized):

         

Class II Shares

      1,117,605  

Class VII Shares

      56  
    

Total

      1,117,661  
    

Net asset value and offering price per share:*

         

Class II Shares

    $ 17.41  

Class VII Shares

    $ 17.42 (a)

Statement of Operations

For the period ended June 30, 2006 (Unaudited)(b)

 

Investment Income:

         

Dividend income

    $ 222,027  
    

Total Income

      222,027  
    

Expenses:

         

Fund administration and transfer agent fees

      1,436  

Master feeder service provider fee

      2,675  

Distribution fees Class II Shares

      2,674  

Distribution fees Class VII Shares

      1  

Administrative servicing fees Class II Shares

      2,674  

Administrative servicing fees Class VII Shares

      1  

Professional fees

      2,162  

Trustee fees

      74  

Other

      1,129  
    

Total expenses before waived expenses

      12,826  

Expenses waived

      (1,605 )
    

Total Expenses

      11,221  
    

Net Investment Income (Loss)

      210,806  
    

REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (1,667 )

Net change in unrealized appreciation/depreciation on investments

      (10,545 )
    

Net realized/unrealized gains (losses) on investments

      (12,212 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 198,594  
    

 

 

* Not subject to a front-end sales charge.

 

(a) Due to rounding, Net Assets divided by shares outstanding does not equal the NAV.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

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AMERICAN FUNDS GVIT ASSET ALLOCATION FUND

 

Statement of Changes in Net Assets

     Period Ended
June 30, 2006(a)
  
     (Unaudited)  

From Investment Activities:

         

Operations:

         

Net investment income (loss)

    $ 210,806  

Net realized gains (losses) on investment transactions

      (1,667 )

Net change in unrealized appreciation/depreciation on investments

      (10,545 )
    

Change in net assets resulting from operations

      198,594  
    

Distributions to Class II shareholders from:

         

Net investment income

      (41,789 )

Distributions to Class VII shareholders from:

         

Net investment income

      (2 )
    

Change in net assets from shareholder distributions

      (41,791 )
    

Change in net assets from capital transactions

      19,306,296  
    

Change in net assets

      19,463,099  

Net Assets:

         

Beginning of period

      —  
    

End of period

    $ 19,463,099  
    

Accumulated net investment income (loss)

    $ 169,015  
    

CAPITAL TRANSACTIONS:

         

Class II Shares

         

Proceeds from shares issued

    $ 19,344,114  

Dividends reinvested

      41,789  

Cost of shares redeemed

      (80,609 )
    
       19,305,294  
    

Class VII Shares

         

Proceeds from shares issued

      1,000  

Dividends reinvested

      2  
    
       1,002  
    

Change in net assets from capital transactions

    $ 19,306,296  
    

SHARE TRANSACTIONS:

         

Class II Shares

         

Issued

      1,119,888  

Reinvested

      2,442  

Redeemed

      (4,725 )
    
       1,117,605  
    

Class VII Shares

         

Issued

      56  

Reinvested

      — (b)
    
       56  
    

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(b) Amount is less than 1 share.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

American Funds GVIT Asset Allocation Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value,
End
of
Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses (Prior
to
Reimbursements)
to Average Net
Assets		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average Net
Assets		     Portfolio
Turnover(a)

Class II Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(b)

   $ 17.92   0.20   (0.66 )   (0.46 )   (0.05 )   (0.05 )   $ 17.41   (2.58% )(c)   $ 19,462   0.50% (d)   10.96% (d)   0.58% (d)   10.87% (d)   21.00%

Class VII Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(b)

   $ 17.92   0.26   (0.73 )   (0.47 )   (0.03 )   (0.03 )   $ 17.42   (2.61% )(c)   $ 1   1.14% (d)   9.29% (d)   1.14% (d)   9.29% (d)   21.00%

 

(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(c) Not annualized.

 

(d) Annualized.

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the American Funds GVIT Asset Allocation Fund (the “Fund”).

 

The Fund operates as a “feeder fund” which means that the Fund does not buy individual securities directly. Instead, the Fund invests all of its assets in another mutual fund, the American Asset Allocation Fund (the “Master Fund”), a series of the American Funds Insurance Series® (“American Funds”), which invests directly in individual securities. The Fund, therefore, has the same investment objective and limitations as the Master Fund in which the Fund invests and the same gross investment returns as the Master Fund.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

The net asset value (“NAV”) per share of each class of the Fund is calculated by taking the NAV of the Master Fund, subtracting the Fund’s liabilities attributable to the Fund, and dividing by the number of shares of that class that are outstanding. The Fund’s NAV is determined at the close of regular trading on the New York Stock Exchange (the “Exchange”) (usually 4 p.m. Eastern Time) (“Close of Trading”) on each day the Exchange is open for trading (“Business Day”). Each Fund may reject any order to buy Fund shares and may suspend the sale of Fund shares at any time.

 

The Master Fund calculates its NAV at the Close of Trading on each Business Day. Assets held by the Master Fund are valued primarily on the basis of market quotations. The Master Fund, however, has adopted procedures for making “fair value” determinations if market quotations are not readily available. For example, if events occur between the close of markets outside the United States and the close of regular trading on the New York Stock Exchange that, in the opinion of Capital Research and Management Company (“Capital Research”), the Master Fund’s investment adviser, materially affect the value of the portfolio securities of the Master Fund, the securities will be valued in accordance with the Master Fund’s

 

5

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

fair value procedures. Use of these procedures is intended to result in more appropriate NAVs. In addition, such use will reduce, if not eliminate, potential arbitrage opportunities otherwise available to short-term investors in the Master Fund.

 

(b) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(c) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the NAV of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(d) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

    Unrealized
Appreciation
    Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
  

$19,069,183

    $ —    $ (12,212 )   $ (12,212 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(e) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Master Fund’s Investment Advisory Agreement, Capital Research manages the investment of the assets and supervises the daily business affairs of the Master Fund. Gartmore SA Capital Trust (“GSA”) provides non-investment master-feeder operational support services to the Fund. Under the terms of the Trust’s Master-Feeder Services Agreement with GSA on behalf of the Fund, the Fund pays GSA a fee of 0.25% based on the Fund’s average daily net assets. GSA has entered into a contractual agreement with the Trust under which GSA will waive 0.15% of the fees GSA receives for the providing the Fund with non-investment master-feeder operational support services until May 1, 2007.

 

6

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, GSA provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all Funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Fund for expenses associated with the distribution of the shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares and Class VII shares of the Fund at an annual rate not to exceed 0.25% of Class II shares and 0.40% of Class VII shares.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the period ended June 30, 2006, Nationwide Financial Services received $2,867 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the period ended June 30, 2006, (excluding short-term securities) the Master Fund had purchases of $1,231,288 and sales of $1,240,593.

 

5. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging markets instruments that are subject to certain additional credit and market risks. The yields of emerging markets debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association-College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”),3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		  

Principal Occupation(s)

During Past 5 Years

   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

12

Table of Contents

Financial Statements

for the American Funds Master Fund

AMERICAN FUNDS INSURANCE SERIES

Asset Allocation Fund

INVESTMENT MIX BY SECURITY TYPE

Where the fund’s assets were invested

based on total net assets as of

June 30, 2006

 

    

Percent of

net assets

  

Equity Securities

    70.2  

Corporate bonds

    9.3  

U.S. Government & government agency bonds & notes

    5.5  

Non-U.S. government bonds & notes

    0.1  

Mortgage-backed obligations

    6.0  

Asset-backed obligations

    0.9  

Short-term securities & other assets less liabilities

    8.0  
      
   100.0 %
      

Table of Contents

AMERICAN FUNDS INSURANCE SERIES

Asset Allocation Fund

LARGEST INDIVIDUAL EQUITY SECURITIES

As of June 30, 2006

 

    

Percent of

net assets

  

Microsoft

    3.8 %

Altria Group

    3.5  

Schlumberger

    2.5  

Suncor Energy

    2.4  

Boeing

    2.0  

Petro-Canada

    1.6  

Lowe’s Companies

    1.6  

BHP Biliton

    1.6  

Medtronic

    1.4  

Fannie Mae

    1.3  

Table of Contents

American Funds Insurance Series Asset Allocation Fund

Investment portfolio, June 30, 2006

 

Common stocks

    Shares    Market
value
          (000)

Abbott Laboratories

    750,000    32,708

AFLAC Inc.

    700,000    32,445

Alcan Inc.

    875,000    41,073

Alcoa Inc.

    1,100,000    35,596

Allstate Corp.

    540,000    29,554

Altria Group, Inc.

    3,100,000    227,633

Anheuser-Busch Companies, Inc.

    750,000    34,193

Applied Materials, Inc.

    2,500,000    40,700

Arch Coal, Inc.

    1,000,000    42,370

AstraZeneca PLC (ADR) (United Kingdom)

    700,000    41,874

AstraZeneca PLC (Sweden)

    106,000    6,395

Aventine Renewable Energy, Inc. (1) (2)

    1,350,000    52,515

Avnet, Inc. (2)

    1,400,000    28,028

Bank of America Corp.

    1,250,000    60,125

BellSouth Corp.

    2,190,000    79,278

Best Buy Co., Inc.

    705,350    38,681

BHP Billiton Ltd.

    4,775,000    102,845

Boeing Co.

    1,550,000    126,961

Bristol-Myers Squibb Co.

    2,000,000    51,720

C&C Group PLC

    4,234,622    36,735

Cameco Corp.

    1,200,000    47,817

Cardinal Health, Inc.

    1,000,000    64,330

Carnival Corp., units

    1,200,000    50,088

CDW Corp.

    300,000    16,395

Ceridian Corp. (2)

    457,000    11,169

Chevron Corp.

    1,234,328    76,602

CIGNA Corp.

    300,000    29,553

Cisco Systems, Inc. (2)

    2,000,000    39,060

Citigroup Inc.

    1,200,000    57,888

CNX Gas Corp. (1) (2)

    125,000    3,750

COLT Telecom Group SA (2) (4)

    51,200    166

Commerce Bancorp, Inc.

    1,000,000    35,670

CONSOL Energy Inc.

    395,000    18,454

DataPath, Inc. (1) (2) (4)

    1,193,063    13,124

Deere & Co.

    640,000    53,434

Delta Air Lines, Inc. (1) (2)

    48,101    36

DigitalGlobe Inc. (1) (2) (4)

    1,225,858    1,226

Eli Lilly and Co.

    1,200,000    66,324

Energy XXI Acquisition Corp. (Bermuda) Ltd. (1) (2)

    1,108,618    5,599

Fannie Mae

    1,800,000    86,580

Freddie Mac

    800,000    45,608

General Electric Co.

    1,700,000    56,032

General Mills, Inc.

    600,000    30,996

Hewlett-Packard Co.

    1,800,000    57,024

HSBC Holdings PLC (ADR)

    500,000    44,175

Intel Corp.

    2,022,725    38,331

International Business Machines Corp.

    600,000    46,092

J.P. Morgan Chase & Co.

    1,500,000    63,000

Johnson & Johnson

    500,000    29,960

Kohl’s Corp. (2)

    1,000,000    59,120

Table of Contents

Lockheed Martin Corp.

    700,000      50,218

Lowe’s Companies, Inc.

    1,700,000      103,139

Magna International Inc., Class A

    320,000      23,030

Marathon Oil Corp.

    750,000      62,475

Marshall & Ilsley Corp.

    1,000,000      45,740

Martek Biosciences Corp. (2)

    600,000      17,370

Medtronic, Inc.

    2,000,000      93,840

Mellon Financial Corp.

    1,200,000      41,316

Microsoft Corp.

    10,500,000      244,650

Mitsubishi Corp.

    2,000,000      39,944

Murphy Oil Corp.

    200,000      11,172

Oracle Corp. (2)

    3,000,000      43,470

PepsiCo, Inc.

    600,000      36,024

Petro-Canada

    2,200,000      104,401

Pfizer Inc

    2,000,000      46,940

Raytheon Co.

    1,040,000      46,353

Reliant Energy, Inc. (2)

    4,000,000      47,920

Rio Tinto PLC

    1,112,230      58,732

Roche Holding AG

    300,000      49,506

Rosetta Resources Inc. (1) (2) (3)

    2,970,000      49,361

Royal Dutch Shell PLC, Class A (ADR)

    600,000      40,188

Sanofi-Aventis

    360,000      35,093

Schlumberger Ltd.

    2,459,800    $ 160,158

Sealed Air Corp.

    800,000      41,664

Société Générale

    465,000      68,320

Sprint Nextel Corp., Series 1

    1,500,000      29,985

State Street Corp.

    1,250,000      72,612

Suncor Energy Inc.

    1,958,788      158,564

Symantec Corp. (2)

    2,000,000      31,080

Target Corp.

    1,150,000      56,201

Telephone and Data Systems, Inc.

    575,000      23,805

Telephone and Data Systems, Inc., Special Common Shares

    575,000      22,368

Toyota Motor Corp.

    800,000      41,884

Verizon Communications Inc.

    1,200,000      40,188

Walgreen Co.

    1,708,900      76,627

Weyerhaeuser Co.

    480,000      29,880

Other common stocks in initial period of acquisition

         115,345

Total common stocks (cost: $3,600,832,000)

         4,548,595

Preferred stocks

    Shares    Market
value
          (000)

BNP Paribas 5.186% noncumulative (1) (5)

    2,500,000      2,271

Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (1) (5)

    250,000      268

IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred (1) (5)

    2,250,000      2,365

National Bank of Canada, Series A, 8.35% exchangeable preferred depositary shares

    60,000      1,576

Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative preferred (1) (5)

    3,905,000    $ 3,728

Total preferred stocks (cost: $10,209,000)

         10,208

Table of Contents

Rights & warrants

    Shares    Market
value
          (000)

GT Group Telecom Inc., warrants, expire 2010 (1) (2) (4)

    2,250    0

Total rights & warrants (cost: $117,000)

      

Bonds & notes

    Principal
amount		    Market
value
     (000)    (000)

Abitibi-Consolidated Co. of Canada 6.00% 2013

    950    774

Accellent Inc. 10.50% 2013

    2,540    2,610

Accuride Corp. 8.50% 2015

    1,740    1,679

ACE Capital Trust II 9.70% 2030

    2,000    2,470

ACIH, Inc. 0%/11.50% 2012 (1) (8)

    1,060    848

Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 5.397% 2013 (5)

    9,860    9,849

AES Corp. 8.75% 2013 (1)

    2,200    2,365

AES Corp. 9.375% 2010

    112    120

AES Corp. 9.50% 2009

    2,800    2,982

Ahern Rentals, Inc. 9.25% 2013

    2,075    2,106

Ainsworth Lumber Co. Ltd. 7.25% 2012

    2,100    1,733

Albertson’s, Inc. 7.45% 2029

    2,500    2,160

Allied Waste North America, Inc. 8.50% 2008

    875    910

Allied Waste North America, Inc., Series B, 5.75% 2011

    750    703

Allied Waste North America, Inc., Series B, 6.125% 2014

    750    679

Allied Waste North America, Inc., Series B, 7.375% 2014

    3,890    3,715

AMC Entertainment Inc. 9.50% 2011

    1,080    1,066

AMC Entertainment Inc. 9.875% 2012

    500    500

American Airlines, Inc., Series 2001-1, Class B, 7.377% 2019 (6)

    100    91

American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 2013 (6)

    1,490    1,580

American Cellular Corp., Series B, 10.00% 2011

    2,250    2,379

American Commercial Lines LLC and ACL Finance Corp. 9.50% 2015

    1,346    1,481

American Media Operations, Inc. 8.875% 2011

    1,715    1,526

American Media Operations, Inc., Series B, 10.25% 2009

    2,325    2,180

American Tower Corp. 7.125% 2012

    7,840    7,860

American Tower Corp. 7.50% 2012

    250    254

AmeriCredit Automobile Receivables Trust, Series 2003-C-F, Class A-4, FSA insured, 3.48% 2010

    2,130    2,108

Ameriquest Mortgage Securities Inc., Series 2003-12, Class M-1, 6.073% 2033 (5)

    5,000    5,059

AMH Holdings, Inc. 0%/11.25% 2014 (8)

    1,860    1,130

AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015

    2,040    2,147

Appalachian Power Co., Series M, 5.55% 2011

    1,375    1,353

Argo-Tech Corp. 9.25% 2011

    2,285    2,365

Ashtead Group PLC 8.625% 2015 (1)

    550    558

Associated Materials Inc. 9.75% 2012

    1,020    1,020

Assurant, Inc. 5.625% 2014

    1,500    1,441

AT&T Corp. 7.30% 2011 (5)

    686    729

Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014

    2,300    2,173

Aztar Corp. 7.875% 2014

    1,500    1,594

BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 2011 (1) (6)

    4,782    4,904

Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-3, 4.561% 2041

    6,000    5,671

Banc of America Mortgage Securities Trust, Series 2003-G, Class 2-A-1, 4.088% 2033 (5)

    1,622    1,560

Bank of Ireland 6.107% (undated) (1) (5)

    2,250    2,099

Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.98% 2034 (5)

    2,541    2,485

Bear Stearns ARM Trust, Series 2004-3, Class II-A, 4.251% 2034 (5)

    3,114    2,996

Table of Contents

Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-3, 4.868% 2042

    7,000    6,597

BellSouth Corp. 4.20% 2009

    3,000    2,862

Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014

    2,255    2,007

Boyd Gaming Corp. 7.75% 2012

    1,000    1,014

Brandywine Operating Partnership, LP 5.75% 2012

    1,000    980

Buffets, Inc. 11.25% 2010

    2,000    2,077

Building Materials Corp. of America 7.75% 2014

    2,275    2,184

Building Materials Corp. of America 8.00% 2008

    420    425

Building Materials Corp. of America, Series B, 8.00% 2007

    250    253

Burlington Coat Factory Holdings, Inc. 11.125% 2014 (1)

    2,250    2,194

Cablevision Systems Corp., Series B, 8.00% 2012

    3,150    3,122

California Infrastructure and Economic Development Bank, Special Purpose Trust, SCE-1, Series 1997-1,
Class A-6, 6.38% 2008

    120    121

CanWest Media Inc., Series B, 8.00% 2012

    3,687    3,669

Cardinal Health, Inc. 5.85% 2017

    3,000    2,866

Carmike Cinemas, Inc., Series B, 7.937% 2012 (5)

    475    476

CCMG Acquisition Corp. 10.50% 2016 (1)

    2,125    2,263

CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013

    3,750    3,675

Celestica Inc. 7.625% 2013

    1,145    1,116

Celestica Inc. 7.875% 2011

    3,655    3,609

Cendant Corp. 6.25% 2008

    2,000    2,019

Cendant Corp. 6.875% 2006

    1,000    1,001

Centennial Communications Corp. 10.74% 2013 (5)

    1,000    1,025

Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013

    1,475    1,560

Centennial Communications Corp. and Centennial Cellular Operating Co. LLC and Centennial Puerto Rico Operations Corp. 8.125% 2014 (5)

    1,725    1,669

Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 2014 (1)

    2,750    2,767

Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032

    1,168    1,226

CHL Mortgage Pass-Through Trust, Series 2003-27, Class A-1, 3.704% 2033 (5)

    879    835

CHL Mortgage Pass-Through Trust, Series 2004-HYB6, Class A-3, 5.149% 2034 (5)

    4,691    4,626

CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.71% 2035 (5)

    8,774    8,625

Cinemark USA, Inc. 9.00% 2013

    2,325    2,453

Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012

    2,295    2,436

Cisco Systems, Inc. 5.25% 2011

    2,375    2,333

Citigroup Commercial Mortgage Trust, Series 2004-C2, Class A-1, 3.787% 2041

    1,881    1,828

CNA Financial Corp. 7.25% 2023

    1,800    1,801

Comcast Cable Communications, Inc. 6.875% 2009

    4,000    4,118

Comcast Corp. 5.85% 2015

    2,000    1,930

Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 2038

    6,000    5,417

Concentra Operating Corp. 9.50% 2010

    2,750    2,860

Consumer Credit Reference Index Securities Program Trust, Series 2002-2A, Class FX, 10.421% 2007 (1)

    1,000    1,016

Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 2019 (6)

    811    815

Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 2022 (6)

    1,132    1,103

Continental Airlines, Inc., Series 2003-ERJ1, Class A, 7.875% 2020 (6)

    426    415

Cooper-Standard Automotive Inc. 7.00% 2012

    1,530    1,377

Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035

    12,939    12,774

Countrywide Alternative Loan Trust, Series 2005-6CB, Class 2-A-1, 5.00% 2020

    7,467    7,123

Covalence Specialty Materials Corp. 10.25% 2016 (1)

    3,175    3,064

Cox Communications, Inc. 7.875% 2009

    4,000    4,205

CPS Auto Receivables Trust, Series 2003-A, Class A-2, XLCA insured, 2.89% 2009 (1)

    518    508

CPS Auto Receivables Trust, Series 2004-B, Class A-2, XLCA insured, 3.56% 2011 (1)

    1,967    1,931

CPS Auto Receivables Trust, Series 2006-A, Class 1-A-4, FSA insured, 5.33% 2012 (1)

    700    687

Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035 (1)

    3,800    3,702

CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 2034

    1,709    1,717

Table of Contents

CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035

    8,000    8,154

CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036

    5,000    5,124

CS First Boston Mortgage Securities Corp., Series 2004-5, Class IV-A-1, 6.00% 2034

    2,415    2,358

CS First Boston Mortgage Securities Corp., Series 2004-AR1, Class II-A-1, 4.663% 2034 (5)

    1,538    1,505

CS First Boston Mortgage Securities Corp., Series 2005-7, Class III-A-1, 5.00% 2020

    2,241    2,138

CS First Boston Mortgage Securities Corp., Series 2006-3, Class 1-A-4A, 5.896% 2036

    2,000    1,968

DaimlerChrysler North America Holding Corp. 7.20% 2009

    1,000    1,032

DaimlerChrysler North America Holding Corp. 7.75% 2011

    1,000    1,057

Delphi Corp. 6.50% 2013 (9)

    985    773

Developers Diversified Realty Corp. 3.875% 2009

    3,000    2,857

Developers Diversified Realty Corp. 5.50% 2015

    2,000    1,886

Dex Media, Inc., Series B, 8.00% 2013

    1,750    1,767

DLJ Mortgage Acceptance Corp., Series 1998-CF1, Class A-1B, 6.41% 2031

    4,444    4,480

Dobson Cellular Systems, Inc. 8.375% 2011 (1)

    1,500    1,549

Dobson Cellular Systems, Inc. 9.875% 2012

    1,250    1,325

Dobson Communications Corp. 8.875% 2013

    1,750    1,728

Dole Food Co., Inc. 7.25% 2010

    1,000    900

Dole Food Co., Inc. 8.875% 2011

    1,160    1,093

Dollarama Group LP 8.875% 2012 (1)

    2,650    2,676

DRS Technologies, Inc. 6.625% 2016

    850    827

DRS Technologies, Inc. 6.875% 2013

    1,350    1,306

DRS Technologies, Inc. 7.625% 2018

    275    275

Drummond Co., Inc. 7.375% 2016 (1)

    3,375    3,147

DynCorp International and DIV Capital Corp., Series A, 9.50% 2013

    2,528    2,642

E*TRADE Financial Corp. 7.875% 2015

    2,560    2,637

Earle M. Jorgensen Co. 9.75% 2012

    1,100    1,177

Edison Mission Energy 7.50% 2013 (1)

    3,725    3,669

Edison Mission Energy 7.73% 2009

    6,750    6,851

El Paso Corp. 6.375% 2009 (1)

    150    148

El Paso Corp. 7.875% 2012

    1,125    1,150

El Paso Energy Corp. 7.375% 2012

    2,245    2,239

El Paso Energy Corp. 7.75% 2010 (1)

    875    893

Electricidad de Caracas Finance BV 10.25% 2014 (1)

    1,280    1,334

Electronic Data Systems Corp. 7.45% 2029

    1,885    1,947

Electronic Data Systems Corp., Series B, 6.50% 2013 (5)

    5,105    5,043

Elizabeth Arden, Inc. 7.75% 2014

    1,455    1,437

Emmis Operating Co. 6.875% 2012

    2,000    1,970

Encore Acquisition Co. 6.00% 2015

    2,000    1,810

Energy Transfer Partners, LP 5.95% 2015

    2,000    1,929

Enterprise Products Operating LP 6.875% 2033

    2,600    2,550

EOP Operating LP 4.65% 2010

    1,000    949

EOP Operating LP 7.25% 2018

    1,000    1,073

EOP Operating LP 7.75% 2007

    1,000    1,025

Equistar Chemicals, LP 10.125% 2008

    2,100    2,221

Exelon Corp. 4.45% 2010

    1,500    1,429

Exelon Generation Co., LLC 6.95% 2011

    1,680    1,753

Fairfax Financial Holdings Ltd. 7.75% 2012

    1,550    1,356

Fannie Mae 4.00% 2015

    7,995    7,443

Fannie Mae 4.89% 2012

    10,000    9,577

Fannie Mae 5.00% 2018

    8,092    7,825

Fannie Mae 5.50% 2017

    3,222    3,169

Fannie Mae 5.50% 2033

    6,700    6,459

Fannie Mae 5.50% 2036

    4,880    4,686

Fannie Mae 6.00% 2021

    1,250    1,254

Fannie Mae 6.25% 2029

    3,000    3,247

Fannie Mae 6.50% 2036

    4,092    4,114

Fannie Mae 7.00% 2009

    46    46

Table of Contents

Fannie Mae 7.00% 2032

      682    698

Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041

      1,092    1,112

Fannie Mae, Series 2006-43, Class JO, principal only, 0% 2036

      997    699

Fannie Mae, Series 2006-49, Class PA, 6.00% 2036

      3,842    3,844

Federal Agricultural Mortgage Corp. 4.25% 2008

      3,000    2,925

Federal Home Loan Bank 4.50% 2012

      30,000    28,461

Federal Home Loan Bank 5.625% 2016

      6,000    5,932

Federal Realty Investment Trust 6.125% 2007

      1,000    1,002

FelCor Lodging LP 8.50% 2011 (5)

      2,072    2,207

First Investors Auto Owner Trust, Series 2003-A, Class A, MBIA insured, 2.58% 2011 (1)

      728    710

First Investors Auto Owner Trust, Series 2005-A, Class A-2, MBIA insured, 4.23% 2012 (1)

      3,632    3,585

Fisher Communications, Inc. 8.625% 2014

      3,750    3,900

Freddie Mac 3.625% 2008

      2,000    1,926

Freddie Mac 4.789% 2035 (5)

      8,920    8,683

Freddie Mac 5.00% 2018

      2,885    2,786

Freddie Mac 5.00% 2035

      3,733    3,487

Freddie Mac 5.802% 2036 (5)

      6,980    6,910

Freddie Mac 6.00% 2036

      53,106    52,272

Freddie Mac 6.50% 2016

    $ 1,244    1,259

Freddie Mac, Series T-041, Class 3-A, 7.50% 2032

      1,176    1,207

Gaylord Entertainment Co. 8.00% 2013

      2,000    2,007

GE Capital Commercial Mortgage Corp., Series 2002-1, Class A-3, 6.269% 2035

      3,338    3,420

GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.333% 2045

      5,000    4,889

GE SeaCo Finance SRL, Series 2004-1, Class A, AMBAC insured, 5.552% 2019 (1) (5)

      3,917    3,917

General Dynamics Corp. 4.50% 2010

      1,000    961

General Electric Capital Corp., Series A, 5.00% 2007

      2,000    1,989

General Motors Acceptance Corp. 6.125% 2006

      2,810    2,806

General Motors Acceptance Corp. 7.00% 2012

      3,250    3,088

General Motors Acceptance Corp. 7.25% 2011

      3,500    3,397

General Motors Corp. 7.20% 2011

      1,865    1,660

General Motors Corp. 7.70% 2016

      2,875    2,372

Georgia-Pacific Corp. 8.30% 2013 (5)

      850    859

GMAC Commercial Mortgage Securities, Inc., Series 1999-C3, Class C, 7.786% 2036

      1,000    1,056

Gold Kist Inc. 10.25% 2014

      1,804    1,890

Goodman Global Holdings, Inc., Series B, 7.875% 2012

      2,960    2,842

Government National Mortgage Assn. 4.00% 2035 (5)

      5,396    5,257

Government National Mortgage Assn. 4.00% 2035 (5)

      1,649    1,601

Government National Mortgage Assn. 4.00% 2035 (5)

      1,530    1,486

Government National Mortgage Assn. 5.50% 2036

      24,961    24,087

Government National Mortgage Assn. 6.00% 2036

      15,000    14,847

Government National Mortgage Assn. 6.00% 2036

      5,000    4,947

Government National Mortgage Assn. 8.50% 2021

      97    103

Graphic Packaging International, Inc. 8.50% 2011

      1,250    1,253

Graphic Packaging International, Inc. 9.50% 2013

      1,980    1,970

Gray Communications Systems, Inc. 9.25% 2011

      2,000    2,090

Greenwich Capital Commercial Funding Corp., Series 2002-C1, Class A-2, 4.112% 2017

      5,370    5,171

Grupo Posadas, SA de CV 8.75% 2011 (1)

      2,000    2,010

Hawaiian Telcom Communications, Inc. 10.789% 2013 (5)

      175    178

Hawaiian Telcom Communications, Inc. 9.75% 2013

      1,720    1,759

HBOS PLC, Series B, 5.92% (undated) (1) (5)

      6,500    5,999

HealthSouth Corp. 10.75% 2016 (1)

      1,500    1,478

Horizon Lines, LLC and Horizon Lines Holding Corp. 9.00% 2012

      2,167    2,210

Hospitality Properties Trust 6.75% 2013

      1,000    1,025

Host Marriott, LP, Series G, 9.25% 2007

      1,250    1,295

Host Marriott, LP, Series I, 9.50% 2007

      350    360

Hughes Network Systems, LLC and HNS Finance Corp. 9.50% 2014 (1)

      2,750    2,709

Table of Contents

Huntsman LLC 11.50% 2012

      759    852

HVB Funding Trust I 8.741% 2031 (1)

      900    1,063

HVB Funding Trust III 9.00% 2031 (1)

      1,600    1,938

Iesy Repository GmbH 10.125% 2015

    € 1,000    1,233

Impac CMB Grantor Trust, Series 2004-6, Class 1-A-1, 5.723% 2034 (5)

    $ 1,079    1,089

Intelsat (Bermuda), Ltd. 8.25% 2013

      2,030    2,025

Intelsat PanAmSat Opco 9.00% 2016 (1)

      1,750    1,785

International Coal Group, Inc. 10.25% 2014 (1)

      1,250    1,255

International Lease Finance Corp. 4.35% 2008

      1,500    1,457

International Lease Finance Corp. 4.50% 2008

      2,000    1,959

International Lease Finance Corp. 5.00% 2012

      1,500    1,430

Iron Mountain Inc. 6.625% 2016

      980    887

Iron Mountain Inc. 7.75% 2015

      1,590    1,526

iStar Financial, Inc. 6.05% 2015

      4,000    3,918

J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC12, Class A-3B, 5.511% 2037 (5)

      5,000    4,893

Jacuzzi Brands, Inc. 9.625% 2010

      1,500    1,592

Jefferson Smurfit Corp. (U.S.) 7.50% 2013

      1,450    1,305

Jefferson Smurfit Corp. (U.S.) 8.25% 2012

      910    858

John Deere Capital Corp., Series D, 4.125% 2010

      2,000    1,901

JSG Funding PLC 9.625% 2012

      1,565    1,620

JSG Holdings PLC 11.50% 2015 (7)

    € 3,107    3,953

K&F Industries, Inc. 7.75% 2014

    $ 1,800    1,782

K. Hovnanian Enterprises, Inc. 7.75% 2013

      1,250    1,147

K. Hovnanian Enterprises, Inc. 8.875% 2012

      780    780

Koninklijke KPN NV 8.00% 2010

      4,000    4,247

L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (1)

      1,908    2,000

LaBranche & Co Inc. 11.00% 2012

      2,000    2,200

Lazard Group LLC 7.125% 2015

      880    891

LBI Media, Inc. 10.125% 2012

      3,900    4,173

Liberty Media Corp. 5.70% 2013

      1,500    1,370

Liberty Media Corp. 7.875% 2009

      1,250    1,300

Liberty Mutual Group Inc. 6.50% 2035 (1)

      1,335    1,169

Lighthouse International Co. SA 8.00% 2014

    € 975    1,319

Lincoln National Corp. 7.00% 2066 (5)

    $ 3,515    3,494

Linens n’ Things, Inc. 10.702% 2014 (1) (5)

      2,500    2,381

Long Beach Mortgage Loan Trust, Series 2004-A, Class M-2, 5.923% 2024 (5)

      72    72

MASTR Alternative Loan Trust, Series 2004-2, Class 2-A-1, 6.00% 2034

      4,986    4,867

MASTR Asset-backed Securities Trust, Series 2006-AB1, Class A-4, 5.719% 2036

      750    726

MBNA Credit Card Master Note Trust, Series 2002-1, Class B, 5.15% 2009

      3,000    2,992

Mediacom LLC and Mediacom Capital Corp. 9.50% 2013

      2,250    2,250

Merrill Lynch Mortgage Investors, Inc., Series 2002-MW1, Class A-3, 5.403% 2034

      4,000    3,946

MetroPCS, Inc. 12.00% 2007 (5)

      1,125    1,184

MGM MIRAGE 6.00% 2009

      1,575    1,540

MGM MIRAGE 6.625% 2015

      425    398

MGM MIRAGE 6.75% 2013 (1)

      870    834

MidAmerican Energy Holdings Co. 6.125% 2036 (1)

      3,000    2,814

Millicom International Cellular SA 10.00% 2013

      2,010    2,251

MMCA Auto Owner Trust, Series 2002-2, Class A-4, 4.30% 2010

      115    115

Mohegan Tribal Gaming Authority 6.375% 2009

      1,280    1,253

Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030

      2,546    2,577

Morris Publishing Group, LLC and Morris Publishing Finance Co., Series B, 7.00% 2013

      2,250    2,149

Nalco Co. 7.75% 2011

      1,190    1,193

Nalco Co. 8.875% 2013

      1,000    1,013

National Westminster Bank PLC 7.75% (undated) (5)

      2,000    2,045

Neenah Paper, Inc. 7.375% 2014

      775    717

Neiman Marcus Group, Inc. 9.00% 2015 (1) (7)

      4,150    4,357

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Nevada Power Co., General and Refunding Mortgage Notes, Series G, 9.00% 2013

    1,089    1,184

Newfield Exploration Co. 6.625% 2014

    1,225    1,173

Newfield Exploration Co. 6.625% 2016

    3,925    3,719

News America Inc. 5.30% 2014

    1,165    1,107

Nextel Communications, Inc., Series E, 6.875% 2013

    3,250    3,273

Nortel Networks Ltd. 10.125% 2013 (1)

    1,975    2,019

Northwest Pipeline Corp. 8.125% 2010

    1,850    1,933

NPF XII, Inc., Series 2001-3, Class A, 5.52% 2007 (1) (10)

    5,000    138

NRG Energy, Inc. 7.25% 2014

    2,250    2,199

NTL Cable PLC 8.75% 2014

    2,000    1,995

Oregon Steel Mills, Inc. 10.00% 2009

    2,000    2,100

Origen Manufactured Housing Contract Trust, Series 2001-A, Class A-5, 7.08% 2032

    5,000    5,074

Origen Manufactured Housing Contract Trust, Series 2004-B, Class A-4, 5.46% 2035

    1,800    1,657

Owens-Brockway Glass Container Inc. 7.75% 2011

    2,000    2,025

Owens-Illinois, Inc. 7.35% 2008

    750    759

Pacific Gas and Electric Co., First Mortgage Bonds, 3.60% 2009

    1,500    1,425

Pathmark Stores, Inc. 8.75% 2012

    2,975    2,841

Payless ShoeSource, Inc. 8.25% 2013

    1,350    1,402

PETCO Animal Supplies, Inc. 10.75% 2011

    250    265

Petro Stopping Centers, LP and Petro Financial Corp. 9.00% 2012

    4,670    4,658

PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-2, 3.87% 2011

    2,940    2,866

Plastipak Holdings, Inc. 8.50% 2015 (1)

    2,750    2,764

Playtex Products, Inc. 8.00% 2011

    1,500    1,560

Playtex Products, Inc. 9.375% 2011

    250    262

Plum Creek Timberlands, LP 5.875% 2015

    2,000    1,914

Pogo Producing Co. 6.625% 2015

    150    139

Pogo Producing Co. 6.875% 2017

    1,750    1,630

Pogo Producing Co. 7.875% 2013 (1)

    2,075    2,091

Premcor Refining Group Inc. 7.50% 2015

    1,500    1,551

ProLogis 5.625% 2015 (1)

    1,000    957

Prudential Financial, Inc., Series D, 5.50% 2016

    2,000    1,926

Prudential Holdings, LLC, Series C, 8.695% 2023 (1) (6)

    3,000    3,570

PSEG Energy Holdings Inc. 8.625% 2008

    1,775    1,828

Pulte Homes, Inc. 4.875% 2009

    3,000    2,896

Pulte Homes, Inc. 7.875% 2011

    1,000    1,051

Qwest Capital Funding, Inc. 7.25% 2011

    2,550    2,493

Qwest Capital Funding, Inc. 7.75% 2006

    1,260    1,266

Qwest Capital Funding, Inc. 7.75% 2031

    1,370    1,288

Radio One, Inc., Series B, 8.875% 2011

    1,935    2,015

Ras Laffan Liquefied Natural Gas III 5.838% 2027 (1) (6)

    5,000    4,669

Raytheon Co. 4.85% 2011

    3,000    2,892

Reader’s Digest Assn., Inc. 6.50% 2011

    1,500    1,455

Rental Car Finance Corp., Series 2005-1, Class A-2, XLCA insured, 4.59% 2011 (1)

    6,860    6,581

Residential Accredit Loans, Inc., Series 2004-QS6, Class A-1, 5.00% 2019

    4,467    4,261

Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034

    9,842    9,671

Residential Accredit Loans, Inc., Series 2006-QA1, Class A-III-1, 6.284% 2036 (5)

    7,237    7,243

Residential Asset Mortgage Products Trust, Series 2003-RS11, Class A-I-7, 4.828% 2033

    2,000    1,909

Residential Asset Securities Corp. Trust, Series 2004-KS12, Class A-1-2, 5.553% 2035 (5)

    6,948    6,961

Residential Asset Securitization Trust, Series 2005-A8CB, Class A-11, 6.00% 2035

    4,347    4,244

Residential Capital Corp. 6.00% 2011

    3,000    2,910

Residential Capital Corp. 6.375% 2010

    1,000    987

Resona Bank, Ltd. 5.85% (undated) (1) (5)

    1,000    932

Riddell Bell Holdings Inc. 8.375% 2012

    2,925    2,896

Rite Aid Corp. 6.125% 2008 (1)

    2,125    2,067

Rite Aid Corp. 6.875% 2013

    2,500    2,175

Rite Aid Corp. 7.70% 2027

    250    206

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Rockwood Specialties Group, Inc. 7.50% 2014

      1,165    1,148

Rural Cellular Corp. 10.899% 2012 (1) (5)

      1,300    1,341

Rural Cellular Corp. 9.75% 2010

      1,500    1,502

Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class B, 6.758% 2033

      1,000    1,030

Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-3, 6.428% 2035

      5,000    5,115

Sanmina-SCI Corp. 6.75% 2013

      1,500    1,406

Sanmina-SCI Corp. 8.125% 2016

      4,000    3,920

SBA CMBS Trust, Series 2005-1, Class B, 5.565% 2035 (1)

      4,000    3,934

SBC Communications Inc. 4.125% 2009

      2,250    2,139

SBC Communications Inc. 5.10% 2014

      1,125    1,045

Scotia Pacific Co. LLC, Series B, Class A-2, 7.11% 2028 (6)

      1,560    1,257

Scottish Power PLC 5.375% 2015

      1,500    1,426

Sealy Mattress Co. 8.25% 2014

      2,750    2,764

Select Medical Corp. 7.625% 2015

      1,650    1,444

Seneca Gaming Corp. 7.25% 2012

      2,100    2,045

Sensata Technologies BV 8.00% 2014 (1)

      2,010    1,950

Serena Software, Inc. 10.375% 2016 (1)

      658    663

Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012

      1,125    1,111

Sierra Pacific Resources 8.625% 2014

      550    585

Six Flags, Inc. 9.75% 2013

      2,605    2,406

SLM Corp., Series A, 4.00% 2010

      2,500    2,363

SLM Corp., Series A, 4.50% 2010

      2,000    1,908

Solectron Global Finance Ltd 8.00% 2016 (1)

      1,250    1,238

Sonat Inc. 7.625% 2011

      125    127

St. Paul Travelers Companies, Inc. 6.25% 2016

      1,800    1,796

Standard Aero Holdings, Inc. 8.25% 2014

      1,950    1,745

Stater Bros. Holdings Inc. 8.125% 2012

      3,200    3,176

Stone Container Corp. 8.375% 2012

      500    475

Stoneridge, Inc. 11.50% 2012

      2,000    1,930

Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 6.00% 2036 (5)

      7,634    7,564

Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 4-A-1, 5.995% 2036 (5)

      6,079    5,997

Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.991% 2036 (5)

      10,063    9,937

Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.526% 2027 (1) (5)

      611    615

Sumitomo Mitsui Banking Corp. 5.625% (undated) (1) (5)

      8,155    7,619

Sun Media Corp. 7.625% 2013

      2,000    2,022

SunGard Data Systems Inc. 9.125% 2013 (1)

      3,140    3,273

Targa Resources, Inc. and Targa Resources Finance Corp. 8.50% 2013 (1)

      2,060    1,998

Team Finance LLC and Health Finance Corp. 11.25% 2013

      2,000    2,100

Technical Olympic USA, Inc. 10.375% 2012

      2,500    2,412

Teekay Shipping Corp. 8.875% 2011

      625    658

Telecom Italia Capital SA 5.25% 2015

      4,000    3,627

Telenet Communications NV 9.00% 2013

    € 1,419    1,995

Telenet Group Holding NV 0%/11.50% 2014 (1) (8)

    $ 844    720

Tenet Healthcare Corp. 6.375% 2011

      4,850    4,353

Tenet Healthcare Corp. 7.375% 2013

      2,440    2,239

Tenet Healthcare Corp. 9.25% 2015 (1)

      1,550    1,527

Tenneco Automotive Inc. 8.625% 2014

      2,990    2,997

TFM, SA de CV 10.25% 2007

      475    492

TFM, SA de CV 12.50% 2012

      435    482

TFM, SA de CV 9.375% 2012

      2,500    2,675

THL Buildco, Inc. 8.50% 2014

      3,230    3,141

Toll Brothers, Inc. 4.95% 2014

      3,750    3,282

Tower Ventures, LLC, Series 2006-1, Class A-2, 5.45% 2036 (1)

      2,000    1,957

Tower Ventures, LLC, Series 2006-1, Class F, 7.036% 2036 (1)

      1,460    1,440

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Tri-State Generation and Transmission Assn. Inc., Pass Through Trust, Series 2003-A, 6.04% 2018 (1) (6)

      1,500    1,472

Triton PCS, Inc. 8.50% 2013

      5,800    5,350

U S WEST Capital Funding, Inc. 6.375% 2008

      720    713

U S WEST Capital Funding, Inc. 6.875% 2028

      275    239

U.S. Treasury 3.375% 2008

      6,500    6,246

U.S. Treasury 3.875% 2010

      164,000    156,505

U.S. Treasury 4.25% 2013

      10,000    9,489

U.S. Treasury 5.25% 2029

      50,000    49,789

U.S. Treasury 5.75% 2010

      2,500    2,562

U.S. Treasury 7.00% 2006

      25,000    25,014

U.S. Treasury 7.25% 2016

      2,000    2,316

U.S. Treasury 7.875% 2021

      22,000    27,679

U.S. Treasury 8.875% 2017

      20,000    26,100

U.S. Treasury 9.25% 2016

      5,000    6,527

UCAR Finance Inc. 10.25% 2012

      1,850    1,961

Ultrapetrol (Bahamas) Ltd., First Preferred Ship Mortgage Notes, 9.00% 2014

      3,425    3,108

United Air Lines, Inc., Series 1995-A1, 9.02% 2012 (6) (9)

      920    537

United Air Lines, Inc., Series 1996-A2, 7.87% 2019 (6) (9)

      2,246    1,404

United Air Lines, Inc., Series B, 8.986% 2012 (5)

      3,750    3,802

United Mexican States Government Global 6.75% 2034

      8,000    7,800

United Rentals (North America), Inc., Series B, 6.50% 2012

      1,750    1,663

Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015

      1,290    1,338

Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-B-1, 8.395% 2016

      955    961

Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006

      4,000    3,996

Viacom Inc. 6.25% 2016 (1)

      2,000    1,945

Vidéotron Ltée 6.375% 2015

      1,000    917

Vidéotron Ltée 6.875% 2014

      1,225    1,167

Vitamin Shoppe Industries, Inc. 12.67% 2012 (1) (5)

      3,130    3,216

Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 2042

      4,000    3,773

WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR7, Class A-7, 3.842% 2033 (5)

      1,071    1,044

WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR8, Class A, 4.03% 2033 (5)

      2,217    2,164

WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 4.572% 2034 (5)

      3,975    3,863

Warner Chilcott Corp. 8.75% 2015

      2,840    2,939

Warner Music Group 7.375% 2014

      2,500    2,437

Washington Mutual Preferred Funding I Ltd. 6.534% (undated) (1) (5)

      5,500    5,288

Washington Mutual Securities Corp., WMALT Series 2005-1, Class 5-A-1, 6.00% 2035

      7,722    7,635

Washington Mutual, Inc. 5.25% 2017

      2,000    1,831

Waste Management, Inc. 6.875% 2009

      2,000    2,058

WCI Communities, Inc. 9.125% 2012

      1,500    1,414

WDAC Subsidiary Corp. 8.375% 2014 (1)

      1,675    1,654

WDAC Subsidiary Corp. 8.50% 2014

    € 375    477

Wells Fargo & Co. 3.50% 2008

    $ 2,000    1,930

Westfield Capital Corp. Ltd. and WT Finance (Australia) Pty Ltd. and WEA Finance LLC 4.375%
2010 (1)

      3,500    3,306

Weyerhaeuser Co. 7.375% 2032

      2,000    2,031

WH Holdings (Cayman Islands) Ltd. and WH Capital Corp. 9.50% 2011

      1,500    1,650

William Lyon Homes, Inc. 10.75% 2013

      2,500    2,412

William Lyon Homes, Inc. 7.50% 2014

      1,000    835

Williams Companies, Inc. 8.75% 2032

      1,660    1,814

Williams Scotsman, Inc. 8.50% 2015

      2,200    2,183

Windstream Corp. 8.125% 2013 (1)

      3,250    3,331

Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014

      3,100    2,937

XM Satellite Radio Holdings Inc. 9.75% 2014 (1)

      2,250    2,070

Young Broadcasting Inc. 10.00% 2011

      3,367    3,013

Total bonds & notes (cost: $1,451,344,000)

       1,417,231

Table of Contents

Short-term securities

    Principal
amount		    Market
value		  
     (000)    (000)  

3M Co. 5.02% due 7/27/2006

    50,000      49,812  

Atlantic Industries 5.22% due 8/14/2006 (1) (11)

    20,000      19,869  

BellSouth Corp. 5.00% due 7/13/2006 (1)

    24,300      24,258  

CAFCO, LLC 5.04%-5.35% due 7/14-8/28/2006 (1)

    33,500      33,313  

Chevron Funding Corp. 5.06% due 7/27/2006

    25,000      24,905  

Ciesco LLC 5.23% due 8/24/2006 (1) (11)

    14,200      14,090  

Clipper Receivables Co., LLC 5.08% due 7/10/2006 (1)

    21,600      21,569  

Coca-Cola Co. 4.95% due 7/24/2006

    20,000      19,933  

Concentrate Manufacturing Co. of Ireland 5.17% due 7/21/2006 (1)

    4,800      4,786  

Edison Asset Securitization LLC 5.02% due 8/1/2006 (1) (11)

    22,600      22,498  

Fannie Mae 4.94% due 8/2/2006 (11)

    14,700      14,633  

Federal Home Loan Bank 4.905%-5.25 due 7/26-9/13/2006 (11)

    80,751      80,148  

Hershey Co. 5.23% due 8/29/2006 (1)

    18,000      17,843  

Hewlett-Packard Co. 5.20% due 7/31/2006 (1)

    25,000      24,888  

International Lease Finance Corp. 5.04%-5.26% due 8/2-8/10/2006 (11)

    27,700      27,560  

Medtronic Inc. 5.21% due 8/25/2006 (1)

    20,000      19,843  

Park Avenue Receivables Co., LLC 5.21% due 7/20/2006 (1)

    50,000      49,855  

Preferred Receivables Funding Corp. 5.19% due 7/18/2006 (1)

    10,290      10,263  

Ranger Funding Co. LLC 5.17% due 7/26-8/9/2006 (1)

    46,400      46,189  

Tennessee Valley Authority 5.15% due 8/3/2006

    13,200      13,136  

Three Pillars Funding LLC 5.06% due 7/3/2006 (1)

    15,100      15,094  

Variable Funding Capital Corp. 5.02% due 7/6/2006 (1)

    50,000      49,958  

Total short-term securities (cost: $604,426,000)

         604,443  

Total investment securities (cost: $5,666,928,000)

         6,580,477  

Other assets less liabilities

         (82,109 )

Net assets

       $ 6,498,368  

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

(1) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $667,231,000, which represented 10.27% of the net assets of the fund.
(2) Security did not produce income during the last 12 months.
(3) Represents an affiliated company as defined under the Investment Company Act of 1940.
(4) Valued under fair value procedures adopted by authority of the board of trustees.
(5) Coupon rate may change periodically.

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(6) Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturities are shorter than the stated maturities.
(7) Payment in kind; the issuer has the option of paying additional securities in lieu of cash.
(8) Step bond; coupon rate will increase at a later date.
(9) Scheduled interest payments not being made; reorganization pending.
(10) Company not making scheduled interest payments; bankruptcy proceedings pending.
(11) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

ADR = American Depositary Receipts

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Assets:

            

Investment securities at market:

            

Unaffiliated issuers

    $ 3,334,719    $ 24,093,055    $ 6,531,116    $ 2,919,735

Affiliated issuers

      —        143,235      49,361      —  

Cash denominated in non-U.S. currencies

      2,690      4,325      —        —  

Cash

      236      1,728      2,008      7,411

Receivables for:

            

Sales of investments

      4,219      136,311      38,340      1,388

Sales of fund’s shares

      3,034      22,713      4,098      2,121

Open forward currency contracts

      —        —        19      392

Dividends and interest

      6,391      23,180      24,729      34,881
     3,351,289      24,424,547      6,649,671      2,965,928

Liabilities:

            

Payables for:

            

Purchases of investments

      2,443      70,125      147,523      40,145

Repurchases of fund’s shares

      44      5,358      843      17

Open forward currency contracts

      —        —        98      267

Investment advisory services

      1,338      5,694      1,536      887

Distribution services

      624      4,125      1,123      554

Deferred trustees’ compensation

      40      625      166      33

Other fees and expenses

      622      237      14      11
     5,111      86,164      151,303      41,914

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014

Investment securities at cost

            

Unaffiliated issuers

    $ 2,758,589    $ 19,440,548    $ 5,618,447    $ 2,954,017

Affiliated issuers

      —      $ 133,658    $ 48,481      —  

Cash denominated in non-U.S. currencies at cost

    $ 2,659    $ 4,338      —        —  

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund  

Net assets consist of:

            

Capital paid in on shares of beneficial interest

    $ 2,664,757    $ 18,351,261    $ 5,366,389    $ 2,899,532  

Undistributed (distributions in excess of) net investment income

      33,224      103,564      77,407      69,335  

Undistributed (accumulated) net realized gain (loss)

      72,534      1,221,378      141,096      (10,776 )

Net unrealized appreciation (depreciation)

      575,663      4,662,180      913,476      (34,077 )

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014  

Shares of beneficial interest issued and outstanding - unlimited shares authorized:

            

Class 1:

            

Net assets (total: $11,157,497)

    $ 214,609    $ 3,490,659    $ 903,248    $ 187,817  

Shares outstanding

      10,399      57,813      52,575      17,074  

Net asset value per share

    $ 20.64    $ 60.38    $ 17.18    $ 11.00  

Class 2:

            

Net assets (total: $65,221,819)

    $ 3,131,569    $ 20,385,930    $ 5,519,490    $ 2,736,197  

Shares outstanding

      152,508      340,114      323,378      250,811  

Net asset value per share

    $ 20.53    $ 59.94    $ 17.07    $ 10.91  

Class 3:

            

Net assets (total: $1,181,927)

      —      $ 461,794    $ 75,630      —    

Shares outstanding

      —        7,655      4,406      —    

Net asset value per share

      —      $ 60.33    $ 17.16      —    
* Amount less than one thousand

See Notes to Financial Statements

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Investment income:

            

Income (net of non-U.S. taxes):

            

Dividends

    $ 34,509    $ 118,613    $ 42,570    $ 329

Interest

      11,885      51,547      52,240      78,520
     46,394      170,160      94,810      78,849

Fees and expenses:

            

Investment advisory services

      8,777      38,583      10,390      5,618

Distribution services - Class 2

      3,654      24,498      6,773      3,131

Distribution services - Class 3

      —        437      69      —  

Transfer agent services

      1      8      2      1

Reports to shareholders

      47      358      96      41

Registration statement and prospectus

      62      479      130      53

Postage, stationery and supplies

      8      60      16      7

Trustees’ compensation

      13      132      35      11

Auditing and legal

      6      21      7      2

Custodian

      386      725      89      55

State and local taxes

      28      220      60      25

Other

      15      48      15      5

Total fees and expenses before waiver

      12,997      65,569      17,682      8,949

Less waiver of fees and expenses:

            

Investment advisory services

      878      3,858      1,039      562

Total fees and expenses after waiver

      12,119      61,711      16,643      8,387

Net investment income

      34,275      108,449      78,167      70,462

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund     Asset Allocation Fund     Bond Fund  

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency:

          

Net realized gain (loss) on:

          

Investments

      135,390      1,227,220       145,831       (2,595 )

Non-U.S. currency transactions

      5,200      261       (466 )     (3,677 )
     140,590      1,227,481       145,365       (6,272 )

Net unrealized appreciation (depreciation) on:

          

Investments

      538      (795,483 )     117,305       (31,900 )

Non-U.S. currency translations

      89      208       (97 )     485  
     627      (795,275 )     117,208       (31,415 )

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency

      141,217      432,206       262,573       (37,687 )

Net increase (decrease) in net assets resulting from operations

    $ 175,492    $ 540,655     $ 340,740     $ 32,775  

See Notes to Financial Statements

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended
December 31,

2005

  

Operations:

                 

Net investment income

    $ 34,275     $ 30,708     $ 108,449     $ 128,993     $ 78,167     $ 126,432     $ 70,462     $ 110,408  

Net realized gain (loss) on investments and non-U.S. currency transactions

      140,590       83,182       1,227,481       637,504       145,365       133,120       (6,272 )     2,178  

Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations

      627       222,184       (795,275 )     2,278,471       117,208       234,416       (31,415 )     (77,663 )

Net increase (decrease) in net assets resulting from operations

      175,492       336,074       540,655       3,044,968       340,740       493,968       32,775       34,923  

Dividends and distributions paid to shareholders:

                 

Dividends from net investment income and non-U.S. currency gains:

                 

Class 1

      (2,252 )     (1,641 )     (5,705 )     (31,560 )     (3,555 )     (20,656 )     (7,578 )     (7,502 )

Class 2

      (27,641 )     (14,177 )     (25,853 )     (112,734 )     (19,628 )     (106,102 )     (106,551 )     (73,453 )

Class 3

      —         —         (605 )     (3,387 )     (279 )     (1,653 )     —         —    

Total dividends from net investment income and non-U.S. currency gains

      (29,893 )     (15,818 )     (32,163 )     (147,681 )     (23,462 )     (128,411 )     (114,129 )     (80,955 )

Distributions from net realized gain on investments:

                 

Short-term net realized gains:

                 

Class 1

      —         —         —         —         —         —         —         —    

Class 2

      —         —         —         —         —         —         —         —    

Class 3

      —         —         —         —         —         —         —         —    

Long-term net realized gains:

                 

Class 1

      —         —         (21,900 )     —         (11,851 )     —         —         —    

Class 2

      —         —         (127,584 )     —         (72,811 )     —         —         —    

Class 3

      —         —         (2,908 )     —         (1,004 )     —         —         —    

Total distributions from net realized gain on investments

      —         —         (152,392 )     —         (85,666 )     —         —         —    

Total dividends and distributions paid to shareholders

      (29,893 )     (15,818 )     (184,555 )     (147,681 )     (109,128 )     (128,411 )     (114,129 )     (80,955 )

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended
December 31,

2005

  

Capital share transactions:

                 

Class 1:

                 

Proceeds from initial capitalization

      —         —         —         —         —         —         —         —    

Proceeds from shares sold

      9,129       4,184       9,292       5,159       25,104       6,110       12,562       10,970  

Proceeds from reinvestment of dividends and distributions

      2,252       1,641       27,605       31,560       15,406       20,656       7,578       7,502  

Cost of shares repurchased

      (13,591 )     (26,337 )     (323,657 )     (588,755 )     (50,269 )     (104,648 )     (9,822 )     (26,416 )

Net increase (decrease) from Class 1 transactions

      (2,210 )     (20,512 )     (286,760 )     (552,036 )     (9,759 )     (77,882 )     10,318       (7,944 )

Class 2:

                 

Proceeds from shares sold

      373,544       541,733       1,846,045       4,085,834       391,458       970,962       416,369       561,561  

Proceeds from reinvestment of dividends and distributions

      27,641       14,177       153,437       112,734       92,439       106,102       106,551       73,453  

Cost of shares repurchased

      (21,874 )     (30,170 )     (235,018 )     (220,641 )     (279,357 )     (56,161 )     (22,339 )     (40,314 )

Net increase from Class 2 transactions

      379,311       525,740       1,764,464       3,977,927       204,540       1,020,903       500,581       594,700  

Class 3:

                 

Proceeds from shares sold

      —         —         5,657       16,188       1,925       2,351       —         —    

Proceeds from reinvestment of dividends and distributions

      —         —         3,513       3,387       1,283       1,653       —         —    

Cost of shares repurchased

      —         —         (55,454 )     (106,454 )     (6,411 )     (14,040 )     —         —    

Net increase (decrease) from Class 3 transactions

      —         —         (46,284 )     (86,879 )     (3,203 )     (10,036 )     —         —    

Net increase in net assets resulting from capital share transactions

      377,101       505,228       1,431,420       3,339,012       191,578       932,985       510,899       586,756  

Total increase (decrease) in net assets

      522,700       825,484       1,787,520       6,236,299       423,190       1,298,542       429,545       540,724  

Net assets:

                 

Beginning of period

      2,823,478       1,997,994       22,550,863       16,314,564       6,075,178       4,776,636       2,494,469       1,953,745  

End of period

    $ 3,346,178     $ 2,823,478     $ 24,338,383     $ 22,550,863     $ 6,498,368     $ 6,075,178     $ 2,924,014     $ 2,494,469  

Undistributed (distributions in excess of) net investment income

    $ 33,224     $ 28,842     $ 103,564     $ 27,278     $ 77,407     $ 22,702     $ 69,335     $ 113,002  

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended

December 31,

2005

    

Six months

ended June 30,

2006(1)

    

Year ended
December 31,

2005

  

Shares of beneficial interest:

                 

Class 1:

                 

Shares issued from initial capitalization

    —       —       —       —       —       —       —       —    

Shares sold

    438     233     153     94     1,454     385     1,109     962  

Shares issued on reinvestment of dividends and distributions

    114     95     477     549     920     1,258     691     670  

Shares repurchased

    (658 )   (1,486 )   (5,299 )   (11,005 )   (2,902 )   (6,585 )   (864 )   (2,323 )

Net increase (decrease) in shares outstanding

    (106 )   (1,158 )   (4,669 )   (10,362 )   (528 )   (4,942 )   936     (691 )

Class 2:

                 

Shares sold

    18,130     30,710     30,379     77,199     22,735     61,664     36,917     49,855  

Shares issued on reinvestment of dividends and distributions

    1,402     824     2,668     1,976     5,559     6,492     9,793     6,611  

Shares repurchased

    (1,077 )   (1,695 )   (3,920 )   (4,104 )   (15,780 )   (3,564 )   (1,984 )   (3,572 )

Net increase in shares outstanding

    18,455     29,839     29,127     75,071     12,514     64,592     44,726     52,894  

Class 3:

                 

Shares sold

    —       —       91     320     111     148     —       —    

Shares issued on reinvestment of dividends and distributions

    —       —       61     60     76     101     —       —    

Shares repurchased

    —       —       (912 )   (2,009 )   (370 )   (887 )   —       —    

Net increase (decrease) in shares outstanding

    —       —       (760 )   (1,629 )   (183 )   (638 )   —       —    
(1) Unaudited.

See Notes to Financial Statements

Table of Contents

Financial Highlights (1)

 

       

Income (loss) from investment

operations (2)

     Dividends and distributions                                  

Period
ended

  

Net asset

value,

beginning

of period

  

Net

investment

income (loss)

  

Net

gains (losses)
on securities

(both realized

and unrealized)

    

Total from

investment

operations

    

Dividends

(from net

investment

income)

    

Distributions

(from capital

gains)

    

Total

dividends and

distributions

    

Net asset

value, end

of period

  

Total

return

    

Net assets,

end of period

(in millions)

  

Ratio of

expenses to

average

net assets

before waiver

    

Ratio of

expenses to

average net

assets after
waiver (3)

    

Ratio of

net income

(loss)

to average

net assets

  

Global Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 19.63   $ .24   $ .99     $ 1.23     $ (.22 )   $ —       $ (.22 )   $ 20.64   6.31 %   $ 215   .60 %(6)   .54 %(6)   2.37 %(6)

12/31/05

     17.31     .28     2.19       2.47       (.15 )     —         (.15 )     19.63   14.37       206   .62     .57     1.56  

12/31/04

     15.30     .18     1.92       2.10       (.09 )     —         (.09 )     17.31   13.80       202   .65     .64     1.15  

12/31/03

     11.35     .12     3.91       4.03       (.08 )     —         (.08 )     15.30   35.63       188   .70     .70     .94  

12/31/02

     13.42     .09     (2.02 )     (1.93 )     (.14 )     —         (.14 )     11.35   (14.46 )     152   .71     .71     .73  

12/31/01

     17.25     .18     (2.50 )     (2.32 )     (.15 )     (1.36 )     (1.51 )     13.42   (13.99 )     215   .70     .70     1.24  

Class 2

                          

6/30/06 (5)

     19.52     .22     .97       1.19       (.18 )   $ —         (.18 )     20.53   6.16       3,131   .85 (6)   .79 (6)   2.17 (6)

12/31/05

     17.23     .23     2.18       2.41       (.12 )     —         (.12 )     19.52   14.07       2,617   .87     .82     1.30  

12/31/04

     15.25     .14     1.91       2.05       (.07 )     —         (.07 )     17.23   13.49       1,796   .90     .89     .92  

12/31/03

     11.32     .09     3.89       3.98       (.05 )     —         (.05 )     15.25   35.27       1,082   .95     .95     .68  

12/31/02

     13.38     .06     (2.01 )     (1.95 )     (.11 )     —         (.11 )     11.32   (14.64 )     592   .96     .96     .48  

12/31/01

     17.21     .13     (2.49 )     (2.36 )     (.11 )     (1.36 )     (1.47 )     13.38   (14.22 )     600   .95     .95     .88  

Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 59.36   $ .34   $ 1.16     $ 1.50     $ (.10 )   $ (.38 )   $ (.48 )   $ 60.38   2.56 %   $ 3,490   .34 %(6)   .31 %(6)   1.12 %(6)

12/31/05

     51.39     .46     8.00       8.46       (.49 )     —         (.49 )     59.36   16.50       3,709   .35     .32     .87  

12/31/04

     45.74     .32     5.51       5.83       (.18 )     —         (.18 )     51.39   12.75       3,744   .36     .36     .68  

12/31/03

     33.47     .16     12.26       12.42       (.15 )     —         (.15 )     45.74   37.15       3,877   .39     .39     .41  

12/31/02

     44.30     .12     (10.87 )     (10.75 )     (.08 )     —         (.08 )     33.47   (24.27 )     3,195   .40     .40     .30  

12/31/01

     73.51     .18     (11.99 )     (11.81 )     (.41 )     (16.99 )     (17.40 )     44.30   (17.93 )     5,207   .38     .38     .34  

Class 2

                          

6/30/06 (5)

     58.98     .27     1.15       1.42       (.08 )     (.38 )     (.46 )     59.94   2.44       20,386   .59 (6)   .56 (6)   .88 (6)

12/31/05

     51.10     .34     7.92       8.26       (.38 )     —         (.38 )     58.98   16.19       18,343   .60     .57     .64  

12/31/04

     45.50     .23     5.45       5.68       (.08 )     —         (.08 )     51.10   12.50       12,055   .61     .61     .50  

12/31/03

     33.29     .06     12.19       12.25       (.04 )     —         (.04 )     45.50   36.80       7,107   .64     .64     .16  

12/31/02

     44.09     .03     (10.82 )     (10.79 )     (.01 )     —         (.01 )     33.29   (24.46 )     3,009   .65     .65     .07  

12/31/01

     73.28     .04     (11.94 )     (11.90 )     (.30 )     (16.99 )     (17.29 )     44.09   (18.15 )     2,937   .63     .63     .07  

Class 3

                          

6/30/06 (5)

     59.34     .28     1.17       1.45       (.08 )     (.38 )     (.46 )     60.33   2.48       462   .52 (6)   .49 (6)   .94 (6)

12/31/05

     51.38     .37     7.98       8.35       (.39 )     —         (.39 )     59.34   16.28       499   .53     .50     .69  

12/31/04 (7)

     47.74     .24     3.50       3.74       (.10 )     —         (.10 )     51.38   7.85       516   .54 (6)   .53 (6)   .54 (6)

Asset Allocation Fund

                        

Class 1

                          

6/30/06 (5)

   $ 16.56   $ .23   $ .69     $ .92     $ (.07 )   $ (.23 )   $ (.30 )   $ 17.18   5.60 %   $ 903   .34 %(6)   .31 %(6)   2.66 %(6)

12/31/05

     15.49     .41     1.05       1.46       (.39 )     —         (.39 )     16.56   9.45       879   .35     .32     2.57  

12/31/04

     14.58     .39     .84       1.23       (.32 )     —         (.32 )     15.49   8.50       899   .38     .37     2.64  

12/31/03

     12.23     .41     2.29       2.70       (.35 )     —         (.35 )     14.58   22.14       911   .42     .42     3.12  

12/31/02

     14.30     .45     (2.19 )     (1.74 )     (.33 )     —         (.33 )     12.23   (12.19 )     797   .45     .45     3.31  

12/31/01

     15.71     .49     (.37 )     .12       (.59 )     (.94 )     (1.53 )     14.30   .77       1,012   .45     .45     3.30  

Class 2

                          

6/30/06 (5)

     16.47     .21     .68       .89       (.06 )     (.23 )     (.29 )     17.07   5.46       5,519   .59 (6)   .56 (6)   2.41 (6)

12/31/05

     15.42     .37     1.04       1.41       (.36 )     —         (.36 )     16.47   9.14       5,120   .60     .57     2.31  

12/31/04

     14.51     .36     .84       1.20       (.29 )     —         (.29 )     15.42   8.34       3,797   .62     .62     2.42  

12/31/03

     12.18     .37     2.27       2.64       (.31 )     —         (.31 )     14.51   21.74       2,314   .67     .67     2.81  

12/31/02

     14.25     .42     (2.18 )     (1.76 )     (.31 )     —         (.31 )     12.18   (12.38 )     1,056   .70     .70     3.11  

12/31/01

     15.67     .45     (.36 )     .09       (.57 )     (.94 )     (1.51 )     14.25   .52       730   .70     .70     3.03  

Table of Contents

Financial Highlights (1)

 

       

Income (loss) from investment

operations (2)

   Dividends and distributions                                  

Period
ended

  

Net asset

value,

beginning

of period

  

Net

investment

income (loss)

  

Net

gains (losses)
on securities

(both realized

and unrealized)

    

Total from

investment

operations

  

Dividends

(from net

investment

income)

    

Distributions

(from capital

gains)

    

Total

dividends and

distributions

    

Net asset

value, end

of period

  

Total

return

    

Net assets,

end of period

(in millions)

  

Ratio of

expenses to

average

net assets

before waiver

    

Ratio of

expenses to

average net

assets after
waiver (3)

    

Ratio of

net income

(loss)

to average

net assets

  

Asset Allocation Fund (Continued)

                        

Class 3

                          

6/30/06 (5)

     16.56     .21     .68       .89     (.06 )     (.23 )     (.29 )     17.16   5.44       76   .52 (6)   .49 (6)   2.48 (6)

12/31/05

     15.49     .38     1.05       1.43     (.36 )     —         (.36 )     16.56   9.26       76   .53     .50     2.39  

12/31/04 (7)

     14.85     .36     .58       .94     (.30 )     —         (.30 )     15.49   6.38       81   .55 (6)   .55 (6)   2.50 (6)

Bond Fund

                          

Class 1

                          

6/30/06 (5)

   $ 11.31   $ .31   $ (.15 )   $ .16   $ (.47 )   $ —       $ (.47 )   $ 11.00   1.41 %   $ 188   .43 %(6)   .39 %(6)   5.48 %(6)

12/31/05

     11.57     .60     (.40 )     .20     (.46 )     —         (.46 )     11.31   1.77       182   .44     .40     5.30  

12/31/04

     11.34     .56     .10       .66     (.43 )     —         (.43 )     11.57   6.04       195   .45     .44     4.94  

12/31/03

     10.41     .57     .78       1.35     (.42 )     —         (.42 )     11.34   13.07       213   .47     .47     5.19  

12/31/02

     10.44     .67     (.24 )     .43     (.46 )     —         (.46 )     10.41   4.26       218   .49     .49     6.60  

12/31/01

     10.18     .77     .08       .85     (.59 )     —         (.59 )     10.44   8.48       194   .49     .49     7.38  

Class 2

                          

6/30/06 (5)

     11.22     .29     (.15 )     .14     (.45 )     —         (.45 )     10.91   1.23       2,736   .68 (6)   .64 (6)   5.23 (6)

12/31/05

     11.48     .57     (.39 )     .18     (.44 )     —         (.44 )     11.22   1.59       2,312   .69     .65     5.06  

12/31/04

     11.27     .53     .09       .62     (.41 )     —         (.41 )     11.48   5.72       1,759   .70     .69     4.68  

12/31/03

     10.36     .53     .78       1.31     (.40 )     —         (.40 )     11.27   12.80       1,280   .72     .72     4.88  

12/31/02

     10.40     .64     (.24 )     .40     (.44 )     —         (.44 )     10.36   4.05       697   .74     .74     6.34  

12/31/01

     10.16     .73     .08       .81     (.57 )     —         (.57 )     10.40   8.15       349   .74     .74     7.06  

Portfolio turnover rate for all classes of shares

    Six months
ended
June 30, 2006 (5)		  

Year Ended

December 31
2005

   2004   2003   2002   2001

Global Growth Fund

   17   26   24   27   30   38

Growth Fund

   23   29   30   34   34   31

Asset Allocation Fund

   21   23   20   20   25   32

Bond Fund

   29   46   34   20   29   59
(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) The ratios in this column reflect the impact, if any, of certain waivers by CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.
(4) Commenced operations July 5, 2001.
(5) Unaudited.
(6) Annualized.
(7) From January 16, 2004, when Class 3 shares were first issued.

See Notes to Financial Statements

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Notes to financial statements   unaudited

1. Organization and significant accounting policies

Organization – American Funds Insurance Series (the “series”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company with 14 different funds. The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives are as follows:

 

Global Discovery Fund

    Long-term growth of capital by investing primarily in stocks of companies in the services and information area of the global economy.

Global Growth Fund

    Long-term growth of capital by investing primarily in common stocks of companies located around the world.

Global Small Capitalization Fund

    Long-term growth of capital by investing primarily in stocks of smaller companies located around the world.

Growth Fund

    Long-term growth of capital by investing primarily in common stocks of companies that offer opportunities for growth of capital.

International Fund

    Long-term growth of capital by investing primarily in common stocks of companies located outside the U.S.

New World Fund

    Long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets.

Blue Chip Income and Growth Fund

    To produce income exceeding the average yield on U.S. stocks and to provide an opportunity for growth of principal.

Global Growth and Income Fund

    Long-term growth of capital and current income by investing primarily in stocks of well-established companies located around the world.

Growth-Income Fund

    Growth of capital and income by investing primarily in common stocks or other securities that demonstrate the potential for appreciation and/or dividends.

Asset Allocation Fund

    High total return (including income and capital gains) consistent with long-term preservation of capital.

Bond Fund

    As high a level of current income as is consistent with the preservation of capital by investing primarily in fixed-income securities.

High-Income Bond Fund

    High current income and, secondarily, capital appreciation by investing primarily in intermediate and long-term corporate obligations, with emphasis on higher yielding, higher risk, lower rated or unrated securities.

U.S. Government/AAA-Rated Securities Fund

    A high level of current income consistent with prudent investment risk and preservation of capital by investing primarily in a combination of securities guaranteed by the U.S. government and other debt securities rated AAA or Aaa.

Cash Management Fund

    High current yield while preserving capital by investing in a diversified selection of high-quality money market instruments.

Each fund offers two or three share classes (1, 2 and 3). Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for certain distribution expenses. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

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Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the series:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. Securities and other assets for which representative market quotations are not readily available or are considered unreliable are fair valued as determined in good faith under procedures adopted by authority of the series’ board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

Security transactions and related investment income – Security transactions are recorded by the series as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the series will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations –Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution expenses, are accrued daily and charged directly to the respective share class.

Dividends and distributions to shareholders –Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation – Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

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Forward currency contracts – The series may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The series enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the series could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the series values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The series records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

Mortgage dollar rolls – The series may enter into mortgage dollar roll transactions in which a fund in the series sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

2. Non-U.S. investments

Investment risk – The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the funds on the sale of securities in certain countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

3. Federal income taxation and distributions

The series complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The series is not subject to income taxes to the extent such distributions are made.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; paydowns on fixed-income securities; net capital losses; non-U.S. taxes on capital gains; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of December 31, 2005, the funds’ most recent fiscal year end. Tax-basis unrealized appreciation (depreciation) and cost of investments are reported as of June 30, 2006.

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Additional tax basis disclosures are as follows:

(dollars in thousands)

 

     Growth
Fund		    

Global
Growth

Fund

    

Asset

Allocation
Fund

    

Bond

Fund

  

As of December 31, 2005:

         

Undistributed ordinary income

    $ 29,555     $ 31,502     $ 22,899     $ 113,791  

Undistributed long-term capital gains

      —         151,590       85,106       —    

Capital loss carryforwards

      (66,686 )     —         —         (3,617 )

As of June 30, 2006:

         

Gross unrealized appreciation on investment securities

      632,332       5,224,347       1,067,049       30,547  

Gross unrealized depreciation on investment securities

      (56,728 )     (569,283 )     (156,712 )     (66,148 )

Net unrealized appreciation (depreciation) on investment securities

      575,604       4,655,064       910,337       (35,601 )

Cost of portfolio securities

      2,759,115       19,581,226       5,670,140       2,955,336  

Capital loss carryforwards expire in:

         

2006

    $ —         —         —       $ —    

2007

      —         —         —         —    

2008

      —         —         —         —    

2009

      —         —         —         —    

2010

      10,546       —         —         —    

2011

      56,140       —         —         3,029  

2012

      —         —         —         —    

2013

      —         —         —         588  
   $ 66,686       —         —       $ 3,617  
* For the period May 1, 2006, commencement of operations, through June 30, 2006.
† Amount less than one thousand.

4. Fees and transactions with related parties

Capital Research and Management Company (“CRMC”), the series’ investment adviser, is the parent company of American Funds Service Company SM (“AFS”), the series’ transfer agent, and American Funds Distributors, Inc. SM (“AFD”), the principal underwriter of the series’ shares.

Investment advisory services – The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on annual rates that generally decrease as average net asset levels increase.

The board of trustees approved an amended agreement for Growth-Income Fund and Global Small Capitalization Fund, effective April 1, 2006, and July 1, 2006, respectively, that provided for reduced annual rates as reflected in the chart below. During the six months ended June 30, 2006, CRMC voluntarily reduced investment advisory services fees to the rates provided by the amended agreement for Global Small Capitalization Fund. Additionally, CRMC is currently waiving 10% of investment advisory services fees for all funds in the series. During the six months ended June 30, 2006, total aggregate investment advisory services fees waived by CRMC were $13,732,000. As a result, the aggregate fees shown on the accompanying financial statements of $137,318,000 were reduced to $123,586,000. The amended range of rates and asset levels and the current annualized rates of average net assets for the series, before and after the expense waiver, are as follows:

 

      Rates    Net asset level (in billions)    For the six
months ended
June 30, 2006,
before waiver		    For the six
months ended
June 30, 2006,
after waiver

Fund

    Beginning with    Ending with    Up to    In excess of      

Global Growth

    .690    .480    .6    3.0    .56    .50

Growth

    .500    .285    .6    27.0    .33    .29

Asset Allocation

    .500    .250    .6    8.0    .33    .29

Bond

    .480    .360    .6    3.0    .42    .38
* Results based on activity during the period May 1, 2006, commencement of operations, through June 30, 2006.

Transfer agent services – The aggregate fee of $25,000 was incurred during the six months ended June 30, 2006, pursuant to an agreement with AFS. Under this agreement, the series compensates AFS for transfer agent services, including shareholder recordkeeping, communications and transaction processing.

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Deferred trustees’ compensation – Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the series, are treated as if invested in one or more of the American Funds. These amounts represent general, unsecured liabilities of the series and vary according to the total returns of the selected funds. Trustees’ compensation of $421,000, shown on the accompanying financial statements, includes $244,000 in current fees (either paid in cash or deferred) and a net increase of $177,000 in the value of the deferred amounts.

Affiliated officers and trustees – Officers and certain trustees of the series are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the series.

5. Distribution services

The series has adopted plans of distribution for Class 2 and 3 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets, of 0.25% for Class 2 and 0.18% for Class 3 to pay service fees to firms that have entered into agreements with the series. During the six months ended June 30, 2006, distribution expenses under the plans for the series aggregated $77,715,000 for Class 2 and $1,101,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

6. Investment transactions and other disclosures

As of June 30, 2006, Asset Allocation Fund, Bond Fund and High-Income Bond Fund had outstanding forward currency contracts to sell non-U.S. currencies as follows:

(dollars in thousands)

 

Fund

   

Non-U.S. currency sale contracts

    Contract
amount		    U.S.    U.S.
valuation		       
      Non-U.S.       Amount    Unrealized
(depreciation)
appreciation		  

Asset Allocation

    Euro, expiring 7/19-9/29/2006    € 6,710    $ 8,520    $ 8,599    $ (79 )

Bond

    Euro, expiring 9/14/2006    € 5,585      7,078      7,173      (95 )
  

Pound, expiring 7/13-8/23/2006

    £ 5,780      12,125      11,905      220  

The following table presents additional information for the six months ended June 30, 2006:

 

     Global
Growth
Fund		    Growth
Fund		    Asset
Allocation
Fund		     Bond
Fund

Purchases of investment securities (1)

    $ 615,964    $ 5,156,655    $ 1,231,288     $ 886,794

Sales of investment securities (1)

      451,141      5,061,567      1,240,593       608,522

Non-U.S taxes paid on dividend income

      3,333      5,318      1,139       —  

Non-U.S taxes paid on interest income -

      —        —        (3 )     61

Non-U.S taxes paid on realized gains

      132      —        —         —  

Non-U.S taxes provided on unrealized gains as of June 30, 2006

      545      17      —         —  

Dividends from affiliated issuers

      —        —        —         —  

Realized gain on affiliated issuers

      —        —        16,897       —  
(1) Excludes short-term securities, except for Cash Management Fund.
(2) For the period May 1, 2006, commencement of operations, through June 30, 2006.

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Expense example   unaudited

The funds in the American Funds Insurance Series serve as the underlying investment vehicle for various insurance products. As an owner of an insurance contract that invests in one of the funds in the series, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. Additional fees are charged by the insurance companies related to the various benefits they provide. This example is intended to help you understand your ongoing costs (in dollars) of investing in the underlying funds only so you can compare these costs with the ongoing costs of investing in other mutual funds that serve a similar function in other annuity products. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006, through June 30, 2006).

Actual expenses:

The first line of 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 during period” to estimate the expenses you paid on your account during this period. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Hypothetical example for comparison purposes:

The second line of each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. 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 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in 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.

 

     Beginning
account value
1/1/2006		    Ending
account
value
6/30/2006		    Expenses
paid during
period*		    Annualized
expense
ratio		  

Global Discovery Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.73    $ 2.86    .57 %

Class 1 — assumed 5% return

      1,000.00      1,021.97      2.86    .57  

Class 2 — actual return

      1,000.00      1,024.95      4.12    .82  

Class 2 — assumed 5% return

      1,000.00      1,020.73      4.11    .82  

Global Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,063.06    $ 2.76    .54 %

Class 1 — assumed 5% return

      1,000.00      1,022.12      2.71    .54  

Class 2 — actual return

      1,000.00      1,061.57      4.04    .79  

Class 2 — assumed 5% return

      1,000.00      1,020.88      3.96    .79  

Global Small Capitalization Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,094.50    $ 3.64    .70 %

Class 1 — assumed 5% return

      1,000.00      1,021.32      3.51    .70  

Class 2 — actual return

      1,000.00      1,093.52      4.93    .95  

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Class 2 — assumed 5% return

      1,000.00      1,020.08      4.76    .95  

Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.61    $ 1.56    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,024.37      2.81    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,024.77      2.46    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

International Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,060.13    $ 2.55    .50 %

Class 1 — assumed 5% return

      1,000.00      1,022.32      2.51    .50  

Class 2 — actual return

      1,000.00      1,058.33      3.83    .75  

Class 2 — assumed 5% return

      1,000.00      1,021.08      3.76    .75  

Class 3 — actual return

      1,000.00      1,058.74      3.47    .68  

Class 3 — assumed 5% return

      1,000.00      1,021.42      3.41    .68  

New World Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,089.69    $ 4.20    .81 %

Class 1 — assumed 5% return

      1,000.00      1,020.78      4.06    .81  

Class 2 — actual return

      1,000.00      1,089.24      5.49    1.06  

Class 2 — assumed 5% return

      1,000.00      1,019.54      5.31    1.06  

Blue Chip Income and Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,046.45    $ 1.98    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,045.57      3.25    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

Global Growth and Income Fund†

            

Class 1 — actual return

    $ 1,000.00    $ 961.00    $ 1.05    .65 %

Class 1 — assumed 5% return

      1,000.00      1,021.57      3.26    .65  

Class 2 — actual return

      1,000.00      960.00      1.45    .90  

Class 2 — assumed 5% return

      1,000.00      1,020.33      4.51    .90  

Growth-Income Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,040.86    $ 1.32    .26 %

Class 1 — assumed 5% return

      1,000.00      1,023.51      1.30    .26  

Class 2 — actual return

      1,000.00      1,039.62      2.58    .51  

Class 2 — assumed 5% return

      1,000.00      1,022.27      2.56    .51  

Class 3 — actual return

      1,000.00      1,039.98      2.23    .44  

Class 3 — assumed 5% return

      1,000.00      1,022.61      2.21    .44  

Asset Allocation Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,055.97    $ 1.58    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,054.62      2.85    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,054.43      2.50    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,014.08    $ 1.95    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,012.33      3.19    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

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High-Income Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,033.23    $ 2.27    .45 %

Class 1 — assumed 5% return

      1,000.00      1,022.56      2.26    .45  

Class 2 — actual return

      1,000.00      1032.38      3.53    .70  

Class 2 — assumed 5% return

      1,000.00      1021.32      3.51    .70  

Class 3 — actual return

      1,000.00      1,032.67      3.18    .63  

Class 3 — assumed 5% return

      1,000.00      1,021.67      3.16    .63  

U.S. Government/AAA-Rated Securities Fund

            

Class 1 — actual return

    $ 1,000.00    $ 993.10    $ 2.12    .43 %

Class 1 — assumed 5% return

      1,000.00      1,022.66      2.16    .43  

Class 2 — actual return

      1,000.00      992.63      3.31    .67  

Class 2 — assumed 5% return

      1,000.00      1,021.47      3.36    .67  

Class 3 — actual return

      1,000.00      992.50      3.01    .61  

Class 3 — assumed 5% return

      1,000.00      1,021.77      3.06    .61  

Cash Management Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,021.95    $ 1.50    .30 %

Class 1 — assumed 5% return

      1,000.00      1,023.31      1.51    .30  

Class 2 — actual return

      1,000.00      1,021.44      2.76    .55  

Class 2 — assumed 5% return

      1,000.00      1,022.07      2.76    .55  

Class 3 — actual return

      1,000.00      1,021.19      2.41    .48  

Class 3 — assumed 5% return

      1,000.00      1,022.41      2.41    .48  
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
† The annualized expense ratio and the information in the first line of each share class are based on operations for the period May 1, 2006 (when the fund commenced operations), through June 30, 2006, and, accordingly, are not representative of a full period.

Table of Contents

Board of trustees

“Non-interested” trustees

 

Name and age

   

Year first
elected

a trustee
of the series1

   

Principal occupation(s)

during past five years

    Number of
portfolios in fund
complex2 overseen
by trustee		   

Other directorships3

held by trustee

Lee A. Ault III, 70

Chairman of the Board

    1999    Chairman of the Board, In-Q-Tel, Inc. (an independent technology venture company funded principally by the Central Intelligence Agency); former Chairman of the Board, President and CEO, Telecredit, Inc.    1    Anworth Mortgage Asset Corporation; Office Depot, Inc.

H. Frederick Christie, 73

    1994    Private investor; former President and CEO, The Mission Group (non-utility holding company, subsidiary of Southern California Edison Company)    19    Ducommun Incorporated; IHOP Corporation; Southwest Water Company

Joe E. Davis, 72

    1991    Private investor; former Chairman of the Board, Linear Corporation (linear motor design and production); former President and CEO, National Health Enterprises, Inc;    1    Anworth Mortgage Asset Corporation; Natural Alternatives, Inc.

Martin Fenton, 71

    1995    Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities)    16    None

Leonard R. Fuller, 60

    1999    President and CEO, Fuller Consulting (financial management consulting firm)    14    None

Mary Myers Kauppila, 52

    1994    Private investor; Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc.    5    None

Kirk P. Pendleton, 66

    1996    Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment)      

“Interested” trustees

 

Name, age and

position with series

   

Year first

elected

a trustee or officer

of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

   

Number of

portfolios in fund

complex2 overseen

by trustee

   

Other directorships3

held by trustee

James K. Dunton, 68

Vice Chairman of the Board

    1993    Senior Vice President and Director, Capital Research and Management Company    2    None

Donald D. O’Neal, 46

President

    1998    Senior Vice President, Capital Research and Management Company    3    None

The statement of additional information includes additional information about the series’ trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the series is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

Table of Contents

Other officers

 

Name, age and

position with series

   

Year first

elected

a trustee or officer

of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

Alan N. Burro, 45

Senior Vice President

    1998   

Vice President, Capital Research and Management Company;

Senior Vice President, Capital Research Company5

Michael J. Downer, 51

Senior Vice President

    1991   

Vice President and Secretary, Capital Research and Management Company;

Director, American Funds Distributors, Inc.; 5 Director, Capital Bank and Trust Company5

Abner D. Goldstine. 76

Senior Vice President

    1993    Senior Vice President and Director, Capital Research and Management Company

John H. Smut, 49

Senior Vice President

    1994   

Senior Vice President, Capital Research and Management Company;

Director, American Funds Distributors, Inc.5

Claudia P. Huntington, 54

Vice President

    1994   

Senior Vice President, Capital Research and Management Company;

Director, The Capital Group Companies, Inc.5

Robert W. Lovelace, 43

Vice President

    1997    Senior Vice President, Capital Research and Management Company; Chairman of the Board, Capital Research Company,5 Director, The Capital Group Companies, Inc.5

Susan M. Tolson, 44

Vice President

    1999    Senior Vice President, Capital Research Company5

Chad L. Norton, 46

Secretary

    1994    Vice President — Fund Business Management Group, Capital Research and Management Company

David A. Pritchett, 40

Treasurer

    1999    Vice President — Fund Business Management Group, Capital Research and Management Company

Steven I. Koszalka, 42

Assistant Secretary

    2003    Assistant Vice President — Fund Business Management Group, Capital Research and Management Company

Karl C. Grauman, 38

Assistant Treasurer

    2006    Vice President — Fund Business Management Group, Capital Research and Management Compa

Sheryl F. Johnson, 38

Assistant Treasurer

    1997    Vice President — Fund Business Management Group, Capital Research and Management Company
1 Trustees and officers of the series serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds, consisting of 29 funds, and Endowments, whose shareholders are limited to certain nonprofit organizations.
3 This includes all directorships (other than those in the American Funds) that are held by each trustee as a director of a public company or a registered investment company.
4 “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the series’ investment adviser, Capital Research and Management Company, or affiliated entities (including the series’ principal underwriter).
5 Company affiliated with Capital Research and Management Company.

Table of Contents

 

American Funds GVIT Bond Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
2    Statement of Assets and Liabilities
2    Statement of Operations
3    Statements of Changes in Net Assets
4    Financial Highlights
5    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-AGB (8/06)

Table of Contents

 

Shareholder

Expense Example

American Funds GVIT Bond Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, May 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
May 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period
      Annualized
Expense Ratio
  
American Funds GVIT Bond Fund                                         

Class II

      Actual    $ 1,000.00      $ 999.90      $ 6.05 (a)    1.22% (a)
       Hypothetical1    $ 1,000.00      $ 1,018.75      $ 6.12 (b)    1.22% (b)

Class VII

      Actual    $ 1,000.00      $ 999.10      $ 10.46 (a)    2.11% (a)
       Hypothetical1    $ 1,000.00      $ 1,014.34      $ 10.59 (b)    2.11% (b)

 

 

 

1 Represents the hypothetical 5% return before expenses.

 

(a) Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

(b) Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1

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GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT BOND FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments in Portfolio cost $5,152,967

    $ 5,042,085  

Receivable for capital shares issued

      170,113  
    

Total Assets

      5,212,198  
    

Liabilities:

         

Payable for capital shares redeemed

      86  

Accrued expenses and other payables:

         

Fund administration and transfer agent fees

      928  

Master feeder service provider fee

      230  

Distribution fees

      574  

Administrative servicing fees

      564  

Trustee fees

      67  

Other

      2,048  
    

Total Liabilities

      4,497  
    

Net Assets

    $ 5,207,701  
    

Represented by:

         

Capital

    $ 5,319,442  

Accumulated net investment income (loss)

      (759 )

Accumulated net realized gains (losses) from investment

      (100 )

Net unrealized appreciation (depreciation) on investments

      (110,882 )
    

Net Assets

    $ 5,207,701  
    

Net Assets:

         

Class II Shares

    $ 5,206,703  

Class VII Shares

      998  
    

Total

    $ 5,207,701  
    

Shares outstanding (unlimited number of shares authorized):

         

Class II Shares

      468,380  

Class VII Shares

      90  
    

Total

      468,470  
    

Net asset value and offering price per share:*

         

Class II Shares

    $ 11.12  

Class VII Shares

    $ 11.12 (a)

Statement of Operations

For the period ended June 30, 2006 (Unaudited) (b)

 

Investment Income:

         

Dividend income

    $ 120,031  
    

Total Income

      120,031  
    

Expenses:

         

Fund administration and transfer agent fees

      970  

Master feeder service provider fee

      734  

Distribution fees Class II Shares

      733  

Distribution fees Class VII Shares

      1  

Administrative servicing fees Class II Shares

      733  

Administrative servicing fees Class VII Shares

      1  

Professional fees

      2,162  

Printing fees

      469  

Trustee fees

      74  

Other

      660  
    

Total expenses before waived expenses

      6,537  

Expenses waived

      (440 )
    

Total Expenses

      6,097  
    

Net Investment Income (Loss)

      113,934  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses)

      (100 )

Net change in unrealized appreciation/depreciation on investments

      (110,882 )
    

Net realized/unrealized gains (losses) on investments

      (110,982 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 2,952  
    

 

* Not subject to a front-end sales charge.
(a) Due to rounding, Net Assets divided by shares outstanding does not equal the NAV.
(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

2

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GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT BOND FUND

 

Statement of Changes in Net Assets

 

       Period Ended
June 30, 2006(a)
  
       (Unaudited)  

From Investment Activities:

           

Operations:

           

Net investment income (loss)

      $ 113,934  

Net realized gains (losses) on investment transactions

        (100 )

Net change in unrealized appreciation/depreciation on investments

        (110,882 )
      

Change in net assets resulting from operations

        2,952  
      

Distributions to Class II shareholders from:

           

Net investment income

        (114,666 )

Distributions to Class VII shareholders from:

           

Net investment income

        (27 )
      

Change in net assets from shareholder distributions

        (114,693 )
      

Change in net assets from capital transactions

        5,319,442  
      

Change in net assets

        5,207,701  

Net Assets:

           

Beginning of period

        —  
      

End of period

      $ 5,207,701  
      

Accumulated net investment income (loss)

      $ (759 )
      

CAPITAL TRANSACTIONS:

           

Class II Shares

           

Proceeds from shares issued

      $ 5,502,425  

Dividends reinvested

        114,666  

Cost of shares redeemed

        (298,676 )
      
         5,318,415  
      

Class VII Shares

           

Proceeds from shares issued

        1,000  

Dividends reinvested

        27  
      
         1,027  
      

Change in net assets from capital transactions

      $ 5,319,442  
      

SHARE TRANSACTIONS:

           

Class II Shares

           

Issued

        484,161  

Reinvested

        10,377  

Redeemed

        (26,158 )
      
         468,380  
      

Class VII Shares

           

Issued

        88  

Reinvested

        2  
      
         90  
      

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

3

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

American Funds GVIT Bond Fund

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net
Asset
Value,
End of
Period		   Total
Return		     Net
Assets at
End of
Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimburse-
ments) to
Average
Net Assets		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimburse-
ments) to
Average Net
Assets		     Portfolio
Turnover(a)

Class II Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(b)(e)

   $ 11.45   0.42   (0.43 )   (0.01 )   (0.32 )   (0.32 )   $ 11.12   (0.09% )(c)   $ 5,207   1.14% (d)   22.88% (d)   1.22% (d)   22.79% (d)   29.00%

Class VII Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(b)

   $ 11.45   0.43   (0.45 )   (0.02 )   (0.31 )   (0.31 )   $ 11.12   (0.18% )(c)   $ 1   2.11% (d)   22.42% (d)   2.11% (d)   22.42% (d)   29.00%

 

(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(c) Not annualized.

 

(d) Annualized.

 

(e) Net investment income (loss) is based on average shares outstanding during the period.

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the American Funds GVIT Bond Fund (the “Fund”).

 

The Fund operates as a “feeder fund” which means that the Fund does not buy individual securities directly. Instead, the Fund invests all of its assets in another mutual fund, the American Bond Fund (the “Master Fund”), a series of the American Funds Insurance Series® (“American Funds”), which invests directly in individual securities. The Fund, therefore, has the same investment objective and limitations as the Master Fund in which the Fund invests and the same gross investment returns as the Master Fund.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

The net asset value (“NAV”) per share of each class of the Fund is calculated by taking the NAV of the Master Fund, subtracting the Fund’s liabilities attributable to the Fund, and dividing by the number of shares of that class that are outstanding. The Fund’s NAV is determined at the close of regular trading on the New York Stock Exchange (the “Exchange”) (usually 4 p.m. Eastern Time) (“Close of Trading”) on each day the Exchange is open for trading (“Business Day”). Each Fund may reject any order to buy Fund shares and may suspend the sale of Fund shares at any time.

 

The Master Fund calculates its NAV at the Close of Trading on each Business Day. Assets held by the Master Fund are valued primarily on the basis of market quotations. The Master Fund, however, has adopted procedures for making “fair value” determinations if market quotations are not readily available. For example, if events occur between the close of markets outside the United States and the close of regular trading on the New York Stock Exchange that, in the opinion of Capital Research and Management Company (“Capital Research”), the Master Fund’s investment adviser, materially affect the value of the portfolio securities of the Master Fund, the securities will be valued in accordance with the Master Fund’s fair value procedures. Use of these procedures is intended to result in more appropriate NAVs. In addition, such use will reduce, if not eliminate, potential arbitrage opportunities otherwise available to short-term investors in the Master Fund.

 

5

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(b) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(c) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the NAV of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(d) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities

    Unrealized
Appreciation
    Unrealized
Depreciation
   Net Unrealized
Appreciation
(Depreciation)*

$5,152,967

    $—    $(110,882)   $(110,882)

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(e) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Master Fund’s Investment Advisory Agreement, Capital Research manages the investment of the assets and supervises the daily business affairs of the Master Fund. Gartmore SA Capital Trust (“GSA”) provides non-investment master-feeder operational support services to the Fund. Under the terms of the Trust’s Master-Feeder Services Agreement with GSA on behalf of the Fund, the Fund pays GSA a fee of 0.25% based on the Fund’s average daily net assets. GSA has entered into a contractual agreement with the Trust under which GSA will waive 0.15% of the fees GSA receives for the providing the Fund with non-investment master-feeder operational support services until May 1, 2007.

 

Under the terms of a Fund Administration and Transfer Agency Agreement, GSA provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all Funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Fund for expenses associated with the distribution of the shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares and Class VII shares of the Fund at an annual rate not to exceed 0.25% of Class II shares and 0.40% of Class VII shares.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the period ended June 30, 2006, Nationwide Financial Services received $782 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the period ended June 30, 2006, (excluding short-term securities) the Master Fund had purchases of $886,794 and sales of $608,522.

 

5. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging markets instruments that are subject to certain additional credit and market risks. The yields of emerging markets debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

7

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

  

Trustee

since 1990

   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		  

Number of
Portfolios in

the Gartmore
Fund Complex
Overseen by
Trustee

   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

12

Table of Contents

Financial Statements

for the American Funds Master Fund

American Funds Insurance Series Bond Fund

Investment portfolio, June 30, 2006

unaudited

 

Bonds & notes - 77.79%

    Principal
amount		    Market
value
     (000)    (000)

General Motors Nova Scotia Finance Co. 6.85% 2008

    $ 3,500    $ 3,334

Residential Capital Corp. 6.168% 2009 (1)

      2,700      2,695

Residential Capital Corp. 6.375% 2010

      3,500      3,455

General Motors Acceptance Corp. 7.75% 2010

      530      528

Residential Capital Corp. 6.00% 2011

      6,000      5,820

General Motors Corp. 7.20% 2011

      4,540      4,041

General Motors Acceptance Corp. 7.25% 2011

      12,530      12,160

General Motors Acceptance Corp. 6.875% 2012

      1,000      943

General Motors Acceptance Corp. 7.00% 2012

      3,700      3,516

Residential Capital Corp. 6.50% 2013

      3,000      2,948

General Motors Corp. 7.125% 2013

      7,710      6,476

General Motors Corp. 7.25% 2013

    € 1,000      1,060

General Motors Acceptance Corp. 7.431% 2014 (1)

    $ 5,000      4,853

General Motors Corp. 7.70% 2016

      9,585      7,908

General Motors Corp. 8.80% 2021

      2,500      2,137

General Motors Corp. 9.40% 2021

      1,000      872

General Motors Corp. 8.375% 2033

      1,000      805

Ford Motor Credit Co. 4.875% 2007

    € 1,350      1,714

Ford Motor Credit Co. 7.375% 2009

    $ 14,625      13,531

Ford Motor Credit Co. 6.638% 2010 (1)

      3,670      3,346

Ford Motor Credit Co. 7.875% 2010

      7,625      7,040

Ford Motor Credit Co. 9.75% 2010 (2)

      1,750      1,707

DaimlerChrysler North America Holding Corp. 5.74% 2009 (1)

      5,000      5,007

DaimlerChrysler North America Holding Corp. 7.20% 2009

      3,000      3,097

DaimlerChrysler North America Holding Corp. 4.875% 2010

      2,500      2,392

DaimlerChrysler North America Holding Corp. 8.00% 2010

      6,325      6,721

DaimlerChrysler North America Holding Corp. 7.75% 2011

      3,250      3,434

Royal Caribbean Cruises Ltd. 7.00% 2007

      1,175      1,192

Royal Caribbean Cruises Ltd. 8.00% 2010

      1,875      1,970

Royal Caribbean Cruises Ltd. 8.75% 2011

      2,675      2,889

Royal Caribbean Cruises Ltd. 7.00% 2013

      5,615      5,592

Royal Caribbean Cruises Ltd. 7.25% 2016

      2,000      1,991

News America Inc. 4.75% 2010

      2,000      1,928

News America Holdings Inc. 9.25% 2013

      2,500      2,898

News America Holding Inc. 8.25% 2018

      3,885      4,458

News America Inc. 6.40% 2035

      3,000      2,783

News America Inc. 6.75% 2038

      1,000      1,018

Clear Channel Communications, Inc. 4.625% 2008

      875      857

Clear Channel Communications, Inc. 6.625% 2008

      750      756

Chancellor Media Corp. of Los Angeles 8.00% 2008

      4,250      4,421

Clear Channel Communications, Inc. 5.75% 2013

      1,575      1,480

Clear Channel Communications, Inc. 5.50% 2014

      5,425      4,919

J.C. Penney Co., Inc. 8.00% 2010

      7,380      7,869

J.C. Penney Co., Inc. 9.00% 2012

      2,485      2,852

J.C. Penney Co., Inc. 7.65% 2016

      1,000      1,088

MGM MIRAGE 6.00% 2009

      4,750      4,643

MGM MIRAGE 6.75% 2012

      4,000      3,870

MGM MIRAGE 6.75% 2013 (2)

      1,250      1,198

MGM MIRAGE 5.875% 2014

      1,700      1,532

Comcast Cable Communications, Inc. 8.375% 2007

      750      766

Tele-Communications, Inc. 9.80% 2012

      2,000      2,310

Comcast Corp. 5.85% 2015

      5,825      5,620

Table of Contents

Comcast Corp. 6.50% 2015

      1,750    1,767

Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 11.75% 2011

      1,225    766

Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 13.50% 2011

      425    278

Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 2012 (2)

      4,000    4,000

Charter Communications, Series B, 7.755% 2013 (1)

      1,175    1,179

CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013

      2,425    2,377

Delphi Automotive Systems Corp. 6.50% 2009 (4)

      7,500    6,300

Delphi Corp. 6.50% 2013 (4)

      480    377

Delphi Automotive Systems Corp. 6.55% 2006 (4)

      500    417

Delphi Automotive Systems Corp. 7.125% 2029 (4)

      1,750    1,374

Harrah’s Operating Co., Inc. 5.50% 2010

      4,500    4,394

Harrah’s Operating Co., Inc. 5.625% 2015

      4,250    3,938

Cox Communications, Inc. 5.869% 2007 (1)

      1,750    1,759

Cox Communications, Inc. 7.875% 2009

      1,500    1,577

Cox Communications, Inc. 4.625% 2010

      1,750    1,671

Cox Communications, Inc. 5.45% 2014

      3,500    3,241

Mohegan Tribal Gaming Authority 6.375% 2009

      5,250    5,138

Mohegan Tribal Gaming Authority 7.125% 2014

      1,750    1,702

Liberty Media Corp. 7.75% 2009

      1,750    1,812

Liberty Media Corp. 7.875% 2009

      2,200    2,289

Liberty Media Corp. 8.25% 2030

      2,375    2,285

D.R. Horton, Inc. 8.00% 2009

      2,700    2,809

D.R. Horton, Inc. 7.875% 2011

      1,100    1,156

Schuler Homes, Inc. 10.50% 2011

      250    263

D.R. Horton, Inc. 6.875% 2013

      600    599

D.R. Horton, Inc. 6.50% 2016

      855    824

Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014

      5,700    5,401

Radio One, Inc., Series B, 8.875% 2011

      4,600    4,790

Radio One, Inc. 6.375% 2013

      525    483

Vidéotron Ltée 6.875% 2014

      4,125    3,929

Vidéotron Ltée 6.375% 2015

      1,000    918

Visteon Corp. 8.25% 2010

      3,200    3,008

Visteon Corp. 7.00% 2014

      2,000    1,643

NTL Cable PLC 8.75% 2014

      1,825    1,820

NTL Cable PLC 8.75% 2014

    € 1,000    1,305

NTL Cable PLC 9.75% 2014

    £ 700    1,296

Starwood Hotels & Resorts Worldwide, Inc. 7.375% 2007

    $ 2,730    2,761

Starwood Hotels & Resorts Worldwide, Inc. 7.875% 2012

      1,575    1,652

K. Hovnanian Enterprises, Inc. 10.50% 2007

      1,000    1,051

K. Hovnanian Enterprises, Inc. 6.00% 2010

      3,225    3,040

K. Hovnanian Enterprises, Inc. 7.50% 2016

      225    210

Cinemark USA, Inc. 9.00% 2013

      4,000    4,220

Hilton Hotels Corp. 7.625% 2008

      695    713

Hilton Hotels Corp. 7.20% 2009

      825    843

Hilton Hotels Corp. 8.25% 2011

      2,522    2,656

Dex Media, Inc., Series B, 0%/9.00% 2013 (3)

      1,400    1,186

Dex Media, Inc., Series B, 0%/9.00% 2013 (3)

      1,250    1,059

R.H. Donnelley Corp., Series A-1, 6.875% 2013 (2)

      425    393

Dex Media, Inc., Series B, 8.00% 2013

      1,250    1,263

R.H. Donnelley Corp., Series A-3, 8.875% 2016 (2)

      200    203

Grupo Posadas, SA de CV 8.75% 2011 (2)

      4,000    4,020

AOL Time Warner Inc. 6.875% 2012

      1,250    1,293

AOL Time Warner Inc. 7.625% 2031

      2,250    2,430

MDC Holdings, Inc. 5.50% 2013

      3,885    3,551

Thomson Corp. 6.20% 2012

      1,035    1,047

Thomson Corp. 5.50% 2035

      2,680    2,324

Marriott International, Inc., Series F, 4.625% 2012

      3,350    3,094

Centex Corp. 5.25% 2015

      650    585

Centex Corp. 6.50% 2016

      2,500    2,434

Kabel Deutschland GmbH 10.625% 2014 (2)

      2,625    2,782

Toll Brothers, Inc. 4.95% 2014

      580    508

Toll Brothers, Inc. 5.15% 2015

      2,600    2,273

CSC Holdings, Inc., Series B, 8.125% 2009

      750    767

CSC Holdings, Inc., Series B, 7.625% 2011

      1,000    1,005

Table of Contents

Cablevision Systems Corp., Series B, 8.00% 2012

      1,000    991

American Media Operations, Inc. 8.875% 2011

      3,030    2,697

Telenet Communications NV 9.00% 2013

    € 747    1,050

Telenet Group Holding NV 0%/11.50% 2014 (2) (3)

    $ 1,635    1,394

American Honda Finance Corp. 5.125% 2010 (2)

      2,500    2,441

Young Broadcasting Inc. 10.00% 2011

      2,716    2,431

DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013

      2,275    2,394

Viacom Inc. 6.25% 2016 (2)

      2,040    1,984

Viacom Inc. 6.875% 2036 (2)

      260    252

Dillard’s, Inc. 6.625% 2008

      700    705

Dillard Department Stores, Inc. 9.125% 2011

      1,400    1,515

Ryland Group, Inc. 5.375% 2012

      2,400    2,219

Staples, Inc. 7.375% 2012

      2,000    2,138

Tenneco Automotive Inc. 8.625% 2014

      2,000    2,005

Neiman Marcus Group, Inc. 9.00% 2015 (2) (5)

      1,900    1,995

Reader’s Digest Assn., Inc. 6.50% 2011

      2,000    1,940

Seminole Tribe of Florida 5.798% 2013 (2)

      2,000    1,940

Standard Pacific Corp. 5.125% 2009

      2,000    1,885

KB Home 6.25% 2015

      2,000    1,788

Hyatt Equities, LLC 6.875% 2007 (2)

      1,500    1,509

Pulte Homes, Inc. 8.125% 2011

      1,395    1,478

TRW Automotive Acquisition Corp. 9.375% 2013

      1,375    1,468

Adelphia Communications Corp. 10.25% 2006 (4)

      1,000    540

Adelphia Communications Corp. 10.25% 2011 (4)

      1,450    841

CanWest Media Inc., Series B, 8.00% 2012

      1,358    1,351

LBI Media, Inc. 10.125% 2012

      1,250    1,337

Quebecor Media Inc. 7.75% 2016 (2)

      1,325    1,305

William Lyon Homes, Inc. 7.625% 2012

      1,500    1,252

Carnival Corp. 3.75% 2007

      500    486

Carnival Corp. 6.15% 2008

      750    754

Viacom Inc. 5.625% 2007

      1,200    1,199

YUM! Brands, Inc. 7.70% 2012

      1,000    1,077

Regal Cinemas Corp., Series B, 9.375% 2012 (6)

      1,000    1,061

Six Flags, Inc. 8.875% 2010

      1,000    955

Omnicom Group Inc. 5.90% 2016

      995    955

Gray Communications Systems, Inc. 9.25% 2011

      875    914

Boyd Gaming Corp. 7.75% 2012

      750    760

AMC Entertainment Inc. 8.00% 2014

      675    622

Toys “R” Us, Inc. 7.875% 2013

      525    416

British Sky Broadcasting Group PLC 8.20% 2009

      375    398

RBS-Zero Editora Jornalística SA 11.00% 2010 (2)

      189    195

U.S. Treasury 7.00% 2006

      4,000    4,002

U.S. Treasury 3.25% 2007

      7,000    6,847

U.S. Treasury 6.25% 2007

      33,455    33,638

U.S. Treasury 3.625% 2009

      55,250    52,945

U.S. Treasury 3.875% 2009

      7,500    7,250

U.S. Treasury 6.00% 2009

      7,315    7,498

U.S. Treasury 5.00% 2011

      45,490    45,362

U.S. Treasury 5.00% 2011

      2,000    1,995

U.S. Treasury 10.375% 2012

      1,000    1,068

U.S. Treasury 4.25% 2013

      33,250    31,551

U.S. Treasury 4.00% 2014

      22,970    21,341

U.S. Treasury 4.50% 2036

      50,615    45,396

Freddie Mac 2.875% 2006

      37,275    36,829

Freddie Mac 5.50% 2011

      9,000    9,015

Fannie Mae 2.625% 2006

      6,225    6,159

Fannie Mae 5.25% 2007

      12,750    12,698

Fannie Mae 1.75% 2008

    ¥ 640,000    5,693

United States Agency for International Development, Republic of Egypt 4.45% 2015

    $ 5,000    4,637

Federal Home Loan Bank 5.625% 2016

      2,000    1,977

Small Business Administration, Series 2001-20J, 5.76% 2021 (7)

      538    540

AIG SunAmerica Global Financing XII 5.30% 2007 (2)

      4,000    3,985

AIG SunAmerica Global Financing VII 5.85% 2008 (2)

      1,000    1,004

International Lease Finance Corp., Series O, 4.55% 2009

      7,000    6,750

American General Finance Corp. 5.85% 2013

      2,500    2,482

American International Group, Inc. 6.25% 2036 (2)

      2,000    1,923

ILFC E-Capital Trust I 5.90% 2065 (1) (2)

      6,000    5,854

Table of Contents

ILFC E-Capital Trust II 6.25% 2065 (1) (2)

      4,875    4,614

Sumitomo Mitsui Banking Corp. 4.375% 2014 (1)

    € 1,645    2,110

Sumitomo Mitsui Banking Corp. 5.625% (undated) (1) (2)

    $ 18,920    17,676

Washington Mutual, Inc. 5.737% 2012 (1)

      6,850    6,836

Providian Financial Corp., Series A, 9.525% 2027 (2)

      750    797

Washington Mutual Preferred Funding I Ltd. 6.534% (undated) (1) (2)

      11,300    10,864

Santander Issuances, SA Unipersonal 5.805% 2016 (2)

      7,300    7,247

Abbey National PLC 6.70% (undated) (1)

      5,600    5,678

Abbey National PLC 7.35% (undated) (1)

      3,000    3,018

J.P. Morgan Chase & Co. 5.75% 2013

      750    743

J.P. Morgan Chase & Co. 4.75% 2015

      3,000    2,754

J.P. Morgan Chase & Co. 4.891% 2015

      5,300    5,108

Chase Capital II, Global Floating Rate Capital Securities, Series B, 5.649% 2027 (1)

      5,000    4,821

CIT Group Inc. 3.65% 2007

      3,585    3,487

CIT Group Inc. 5.75% 2007

      1,500    1,500

CIT Group Inc. 6.875% 2009

      2,500    2,578

CIT Group Inc. 7.75% 2012

      750    814

CIT Group Inc. 5.40% 2013

      4,000    3,875

HBOS PLC 5.375% (undated) (1) (2)

      2,750    2,608

HBOS PLC, Series B, 5.92% (undated) (1) (2)

      9,200    8,490

Bank of Scotland 7.00% (undated) (1) (2)

      480    486

Mizuho Capital Investment (USD) 1 Ltd. and Mizuho Capital Investment (EUR) 1 Ltd. 6.686%
noncumulative preferred (undated) (1) (2)

      11,476    10,909

Resona Bank, Ltd. 3.75% 2015 (1)

    € 1,015    1,266

Resona Bank, Ltd. 4.125% (undated) (1)

      970    1,180

Resona Bank, Ltd. 5.85% (undated) (1) (2)

    $ 6,465    6,026

Household Finance Corp. 4.125% 2009

      2,000    1,905

HSBC Finance Corp. 4.625% 2010

      1,500    1,439

Household Finance Corp. 6.375% 2011

      1,000    1,023

HSBC Finance Capital Trust IX 5.911% 2035 (1)

      4,000    3,824

Lazard Group LLC 7.125% 2015

      6,840    6,924

ZFS Finance (USA) Trust I 6.15% 2065 (1) (2)

      5,000    4,795

ZFS Finance (USA) Trust II 6.45% 2065 (2)

      2,000    1,833

Rouse Co. 3.625% 2009

      1,140    1,065

Rouse Co. 7.20% 2012

      3,860    3,890

Rouse Co. (TRC) 6.75% 2013 (2)

      1,500    1,468

iStar Financial, Inc. 7.00% 2008

      950    965

iStar Financial, Inc. 8.75% 2008

      309    325

iStar Financial, Inc. 5.375% 2010

      3,500    3,420

iStar Financial, Inc. 6.00% 2010

      750    748

iStar Financial, Inc., Series B, 5.125% 2011

      1,000    958

Citigroup Inc. 4.25% 2009

      3,000    2,889

Citigroup Inc. 4.125% 2010

      3,000    2,855

Host Marriott, LP, Series M, 7.00% 2012

      4,050    4,035

Host Marriott, LP, Series K, 7.125% 2013

      1,500    1,502

Nationwide Life Insurance Co. 5.35% 2007 (2)

      1,000    998

North Front Pass Through Trust 5.81% 2024 (1) (2)

      3,125    2,976

Nationwide Mutual Insurance Co. 7.875% 2033 (2)

      750    834

Berkshire Hathaway Finance Corp. 4.125% 2010

      5,000    4,761

World Savings Bank, FSB, Bank Notes, Series 2008-FXR, 4.125% 2008

      4,750    4,634

ProLogis Trust 7.05% 2006

      250    250

ProLogis 5.50% 2012

      2,500    2,437

ProLogis 5.50% 2013

      2,000    1,944

Lincoln National Corp. 7.00% 2066 (1)

      4,650    4,622

New York Life Global Funding 3.875% 2009 (2)

      2,250    2,157

New York Life Global Funding 4.625% 2010 (2)

      2,500    2,405

HVB Funding Trust I 8.741% 2031 (2)

      1,245    1,470

HVB Funding Trust III 9.00% 2031 (2)

      2,500    3,029

CNA Financial Corp. 6.75% 2006

      230    231

CNA Financial Corp. 6.60% 2008

      1,736    1,764

CNA Financial Corp. 5.85% 2014

      2,575    2,433

Downey Financial Corp. 6.50% 2014

      4,500    4,424

Bank of America Corp. 4.375% 2010

      3,000    2,853

MBNA Corp., Series F, 6.125% 2013

      1,500    1,524

Development Bank of Singapore Ltd. 7.875% 2009 (2)

      4,000    4,214

Met Life Global Funding I 2.60% 2008 (2)

      4,450    4,192

PRICOA Global Funding I 4.20% 2010 (2)

      2,750    2,614

Table of Contents

Prudential Holdings, LLC, Series C, 8.695% 2023 (2) (7)

      1,250    1,488

Capital One Financial Corp. 4.738% 2007

      3,000    2,972

Capital One Financial Corp. 8.75% 2007

      800    813

Capital One Capital I 6.699% 2027 (1) (2)

      250    252

XL Capital Ltd. 5.25% 2014

      1,130    1,044

Twin Reefs Asset Trust (XLFA), Series B, 6.17% (undated) (1) (2)

      2,500    2,500

Simon Property Group, LP 4.875% 2010

      1,000    965

Simon Property Group, LP 5.375% 2011

      2,500    2,440

USA Education, Inc. 5.625% 2007

      3,250    3,247

SocGen Real Estate Co. LLC, Series A, 7.64% (undated) (1) (2)

      3,000    3,064

ERP Operating LP 4.75% 2009

      1,000    974

ERP Operating LP 6.625% 2012

      2,000    2,072

ACE INA Holdings Inc. 5.875% 2014

      1,080    1,045

ACE INA Holdings Inc. 6.70% 2036

      2,050    1,972

E*TRADE Financial Corp. 7.375% 2013

      1,900    1,909

E*TRADE Financial Corp. 7.875% 2015

      1,050    1,082

US Bank National Assn. 4.40% 2008

      3,000    2,936

Hospitality Properties Trust 6.75% 2013

      1,500    1,537

Hospitality Properties Trust 6.30% 2016

      1,300    1,283

Kimco Realty Corp. 6.00% 2012

      500    502

Kimco Realty Corp., Series C, 4.82% 2014

      2,500    2,292

Kazkommerts International BV 7.00% 2009 (2)

      500    496

Kazkommerts International BV 7.875% 2014 (2)

      800    790

Kazkommerts International BV 8.00% 2015 (2)

      1,250    1,219

United Dominion Realty Trust, Inc., Series E, 4.50% 2008

      500    489

United Dominion Realty Trust, Inc. 6.50% 2009

      1,000    1,030

United Dominion Realty Trust, Inc. 5.00% 2012

      1,000    947

Countrywide Home Loans, Inc., Series M, 4.125% 2009

      2,500    2,379

EOP Operating LP 8.10% 2010

      500    538

EOP Operating LP 6.75% 2012

      750    775

EOP Operating LP 4.75% 2014

      1,000    908

Protective Life Insurance Co., Series 2005-C, 4.85% 2010

      2,250    2,192

Shinsei Bank, Ltd. 3.75% 2016

    € 1,030    1,266

Shinsei Bank, Ltd. 3.75% 2016 (1)

      675    830

Liberty Mutual Group Inc. 6.50% 2035 (2)

    $ 2,380    2,084

Allstate Financial Global Funding LLC 5.25% 2007 (2)

      750    749

Allstate Financial Global Funding LLC 4.25% 2008 (2)

      1,250    1,215

Rodamco Europe Finace BV 3.75% 2012

    € 1,600    1,946

WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012

      1,595    1,935

Plum Creek Timberlands, LP 5.875% 2015

    $ 2,000    1,914

Developers Diversified Realty Corp. 3.875% 2009

      1,000    952

Developers Diversified Realty Corp. 4.625% 2010

      1,000    953

John Hancock Global Funding II, Series 2004-A, 3.50% 2009 (2)

      2,000    1,903

Marsh & McLennan Companies, Inc. 5.75% 2015

      1,800    1,702

Zions Bancorporation 5.50% 2015

      740    707

Zions Bancorporation 6.00% 2015

      1,000    993

UnumProvident Finance Co. PLC 6.85% 2015 (2)

      1,500    1,477

City National Corp. 5.125% 2013

      1,500    1,434

Banco Santander-Chile 5.375% 2014 (2)

      1,500    1,429

TuranAlem Finance BV 7.75% 2013 (2)

      1,000    976

TuranAlem Finance BV 8.50% 2015 (2)

      375    370

First Industrial, LP 6.875% 2012

      1,250    1,288

ReliaStar Financial Corp. 8.00% 2006

      250    252

ING Security Life Institutional Funding 2.70% 2007 (2)

      1,000    980

Chevy Chase Bank, FSB 6.875% 2013

      1,000    1,005

Chohung Bank 4.50% 2014 (1)

      1,030    971

Assurant, Inc. 5.625% 2014

      1,000    961

Monumental Global Funding Trust II, Series 2002-A, 5.20% 2007 (2)

      750    748

Skandinaviska Enskilda Banken AB 4.958% (undated) (1) (2)

      750    670

Bank of Ireland 6.107% (undated) (1) (2)

      600    560

BCI U.S. Funding Trust I 8.01% noncumulative preferred (undated) (1) (2)

      500    519

Advanta Capital Trust I, Series B, 8.99% 2026

      500    506

Comerica, Inc., Imperial Capital Trust I, Imperial Bancorp, Series B, 9.98% 2026

      350    380

BankUnited Capital Trust, BankUnited Financial Corp. 10.25% 2026

      250    271

National Westminster Bank PLC 7.75% (undated) (1)

      250    256

Fannie Mae, Series 2000-T5B, 7.30% 2010

      6,500    6,907

Table of Contents

Fannie Mae, Series 2001-T11, Class B, 5.503% 2011

    5,000    4,983

Fannie Mae, Series 2001-T6B, 6.088% 2011

    6,750    6,885

Fannie Mae 10.00% 2018

    15    17

Fannie Mae 6.00% 2021

    910    913

Fannie Mae, Series 2001-4, Class GA, 10.269% 2025 (1)

    183    201

Fannie Mae 7.00% 2026

    68    70

Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028

    225    231

Fannie Mae 7.50% 2031

    36    37

Fannie Mae, Series 2001-20, Class C, 12.009% 2031 (1)

    120    133

Fannie Mae 5.00% 2035

    3,301    3,087

Fannie Mae 5.50% 2035

    1,663    1,602

Fannie Mae 5.50% 2036

    18,930    18,176

Fannie Mae 5.50% 2036

    4,757    4,568

Fannie Mae 6.50% 2036

    21    21

Fannie Mae, Series 2001-T10, Class A-1, 7.00% 2041

    164    167

Fannie Mae, Series 2001-50, Class BA, 7.00% 2041

    148    151

Fannie Mae, Series 2002-W1, Class 2A, 7.50% 2042

    225    230

Countrywide Alternative Loan Trust, Series 2005-J8, Class 2-A-1, 5.00% 2020

    5,780    5,515

Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 5.011% 2035 (1)

    2,960    2,962

Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035

    2,740    2,617

Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035

    2,580    2,547

Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 2035

    2,586    2,540

Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-9, 5.50% 2035

    2,089    2,063

Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035

    4,163    4,101

Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035

    3,804    3,785

Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-1, 5.50% 2036

    3,161    3,087

Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 2036

    2,897    2,867

Freddie Mac 4.00% 2015

    2,383    2,209

Freddie Mac 5.00% 2035

    6,113    5,708

Freddie Mac 5.00% 2035

    6,105    5,701

Freddie Mac 5.50% 2035

    3,027    2,907

Freddie Mac 5.50% 2035

    3,025    2,905

Freddie Mac, Series 3061, Class PN, 5.50% 2035

    2,157    2,120

Freddie Mac, Series 3146, Class PO, principal only, 0% 2036

    3,481    2,354

Freddie Mac, Series 3156, Class PO, principal only, 0% 2036

    2,993    2,094

Government National Mortgage Assn. 6.00% 2036

    19,000    18,800

CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 2036

    3,000    3,074

CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-1A, 3.883% 2037

    1,719    1,671

CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 2040

    7,000    6,731

CS First Boston Mortgage Securities Corp., Series 1998-C1, Class A-1B, 6.48% 2040

    1,170    1,184

Wachovia Bank Commercial Mortgage Trust, Series 2002-C1, Class A-2, 5.681% 2034

    2,500    2,497

Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-2, 4.782% 2042

    4,000    3,878

Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 2042

    3,250    3,065

Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 2035 (2)

    3,000    2,875

Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035 (2)

    6,300    6,138

Bear Stearns ALT-A Trust, Series 2006-2, Class II-4-A-1, 5.982% 2036 (1)

    8,162    8,117

J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-LN1, Class H, 5.557% 2037 (2)

    2,000    1,934

J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 2042

    2,540    2,450

J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046

    3,500    3,382

Bear Stearns Commercial Mortgage Securities Inc., Series 2000-WF2, Class A-2, 7.32% 2032

    1,520    1,601

Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035

    2,131    2,056

Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A-2, 6.48% 2035

    750    771

Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-2, 4.735% 2042

    3,000    2,893

WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR5, Class A-7, 4.208% 2033 (1)

    496    483

WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR2, Class 2-A1, 5.844% 2037 (1)

    3,894    3,818

WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 5.583% 2045 (1)

    2,789    2,798

Tower Ventures, LLC, Series 2006-1, Class C, 5.707% 2036 (2)

    500    491

Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 2036 (2)

    6,000    5,948

First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class I-A-14, 5.50% 2035

    1,801    1,775

Table of Contents

First Horizon Alternative Mortgage Securities Trust, Series 2005-FA11, Class I-A-5, 5.75% 2036

      4,307    4,226

Hilton Hotel Pool Trust, Series 2000-HLTA, Class F, 7.75% 2015 (2)

      5,000    5,086

SBA CMBS Trust, Series 2005-1, Class A, 5.369% 2035 (2)

      1,750    1,716

SBA CMBS Trust, Series 2005-1, Class D, 6.219% 2035 (2)

      3,000    2,970

Bear Stearns ARM Trust, Series 2003-3, Class III-A-1, 5.118% 2033 (1)

      848    830

Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.98% 2034 (1)

      1,016    994

Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 2035 (1)

      3,000    2,859

Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034

      2,953    2,901

Residential Accredit Loans, Inc., Series 2006-QS1, Class A-3, 5.75% 2036

      1,212    1,205

IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.884% 2036 (1)

      3,921    3,868

GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034

      3,750    3,840

Nykredit 4.00% 2035

    DKr 23,923    3,714

Chase Commercial Mortgage Securities Corp., Series 1998-2, Class A-2, 6.39% 2030

    $ 707    716

Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A-2, 6.56% 2030

      892    901

Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032

      1,572    1,651

Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A1, 6.038% 2035 (1)

      3,150    3,118

GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.333% 2045

      3,000    2,933

Merrill Lynch Mortgage Investors, Inc., Series 1999-C1, Class A-2, 7.56% 2031

      1,421    1,478

Merrill Lynch Mortgage Investors, Inc., Series 2004-A1, Class II-A-1, 4.595% 2034 (1)

      1,306    1,276

Commercial Mortgage Trust, Series 2000-C1, Class E, 8.132% 2033

      2,500    2,623

L.A. Arena Funding, LLC, Series 1, Class A, 7.656% 2026 (2)

      2,503    2,623

GS Mortgage Securities Corp. II, Series 1998-C1, Class E, 7.42% 2030 (1)

      1,250    1,288

GS Mortgage Securities Corp. II, Series 1998-C1, Class D, 7.42% 2030 (1)

      1,000    1,030

Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.693% 2034 (1)

      2,035    1,946

HarborView Mortgage Loan Trust, Series 2005-15, Class 2-A1A2, 6.067% 2045 (1)

      1,682    1,699

Salomon Brothers Commercial Mortgage Trust, Series 2000-C1, Class A-1, 7.46% 2008

      279    282

Salomon Brothers Commercial Mortgage Trust, Series 2000-C3, Class A-2, 6.592% 2033

      1,250    1,284

Morgan Stanley Dean Witter Capital I Trust, Series 2001-TOP5, Class A-3, 6.16% 2035

      1,250    1,265

Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 2036

      968    994

Morgan Stanley Capital I, Inc., Series 1998-HF2, Class A-2, 6.48% 2030

      849    859

Chase Manhattan Bank - First Union National Bank, Commercial Mortgage Trust,
Series 1999-1, Class B, 7.619% 2031

      750    790

Citigroup Mortgage Loan Trust, Inc., Series 2004-HYB1, Class A-3-1, 4.55% 2034 (1)

      744    729

GGP Mall Properties Trust, Series 2001-GGP1, Class A-2, 5.007% 2011 (2)

      716    715

First Union National Bank Commercial Mortgage Trust, Series 2002-C1, Class A-1, 5.585% 2034

      712    711

LB-UBS Commercial Mortgage Trust, Series 2000-C3, Class A-2, 7.95% 2025

      500    534

DLJ Commercial Mortgage Corp., Series 1999-CG1, Class A-1B, 6.46% 2032

      500    509

Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.526% 2027 (1) (2)

      108    109

Nomura Asset Securities Corp., Series 1998-D6, Class A-1A, 6.28% 2030

      83    83

German Government 4.50% 2006

    € 12,330    15,780

German Government 5.25% 2008

      5,650    7,397

German Government 5.25% 2011

      1,750    2,364

German Government 4.25% 2014

      5,530    7,186

Korean Government 4.00% 2010

    KRW 7,540,000    7,674

Korean Government 5.00% 2011

      7,685,000    8,082

Korean Government 4.25% 2014

      8,765,000    8,769

United Mexican States Government Global 9.875% 2010

    $ 1,000    1,127

United Mexican States Government, Series MI10, 9.50% 2014

    MXP 130,500    11,871

United Mexican States Government Global 11.375% 2016

    $ 1,920    2,621

United Mexican States Government Global 5.625% 2017

      1,500    1,399

United Mexican States Government, Series M20, 10.00% 2024

    MXP 22,000    2,043

United Mexican States Government Global 7.50% 2033

    $ 1,080    1,150

United Kingdom 7.50% 2006

    £ 2,980    5,570

United Kingdom 4.75% 2015

      2,030    3,757

United Kingdom 4.75% 2020

      1,340    2,498

United Kingdom 4.75% 2038

      2,240    4,451

Spanish Government 4.25% 2007

    € 11,395    14,711

French Government O.A.T. Eurobond 4.75% 2035

      8,685    11,825

Polish Government 5.75% 2010

    PLN 36,825    11,693

Japanese Government 0.50% 2007

    ¥ 872,300    7,627

Japanese Government 2.30% 2035

      380,400    3,176

Thai Government 4.125% 2009

    THB 146,380    3,684

Thai Government 5.00% 2014

      68,105    1,717

Thai Government 5.40% 2016

      83,125    2,136

Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014

    $ 5,750    7,159

Table of Contents

Israeli Government 7.50% 2014

    ILS 21,870    5,202

Russian Federation 8.25% 2010

    $ 3,111    3,239

Russian Federation 8.25% 2010 (2)

      1,778    1,851

Panama (Republic of) Global 7.125% 2026

      390    378

Panama (Republic of) Global 9.375% 2029

      1,000    1,185

Panama (Republic of) Global 6.70% 2036

      2,805    2,581

Singapore (Republic of) 3.125% 2011

    S$ 3,060    1,915

Singapore (Republic of) 3.75% 2016

      2,985    1,913

Argentina (Republic of) 4.278% 2012 (1)

    $ 2,000    1,625

Canadian Government 4.25% 2026 (8)

    C$ 1,000    1,556

El Salvador (Republic of) 7.65% 2035 (2)

    $ 1,250    1,206

Dominican Republic 9.04% 2018 (2) (5)

      1,069    1,122

Brazil (Federal Republic of) Global 10.25% 2013

      375    445

Brazil (Federal Republic of) Global 11.00% 2040

      500    621

State of Qatar 9.75% 2030

      500    698

Sprint Capital Corp. 4.78% 2006

      1,500    1,498

Nextel Communications, Inc., Series E, 6.875% 2013

      6,410    6,455

Nextel Communications, Inc., Series D, 7.375% 2015

      26,790    27,287

Sprint Capital Corp. 6.875% 2028

      1,250    1,263

SBC Communications Inc. 5.38% 2008 (1)

      1,625    1,629

SBC Communications Inc. 4.125% 2009

      2,500    2,377

AT&T Corp. 7.30% 2011 (1)

      6,580    6,993

SBC Communications Inc. 5.10% 2014

      2,700    2,509

SBC Communications Inc. 5.625% 2016

      1,750    1,662

Qwest Capital Funding, Inc. 7.75% 2006

      625    628

U S WEST Capital Funding, Inc. 6.375% 2008

      100    99

Qwest Capital Funding, Inc. 7.90% 2010

      3,820    3,820

Qwest Capital Funding, Inc. 7.25% 2011

      3,950    3,861

Qwest Corp. 8.875% 2012

      1,250    1,325

Qwest Capital Funding, Inc. 7.625% 2021

      500    466

U S WEST Capital Funding, Inc. 6.875% 2028

      2,300    1,995

American Tower Corp. 7.25% 2011

      1,825    1,875

American Tower Corp. 7.125% 2012

      5,250    5,263

American Tower Corp. 7.50% 2012

      4,500    4,567

Dobson Cellular Systems, Inc. 8.375% 2011 (2)

      2,500    2,581

American Cellular Corp., Series B, 10.00% 2011

      4,750    5,023

Dobson Cellular Systems, Inc. 9.875% 2012

      500    530

Dobson Communications Corp. 8.875% 2013

      688    679

Telefónica Emisiones, SAU 5.984% 2011

      5,000    4,987

Telefónica Emisiones, SAU 7.045% 2036

      3,000    3,008

France Télécom 7.75% 2011 (1)

      6,500    6,989

Telecom Italia SpA 6.25% 2012

    € 920    1,258

Telecom Italia Capital SA, Series B, 5.25% 2013

    $ 2,750    2,546

Telecom Italia Capital SA 4.95% 2014

      2,500    2,242

Telecom Italia Capital SA 5.25% 2015

      1,000    907

Rogers Wireless Inc. 7.25% 2012

      3,825    3,873

Rogers Wireless Inc. 7.50% 2015

      1,975    2,005

Rogers Cantel Inc. 9.75% 2016

      500    579

Hawaiian Telcom Communications, Inc. 9.75% 2013

      2,870    2,935

Hawaiian Telcom Communications, Inc. 10.789% 2013 (1)

      2,195    2,228

Hawaiian Telcom Communications, Inc., Series B, 12.50% 2015

      1,125    1,184

Cingular Wireless LLC 5.625% 2006

      1,000    1,000

AT&T Wireless Services, Inc. 7.875% 2011

      1,890    2,038

AT&T Wireless Services, Inc. 8.125% 2012

      2,850    3,140

Windstream Corp. 8.625% 2016 (2)

      5,100    5,240

Cincinnati Bell Inc. 7.25% 2013

      5,250    5,197

Intelsat (Bermuda), Ltd. 9.614% 2012 (1)

      3,325    3,375

Intelsat (Bermuda), Ltd. 8.25% 2013

      1,775    1,771

BellSouth Corp. 4.75% 2012

      1,250    1,161

BellSouth Corp. 6.55% 2034

      3,000    2,866

MetroPCS, Inc. 12.00% 2007 (1)

      900    947

MetroPCS, Inc. 9.25% 2011 (1)

      3,000    3,060

Centennial Cellular Corp. 10.75% 2008

      324    330

Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013

      1,000    1,058

Centennial Communications Corp. 10.74% 2013 (1)

      500    513

Centennial Communications Corp. and Centennial Cellular Operating Co. LLC and Centennial Puerto Rico Operations Corp. 8.125% 2014 (1)

      2,000    1,935

Table of Contents

Triton PCS, Inc. 9.375% 2011

      1,000    720

Triton PCS, Inc. 8.50% 2013

      3,250    2,998

Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006

      3,090    3,087

Deutsche Telekom International Finance BV 8.125% 2012 (1)

    € 835    1,257

Deutsche Telekom International Finance BV 8.25% 2030 (1)

    $ 1,250    1,447

Intelsat PanAmSat Opco 9.00% 2016 (2)

      2,500    2,550

NTELOS Inc., Series B, 7.48% 2011 (1)

      2,494    2,497

ALLTEL Corp. 4.656% 2007

      1,600    1,589

Verizon Global Funding Corp. 7.75% 2030

      1,230    1,330

PCCW-HKT Capital Ltd. 8.00% 2011 (1) (2)

      1,000    1,072

TELUS Corp. 8.00% 2011

      750    813

Koninklijke KPN NV 8.00% 2010

      750    796

Singapore Telecommunications Ltd. 6.375% 2011 (2)

      750    764

Continental Airlines, Inc., Series 2001-1, Class A-2, 6.503% 2011

      1,000    999

Continental Airlines, Inc., Series 2000-2, Class A-1, 7.487% 2012

      3,570    3,661

Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 2018 (7)

      1,684    1,576

Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 2019 (7)

      2,746    2,733

Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 2019 (7)

      3,316    3,331

Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 2020 (7)

      1,204    1,193

Continental Airlines, Inc., Series 2003-ERJ1, Class A, 7.875% 2020 (7)

      1,703    1,662

Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 2022 (7)

      744    740

Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 2022 (7)

      2,419    2,529

Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 2022 (7)

      2,338    2,468

American Airlines, Inc., Series 2001-2, Class A-1, 6.978% 2012 (7)

      2,490    2,538

American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 2013

      9,475    10,050

American Airlines, Inc., Series 2001-1, Class B, 7.377% 2019 (7)

      1,091    999

AMR Corp. 10.00% 2021

      1,200    1,125

Delta Air Lines, Inc. 8.00% 2007 (2) (4)

      1,500    420

Delta Air Lines, Inc., Series 2000-1, Class B, 7.92% 2012

      1,000    931

Delta Air Lines, Inc., Series 2002-1, Class C, 7.779% 2013 (7)

      328    304

Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 2014

      10,798    10,917

Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 2024

      1,837    1,869

Allied Waste North America, Inc. 8.50% 2008

      4,750    4,940

Allied Waste North America, Inc., Series B, 6.50% 2010

      2,250    2,182

Allied Waste North America, Inc., Series B, 5.75% 2011

      1,000    937

Allied Waste North America, Inc., Series B, 6.125% 2014

      2,000    1,810

Allied Waste North America, Inc. 7.25% 2015

      2,000    1,920

Cendant Corp. 6.25% 2008

      4,200    4,239

Cendant Corp. 7.375% 2013

      5,405    5,921

General Electric Capital Corp., Series A, 5.375% 2007

      1,250    1,249

General Electric Capital Corp., Series A, 6.00% 2012

      1,000    1,013

General Electric Co. 5.00% 2013

      2,750    2,638

General Electric Capital Corp., Series A, 5.223% 2016 (1)

      2,000    2,003

General Electric Capital Corp., Series A, 5.53% 2026 (1)

      3,000    3,010

United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 2010 (7)

      1,100    1,101

United Air Lines, Inc., Series B, 8.986% 2012 (1)

      5,275    5,348

United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 2014 (7)

      894    893

United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 2015 (7)

      1,584    1,591

United Air Lines, Inc., 1991 Equipment Trust Certificates, Series A, 10.11% 2006 (4) (7)

      246    123

Hutchison Whampoa International Ltd. 7.00% 2011 (2)

      500    520

Hutchison Whampoa International Ltd. 6.50% 2013 (2)

      6,750    6,844

Terex Corp. 9.25% 2011

      1,250    1,334

Terex Corp. 7.375% 2014

      6,000    6,000

TFM, SA de CV 10.25% 2007

      2,445    2,531

TFM, SA de CV 9.375% 2012

      3,150    3,370

Burlington Northern and Santa Fe Railway Co. Pass Through Trust, Series 2002-2, 5.14% 2021 (7)

      990    939

BNSF Funding Trust I 6.613% 2055 (1)

      4,900    4,615

American Standard Inc. 8.25% 2009

      1,700    1,794

American Standard Inc. 7.625% 2010

      2,300    2,403

BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 2011 (2) (7)

      1,232    1,264

BAE SYSTEMS 2001 Asset Trust, Series 2001, Class G, MBIA insured, 6.664% 2013 (2) (7)

      2,041    2,103

THL Buildco, Inc. 8.50% 2014

      3,225    3,136

Kansas City Southern Railway Co. 9.50% 2008

      1,850    1,947

Kansas City Southern Railway Co. 7.50% 2009

      750    754

Tyco International Group SA 6.125% 2008

      2,375    2,391

Northwest Airlines, Inc. 9.875% 2007 (4)

      1,000    510

Table of Contents

Northwest Airlines, Inc. 7.875% 2008 (4)

      1,000    505

Northwest Airlines, Inc. 10.00% 2009 (4)

      2,750    1,341

H-Lines Finance Holding Corp. 0%/11.00% 2013 (3)

      2,600    2,242

Waste Management, Inc. 7.00% 2006

      1,000    1,003

Waste Management, Inc. 7.375% 2010

      650    686

WMX Technologies, Inc. 7.10% 2026

      500    526

CCMG Acquisition Corp. 8.875% 2014 (2)

      2,000    2,060

Union Pacific Railroad Co. Pass Through Trust, Series 2002-1, 6.061% 2023 (7)

      493    503

Union Pacific Railroad Co. Pass Through Trust, Series 2003-1, 4.698% 2024 (7)

      1,488    1,366

Bombardier Inc. 6.30% 2014 (2)

      2,100    1,837

Williams Scotsman, Inc. 8.50% 2015

      1,500    1,489

John Deere Capital Corp., Series D, 4.375% 2008

      1,500    1,469

DynCorp International and DIV Capital Corp., Series A, 9.50% 2013

      1,369    1,431

Standard Aero Holdings, Inc. 8.25% 2014

      1,575    1,410

K&F Industries, Inc. 7.75% 2014

      1,400    1,386

Southwest Airlines Co., Series 2001-1, Class B, 6.126% 2006 (7)

      1,000    1,002

Qantas Airways Ltd. 6.05% 2016 (2)

      900    873

Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 2023 (2) (7)

      563    549

Jet Equipment Trust, Series 1994-A, 11.79% 2013 (2) (4)

      250    —  

Abitibi-Consolidated Co. of Canada 5.25% 2008

      1,500    1,410

Abitibi-Consolidated Finance LP 7.875% 2009

      2,812    2,707

Abitibi-Consolidated Co. of Canada 8.829% 2011 (1)

      3,500    3,430

Abitibi-Consolidated Co. of Canada 8.375% 2015

      8,175    7,501

JSG Funding PLC 9.625% 2012

      575    595

JSG Funding PLC 7.75% 2015

    € 3,000    3,593

JSG Funding PLC 7.75% 2015

    $ 2,000    1,820

JSG Holdings PLC 11.50% 2015 (5)

    € 3,420    4,351

Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014

    $ 8,275    7,365

Owens-Brockway Glass Container Inc. 8.875% 2009

      2,500    2,588

Owens-Brockway Glass Container Inc. 8.75% 2012

      2,250    2,354

Owens-Brockway Glass Container Inc. 6.75% 2014

    € 1,250    1,581

Stone Container Corp. 9.75% 2011

    $ 816    843

Jefferson Smurfit Corp. (U.S.) 8.25% 2012

      2,000    1,885

Stone Container Corp. 8.375% 2012

      250    237

Jefferson Smurfit Corp. (U.S.) 7.50% 2013

      2,800    2,520

Norske Skogindustrier ASA 7.625% 2011 (2)

      4,000    4,044

Norske Skogindustrier ASA 6.125% 2015 (2)

      1,500    1,344

Rhodia SA 8.00% 2010

    € 1,300    1,731

Rhodia 10.25% 2010

    $ 1,625    1,743

Rhodia SA 9.25% 2011

    € 1,172    1,565

UPM-Kymmene Corp. 5.625% 2014 (2)

    $ 4,500    4,258

Georgia-Pacific Corp. 7.449% 2012 (1)

      1,020    1,021

Georgia-Pacific Corp. 8.30% 2013 (1)

      3,075    3,106

Graphic Packaging International, Inc. 8.50% 2011

      3,475    3,484

Graphic Packaging International, Inc. 9.50% 2013

      500    497

Lyondell Chemical Co. 9.50% 2008

      1,355    1,399

Equistar Chemicals, LP and Equistar Funding Corp. 8.75% 2009

      750    778

Equistar Chemicals, LP and Equistar Funding Corp. 10.625% 2011

      1,500    1,618

International Paper Co. 5.85% 2012

      3,640    3,588

Weyerhaeuser Co. 5.95% 2008

      533    534

Weyerhaeuser Co. 7.375% 2032

      2,565    2,604

Stora Enso Oyj 6.404% 2016 (2)

      700    680

Stora Enso Oyj 7.25% 2036 (2)

      2,265    2,218

United States Steel Corp. 9.75% 2010

      2,103    2,250

Ainsworth Lumber Co. Ltd. 7.25% 2012

      375    309

Ainsworth Lumber Co. Ltd. 6.75% 2014

      2,000    1,530

Ainsworth Lumber Co. Ltd. 6.75% 2014

      500    383

Neenah Paper, Inc. 7.375% 2014

      2,325    2,151

Plastipak Holdings, Inc. 8.50% 2015 (2)

      2,000    2,010

Graham Packaging Co., LP and GPC Capital Corp. 9.875% 2014

      2,000    1,990

Rockwood Specialties Group, Inc. 7.625% 2014

    € 1,500    1,950

Building Materials Corp. of America 7.75% 2014

    $ 2,000    1,920

Airgas, Inc. 6.25% 2014

      2,000    1,880

Steel Dynamics, Inc. 9.50% 2009

      1,750    1,805

Associated Materials Inc. 9.75% 2012

      1,750    1,750

Crystal US Holdings 3 LLC and Crystal US Sub 3 Corp., Series B, 0%/10.50% 2014 (3)

      1,044    822

Table of Contents

BCP Caylux Holdings Luxembourg SCA 9.625% 2014

    650    708

Domtar Inc. 7.125% 2015

    1,500    1,312

Cytec Industries Inc. 6.00% 2015

    1,150    1,094

Oregon Steel Mills, Inc. 10.00% 2009

    1,000    1,050

Allegheny Technologies, Inc. 8.375% 2011

    500    519

Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 2009 (2) (7)

    4,534    4,355

Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 2009 (7)

    63    60

Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 2014 (7)

    675    742

Ras Laffan Liquefied Natural Gas Co. Ltd. 8.294% 2014 (2) (7)

    360    396

Ras Laffan Liquefied Natural Gas II 5.298% 2020 (2) (7)

    7,500    7,006

Premcor Refining Group Inc. 9.25% 2010

    3,750    3,992

Premcor Refining Group Inc. 6.125% 2011

    2,000    2,009

Premcor Refining Group Inc. 6.75% 2011

    2,700    2,771

Premcor Refining Group Inc. 9.50% 2013

    650    711

Premcor Refining Group Inc. 6.75% 2014

    2,000    2,023

Premcor Refining Group Inc. 7.50% 2015

    275    284

Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 2014 (2) (7)

    6,250    6,070

Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 2014 (7)

    3,000    2,914

Williams Companies, Inc. 6.375% 2010 (2)

    1,000    980

Williams Companies, Inc. 7.125% 2011

    500    503

Williams Partners LP 7.50% 2011 (2)

    2,950    2,972

Williams Companies, Inc. 8.125% 2012

    4,030    4,201

Energy Transfer Partners, LP 5.95% 2015

    8,555    8,252

El Paso Corp. 6.375% 2009 (2)

    150    148

El Paso Energy Corp. 7.75% 2010 (2)

    1,500    1,530

El Paso Energy Corp. 7.375% 2012

    100    100

El Paso Natural Gas Co. 7.50% 2026

    175    172

Tennessee Gas Pipeline Co. 7.00% 2028

    2,000    1,862

Southern Natural Gas Co. 7.35% 2031

    1,000    964

Southern Natural Gas Co. 8.00% 2032

    1,325    1,376

Qatar Petroleum 5.579% 2011 (2)

    5,500    5,475

Pogo Producing Co. 7.875% 2013 (2)

    1,325    1,335

Pogo Producing Co. 6.625% 2015

    100    93

Pogo Producing Co. 6.875% 2017

    4,000    3,725

Delek & Avner-Yam Tethys Ltd. 5.326% 2013 (2) (7)

    4,302    4,181

Newfield Exploration Co. 6.625% 2014

    1,000    958

Newfield Exploration Co. 6.625% 2016

    3,250    3,079

Petroleum Export Ltd., Class A-3, 5.265% 2011 (2) (7)

    3,969    3,851

Teekay Shipping Corp. 8.875% 2011

    3,100    3,263

Encore Acquisition Co. 6.00% 2015

    2,500    2,262

Kinder Morgan Energy Partners LP 6.75% 2011

    2,000    2,045

Pemex Project Funding Master Trust 6.625% 2035 (2)

    2,000    1,812

Gulfstream Natural Gas System LLC 6.19% 2025 (2)

    1,220    1,182

Enterprise Products Operating LP, Series B, 5.00% 2015

    1,055    954

Drummond Co., Inc. 7.375% 2016 (2)

    950    886

Reliance Industries Ltd., Series B, 10.25% 2097

    500    664

Overseas Shipholding Group, Inc. 8.25% 2013

    525    547

AES Corp. 9.50% 2009

    695    740

AES Corp. 9.375% 2010

    4,019    4,320

AES Corp. 8.75% 2013 (2)

    6,350    6,826

AES Corp. 9.00% 2015 (2)

    350    378

AES Red Oak, LLC, Series A, 8.54% 2019 (7)

    911    965

AES Ironwood, LLC 8.857% 2025 (7)

    1,154    1,252

AES Red Oak, LLC, Series B, 9.20% 2029 (7)

    2,500    2,713

Mission Energy Holding Co. 13.50% 2008

    1,525    1,708

Edison Mission Energy 7.73% 2009

    1,500    1,523

Edison Mission Energy 7.75% 2016 (2)

    6,000    5,925

Midwest Generation, LLC, Series B, 8.56% 2016 (7)

    1,691    1,777

Midwest Generation, LLC and Midwest Finance Corp. 8.75% 2034

    3,250    3,461

Southern Power Co., Series B, 6.25% 2012

    6,000    6,055

Nevada Power Co., General and Refunding Mortgage Notes, Series G, 9.00% 2013

    3,562    3,873

Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015

    150    143

Nevada Power Co., Series M, 5.95% 2016 (2)

    1,450    1,382

American Electric Power Co., Inc. 5.75%/4.709% 2007 (1)

    5,000    4,940

Virginia Electric and Power Co., Series 2002-A, 5.375% 2007

    2,750    2,743

Dominion Resources, Inc., Series 2002-D, 5.125% 2009

    1,500    1,464

NRG Energy, Inc. 7.25% 2014

    725    709

Table of Contents

NRG Energy, Inc. 7.375% 2016

      3,275    3,201

Constellation Energy Group, Inc. 6.125% 2009

      2,550    2,569

Constellation Energy Group, Inc. 4.55% 2015

      1,080    958

MidAmerican Energy Holdings Co. 5.00% 2014

      2,200    2,059

MidAmerican Energy Holdings Co. 6.125% 2036 (2)

      1,500    1,407

Commonwealth Edison Co., Series 99, 3.70% 2008

      1,500    1,453

Exelon Generation Co., LLC 6.95% 2011

      1,300    1,357

Cilcorp Inc. 8.70% 2009

      1,000    1,079

Union Electric Co. 5.25% 2012

      1,495    1,448

Veolia Environnement 4.875% 2013

    € 1,630    2,109

Duke Capital Corp. 6.25% 2013

    $ 1,000    1,011

Duke Capital Corp. 5.50% 2014

      1,000    964

SP PowerAssets Ltd. 3.80% 2008 (2)

      2,000    1,916

Mirant Americas Generation, Inc. 8.30% 2011

      1,500    1,489

Scottish Power PLC 5.375% 2015

      1,230    1,169

Israel Electric Corp. Ltd. 7.70% 2018 (2)

      1,000    1,068

PSEG Energy Holdings Inc. 8.625% 2008

      1,000    1,030

Oncor Electric Delivery Co. 6.375% 2012

      800    808

ARG Funding Corp., Series 2005-1, Class A-1, MBIA insured, 4.02% 2009 (2)

      3,000    2,925

ARG Funding Corp., Series 2005-1, Class A-3, MBIA insured, 4.29% 2011 (2)

      3,250    3,103

ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 2011 (2)

      5,000    4,863

MBNA Credit Card Master Note Trust, Series 2005-6, Class A, 4.50% 2013

      5,250    5,061

MBNA Credit Card Master Note Trust, Series 2002-1, Class C, 6.80% 2014

      2,500    2,607

Drivetime Auto Owner Trust, Series 2005-A, Class A-3, MBIA insured, 4.302% 2009 (2)

      4,500    4,439

Drive Auto Receivables Trust, Series 2006-1, Class A-4, FSA insured, 5.54% 2013 (2)

      4,000    3,980

Vanderbilt Mortgage and Finance, Inc., Series 1999-B, Class I-B-1, 8.395% 2016

      923    928

Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-1, 8.20% 2020

      2,880    2,940

CPS Auto Receivables Trust, Series 2002-B, Class A-2, XLCA insured, 3.50% 2009 (2)

      146    145

CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 2012 (2)

      3,000    2,966

PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-3, 4.14% 2012

      3,000    2,876

Capital Auto Receivables Asset Trust, Series 2004-2, Class A-4, 3.75% 2009

      2,750    2,665

Specialty Underwriting and Residential Finance Trust, Series 2004-BC4, Class A-2B, 5.633% 2035 (1)

      2,500    2,507

Chase Issuance Trust, Series 2005-7, Class A, 4.55% 2013

      2,250    2,166

Residential Asset Securities Corp. Trust, Series 2004-KS12, Class A-1-2, 5.553% 2035 (1)

      2,070    2,074

Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured,
5.08% 2011 (2)

      2,000    1,947

Conseco Finance Home Loan Trust, Series 1999-G, Class B-2, 10.96% 2029 (4)

      1,686    1,652

Consumer Credit Reference Index Securities Program Trust, Series 2002-2A, Class FX, 10.421% 2007 (2)

      1,500    1,524

Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 2017 (2)

      1,072    1,046

CWABS, Inc., Series 2004-12, Class 2-AV-2, 5.603% 2033 (1)

      908    909

Nordstrom Credit Card Master Note Trust, Series 2002-1, Class B, 5.899% 2010 (1) (2)

      750    754

First Investors Auto Owner Trust, Series 2003-A, Class A, MBIA insured, 2.58% 2011 (2)

      364    355

MMCA Auto Owner Trust, Series 2002-2, Class A-4, 4.30% 2010

      86    86

Electronic Data Systems Corp. 6.334% 2006

      2,000    2,001

Electronic Data Systems Corp., Series B, 6.50% 2013 (1)

      10,025    9,904

Electronic Data Systems Corp. 7.45% 2029

      1,250    1,291

Celestica Inc. 7.875% 2011

      5,650    5,579

Celestica Inc. 7.625% 2013

      3,450    3,364

Sanmina-SCI Corp. 6.75% 2013

      5,500    5,156

Sanmina-SCI Corp. 8.125% 2016

      425    417

Xerox Corp. 7.125% 2010

      5,000    5,063

Motorola, Inc. 7.625% 2010

      239    256

Motorola, Inc. 8.00% 2011

      2,000    2,195

Motorola, Inc. 7.50% 2025

      500    548

Motorola, Inc. 5.22% 2097

      250    189

SunGard Data Systems Inc. 9.125% 2013 (2)

      3,000    3,127

Jabil Circuit, Inc. 5.875% 2010

      3,060    3,037

Sabre Holdings Corp. 6.35% 2016

      3,180    2,980

Freescale Semiconductor, Inc. 6.875% 2011

      2,400    2,424

Nortel Networks Ltd.10.75% 2016 (2)

      1,550    1,585

Cisco Systems, Inc. 5.25% 2011

      1,500    1,474

Exodus Communications, Inc. 11.625% 2010 (4) (6)

      377    —  

Table of Contents

Columbia/HCA Healthcare Corp. 7.00% 2007

      2,500    2,527

HCA Inc. 5.50% 2009

      6,150    5,957

HCA Inc. 6.50% 2016

      2,000    1,859

Concentra Operating Corp. 9.50% 2010

      4,000    4,160

Concentra Operating Corp. 9.125% 2012

      3,250    3,380

Tenet Healthcare Corp. 6.375% 2011

      1,000    897

Tenet Healthcare Corp. 9.875% 2014

      1,600    1,608

Tenet Healthcare Corp. 9.25% 2015 (2)

      750    739

Humana Inc. 7.25% 2006

      1,500    1,501

Humana Inc. 6.45% 2016

      1,500    1,487

Aetna Inc. 5.75% 2011

      3,000    2,982

Mylan Laboratories Inc. 5.75% 2010

      3,000    2,873

Wyeth 5.50% 2016

      3,000    2,869

Amgen Inc. 4.00% 2009

      2,500    2,378

Triad Hospitals, Inc. 7.00% 2012

      2,250    2,250

HealthSouth Corp. 11.418% 2014 (1) (2)

      875    877

HealthSouth Corp. 10.75% 2016 (2)

      875    862

Universal Health Services, Inc. 7.125% 2016

      1,200    1,208

Cardinal Health, Inc. 5.85% 2017

      1,235    1,180

Warner Chilcott Corp. 8.75% 2015

      1,000    1,035

UnitedHealth Group Inc. 5.20% 2007

      1,000    998

WellPoint, Inc. 5.25% 2016

      625    587

Jean Coutu Group (PJC) Inc. 7.625% 2012

      800    780

Jean Coutu Group (PJC) Inc. 8.50% 2014

      6,475    5,989

Delhaize America, Inc. 8.125% 2011

      6,100    6,446

Spectrum Brands, Inc. 7.375% 2015

      7,375    6,029

Ahold Finance U.S.A., Inc. 6.25% 2009

      1,225    1,216

Ahold Finance U.S.A., Inc. 8.25% 2010

      2,000    2,095

Ahold Lease Pass Through Trust, Series 2001-A-1, 7.82% 2020 (7)

      130    132

Ahold Lease Pass Through Trust, Series 2001-A-2, 8.62% 2025 (7)

      1,790    1,778

Stater Bros. Holdings Inc. 8.829% 2010 (1)

      2,550    2,595

Stater Bros. Holdings Inc. 8.125% 2012

      1,000    992

SUPERVALU INC. 7.50% 2012

      1,800    1,782

Albertson’s, Inc. 7.45% 2029

      1,000    864

Albertson’s, Inc. 8.00% 2031

      1,000    906

CVS Corp. 6.117% 2013 (2) (7)

      1,294    1,286

CVS Corp. 5.298% 2027 (2) (7)

      1,752    1,618

Rite Aid Corp. 6.875% 2013

      2,125    1,849

Tyson Foods, Inc. 6.60% 2016

      1,500    1,469

Gold Kist Inc. 10.25% 2014

      1,371    1,436

Duane Reade Inc. 9.829% 2010 (1)

      1,000    975

Tesco PLC 5.50% 2033

    £ 330    625

State of Winsonsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027

    $ 2,920    3,098

State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A-1, 6.25% 2033

      1,500    1,623

State of North Carolina, Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Federally Taxable, Series 2003-E, 5.55% 2014

      1,625    1,540

State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds, Series 2002-A, Class A, 6.72% 2025

      1,523    1,485

State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds, Series 2001-A, Class A, 6.36% 2025

      401    399
       

Total bonds & notes (cost: $2,311,813,000)

       2,274,706
       

Convertible securities - 0.25%

   

Shares or principal

amount

     

Amazon.com, Inc. 6.875% PEACS convertible notes 2010

    € 1,518,000    1,973

Amazon.com, Inc. 4.75% convertible debentures 2009

    $ 648,000    625

Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred 2032

      13,600    378

Conexant Systems, Inc. 4.00% convertible notes 2007

    $ 1,500,000    1,483

SCI Systems, Inc. 3.00% convertible debentures 2007

    $ 1,000,000    972

American Tower Corp. 5.00% convertible debentures 2010

    $ 2,000,000    1,998
       

Total convertible securities (cost: $6,440,000)

       7,429
       

Table of Contents

Preferred stocks - 2.91%

    Shares     

Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative preferred (undated) (1) (2)

    15,050,000    $ 14,368

Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (undated) (1) (2)

    6,430,000      6,888

IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred (undated) (1) (2)

    6,075,000      6,387

Chuo Mitsui Trust and Banking Co., Ltd. 5.506% (undated) (1) (2)

    10,090,000      9,217

HSBC Capital Funding LP, Series 1, 9.547% noncumulative step-up perpetual preferred (undated) (1) (2)

    8,030,000      9,006

Tokai Preferred Capital Co. LLC, Series A, 9.98% noncumulative preferred (undated) (1) (2)

    4,650,000      4,991

MUFG Capital Finance 1 Ltd. 6.346% noncumulative preferred (undated) (1)

    1,415,000      1,363

Fannie Mae, Series O, 7.065% preferred (2)

    100,000      5,394

ING Capital Funding Trust III 8.439% noncumulative preferred (undated) (1)

    4,250,000      4,655

BNP Paribas 5.186% noncumulative (undated) (1) (2)

    2,200,000      1,998

BNP U.S. Funding LLC, Series A, 7.738% noncumulative preferred (undated) (1) (2)

    1,175,000      1,204

BNP Paribas Capital Trust 9.003% noncumulative trust preferred (undated) (1) (2)

    850,000      947

SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred (undated) (1) (2)

    3,750,000      3,985

RBS Capital Trust I 4.709% noncumulative trust preferred (undated) (1)

    3,500,000      3,168

Deutsche Bank Capital Funding Trust I, 7.872% (undated) (1) (2)

    2,500,000      2,620

Wachovia Capital Trust III 5.80% (undated)

    2,450,000      2,380

Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities (2)

    65,000      1,834

HVB Funding Trust VIII 7.055% (undated) (1)

    900,000      1,281

ACE Ltd., Series C, 7.80% preferred depositary shares

    42,760      1,105

DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares (undated) (1) (2)

    750,000      800

First Republic Capital Corp., Series A, 10.50% preferred (2)

    750      788

National Bank of Canada, Series A, 8.35% exchangeable preferred depositary shares

    20,000      525

ZiLOG, Inc. - MOD III Inc., units (6) (9)

    55      8

Adelphia Communications Corp., Series B, 13.00% preferred 2009 (9)

    5,000      3
         

Total preferred stocks (cost: $85,940,000)

         84,915
         

Common stocks - 0.21%

          

Drax Group PLC (9)

    231,144      3,509

Sprint Nextel Corp., Series 1

    33,726      674

XO Holdings, Inc. (9)

    1,134      5

DigitalGlobe Inc. (2) (6) (9)

    306,464      306

Delta Air Lines, Inc. (2) (9)

    60,887      46

ZiLOG, Inc. (9)

    32,500      110

Clarent Hospital Corp. (6) (9)

    16,114      4

Other common stocks in initial period of acquisition

         1,431
         

Total common stocks (cost: $3,173,000)

         6,085
         

Rights & warrants - 0.00%

          

XO Holdings, Inc., Series A, warrants, expire 2010 (9)

    2,273    $ 2

XO Holdings, Inc., Series B, warrants, expire 2010 (9)

    1,704      1

XO Holdings, Inc., Series C, warrants, expire 2010 (9)

    1,704      —  

GT Group Telecom Inc., warrants, expire 2010 (2) (6) (9)

    1,000      —  
         

Total rights & warrants (cost: $52,000)

         3
         

Table of Contents

Short-term securities - 18.69%

    Principal
amount		     
     (000)     

Federal Home Loan Bank 4.915%-5.02% due 7/12-8/4/2006

    $ 75,900    $ 75,642

Gannett Co. 5.00% due 7/7-7/13/2006 (2)

      36,800      36,755

Coca-Cola Co. 5.00% due 8/14/2006

      20,000      19,872

Atlantic Industries 4.92% due 7/6/2006 (2)

      13,100      13,089

Variable Funding Capital Corp. 5.03%-5.23% due 7/14-7/24/2006 (2)

      33,000      32,922

Hershey Co. 4.95%-5.05% due 7/5-7/21/2006 (2)

      32,500      32,452

NetJets Inc. 4.98% due 7/12-7/18/2006 (2)

      28,600      28,534

Clipper Receivables Co., LLC 5.05%-5.07% due 7/12-7/25/2006 (2)

      28,600      28,534

3M Co. 5.00%-5.02% due 7/20-7/26/2006

      28,300      28,205

E.I. duPont de Nemours and Co. 5.03% due 7/17/2006 (2)

      25,000      24,941

Hewlett-Packard Co. 5.21% due 7/31/2006 (2)

      25,000      24,888

Ranger Funding Co. LLC 5.30% due 8/11/2006 (2) (10)

      25,000      24,845

Wal-Mart Stores Inc. 5.05% due 7/11/2006 (2)

      23,500      23,464

Concentrate Manufacturing Co. of Ireland 5.20% due 7/20/2006 (2)

      21,000      20,939

CAFCO, LLC 5.06% due 7/25/2006 (2)

      14,400      14,350

Ciesco LLC 5.29% due 8/17/2006 (2)

      6,600      6,553

International Lease Finance Corp. 5.28%-5.29% due 8/28/2006

      20,800      20,622

Park Avenue Receivables Co., LLC 5.04% due 7/6/2006 (2)

      20,000      19,983

Caterpillar Financial Services Corp. 5.20% due 8/3/2006 (10)

      19,200      19,106

Harley-Davidson Funding Corp. 5.09% due 8/2/2006 (2) (10)

      13,500      13,437

Target Corp. 5.20% due 7/10/2006

      13,400      13,381

Scripps (E.W.) Co. 5.00%-5.28% due 7/3-7/6/2006 (2)

      13,100      13,090

Three Pillars Funding, LLC 5.28% due 7/3/2006 (2)

      9,300      9,296

FCAR Owner Trust I 5.04% due 7/14/2006

      1,700      1,697
         

Total short-term securities (cost: $546,599,000)

         546,597
         

Total investment securities (cost: $2,954,017,000)

         2,919,735

Other assets less liabilities

         4,279
         

Net assets

       $ 2,924,014
         

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

 

(1) Coupon rate may change periodically.
(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $782,363,000, which represented 26.76% of the net assets of the fund.
(3) Step bond; coupon rate will increase at a later date.
(4) Company not making scheduled [interest/dividend] payments; bankruptcy proceedings pending.
(5) Payment in kind; the issuer has the option of paying additional securities in lieu of cash.
(6) Valued under fair value procedures adopted by authority of the board of trustees.
(7) Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturities are shorter than the stated maturities.
(8) Index-linked bond whose principal amount moves with a government retail price index.
(9) Security did not produce income during the last 12 months.
(10) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Assets:

            

Investment securities at market:

            

Unaffiliated issuers

    $ 3,334,719    $ 24,093,055    $ 6,531,116    $ 2,919,735

Affiliated issuers

      —        143,235      49,361      —  

Cash denominated in non-U.S. currencies

      2,690      4,325      —        —  

Cash

      236      1,728      2,008      7,411

Receivables for:

            

Sales of investments

      4,219      136,311      38,340      1,388

Sales of fund’s shares

      3,034      22,713      4,098      2,121

Open forward currency contracts

      —        —        19      392

Dividends and interest

      6,391      23,180      24,729      34,881
     3,351,289      24,424,547      6,649,671      2,965,928

Liabilities:

            

Payables for:

            

Purchases of investments

      2,443      70,125      147,523      40,145

Repurchases of fund’s shares

      44      5,358      843      17

Open forward currency contracts

      —        —        98      267

Investment advisory services

      1,338      5,694      1,536      887

Distribution services

      624      4,125      1,123      554

Deferred trustees’ compensation

      40      625      166      33

Other fees and expenses

      622      237      14      11
     5,111      86,164      151,303      41,914

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014

Investment securities at cost

            

Unaffiliated issuers

    $ 2,758,589    $ 19,440,548    $ 5,618,447    $ 2,954,017

Affiliated issuers

      —      $ 133,658    $ 48,481      —  

Cash denominated in non-U.S. currencies at cost

    $ 2,659    $ 4,338      —        —  

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund  

Net assets consist of:

            

Capital paid in on shares of beneficial interest

    $ 2,664,757    $ 18,351,261    $ 5,366,389    $ 2,899,532  

Undistributed (distributions in excess of) net investment income

      33,224      103,564      77,407      69,335  

Undistributed (accumulated) net realized gain (loss)

      72,534      1,221,378      141,096      (10,776 )

Net unrealized appreciation (depreciation)

      575,663      4,662,180      913,476      (34,077 )

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014  

Shares of beneficial interest issued and outstanding - unlimited shares authorized:

            

Class 1:

            

Net assets (total: $11,157,497)

    $ 214,609    $ 3,490,659    $ 903,248    $ 187,817  

Shares outstanding

      10,399      57,813      52,575      17,074  

Net asset value per share

    $ 20.64    $ 60.38    $ 17.18    $ 11.00  

Class 2:

            

Net assets (total: $65,221,819)

    $ 3,131,569    $ 20,385,930    $ 5,519,490    $ 2,736,197  

Shares outstanding

      152,508      340,114      323,378      250,811  

Net asset value per share

    $ 20.53    $ 59.94    $ 17.07    $ 10.91  

Class 3:

            

Net assets (total: $1,181,927)

      —      $ 461,794    $ 75,630      —    

Shares outstanding

      —        7,655      4,406      —    

Net asset value per share

      —      $ 60.33    $ 17.16      —    
* Amount less than one thousand

See Notes to Financial Statements

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Investment income:

            

Income (net of non-U.S. taxes):

            

Dividends

    $ 34,509    $ 118,613    $ 42,570    $ 329

Interest

      11,885      51,547      52,240      78,520
     46,394      170,160      94,810      78,849

Fees and expenses:

            

Investment advisory services

      8,777      38,583      10,390      5,618

Distribution services - Class 2

      3,654      24,498      6,773      3,131

Distribution services - Class 3

      —        437      69      —  

Transfer agent services

      1      8      2      1

Reports to shareholders

      47      358      96      41

Registration statement and prospectus

      62      479      130      53

Postage, stationery and supplies

      8      60      16      7

Trustees’ compensation

      13      132      35      11

Auditing and legal

      6      21      7      2

Custodian

      386      725      89      55

State and local taxes

      28      220      60      25

Other

      15      48      15      5

Total fees and expenses before waiver

      12,997      65,569      17,682      8,949

Less waiver of fees and expenses:

            

Investment advisory services

      878      3,858      1,039      562

Total fees and expenses after waiver

      12,119      61,711      16,643      8,387

Net investment income

      34,275      108,449      78,167      70,462

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund     Asset Allocation Fund     Bond Fund  

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency:

          

Net realized gain (loss) on:

          

Investments

      135,390      1,227,220       145,831       (2,595 )

Non-U.S. currency transactions

      5,200      261       (466 )     (3,677 )
     140,590      1,227,481       145,365       (6,272 )

Net unrealized appreciation (depreciation) on:

          

Investments

      538      (795,483 )     117,305       (31,900 )

Non-U.S. currency translations

      89      208       (97 )     485  
     627      (795,275 )     117,208       (31,415 )

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency

      141,217      432,206       262,573       (37,687 )

Net increase (decrease) in net assets resulting from operations

    $ 175,492    $ 540,655     $ 340,740     $ 32,775  

See Notes to Financial Statements

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Operations:

                 

Net investment income

    $ 34,275     $ 30,708     $ 108,449     $ 128,993     $ 78,167     $ 126,432     $ 70,462     $ 110,408  

Net realized gain (loss) on investments and non-U.S. currency transactions

      140,590       83,182       1,227,481       637,504       145,365       133,120       (6,272 )     2,178  

Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations

      627       222,184       (795,275 )     2,278,471       117,208       234,416       (31,415 )     (77,663 )

Net increase (decrease) in net assets resulting from operations

      175,492       336,074       540,655       3,044,968       340,740       493,968       32,775       34,923  

Dividends and distributions paid to shareholders:

                 

Dividends from net investment income and non-U.S. currency gains:

                 

Class 1

      (2,252 )     (1,641 )     (5,705 )     (31,560 )     (3,555 )     (20,656 )     (7,578 )     (7,502 )

Class 2

      (27,641 )     (14,177 )     (25,853 )     (112,734 )     (19,628 )     (106,102 )     (106,551 )     (73,453 )

Class 3

      —         —         (605 )     (3,387 )     (279 )     (1,653 )     —         —    

Total dividends from net investment income and non-U.S. currency gains

      (29,893 )     (15,818 )     (32,163 )     (147,681 )     (23,462 )     (128,411 )     (114,129 )     (80,955 )

Distributions from net realized gain on investments:

                 

Short-term net realized gains:

                 

Class 1

      —         —         —         —         —         —         —         —    

Class 2

      —         —         —         —         —         —         —         —    

Class 3

      —         —         —         —         —         —         —         —    

Long-term net realized gains:

                 

Class 1

      —         —         (21,900 )     —         (11,851 )     —         —         —    

Class 2

      —         —         (127,584 )     —         (72,811 )     —         —         —    

Class 3

      —         —         (2,908 )     —         (1,004 )     —         —         —    

Total distributions from net realized gain on investments

      —         —         (152,392 )     —         (85,666 )     —         —         —    

Total dividends and distributions paid to shareholders

      (29,893 )     (15,818 )     (184,555 )     (147,681 )     (109,128 )     (128,411 )     (114,129 )     (80,955 )

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Capital share transactions:

                 

Class 1:

                 

Proceeds from initial capitalization

      —         —         —         —         —         —         —         —    

Proceeds from shares sold

      9,129       4,184       9,292       5,159       25,104       6,110       12,562       10,970  

Proceeds from reinvestment of dividends and distributions

      2,252       1,641       27,605       31,560       15,406       20,656       7,578       7,502  

Cost of shares repurchased

      (13,591 )     (26,337 )     (323,657 )     (588,755 )     (50,269 )     (104,648 )     (9,822 )     (26,416 )

Net increase (decrease) from Class 1 transactions

      (2,210 )     (20,512 )     (286,760 )     (552,036 )     (9,759 )     (77,882 )     10,318       (7,944 )

Class 2:

                 

Proceeds from shares sold

      373,544       541,733       1,846,045       4,085,834       391,458       970,962       416,369       561,561  

Proceeds from reinvestment of dividends and distributions

      27,641       14,177       153,437       112,734       92,439       106,102       106,551       73,453  

Cost of shares repurchased

      (21,874 )     (30,170 )     (235,018 )     (220,641 )     (279,357 )     (56,161 )     (22,339 )     (40,314 )

Net increase from Class 2 transactions

      379,311       525,740       1,764,464       3,977,927       204,540       1,020,903       500,581       594,700  

Class 3:

                 

Proceeds from shares sold

      —         —         5,657       16,188       1,925       2,351       —         —    

Proceeds from reinvestment of dividends and distributions

      —         —         3,513       3,387       1,283       1,653       —         —    

Cost of shares repurchased

      —         —         (55,454 )     (106,454 )     (6,411 )     (14,040 )     —         —    

Net increase (decrease) from Class 3 transactions

      —         —         (46,284 )     (86,879 )     (3,203 )     (10,036 )     —         —    

Net increase in net assets resulting from capital share transactions

      377,101       505,228       1,431,420       3,339,012       191,578       932,985       510,899       586,756  

Total increase (decrease) in net assets

      522,700       825,484       1,787,520       6,236,299       423,190       1,298,542       429,545       540,724  

Net assets:

                 

Beginning of period

      2,823,478       1,997,994       22,550,863       16,314,564       6,075,178       4,776,636       2,494,469       1,953,745  

End of period

    $ 3,346,178     $ 2,823,478     $ 24,338,383     $ 22,550,863     $ 6,498,368     $ 6,075,178     $ 2,924,014     $ 2,494,469  

Undistributed (distributions in excess of) net investment income

    $ 33,224     $ 28,842     $ 103,564     $ 27,278     $ 77,407     $ 22,702     $ 69,335     $ 113,002  

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Shares of beneficial interest:

                 

Class 1:

                 

Shares issued from initial capitalization

    —       —       —       —       —       —       —       —    

Shares sold

    438     233     153     94     1,454     385     1,109     962  

Shares issued on reinvestment of dividends and distributions

    114     95     477     549     920     1,258     691     670  

Shares repurchased

    (658 )   (1,486 )   (5,299 )   (11,005 )   (2,902 )   (6,585 )   (864 )   (2,323 )

Net increase (decrease) in shares outstanding

    (106 )   (1,158 )   (4,669 )   (10,362 )   (528 )   (4,942 )   936     (691 )

Class 2:

                 

Shares sold

    18,130     30,710     30,379     77,199     22,735     61,664     36,917     49,855  

Shares issued on reinvestment of dividends and distributions

    1,402     824     2,668     1,976     5,559     6,492     9,793     6,611  

Shares repurchased

    (1,077 )   (1,695 )   (3,920 )   (4,104 )   (15,780 )   (3,564 )   (1,984 )   (3,572 )

Net increase in shares outstanding

    18,455     29,839     29,127     75,071     12,514     64,592     44,726     52,894  

Class 3:

                 

Shares sold

    —       —       91     320     111     148     —       —    

Shares issued on reinvestment of dividends and distributions

    —       —       61     60     76     101     —       —    

Shares repurchased

    —       —       (912 )   (2,009 )   (370 )   (887 )   —       —    

Net increase (decrease) in shares outstanding

    —       —       (760 )   (1,629 )   (183 )   (638 )   —       —    
(1) Unaudited.

See Notes to Financial Statements

Table of Contents

Financial Highlights (1)

 

Period
ended

   Net asset
value,
beginning
of period		   Income (loss) from investment operations (2)    

Dividends and distributions

    

Net asset
value, end
of period

   Total
return		     Net assets,
end of period
(in millions)		   Ratio of
expenses to
average net
assets
before waiver		     Ratio of
expenses to
average net
assets after
waiver (3)		    

Ratio of
net income
(loss)

to average
net assets

  
    Net
investment
income (loss)		  

Net

gains (losses) on
securities
(both realized
and unrealized)

     Total from
investment
operations		     Dividends
(from net
investment
income)		     Distributions
(from capital
gains)		     Total
dividends and
distributions		              

Global Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 19.63   $ .24   $ .99     $ 1.23     $ (.22 )   $ —       $ (.22 )   $ 20.64   6.31 %   $ 215   .60 %(6)   .54 %(6)   2.37 %(6)

12/31/05

     17.31     .28     2.19       2.47       (.15 )     —         (.15 )     19.63   14.37       206   .62     .57     1.56  

12/31/04

     15.30     .18     1.92       2.10       (.09 )     —         (.09 )     17.31   13.80       202   .65     .64     1.15  

12/31/03

     11.35     .12     3.91       4.03       (.08 )     —         (.08 )     15.30   35.63       188   .70     .70     .94  

12/31/02

     13.42     .09     (2.02 )     (1.93 )     (.14 )     —         (.14 )     11.35   (14.46 )     152   .71     .71     .73  

12/31/01

     17.25     .18     (2.50 )     (2.32 )     (.15 )     (1.36 )     (1.51 )     13.42   (13.99 )     215   .70     .70     1.24  

Class 2

                          

6/30/06 (5)

     19.52     .22     .97       1.19       (.18 )   $ —         (.18 )     20.53   6.16       3,131   .85 (6)   .79 (6)   2.17 (6)

12/31/05

     17.23     .23     2.18       2.41       (.12 )     —         (.12 )     19.52   14.07       2,617   .87     .82     1.30  

12/31/04

     15.25     .14     1.91       2.05       (.07 )     —         (.07 )     17.23   13.49       1,796   .90     .89     .92  

12/31/03

     11.32     .09     3.89       3.98       (.05 )     —         (.05 )     15.25   35.27       1,082   .95     .95     .68  

12/31/02

     13.38     .06     (2.01 )     (1.95 )     (.11 )     —         (.11 )     11.32   (14.64 )     592   .96     .96     .48  

12/31/01

     17.21     .13     (2.49 )     (2.36 )     (.11 )     (1.36 )     (1.47 )     13.38   (14.22 )     600   .95     .95     .88  

Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 59.36   $ .34   $ 1.16     $ 1.50     $ (.10 )   $ (.38 )   $ (.48 )   $ 60.38   2.56 %   $ 3,490   .34 %(6)   .31 %(6)   1.12 %(6)

12/31/05

     51.39     .46     8.00       8.46       (.49 )     —         (.49 )     59.36   16.50       3,709   .35     .32     .87  

12/31/04

     45.74     .32     5.51       5.83       (.18 )     —         (.18 )     51.39   12.75       3,744   .36     .36     .68  

12/31/03

     33.47     .16     12.26       12.42       (.15 )     —         (.15 )     45.74   37.15       3,877   .39     .39     .41  

12/31/02

     44.30     .12     (10.87 )     (10.75 )     (.08 )     —         (.08 )     33.47   (24.27 )     3,195   .40     .40     .30  

12/31/01

     73.51     .18     (11.99 )     (11.81 )     (.41 )     (16.99 )     (17.40 )     44.30   (17.93 )     5,207   .38     .38     .34  

Class 2

                          

6/30/06 (5)

     58.98     .27     1.15       1.42       (.08 )     (.38 )     (.46 )     59.94   2.44       20,386   .59 (6)   .56 (6)   .88 (6)

12/31/05

     51.10     .34     7.92       8.26       (.38 )     —         (.38 )     58.98   16.19       18,343   .60     .57     .64  

12/31/04

     45.50     .23     5.45       5.68       (.08 )     —         (.08 )     51.10   12.50       12,055   .61     .61     .50  

12/31/03

     33.29     .06     12.19       12.25       (.04 )     —         (.04 )     45.50   36.80       7,107   .64     .64     .16  

12/31/02

     44.09     .03     (10.82 )     (10.79 )     (.01 )     —         (.01 )     33.29   (24.46 )     3,009   .65     .65     .07  

12/31/01

     73.28     .04     (11.94 )     (11.90 )     (.30 )     (16.99 )     (17.29 )     44.09   (18.15 )     2,937   .63     .63     .07  

Class 3

                          

6/30/06 (5)

     59.34     .28     1.17       1.45       (.08 )     (.38 )     (.46 )     60.33   2.48       462   .52 (6)   .49 (6)   .94 (6)

12/31/05

     51.38     .37     7.98       8.35       (.39 )     —         (.39 )     59.34   16.28       499   .53     .50     .69  

12/31/04 (7)

     47.74     .24     3.50       3.74       (.10 )     —         (.10 )     51.38   7.85       516   .54 (6)   .53 (6)   .54 (6)

Asset Allocation Fund

                        

Class 1

                          

6/30/06 (5)

   $ 16.56   $ .23   $ .69     $ .92     $ (.07 )   $ (.23 )   $ (.30 )   $ 17.18   5.60 %   $ 903   .34 %(6)   .31 %(6)   2.66 %(6)

12/31/05

     15.49     .41     1.05       1.46       (.39 )     —         (.39 )     16.56   9.45       879   .35     .32     2.57  

12/31/04

     14.58     .39     .84       1.23       (.32 )     —         (.32 )     15.49   8.50       899   .38     .37     2.64  

12/31/03

     12.23     .41     2.29       2.70       (.35 )     —         (.35 )     14.58   22.14       911   .42     .42     3.12  

12/31/02

     14.30     .45     (2.19 )     (1.74 )     (.33 )     —         (.33 )     12.23   (12.19 )     797   .45     .45     3.31  

12/31/01

     15.71     .49     (.37 )     .12       (.59 )     (.94 )     (1.53 )     14.30   .77       1,012   .45     .45     3.30  

Class 2

                          

6/30/06 (5)

     16.47     .21     .68       .89       (.06 )     (.23 )     (.29 )     17.07   5.46       5,519   .59 (6)   .56 (6)   2.41 (6)

12/31/05

     15.42     .37     1.04       1.41       (.36 )     —         (.36 )     16.47   9.14       5,120   .60     .57     2.31  

12/31/04

     14.51     .36     .84       1.20       (.29 )     —         (.29 )     15.42   8.34       3,797   .62     .62     2.42  

12/31/03

     12.18     .37     2.27       2.64       (.31 )     —         (.31 )     14.51   21.74       2,314   .67     .67     2.81  

12/31/02

     14.25     .42     (2.18 )     (1.76 )     (.31 )     —         (.31 )     12.18   (12.38 )     1,056   .70     .70     3.11  

12/31/01

     15.67     .45     (.36 )     .09       (.57 )     (.94 )     (1.51 )     14.25   .52       730   .70     .70     3.03  

Table of Contents

Financial Highlights (1)

 

Period
ended

   Net asset
value,
beginning
of period		   Income (loss) from investment operations (2)   Dividends and distributions     Net asset
value, end
of period		   Total
return		     Net assets,
end of period
(in millions)		   Ratio of
expenses to
average net
assets
before waiver		     Ratio of
expenses to
average net
assets after
waiver (3)		    

Ratio of
net income
(loss)

to average
net assets

  
    Net
investment
income (loss)		  

Net

gains (losses) on
securities
(both realized
and unrealized)

     Total from
investment
operations		   Dividends
(from net
investment
income)		     Distributions
(from capital
gains)		     Total
dividends and
distributions		              

Asset Allocation Fund (Continued)

                        

Class 3

                          

6/30/06 (5)

     16.56     .21     .68       .89     (.06 )     (.23 )     (.29 )     17.16   5.44       76   .52 (6)   .49 (6)   2.48 (6)

12/31/05

     15.49     .38     1.05       1.43     (.36 )     —         (.36 )     16.56   9.26       76   .53     .50     2.39  

12/31/04 (7)

     14.85     .36     .58       .94     (.30 )     —         (.30 )     15.49   6.38       81   .55 (6)   .55 (6)   2.50 (6)

Bond Fund

                        

Class 1

                          

6/30/06 (5)

   $ 11.31   $ .31   $ (.15 )   $ .16   $ (.47 )   $ —       $ (.47 )   $ 11.00   1.41 %   $ 188   .43 %(6)   .39 %(6)   5.48 %(6)

12/31/05

     11.57     .60     (.40 )     .20     (.46 )     —         (.46 )     11.31   1.77       182   .44     .40     5.30  

12/31/04

     11.34     .56     .10       .66     (.43 )     —         (.43 )     11.57   6.04       195   .45     .44     4.94  

12/31/03

     10.41     .57     .78       1.35     (.42 )     —         (.42 )     11.34   13.07       213   .47     .47     5.19  

12/31/02

     10.44     .67     (.24 )     .43     (.46 )     —         (.46 )     10.41   4.26       218   .49     .49     6.60  

12/31/01

     10.18     .77     .08       .85     (.59 )     —         (.59 )     10.44   8.48       194   .49     .49     7.38  

Class 2

                          

6/30/06 (5)

     11.22     .29     (.15 )     .14     (.45 )     —         (.45 )     10.91   1.23       2,736   .68 (6)   .64 (6)   5.23 (6)

12/31/05

     11.48     .57     (.39 )     .18     (.44 )     —         (.44 )     11.22   1.59       2,312   .69     .65     5.06  

12/31/04

     11.27     .53     .09       .62     (.41 )     —         (.41 )     11.48   5.72       1,759   .70     .69     4.68  

12/31/03

     10.36     .53     .78       1.31     (.40 )     —         (.40 )     11.27   12.80       1,280   .72     .72     4.88  

12/31/02

     10.40     .64     (.24 )     .40     (.44 )     —         (.44 )     10.36   4.05       697   .74     .74     6.34  

12/31/01

     10.16     .73     .08       .81     (.57 )     —         (.57 )     10.40   8.15       349   .74     .74     7.06  

Portfolio turnover rate for all classes of shares

 

    

Six months

ended

June 30, 2006 (5)

   

Year Ended

December 31

2005

    2004    2003    2002    2001

Global Growth Fund

    17    26    24    27    30    38

Growth Fund

    23    29    30    34    34    31

Asset Allocation Fund

    21    23    20    20    25    32

Bond Fund

    29    46    34    20    29    59
(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) The ratios in this column reflect the impact, if any, of certain waivers by CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.
(4) Commenced operations July 5, 2001.
(5) Unaudited.
(6) Annualized.
(7) From January 16, 2004, when Class 3 shares were first issued.

See Notes to Financial Statements

Table of Contents

Notes to financial statements

  

unaudited

1. Organization and significant accounting policies

Organization – American Funds Insurance Series (the “series”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company with 14 different funds. The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives are as follows:

 

Global Discovery Fund    Long-term growth of capital by investing primarily in stocks of companies in the services and information area of the global economy.
Global Growth Fund    Long-term growth of capital by investing primarily in common stocks of companies located around the world.
Global Small Capitalization Fund    Long-term growth of capital by investing primarily in stocks of smaller companies located around the world.
Growth Fund    Long-term growth of capital by investing primarily in common stocks of companies that offer opportunities for growth of capital.
International Fund    Long-term growth of capital by investing primarily in common stocks of companies located outside the U.S.
New World Fund    Long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets.
Blue Chip Income and Growth Fund    To produce income exceeding the average yield on U.S. stocks and to provide an opportunity for growth of principal.
Global Growth and Income Fund    Long-term growth of capital and current income by investing primarily in stocks of well-established companies located around the world.
Growth-Income Fund    Growth of capital and income by investing primarily in common stocks or other securities that demonstrate the potential for appreciation and/or dividends.
Asset Allocation Fund    High total return (including income and capital gains) consistent with long-term preservation of capital.
Bond Fund    As high a level of current income as is consistent with the preservation of capital by investing primarily in fixed-income securities.
High-Income Bond Fund    High current income and, secondarily, capital appreciation by investing primarily in intermediate and long-term corporate obligations, with emphasis on higher yielding, higher risk, lower rated or unrated securities.
U.S. Government/AAA-Rated Securities Fund    A high level of current income consistent with prudent investment risk and preservation of capital by investing primarily in a combination of securities guaranteed by the U.S. government and other debt securities rated AAA or Aaa.
Cash Management Fund    High current yield while preserving capital by investing in a diversified selection of high-quality money market instruments.

Each fund offers two or three share classes (1, 2 and 3). Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for certain distribution expenses. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Table of Contents

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the series:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. Securities and other assets for which representative market quotations are not readily available or are considered unreliable are fair valued as determined in good faith under procedures adopted by authority of the series’ board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

Security transactions and related investment income – Security transactions are recorded by the series as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the series will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations –Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution expenses, are accrued daily and charged directly to the respective share class.

Dividends and distributions to shareholders –Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation – Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

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Forward currency contracts – The series may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The series enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the series could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the series values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The series records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

Mortgage dollar rolls – The series may enter into mortgage dollar roll transactions in which a fund in the series sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

2. Non-U.S. investments

Investment risk – The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the funds on the sale of securities in certain countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

3. Federal income taxation and distributions

The series complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The series is not subject to income taxes to the extent such distributions are made.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; paydowns on fixed-income securities; net capital losses; non-U.S. taxes on capital gains; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of December 31, 2005, the funds’ most recent fiscal year end. Tax-basis unrealized appreciation (depreciation) and cost of investments are reported as of June 30, 2006.

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Additional tax basis disclosures are as follows:

(dollars in thousands)

 

     Growth
Fund		    

Global

Growth

Fund

    

Asset

Allocation
Fund

    

Bond

Fund

  

As of December 31, 2005:

         

Undistributed ordinary income

    $ 29,555     $ 31,502     $ 22,899     $ 113,791  

Undistributed long-term capital gains

      —         151,590       85,106       —    

Capital loss carry forwards

      (66,686 )     —         —         (3,617 )

As of June 30, 2006:

         

Gross unrealized appreciation on investment securities

      632,332       5,224,347       1,067,049       30,547  

Gross unrealized depreciation on investment securities

      (56,728 )     (569,283 )     (156,712 )     (66,148 )

Net unrealized appreciation (depreciation) on investment securities

      575,604       4,655,064       910,337       (35,601 )

Cost of portfolio securities

      2,759,115       19,581,226       5,670,140       2,955,336  

Capital loss carry forwards expire in:

         

2006

    $ —         —         —       $ —    

2007

      —         —         —         —    

2008

      —         —         —         —    

2009

      —         —         —         —    

2010

      10,546       —         —         —    

2011

      56,140       —         —         3,029  

2012

      —         —         —         —    

2013

      —         —         —         588  
   $ 66,686       —         —       $ 3,617  
* For the period May 1, 2006, commencement of operations, through June 30, 2006.
† Amount less than one thousand.

4. Fees and transactions with related parties

Capital Research and Management Company (“CRMC”), the series’ investment adviser, is the parent company of American Funds Service Company SM (“AFS”), the series’ transfer agent, and American Funds Distributors, Inc. SM (“AFD”), the principal underwriter of the series’ shares.

Investment advisory services – The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on annual rates that generally decrease as average net asset levels increase.

The board of trustees approved an amended agreement for Growth-Income Fund and Global Small Capitalization Fund, effective April 1, 2006, and July 1, 2006, respectively, that provided for reduced annual rates as reflected in the chart below. During the six months ended June 30, 2006, CRMC voluntarily reduced investment advisory services fees to the rates provided by the amended agreement for Global Small Capitalization Fund. Additionally, CRMC is currently waiving 10% of investment advisory services fees for all funds in the series. During the six months ended June 30, 2006, total aggregate investment advisory services fees waived by CRMC were $13,732,000. As a result, the aggregate fees shown on the accompanying financial statements of $137,318,000 were reduced to $123,586,000. The amended range of rates and asset levels and the current annualized rates of average net assets for the series, before and after the expense waiver, are as follows:

 

     Rates    Net asset level (in billions)   

For the six
months ended
June 30, 2006,

before waiver

   

For the six
months ended
June 30, 2006,

after waiver

Fund

    Beginning with    Ending with        Up to            In excess of          

Global Growth

    .690    .480    .6    3.0    .56    .50

Growth

    .500    .285    .6    27.0    .33    .29

Asset Allocation

    .500    .250    .6    8.0    .33    .29

Bond

    .480    .360    .6    3.0    .42    .38
* Results based on activity during the period May 1, 2006, commencement of operations, through June 30, 2006.

Transfer agent services – The aggregate fee of $25,000 was incurred during the six months ended June 30, 2006, pursuant to an agreement with AFS. Under this agreement, the series compensates AFS for transfer agent services, including shareholder recordkeeping, communications and transaction processing.

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Deferred trustees’ compensation – Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the series, are treated as if invested in one or more of the American Funds. These amounts represent general, unsecured liabilities of the series and vary according to the total returns of the selected funds. Trustees’ compensation of $421,000, shown on the accompanying financial statements, includes $244,000 in current fees (either paid in cash or deferred) and a net increase of $177,000 in the value of the deferred amounts.

Affiliated officers and trustees – Officers and certain trustees of the series are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the series.

5. Distribution services

The series has adopted plans of distribution for Class 2 and 3 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets, of 0.25% for Class 2 and 0.18% for Class 3 to pay service fees to firms that have entered into agreements with the series. During the six months ended June 30, 2006, distribution expenses under the plans for the series aggregated $77,715,000 for Class 2 and $1,101,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

6. Investment transactions and other disclosures

As of June 30, 2006, Asset Allocation Fund, Bond Fund and High-Income Bond Fund had outstanding forward currency contracts to sell non-U.S. currencies as follows:

(dollars in thousands)

 

          Contract
amount		         U.S.
valuation		       

Fund

   

Non-U.S. currency sale contracts

    Non-U.S.    U.S.    Amount   

Unrealized

(depreciation)

appreciation

  

Asset Allocation

    Euro, expiring 7/19-9/29/2006    € 6,710    $ 8,520    $ 8,599    $ (79 )

Bond

    Euro, expiring 9/14/2006    € 5,585      7,078      7,173      (95 )
   Pound, expiring 7/13-8/23/2006    £ 5,780      12,125      11,905      220  

The following table presents additional information for the six months ended June 30, 2006:

 

    

Global

Growth
Fund

    Growth
Fund		   

Asset

Allocation
Fund

     Bond
Fund

Purchases of investment securities (1)

    $ 615,964    $ 5,156,655    $ 1,231,288     $ 886,794

Sales of investment securities (1)

      451,141      5,061,567      1,240,593       608,522

Non-U.S taxes paid on dividend income

      3,333      5,318      1,139       —  

Non-U.S taxes paid on interest income -

      —        —        (3 )     61

Non-U.S taxes paid on realized gains

      132      —        —         —  

Non-U.S taxes provided on unrealized gains as of June 30, 2006

      545      17      —         —  

Dividends from affiliated issuers

      —        —        —         —  

Realized gain on affiliated issuers

      —        —        16,897       —  
(1) Excludes short-term securities, except for Cash Management Fund.
(2) For the period May 1, 2006, commencement of operations, through June 30, 2006.

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Expense example    unaudited

The funds in the American Funds Insurance Series serve as the underlying investment vehicle for various insurance products. As an owner of an insurance contract that invests in one of the funds in the series, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. Additional fees are charged by the insurance companies related to the various benefits they provide. This example is intended to help you understand your ongoing costs (in dollars) of investing in the underlying funds only so you can compare these costs with the ongoing costs of investing in other mutual funds that serve a similar function in other annuity products. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006, through June 30, 2006).

Actual expenses:

The first line of 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 during period” to estimate the expenses you paid on your account during this period. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Hypothetical example for comparison purposes:

The second line of each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. 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 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in 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.

 

    

Beginning

account value

1/1/2006

   

Ending

account

value

6/30/2006

   

Expenses

paid during

period*

   

Annualized

expense

ratio

  

Global Discovery Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.73    $ 2.86    .57 %

Class 1 — assumed 5% return

      1,000.00      1,021.97      2.86    .57  

Class 2 — actual return

      1,000.00      1,024.95      4.12    .82  

Class 2 — assumed 5% return

      1,000.00      1,020.73      4.11    .82  

Global Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,063.06    $ 2.76    .54 %

Class 1 — assumed 5% return

      1,000.00      1,022.12      2.71    .54  

Class 2 — actual return

      1,000.00      1,061.57      4.04    .79  

Class 2 — assumed 5% return

      1,000.00      1,020.88      3.96    .79  

Global Small Capitalization Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,094.50    $ 3.64    .70 %

Class 1 — assumed 5% return

      1,000.00      1,021.32      3.51    .70  

Class 2 — actual return

      1,000.00      1,093.52      4.93    .95  

Class 2 — assumed 5% return

      1,000.00      1,020.08      4.76    .95  

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Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.61    $ 1.56    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,024.37      2.81    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,024.77      2.46    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

International Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,060.13    $ 2.55    .50 %

Class 1 — assumed 5% return

      1,000.00      1,022.32      2.51    .50  

Class 2 — actual return

      1,000.00      1,058.33      3.83    .75  

Class 2 — assumed 5% return

      1,000.00      1,021.08      3.76    .75  

Class 3 — actual return

      1,000.00      1,058.74      3.47    .68  

Class 3 — assumed 5% return

      1,000.00      1,021.42      3.41    .68  

New World Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,089.69    $ 4.20    .81 %

Class 1 — assumed 5% return

      1,000.00      1,020.78      4.06    .81  

Class 2 — actual return

      1,000.00      1,089.24      5.49    1.06  

Class 2 — assumed 5% return

      1,000.00      1,019.54      5.31    1.06  

Blue Chip Income and Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,046.45    $ 1.98    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,045.57      3.25    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

Global Growth and Income Fund†

            

Class 1 — actual return

    $ 1,000.00    $ 961.00    $ 1.05    .65 %

Class 1 — assumed 5% return

      1,000.00      1,021.57      3.26    .65  

Class 2 — actual return

      1,000.00      960.00      1.45    .90  

Class 2 — assumed 5% return

      1,000.00      1,020.33      4.51    .90  

Growth-Income Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,040.86    $ 1.32    .26 %

Class 1 — assumed 5% return

      1,000.00      1,023.51      1.30    .26  

Class 2 — actual return

      1,000.00      1,039.62      2.58    .51  

Class 2 — assumed 5% return

      1,000.00      1,022.27      2.56    .51  

Class 3 — actual return

      1,000.00      1,039.98      2.23    .44  

Class 3 — assumed 5% return

      1,000.00      1,022.61      2.21    .44  

Asset Allocation Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,055.97    $ 1.58    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,054.62      2.85    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,054.43      2.50    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,014.08    $ 1.95    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,012.33      3.19    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

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High-Income Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,033.23    $ 2.27    .45 %

Class 1 — assumed 5% return

      1,000.00      1,022.56      2.26    .45  

Class 2 — actual return

      1,000.00      1032.38      3.53    .70  

Class 2 — assumed 5% return

      1,000.00      1021.32      3.51    .70  

Class 3 — actual return

      1,000.00      1,032.67      3.18    .63  

Class 3 — assumed 5% return

      1,000.00      1,021.67      3.16    .63  

U.S. Government/AAA-Rated Securities Fund

            

Class 1 — actual return

    $ 1,000.00    $ 993.10    $ 2.12    .43 %

Class 1 — assumed 5% return

      1,000.00      1,022.66      2.16    .43  

Class 2 — actual return

      1,000.00      992.63      3.31    .67  

Class 2 — assumed 5% return

      1,000.00      1,021.47      3.36    .67  

Class 3 — actual return

      1,000.00      992.50      3.01    .61  

Class 3 — assumed 5% return

      1,000.00      1,021.77      3.06    .61  

Cash Management Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,021.95    $ 1.50    .30 %

Class 1 — assumed 5% return

      1,000.00      1,023.31      1.51    .30  

Class 2 — actual return

      1,000.00      1,021.44      2.76    .55  

Class 2 — assumed 5% return

      1,000.00      1,022.07      2.76    .55  

Class 3 — actual return

      1,000.00      1,021.19      2.41    .48  

Class 3 — assumed 5% return

      1,000.00      1,022.41      2.41    .48  
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
† The annualized expense ratio and the information in the first line of each share class are based on operations for the period May 1, 2006 (when the fund commenced operations), through June 30, 2006, and, accordingly, are not representative of a full period.

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Board of trustees

“Non-interested” trustees

 

Name and age

  

Year first

elected

a trustee

of the series1

  

Principal occupation(s)

during past five years

   Number of
portfolios in fund
complex2 overseen
by trustee		  

Other directorships3
held by trustee

Lee A. Ault III, 70

Chairman of the Board

   1999   Chairman of the Board, In-Q-Tel, Inc. (an independent technology venture company funded principally by the Central Intelligence Agency); former Chairman of the Board, President and CEO, Telecredit, Inc.   1  

Anworth Mortgage Asset

Corporation;

Office Depot, Inc.

H. Frederick Christie, 73

   1994   Private investor; former President and CEO, The Mission Group (non-utility holding company, subsidiary of Southern California Edison Company)   19   Ducommun Incorporated; IHOP Corporation; Southwest Water Company

Joe E. Davis, 72

   1991   Private investor; former Chairman of the Board, Linear Corporation (linear motor design and production); former President and CEO, National Health Enterprises, Inc;   1   Anworth Mortgage Asset Corporation; Natural Alternatives, Inc.

Martin Fenton, 71

   1995   Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities)   16   None

Leonard R. Fuller, 60

   1999   President and CEO, Fuller Consulting (financial management consulting firm)   14   None

Mary Myers Kauppila, 52

   1994   Private investor; Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc.   5   None

Kirk P. Pendleton, 66

   1996   Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment)    

“Interested” trustees

 

Name, age and

position with series

  

Year first

elected

a trustee or officer
of the series1

  

Principal occupations during past five years
and positions held with affiliated entities or the principal
underwriter of the series

   Number of
portfolios in fund
complex2 overseen
by trustee		  

Other directorships3
held by trustee

James K. Dunton, 68

Vice Chairman of the Board

   1993   Senior Vice President and Director, Capital Research and Management Company   2   None

Donald D. O’Neal, 46

President

   1998   Senior Vice President, Capital Research and Management Company   3   None

The statement of additional information includes additional information about the series’ trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the series is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

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Other officers

 

Name, age and

position with series

   

Year first elected

a trustee or officer
of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

Alan N. Burro, 45

Senior Vice President

    1998    Vice President, Capital Research and Management Company; Senior Vice President, Capital Research Company5

Michael J. Downer, 51

Senior Vice President

    1991    Vice President and Secretary, Capital Research and Management Company; Director, American Funds Distributors, Inc.;5 Director, Capital Bank and Trust Company5

Abner D. Goldstine, 76

Senior Vice President

    1993    Senior Vice President and Director, Capital Research and Management Company

John H. Smut, 49

Senior Vice President

    1994    Senior Vice President, Capital Research and Management Company; Director, American Funds Distributors, Inc.5

Claudia P. Huntington, 54

Vice President

    1994    Senior Vice President, Capital Research and Management Company; Director, The Capital Group Companies, Inc.5

Robert W. Lovelace, 43

Vice President

    1997    Senior Vice President, Capital Research and Management Company; Chairman of the Board, Capital Research Company,5 Director, The Capital Group Companies, Inc.5

Susan M. Tolson, 44

Vice President

    1999    Senior Vice President, Capital Research Company5

Chad L. Norton, 46

Secretary

    1994    Vice President — Fund Business Management Group, Capital Research and Management Company

David A. Pritchett, 40

Treasurer

    1999    Vice President — Fund Business Management Group, Capital Research and Management Company

Steven I. Koszalka, 42

Assistant Secretary

    2003    Assistant Vice President — Fund Business Management Group, Capital Research and Management Company

Karl C. Grauman, 38

Assistant Treasurer

    2006    Vice President — Fund Business Management Group, Capital Research and Management Company

Sheryl F. Johnson, 38

Assistant Treasurer

    1997    Vice President — Fund Business Management Group, Capital Research and Management Company
1 Trustees and officers of the series serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds, consisting of 29 funds, and Endowments, whose shareholders are limited to certain nonprofit organizations.
3 This includes all directorships (other than those in the American Funds) that are held by each trustee as a director of a public company or a registered investment company.
4 “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the series’ investment adviser, Capital Research and Management Company, or affiliated entities (including the series’ principal underwriter).
5 Company affiliated with Capital Research and Management Company.

Table of Contents

 

American Funds GVIT Global Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
2    Statement of Assets and Liabilities
2    Statement of Operations
3    Statements of Changes in Net Assets
4    Financial Highlights
5    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-AGGL (8/06)

Table of Contents

 

Shareholder

Expense Example

American Funds GVIT Global Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, May 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

            Beginning
Account Value,
May 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period
      Annualized
Expense Ratio
  
American Funds GVIT Global Growth Fund                                  

Class II

      Actual    $ 1,000.00      $ 958.80      $ 5.83 (a)    1.20% (a)
       Hypothetical1    $ 1,000.00      $ 1,018.85      $ 6.02 (b)    1.20% (b)

Class VII

      Actual    $ 1,000.00      $ 958.00      $ 9.13 (a)    1.88% (a)
       Hypothetical1    $ 1,000.00      $ 1,015.48      $ 9.44 (b)    1.88% (b)
                                          

 

(a) Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

(b) Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1 Represents the hypothetical 5% return before expenses.

 

1

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GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT GLOBAL GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

        

Investments in Portfolio (cost $4,325,209)

   $ 4,298,104  

Receivable for capital shares issued

     330,012  
   

Total Assets

     4,628,116  
   

Liabilities:

        

Payable for capital shares redeemed

     18  

Accrued expenses and other payables:

        

Fund administration and transfer agent fees

     939  

Master feeder service provider fee

     250  

Distribution fees

     624  

Administrative servicing fees

     608  

Trustee fees

     64  

Other

     2,049  
   

Total Liabilities

     4,552  
   

Net Assets

   $ 4,623,564  
   

Represented by:

        

Capital

   $ 4,651,366  

Accumulated net investment income (loss)

     (697 )

Net unrealized appreciation (depreciation)
on investments

     (27,105 )
   

Net Assets

   $ 4,623,564  
   

Net Assets:

        

Class II Shares

   $ 4,622,605  

Class VII Shares

     959  
   

Total

   $ 4,623,564  
   

Shares outstanding (unlimited number of shares authorized):

        

Class II Shares

     223,868  

Class VII Shares

     46  
   

Total

     223,914  
   

Net asset value and offering price per share:*

        

Class II Shares

   $ 20.65  

Class VII Shares

   $ 20.65 (a)

 

 

Statement of Operations

For the period ended June 30, 2006 (Unaudited)(b)

 

Investment Income:

         

Dividend income

    $ 35,679  
    

Total Income

      35,679  
    

Expenses:

         

Fund administration and transfer agent fees

      995  

Master feeder service provider fee

      837  

Distribution fees Class II Shares

      836  

Distribution fees Class VII Shares

      1  

Administrative servicing fees Class II Shares

      836  

Administrative servicing fees Class VII Shares

      1  

Professional fees

      2,162  

Printing fees

      469  

Trustee fees

      74  

Other

      660  
    

Total expenses before waived expenses

      6,871  

Expenses waived

      (502 )
    

Total Expenses

      6,369  
    

Net Investment Income (Loss)

      29,310  
    

REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:

         

Net change in unrealized appreciation/depreciation on investments

      (27,105 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 2,205  
    

 

* Not subject to a front-end sales charge.

 

(a) Due to rounding, Net Assets divided by shares outstanding does not equal the NAV.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT GLOBAL GROWTH FUND

 

Statement of Changes in Net Assets

 

       Period Ended
June 30, 2006(a)
  
       (Unaudited)  

From Investment Activities:

           

Operations:

           

Net investment income (loss)

      $ 29,310  

Net change in unrealized appreciation/depreciation on investments

        (27,105 )
      

Change in net assets resulting from operations

        2,205  
      

Distributions to Class II shareholders from:

           

Net investment income

        (30,000 )

Distributions to Class VII shareholders from:

           

Net investment income

        (7 )
      

Change in net assets from shareholder distributions

        (30,007 )
      

Change in net assets from capital transactions

        4,651,366  
      

Change in net assets

        4,623,564  

Net Assets:

           

Beginning of period

        —  
      

End of period

      $ 4,623,564  
      

Accumulated net investment income (loss)

      $ (697 )
      

CAPITAL TRANSACTIONS:

           

Class II Shares

           

Proceeds from shares issued

      $ 4,693,980  

Dividends reinvested

        30,000  

Cost of shares redeemed

        (73,621 )
      
         4,650,359  
      

Class VII Shares

           

Proceeds from shares issued

        1,000  

Dividends reinvested

        7  
      
         1,007  
      

Change in net assets from capital transactions

      $ 4,651,366  
      

SHARE TRANSACTIONS:

           

Class II Shares

           

Issued

        225,962  

Reinvested

        1,494  

Redeemed

        (3,588 )
      
         223,868  
      

Class VII Shares

           

Issued

        46  

Reinvested

        — (b)
      
         46  
      

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(b) Amount is less than 1 share.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

American Funds GVIT Global Growth Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value,
End of
Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		    

Ratio of
Net
Investment
Income
(Loss) to

Average
Net Assets

    

Ratio of
Expenses (Prior
to
Reimbursements)
to

Average Net
Assets

    

Ratio of Net

Investment
Income (Loss)

(Prior to
Reimbursements)
to

Average Net
Assets

     Portfolio
Turnover(a)

Class II Shares

                                                                                

Period Ended June 30,
2006 (Unaudited)(b)

   $ 21.69   0.16   (1.04 )   (0.88 )   (0.16 )   (0.16 )   $ 20.65   (4.03% )(c)   $ 4,623   1.10% (d)   5.53% (d)   1.20% (d)   5.44% (d)   17.00%

Class VII Shares

                                                                                

Period Ended June 30,
2006 (Unaudited)(b)

   $ 21.69   0.16   (1.05 )   (0.89 )   (0.15 )   (0.15 )   $ 20.65   (4.11% )(c)   $ 1   1.88% (d)   4.60% (d)   1.88% (d)   4.60% (d)   17.00%

 

(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(c) Not annualized.

 

(d) Annualized.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the American Funds GVIT Global Growth Fund (the “Fund”).

 

The Fund operates as a “feeder fund” which means that the Fund does not buy individual securities directly. Instead, the Fund invests all of its assets in another mutual fund, the American Global Growth Fund (the “Master Fund”), a series of the American Funds Insurance Series® (“American Funds”), which invests directly in individual securities. The Fund, therefore, has the same investment objective and limitations as the Master Fund in which the Fund invests and the same gross investment returns as the Master Fund.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

The net asset value (“NAV”) per share of each class of the Fund is calculated by taking the NAV of the Master Fund, subtracting the Fund’s liabilities attributable to the Fund, and dividing by the number of shares of that class that are outstanding. The Fund’s NAV is determined at the close of regular trading on the New York Stock Exchange (the “Exchange”) (usually 4 p.m. Eastern Time) (“Close of Trading”) on each day the Exchange is open for trading (“Business Day”). Each Fund may reject any order to buy Fund shares and may suspend the sale of Fund shares at any time.

 

The Master Fund calculates its NAV at the Close of Trading on each Business Day. Assets held by the Master Fund are valued primarily on the basis of market quotations. The Master Fund, however, has adopted procedures for making “fair value” determinations if market quotations are not readily available. For example, if events occur between the close of markets outside the United States and the close of regular trading on the New York Stock Exchange that, in the opinion of Capital Research and Management Company (“Capital Research”), the Master Fund’s investment adviser, materially affect the value of the portfolio securities of the Master Fund, the securities will be valued in accordance with the Master Fund’s fair value procedures. Use of these procedures is intended to result in more appropriate NAVs. In addition, such use will reduce, if not eliminate, potential arbitrage opportunities otherwise available to short-term investors in the Master Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

 

(b) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(c) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the NAV of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(d) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)*
  
$4,325,209   $ —   $ (27,105 )   $ (27,105 )

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(e) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Master Fund’s Investment Advisory Agreement, Capital Research manages the investment of the assets and supervises the daily business affairs of the Master Fund. Gartmore SA Capital Trust (“GSA”) provides non-investment master-feeder operational support services to the Fund. Under the terms of the Trust’s Master-Feeder Services Agreement with GSA on behalf of the Fund, the Fund pays GSA a fee of 0.25% based on the Fund’s average daily net assets. GSA has entered into a contractual agreement with the Trust under which GSA will waive 0.15% of the fees GSA receives for the providing the Fund with non-investment master-feeder operational support services until May 1, 2007.

 

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, GSA provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all Funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Fund for expenses associated with the distribution of the shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares and Class VII shares of the Fund at an annual rate not to exceed 0.25% of Class II shares and 0.40% of Class VII shares.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the period ended June 30, 2006, Nationwide Financial Services received $873 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the period ended June 30, 2006, (excluding short-term securities) the Master Fund had purchases of $615,964 and sales of $451,141.

 

5. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging markets instruments that are subject to certain additional credit and market risks. The yields of emerging markets debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association - College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A  

N/A

 

11

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A   N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

12

Table of Contents

Financial Statements for

the American Funds Master Fund

AMERICAN FUNDS INSURANCE SERIES

GLOBAL GROWTH FUND

INVESTMENT MIX BY REGION/COUNTRY

Where the fund’s assets were invested

based on total net assets as of

June 30, 2006

 

     Percent of
net assets		  

Europe

    30.6 %

The Americas

    28.9  

Asia/Pacific Basin

    22.7  

Other countries

    0.4  

Short-term securities & other assets less liabilities

    17.4  
   100.0 %

Europe

   

United Kingdom

    6.1 %

Germany

    4.4  

France

    4.0  

Netherlands

    4.0  

Switzerland

    2.5  

Austria

    2.0  

Spain

    1.9  

Denmark

    1.2  

Finland

    1.4  

Italy

    1.2  

Other

    1.9  
   30.6  

The Americas

   

U.S.

    24.2  

Canada

    2.7  

Mexico

    1.4  

Brazil

    0.6  
   28.9  

Asia/Pacific Basin

   

Japan

    9.7  

Taiwan

    3.0  

Australia

    2.6  

India

    2.3  

South Korea

    2.0  

Hong Kong

    1.4  

Other

    1.7  
   22.7  

Other countries

    0.4  

Short-term securities & other assets less liabilities

    17.4  

Total

    100.0 %

Table of Contents

AMERICAN FUNDS INSURANCE SERIES

GLOBAL GROWTH FUND

LARGEST INDIVIDUAL EQUITY SECURITIES

As of June 30, 2006

 

     Percent of
net assets		  

Sociéte Générale

    1.8 %

Koninklijke KPN

    1.6  

Reliance Industries

    1.6  

AstraZeneca

    1.4  

Telekom Austria

    1.4  

Macquarie Bank

    1.3  

IBM

    1.3  

Telefónica

    1.3  

Tyco

    1.2  

Novo Nordisk

    1.2  

Table of Contents

American Funds Insurance Series Global Growth Fund

Investment portfolio, June 30, 2006

unaudited

 

Common stocks

    Shares      Market
value
            (000)

International Business Machines Corp.

    550,000      $ 42,251

Murata Manufacturing Co., Ltd.

    530,000        34,419

Cisco Systems, Inc. (1)

    1,646,500        32,156

Samsung Electronics Co., Ltd.

    48,440        30,795

Taiwan Semiconductor Manufacturing Co. Ltd.

    11,731,127        21,189

Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)

    709,919        6,517

Rohm Co., Ltd.

    271,800        24,303

Microsoft Corp.

    1,037,000        24,162

Nokia Corp.

    1,075,000        21,920

Motorola, Inc.

    1,050,000        21,157

ASML Holding NV (New York registered) (1)

    771,800        15,606

ASML Holding NV (1)

    125,000        2,530

Powerchip Semiconductor Corp. (1)

    27,350,000        17,975

Molex Inc.

    520,000        17,456

AU Optronics Corp.

    11,935,500        16,870

Hon Hai Precision Industry Co., Ltd.

    2,682,425        16,592

Oracle Corp. (1)

    1,100,000        15,939

Chartered Semiconductor Manufacturing Ltd (1)

    18,250,000        15,567

Chi Mei Optoelectronics Corp.

    13,443,318        14,947

Applied Materials, Inc.

    700,000        11,396

Google Inc., Class A (1)

    25,000        10,483

Xilinx, Inc.

    440,000        9,966

Altera Corp. (1)

    550,000        9,652

Yahoo! Inc. (1)

    275,000        9,075

Citizen Watch Co., Ltd.

    1,000,000        9,064

eBay Inc. (1)

    300,000        8,787

Nintendo Co., Ltd.

    50,000        8,391

Texas Instruments Inc.

    250,000        7,572

Tokyo Electron Ltd.

    96,100        6,720

Venture Corp. Ltd.

    680,000        4,554

Mediatek Incorporation

    489,018        4,537

KLA-Tencor Corp.

    37,921        1,576

Société Générale

    419,400        61,620

Macquarie Bank Ltd.

    856,791        43,907

HSBC Holdings PLC (United Kingdom)

    1,967,769        34,582

Mizuho Financial Group, Inc.

    3,750        31,761

Allianz AG

    192,000        30,299

Mitsubishi UFJ Financial Group, Inc.

    2,023        28,291

Commerzbank U.S. Finance, Inc.

    677,500        24,617

Kookmin Bank

    275,060        22,620

Erste Bank der oesterreichischen Sparkassen AG

    352,480        19,814

Sun Hung Kai Properties Ltd.

    1,750,000        17,846

Hypo Real Estate Holding AG

    285,000        17,292

Shanghai Forte Land Co., Ltd., Class H

    34,776,000        14,105

Hana Financial Holdings

    296,200        13,928

American International Group, Inc.

    225,000        13,286

Westpac Banking Corp.

    690,449        11,938

Willis Group Holdings Ltd.

    350,000        11,235

ING Groep NV

    272,172        10,686

Table of Contents

Lloyds TSB Group PLC

    1,000,000      9,817

UniCredito Italiano SpA

    1,125,000      8,801

Banco Santander Central Hispano, SA

    503,914      7,352

Citigroup Inc.

    150,000      7,236

Marsh & McLennan Companies, Inc.

    250,000      6,722

Bank of Nova Scotia

    140,000      5,547

Westfield Group

    412,507      5,309

Mitsui Sumitomo Insurance Co., Ltd.

    350,000      4,396

Royal Bank of Canada

    100,000      4,061

News Corp. Inc., Class A

    1,291,757      24,776

News Corp. Inc., Class B

    427,507      8,627

Toyota Motor Corp.

    435,000      22,775

Kohl’s Corp. (1)

    350,000      20,692

Carnival Corp., units

    470,000      19,618

Target Corp.

    370,000      18,082

Esprit Holdings Ltd.

    2,100,500      17,148

Starbucks Corp. (1)

    440,000      16,614

Michaels Stores, Inc.

    390,000      16,084

Mediaset SpA

    1,364,500      16,073

Discovery Holding Co., Class A (1)

    1,080,500      15,808

Time Warner Inc.

    900,000      15,570

GOME Electrical Appliances Holding Ltd.

    17,430,000      14,700

H & M Hennes & Mauritz AB, Class B

    376,000      14,567

Viacom Inc., Class B (1)

    389,500      13,960

Kesa Electricals PLC

    2,473,400      13,203

Lowe’s Companies, Inc.

    190,000      11,527

Kingfisher PLC

    2,349,422      10,349

Limited Brands, Inc.

    370,000      9,468

Grupo Televisa, SA, ordinary participation certificates (ADR)

    460,000      8,883

Honda Motor Co., Ltd.

    268,800      8,528

Cie. Financière Richemont AG, Class A, units

    152,893      6,991

Suzuki Motor Corp.

    313,000      6,771

Greek Organization of Football Prognostics SA

    169,790      6,139

DSG International PLC

    1,691,929      5,969

Swatch Group Ltd, non-registered shares

    11,936      2,013

Swatch Group Ltd

    35,521      1,238

Univision Communications Inc., Class A (1)

    70,000      2,345

IAC/InterActiveCorp (1)

    30,000      795

SET Satellite (Singapore) Pte. Ltd. (1) (2) (3)

    155,973      606

Expedia, Inc. (1)

    30,000      449

SET India Ltd. (1) (2) (3)

    6,400      312

AstraZeneca PLC (United Kingdom)

    443,960      26,765

AstraZeneca PLC (Sweden)

    268,005      16,170

AstraZeneca PLC (ADR)

    73,000      4,367

Novo Nordisk A/S, Class B

    602,600      38,360

WellPoint, Inc. (1)

    436,000      31,728

Roche Holding AG

    168,500      27,806

Shionogi & Co., Ltd.

    1,163,000      20,737

Rhön-Klinikum AG

    427,824      19,038

UCB NV

    343,020      18,538

CIGNA Corp.

    185,000      18,224

Smith & Nephew PLC

    1,630,500      12,543

Chugai Pharmaceutical Co., Ltd.

    596,100      12,166

Synthes, Inc.

    100,500      12,104

Aetna Inc.

    300,000      11,979

Pfizer Inc

    500,000      11,735

Sanofi-Aventis

    84,000      8,188

Forest Laboratories, Inc. (1)

    94,800      3,668

Table of Contents

Reliance Industries Ltd.

    2,350,298      54,305

Royal Dutch Shell PLC, Class B

    574,666      20,071

Royal Dutch Shell PLC, Class B (ADR)

    139,643      9,757

Canadian Natural Resources, Ltd.

    456,000      25,219

Schlumberger Ltd.

    380,000      24,742

Norsk Hydro ASA

    875,000      23,183

Technip SA

    325,000      17,979

ENI SpA

    550,000      16,169

Halliburton Co.

    140,000      10,389

Baker Hughes Inc.

    125,000      10,231

Imperial Oil Ltd.

    257,928      9,425

Petróleo Brasileiro SA - Petrobras, ordinary nominative (ADR)

    100,000      8,931

Noble Corp.

    95,000      7,070

Koninklijke KPN NV

    4,875,830      54,756

Telekom Austria AG

    2,101,200      46,737

Telefónica, SA

    2,534,081      42,153

Vodafone Group PLC (ADR)

    500,000      10,650

Vodafone Group PLC

    4,550,000      9,685

Qwest Communications International Inc. (1)

    2,500,000      20,225

América Móvil SA de CV, Series L (ADR)

    585,000      19,457

AT&T Inc.

    600,000      16,734

Sprint Nextel Corp., Series 1

    601,750      12,029

France Télécom, SA

    185,000      3,973

Seven & I Holdings Co., Ltd.

    1,032,000      34,006

Koninklijke Ahold NV (1)

    3,577,000      31,030

Nestlé SA

    83,900      26,307

Avon Products, Inc.

    550,800      17,075

PepsiCo, Inc.

    197,000      11,828

Cia. de Bebidas das Américas - AmBev, preferred nominative (ADR)

    246,000      10,148

Cia. de Bebidas das Américas - AmBev, ordinary nominative (ADR)

    44,000      1,610

METRO AG

    200,000      11,325

Groupe Danone

    72,500      9,202

Altria Group, Inc.

    125,000      9,179

Coca-Cola Co.

    200,000      8,604

Anheuser-Busch Companies, Inc.

    175,000      7,978

Procter & Gamble Co.

    135,000      7,506

Unilever NV

    300,000      6,796

Woolworths Ltd.

    450,040      6,735

Wal-Mart de México, SA de CV, Series V (ADR)

    200,000      5,490

Kimberly-Clark de México, SA de CV, Class A, ordinary participation certificates

    1,540,000      4,904

Unilever PLC

    190,043      4,268

Tyco International Ltd.

    1,465,000      40,288

General Electric Co.

    1,125,455      37,095

Deutsche Post AG

    705,000      18,879

Macquarie Infrastructure Group

    7,326,774      18,284

3M Co.

    160,000      12,923

FANUC LTD

    126,600      11,375

Asahi Glass Co., Ltd.

    826,000      10,476

Bombardier Inc., Class B (1)

    2,500,000      6,967

SMC Corp.

    42,000      5,943

Siemens AG

    50,000      4,346

MISC Berhad

    329,000      690

UPM-Kymmene Corp.

    1,090,000      23,465

Ivanhoe Mines Ltd. (1)

    2,475,000      16,766

Barrick Gold Corp.

    557,174      16,461

Nitto Denko Corp.

    196,400      13,991

Akzo Nobel NV

    258,000      13,897

Galaxy Entertainment Group Ltd. (1)

    13,000,000      12,638

Table of Contents

Bayer AG

      250,000      11,479

Holcim Ltd.

      100,000      7,651

Alcoa Inc.

      183,100      5,925

Gold Fields Ltd.

      163,100      3,711

L’Air Liquide

      8,470      1,648

Weyerhaeuser Co.

      25,000      1,556

Veolia Environnement

      562,771      29,055

Endesa, SA

      405,000      14,069

NTPC Ltd.

      4,951,000      11,970

E.ON AG

      100,000      11,501

Scottish Power PLC

      875,397      9,426

Other common stocks in initial period of acquisition

         97,245

Total common stocks (cost: $2,187,460,000)

         2,763,569

Short-term securities

    Principal
amount		    Market
value
     (000)    (000)

Amsterdam Funding Corp. 5.01%-5.15% due 7/14-8/4/2006 (2)

    $ 36,200    $ 36,068

American Honda Finance Corp. 5.00% due 7/24/2006

      27,800      27,707

BASF AG 5.03%-5.30% due 8/2-8/21/2006 (2)

      27,100      26,913

Fannie Mae 5.30% due 9/27/2006

      26,200      25,869

Old Line Funding, LLC 5.03%-5.07% due 7/7-7/18/2006 (2)

      25,100      25,056

Toyota Credit de Puerto Rico Corp. 5.10% due 8/15/2006

      25,200      25,034

Abbey National North America LLC 5.00% due 7/21/2006

      25,000      24,930

Alcon Capital Corp. 5.05% due 8/3/2006 (2)

      25,000      24,881

International Lease Finance Corp. 5.04%-5.05% due 8/2-8/3/2006

      23,700      23,587

Federal Home Loan Bank 4.95%-4.991% due 7/14-7/28/2006

      22,200      22,143

Allied Irish Banks N.A. Inc. 5.325% due 8/28/2006 (2)

      22,300      22,108

Westpac Banking Corp. 5.155% due 9/7/2006 (2)

      22,000      21,785

Variable Funding Capital Corp. 5.02% due 7/7/2006 (2)

      20,000      19,980

Freddie Mac 5.02% due 8/22/2006

      18,800      18,654

Shell International Finance BV 4.98% due 8/1/2006

      18,600      18,517

CAFCO, LLC 5.04% due 7/14/2006 (2)

      18,500      18,464

Rabobank USA Financial Corp. 5.08% due 8/2/2006

      18,100      18,019

Stadshypotek Delaware Inc. 4.98% due 7/25/2006 (2)

      17,400      17,340

Concentrate Manufacturing Co. of Ireland 5.02% due 7/11/2006 (2)

      17,000      16,974

Swedish Export Credit Corp. 5.02% due 7/17/2006

      17,000      16,960

Three Pillars Funding, LLC 5.28% due 7/3/2006 (2)

      15,600      15,593

Toronto-Dominion Holdings USA Inc. 5.06% due 7/24/2006 (2)

      15,000      14,950

Export Development Corp. 4.98%-5.00% due 7/13-7/24/2006

      13,700      13,661

Danske Corp. 5.05% due 7/18/2006 (2)

      13,400      13,366

International Bank for Reconstruction and Development 5.15% due 8/15/2006

      12,200      12,120

Total Capital SA 5.13% due 8/14/2006 (2)

      12,000      11,923

Spintab AB (Swedmortgage) 5.09%-5.29% due 8/4-8/23/2006

      12,000      11,914

ING (U.S.) Funding LLC CP 5.30% due 8/30/2006

      10,000      9,910

Barton Capital LLC 5.23%-5.32% due 7/3-8/11/2006 (2)

      9,800      9,743

Medtronic Inc. 5.10% due 7/19/2006 (2)

      7,000      6,981

Total short-term securities (cost: $571,129,000)

         571,150

Total investment securities (cost: $2,758,589,000)

         3,334,719

Other assets less liabilities

         11,459

Net assets

       $ 3,346,178

Table of Contents

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

 

(1) Security did not produce income during the last 12 months.
(2) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $603,121,000, which represented 9.15% of the net assets of the fund.
(3) Valued under fair value procedures adopted by authority of the board of trustees.

 

ADR = American Depositary Receipts
GDR = Global Depositary Receipts

See Notes to Financial Statements

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Assets:

            

Investment securities at market:

            

Unaffiliated issuers

    $ 3,334,719    $ 24,093,055    $ 6,531,116    $ 2,919,735

Affiliated issuers

      —        143,235      49,361      —  

Cash denominated in non-U.S. currencies

      2,690      4,325      —        —  

Cash

      236      1,728      2,008      7,411

Receivables for:

            

Sales of investments

      4,219      136,311      38,340      1,388

Sales of fund’s shares

      3,034      22,713      4,098      2,121

Open forward currency contracts

      —        —        19      392

Dividends and interest

      6,391      23,180      24,729      34,881
     3,351,289      24,424,547      6,649,671      2,965,928

Liabilities:

            

Payables for:

            

Purchases of investments

      2,443      70,125      147,523      40,145

Repurchases of fund’s shares

      44      5,358      843      17

Open forward currency contracts

      —        —        98      267

Investment advisory services

      1,338      5,694      1,536      887

Distribution services

      624      4,125      1,123      554

Deferred trustees’ compensation

      40      625      166      33

Other fees and expenses

      622      237      14      11
     5,111      86,164      151,303      41,914

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014

Investment securities at cost

            

Unaffiliated issuers

    $ 2,758,589    $ 19,440,548    $ 5,618,447    $ 2,954,017

Affiliated issuers

      —      $ 133,658    $ 48,481      —  

Cash denominated in non-U.S. currencies at cost

    $ 2,659    $ 4,338      —        —  

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund  

Net assets consist of:

            

Capital paid in on shares of beneficial interest

    $ 2,664,757    $ 18,351,261    $ 5,366,389    $ 2,899,532  

Undistributed (distributions in excess of) net investment income

      33,224      103,564      77,407      69,335  

Undistributed (accumulated) net realized gain (loss)

      72,534      1,221,378      141,096      (10,776 )

Net unrealized appreciation (depreciation)

      575,663      4,662,180      913,476      (34,077 )

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014  

Shares of beneficial interest issued and outstanding - unlimited shares authorized:

            

Class 1:

            

Net assets (total: $11,157,497)

    $ 214,609    $ 3,490,659    $ 903,248    $ 187,817  

Shares outstanding

      10,399      57,813      52,575      17,074  

Net asset value per share

    $ 20.64    $ 60.38    $ 17.18    $ 11.00  

Class 2:

            

Net assets (total: $65,221,819)

    $ 3,131,569    $ 20,385,930    $ 5,519,490    $ 2,736,197  

Shares outstanding

      152,508      340,114      323,378      250,811  

Net asset value per share

    $ 20.53    $ 59.94    $ 17.07    $ 10.91  

Class 3:

            

Net assets (total: $1,181,927)

      —      $ 461,794    $ 75,630      —    

Shares outstanding

      —        7,655      4,406      —    

Net asset value per share

      —      $ 60.33    $ 17.16      —    
* Amount less than one thousand

See Notes to Financial Statements

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Investment income:

            

Income (net of non-U.S. taxes):

            

Dividends

    $ 34,509    $ 118,613    $ 42,570    $ 329

Interest

      11,885      51,547      52,240      78,520
     46,394      170,160      94,810      78,849

Fees and expenses:

            

Investment advisory services

      8,777      38,583      10,390      5,618

Distribution services - Class 2

      3,654      24,498      6,773      3,131

Distribution services - Class 3

      —        437      69      —  

Transfer agent services

      1      8      2      1

Reports to shareholders

      47      358      96      41

Registration statement and prospectus

      62      479      130      53

Postage, stationery and supplies

      8      60      16      7

Trustees’ compensation

      13      132      35      11

Auditing and legal

      6      21      7      2

Custodian

      386      725      89      55

State and local taxes

      28      220      60      25

Other

      15      48      15      5

Total fees and expenses before waiver

      12,997      65,569      17,682      8,949

Less waiver of fees and expenses:

            

Investment advisory services

      878      3,858      1,039      562

Total fees and expenses after waiver

      12,119      61,711      16,643      8,387

Net investment income

      34,275      108,449      78,167      70,462

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund     Asset Allocation Fund     Bond Fund  

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency:

          

Net realized gain (loss) on:

          

Investments

      135,390      1,227,220       145,831       (2,595 )

Non-U.S. currency transactions

      5,200      261       (466 )     (3,677 )
     140,590      1,227,481       145,365       (6,272 )

Net unrealized appreciation (depreciation) on:

          

Investments

      538      (795,483 )     117,305       (31,900 )

Non-U.S. currency translations

      89      208       (97 )     485  
     627      (795,275 )     117,208       (31,415 )

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency

      141,217      432,206       262,573       (37,687 )

Net increase (decrease) in net assets resulting from operations

    $ 175,492    $ 540,655     $ 340,740     $ 32,775  

See Notes to Financial Statements

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		  

Operations:

                 

Net investment income

    $ 34,275     $ 30,708     $ 108,449     $ 128,993     $ 78,167     $ 126,432     $ 70,462     $ 110,408  

Net realized gain (loss) on investments and non-U.S. currency transactions

      140,590       83,182       1,227,481       637,504       145,365       133,120       (6,272 )     2,178  

Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations

      627       222,184       (795,275 )     2,278,471       117,208       234,416       (31,415 )     (77,663 )

Net increase (decrease) in net assets resulting from operations

      175,492       336,074       540,655       3,044,968       340,740       493,968       32,775       34,923  

Dividends and distributions paid to shareholders:

                 

Dividends from net investment income and non-U.S. currency gains:

                 

Class 1

      (2,252 )     (1,641 )     (5,705 )     (31,560 )     (3,555 )     (20,656 )     (7,578 )     (7,502 )

Class 2

      (27,641 )     (14,177 )     (25,853 )     (112,734 )     (19,628 )     (106,102 )     (106,551 )     (73,453 )

Class 3

      —         —         (605 )     (3,387 )     (279 )     (1,653 )     —         —    

Total dividends from net investment income and non-U.S. currency gains

      (29,893 )     (15,818 )     (32,163 )     (147,681 )     (23,462 )     (128,411 )     (114,129 )     (80,955 )

Distributions from net realized gain on investments:

                 

Short-term net realized gains:

                 

Class 1

      —         —         —         —         —         —         —         —    

Class 2

      —         —         —         —         —         —         —         —    

Class 3

      —         —         —         —         —         —         —         —    

Long-term net realized gains:

                 

Class 1

      —         —         (21,900 )     —         (11,851 )     —         —         —    

Class 2

      —         —         (127,584 )     —         (72,811 )     —         —         —    

Class 3

      —         —         (2,908 )     —         (1,004 )     —         —         —    

Total distributions from net realized gain on investments

      —         —         (152,392 )     —         (85,666 )     —         —         —    

Total dividends and distributions paid to shareholders

      (29,893 )     (15,818 )     (184,555 )     (147,681 )     (109,128 )     (128,411 )     (114,129 )     (80,955 )

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		  

Capital share transactions:

                 

Class 1:

                 

Proceeds from initial capitalization

      —         —         —         —         —         —         —         —    

Proceeds from shares sold

      9,129       4,184       9,292       5,159       25,104       6,110       12,562       10,970  

Proceeds from reinvestment of dividends and distributions

      2,252       1,641       27,605       31,560       15,406       20,656       7,578       7,502  

Cost of shares repurchased

      (13,591 )     (26,337 )     (323,657 )     (588,755 )     (50,269 )     (104,648 )     (9,822 )     (26,416 )

Net increase (decrease) from Class 1 transactions

      (2,210 )     (20,512 )     (286,760 )     (552,036 )     (9,759 )     (77,882 )     10,318       (7,944 )

Class 2:

                 

Proceeds from shares sold

      373,544       541,733       1,846,045       4,085,834       391,458       970,962       416,369       561,561  

Proceeds from reinvestment of dividends and distributions

      27,641       14,177       153,437       112,734       92,439       106,102       106,551       73,453  

Cost of shares repurchased

      (21,874 )     (30,170 )     (235,018 )     (220,641 )     (279,357 )     (56,161 )     (22,339 )     (40,314 )

Net increase from Class 2 transactions

      379,311       525,740       1,764,464       3,977,927       204,540       1,020,903       500,581       594,700  

Class 3:

                 

Proceeds from shares sold

      —         —         5,657       16,188       1,925       2,351       —         —    

Proceeds from reinvestment of dividends and distributions

      —         —         3,513       3,387       1,283       1,653       —         —    

Cost of shares repurchased

      —         —         (55,454 )     (106,454 )     (6,411 )     (14,040 )     —         —    

Net increase (decrease) from Class 3 transactions

      —         —         (46,284 )     (86,879 )     (3,203 )     (10,036 )     —         —    

Net increase in net assets resulting from capital share transactions

      377,101       505,228       1,431,420       3,339,012       191,578       932,985       510,899       586,756  

Total increase (decrease) in net assets

      522,700       825,484       1,787,520       6,236,299       423,190       1,298,542       429,545       540,724  

Net assets:

                 

Beginning of period

      2,823,478       1,997,994       22,550,863       16,314,564       6,075,178       4,776,636       2,494,469       1,953,745  

End of period

    $ 3,346,178     $ 2,823,478     $ 24,338,383     $ 22,550,863     $ 6,498,368     $ 6,075,178     $ 2,924,014     $ 2,494,469  

Undistributed (distributions in excess of) net investment income

    $ 33,224     $ 28,842     $ 103,564     $ 27,278     $ 77,407     $ 22,702     $ 69,335     $ 113,002  

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006 (1)		     Year ended
December 31,
2005		  

Shares of beneficial interest:

                 

Class 1:

                 

Shares issued from initial capitalization

    —       —       —       —       —       —       —       —    

Shares sold

    438     233     153     94     1,454     385     1,109     962  

Shares issued on reinvestment of dividends and distributions

    114     95     477     549     920     1,258     691     670  

Shares repurchased

    (658 )   (1,486 )   (5,299 )   (11,005 )   (2,902 )   (6,585 )   (864 )   (2,323 )

Net increase (decrease) in shares outstanding

    (106 )   (1,158 )   (4,669 )   (10,362 )   (528 )   (4,942 )   936     (691 )

Class 2:

                 

Shares sold

    18,130     30,710     30,379     77,199     22,735     61,664     36,917     49,855  

Shares issued on reinvestment of dividends and distributions

    1,402     824     2,668     1,976     5,559     6,492     9,793     6,611  

Shares repurchased

    (1,077 )   (1,695 )   (3,920 )   (4,104 )   (15,780 )   (3,564 )   (1,984 )   (3,572 )

Net increase in shares outstanding

    18,455     29,839     29,127     75,071     12,514     64,592     44,726     52,894  

Class 3:

                 

Shares sold

    —       —       91     320     111     148     —       —    

Shares issued on reinvestment of dividends and distributions

    —       —       61     60     76     101     —       —    

Shares repurchased

    —       —       (912 )   (2,009 )   (370 )   (887 )   —       —    

Net increase (decrease) in shares outstanding

    —       —       (760 )   (1,629 )   (183 )   (638 )   —       —    
(1) Unaudited.

See Notes to Financial Statements

Table of Contents

Financial Highlights (1)

 

Period
ended

   Net asset
value,
beginning
of period		   Income (loss) from investment operations (2)     Dividends and distributions     Net asset
value, end
of period		   Total
return		     Net assets,
end of period
(in millions)		  

Ratio of
expenses to
average

net assets

before waiver

     Ratio of
expenses to
average net
assets after
waiver (3)		    

Ratio of
net income
(loss)

to average
net assets

  
    Net
investment
income (loss)		   Net gains
(losses) on
securities
(both realized
and unrealized)		     Total from
investment
operations		     Dividends
(from net
investment
income)		     Distributions
(from capital
gains)		     Total
dividends and
distributions		              

Global Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 19.63   $ .24   $ .99     $ 1.23     $ (.22 )   $ —       $ (.22 )   $ 20.64   6.31 %   $ 215   .60 %(6)   .54 %(6)   2.37 %(6)

12/31/05

     17.31     .28     2.19       2.47       (.15 )     —         (.15 )     19.63   14.37       206   .62     .57     1.56  

12/31/04

     15.30     .18     1.92       2.10       (.09 )     —         (.09 )     17.31   13.80       202   .65     .64     1.15  

12/31/03

     11.35     .12     3.91       4.03       (.08 )     —         (.08 )     15.30   35.63       188   .70     .70     .94  

12/31/02

     13.42     .09     (2.02 )     (1.93 )     (.14 )     —         (.14 )     11.35   (14.46 )     152   .71     .71     .73  

12/31/01

     17.25     .18     (2.50 )     (2.32 )     (.15 )     (1.36 )     (1.51 )     13.42   (13.99 )     215   .70     .70     1.24  

Class 2

                          

6/30/06 (5)

     19.52     .22     .97       1.19       (.18 )   $ —         (.18 )     20.53   6.16       3,131   .85 (6)   .79 (6)   2.17 (6)

12/31/05

     17.23     .23     2.18       2.41       (.12 )     —         (.12 )     19.52   14.07       2,617   .87     .82     1.30  

12/31/04

     15.25     .14     1.91       2.05       (.07 )     —         (.07 )     17.23   13.49       1,796   .90     .89     .92  

12/31/03

     11.32     .09     3.89       3.98       (.05 )     —         (.05 )     15.25   35.27       1,082   .95     .95     .68  

12/31/02

     13.38     .06     (2.01 )     (1.95 )     (.11 )     —         (.11 )     11.32   (14.64 )     592   .96     .96     .48  

12/31/01

     17.21     .13     (2.49 )     (2.36 )     (.11 )     (1.36 )     (1.47 )     13.38   (14.22 )     600   .95     .95     .88  

Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 59.36   $ .34   $ 1.16     $ 1.50     $ (.10 )   $ (.38 )   $ (.48 )   $ 60.38   2.56 %   $ 3,490   .34 %(6)   .31 %(6)   1.12 %(6)

12/31/05

     51.39     .46     8.00       8.46       (.49 )     —         (.49 )     59.36   16.50       3,709   .35     .32     .87  

12/31/04

     45.74     .32     5.51       5.83       (.18 )     —         (.18 )     51.39   12.75       3,744   .36     .36     .68  

12/31/03

     33.47     .16     12.26       12.42       (.15 )     —         (.15 )     45.74   37.15       3,877   .39     .39     .41  

12/31/02

     44.30     .12     (10.87 )     (10.75 )     (.08 )     —         (.08 )     33.47   (24.27 )     3,195   .40     .40     .30  

12/31/01

     73.51     .18     (11.99 )     (11.81 )     (.41 )     (16.99 )     (17.40 )     44.30   (17.93 )     5,207   .38     .38     .34  

Class 2

                          

6/30/06 (5)

     58.98     .27     1.15       1.42       (.08 )     (.38 )     (.46 )     59.94   2.44       20,386   .59 (6)   .56 (6)   .88 (6)

12/31/05

     51.10     .34     7.92       8.26       (.38 )     —         (.38 )     58.98   16.19       18,343   .60     .57     .64  

12/31/04

     45.50     .23     5.45       5.68       (.08 )     —         (.08 )     51.10   12.50       12,055   .61     .61     .50  

12/31/03

     33.29     .06     12.19       12.25       (.04 )     —         (.04 )     45.50   36.80       7,107   .64     .64     .16  

12/31/02

     44.09     .03     (10.82 )     (10.79 )     (.01 )     —         (.01 )     33.29   (24.46 )     3,009   .65     .65     .07  

12/31/01

     73.28     .04     (11.94 )     (11.90 )     (.30 )     (16.99 )     (17.29 )     44.09   (18.15 )     2,937   .63     .63     .07  

Class 3

                          

6/30/06 (5)

     59.34     .28     1.17       1.45       (.08 )     (.38 )     (.46 )     60.33   2.48       462   .52 (6)   .49 (6)   .94 (6)

12/31/05

     51.38     .37     7.98       8.35       (.39 )     —         (.39 )     59.34   16.28       499   .53     .50     .69  

12/31/04 (7)

     47.74     .24     3.50       3.74       (.10 )     —         (.10 )     51.38   7.85       516   .54 (6)   .53 (6)   .54 (6)

Asset Allocation Fund

                        

Class 1

                          

6/30/06 (5)

   $ 16.56   $ .23   $ .69     $ .92     $ (.07 )   $ (.23 )   $ (.30 )   $ 17.18   5.60 %   $ 903   .34 %(6)   .31 %(6)   2.66 %(6)

12/31/05

     15.49     .41     1.05       1.46       (.39 )     —         (.39 )     16.56   9.45       879   .35     .32     2.57  

12/31/04

     14.58     .39     .84       1.23       (.32 )     —         (.32 )     15.49   8.50       899   .38     .37     2.64  

12/31/03

     12.23     .41     2.29       2.70       (.35 )     —         (.35 )     14.58   22.14       911   .42     .42     3.12  

12/31/02

     14.30     .45     (2.19 )     (1.74 )     (.33 )     —         (.33 )     12.23   (12.19 )     797   .45     .45     3.31  

12/31/01

     15.71     .49     (.37 )     .12       (.59 )     (.94 )     (1.53 )     14.30   .77       1,012   .45     .45     3.30  

Class 2

                          

6/30/06 (5)

     16.47     .21     .68       .89       (.06 )     (.23 )     (.29 )     17.07   5.46       5,519   .59 (6)   .56 (6)   2.41 (6)

12/31/05

     15.42     .37     1.04       1.41       (.36 )     —         (.36 )     16.47   9.14       5,120   .60     .57     2.31  

12/31/04

     14.51     .36     .84       1.20       (.29 )     —         (.29 )     15.42   8.34       3,797   .62     .62     2.42  

12/31/03

     12.18     .37     2.27       2.64       (.31 )     —         (.31 )     14.51   21.74       2,314   .67     .67     2.81  

12/31/02

     14.25     .42     (2.18 )     (1.76 )     (.31 )     —         (.31 )     12.18   (12.38 )     1,056   .70     .70     3.11  

12/31/01

     15.67     .45     (.36 )     .09       (.57 )     (.94 )     (1.51 )     14.25   .52       730   .70     .70     3.03  

Table of Contents

Financial Highlights (1)

 

Period
ended

   Net asset
value,
beginning
of period		   Income (loss) from investment operations (2)   Dividends and distributions     Net asset
value, end
of period		   Total
return		     Net assets,
end of period
(in millions)		  

Ratio of
expenses to
average

net assets

before waiver

     Ratio of
expenses to
average net
assets after
waiver (3)		    

Ratio of
net income
(loss)

to average
net assets

  
    Net
investment
income (loss)		   Net gains
(losses) on
securities
(both realized
and unrealized)		     Total from
investment
operations		   Dividends
(from net
investment
income)		     Distributions
(from capital
gains)		     Total
dividends and
distributions		              

Asset Allocation Fund (Continued)

                        

Class 3

                          

6/30/06 (5)

     16.56     .21     .68       .89     (.06 )     (.23 )     (.29 )     17.16   5.44       76   .52 (6)   .49 (6)   2.48 (6)

12/31/05

     15.49     .38     1.05       1.43     (.36 )     —         (.36 )     16.56   9.26       76   .53     .50     2.39  

12/31/04 (7)

     14.85     .36     .58       .94     (.30 )     —         (.30 )     15.49   6.38       81   .55 (6)   .55 (6)   2.50 (6)

Bond Fund

                        

Class 1

                          

6/30/06 (5)

   $ 11.31   $ .31   $ (.15 )   $ .16   $ (.47 )   $ —       $ (.47 )   $ 11.00   1.41 %   $ 188   .43 %(6)   .39 %(6)   5.48 %(6)

12/31/05

     11.57     .60     (.40 )     .20     (.46 )     —         (.46 )     11.31   1.77       182   .44     .40     5.30  

12/31/04

     11.34     .56     .10       .66     (.43 )     —         (.43 )     11.57   6.04       195   .45     .44     4.94  

12/31/03

     10.41     .57     .78       1.35     (.42 )     —         (.42 )     11.34   13.07       213   .47     .47     5.19  

12/31/02

     10.44     .67     (.24 )     .43     (.46 )     —         (.46 )     10.41   4.26       218   .49     .49     6.60  

12/31/01

     10.18     .77     .08       .85     (.59 )     —         (.59 )     10.44   8.48       194   .49     .49     7.38  

Class 2

                          

6/30/06 (5)

     11.22     .29     (.15 )     .14     (.45 )     —         (.45 )     10.91   1.23       2,736   .68 (6)   .64 (6)   5.23 (6)

12/31/05

     11.48     .57     (.39 )     .18     (.44 )     —         (.44 )     11.22   1.59       2,312   .69     .65     5.06  

12/31/04

     11.27     .53     .09       .62     (.41 )     —         (.41 )     11.48   5.72       1,759   .70     .69     4.68  

12/31/03

     10.36     .53     .78       1.31     (.40 )     —         (.40 )     11.27   12.80       1,280   .72     .72     4.88  

12/31/02

     10.40     .64     (.24 )     .40     (.44 )     —         (.44 )     10.36   4.05       697   .74     .74     6.34  

12/31/01

     10.16     .73     .08       .81     (.57 )     —         (.57 )     10.40   8.15       349   .74     .74     7.06  

Portfolio turnover rate for all classes of shares

 

     Six months
ended
June 30, 2006 (5)		    Year Ended
December 31
2005		    2004    2003    2002    2001

Global Growth Fund

    17    26    24    27    30    38

Growth Fund

    23    29    30    34    34    31

Asset Allocation Fund

    21    23    20    20    25    32

Bond Fund

    29    46    34    20    29    59
(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) The ratios in this column reflect the impact, if any, of certain waivers by CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.
(4) Commenced operations July 5, 2001.
(5) Unaudited.
(6) Annualized.
(7) From January 16, 2004, when Class 3 shares were first issued.

See Notes to Financial Statements

Table of Contents

Notes to financial statements

   unaudited

1. Organization and significant accounting policies

Organization – American Funds Insurance Series (the “series”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company with 14 different funds. The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives are as follows:

 

Global Discovery Fund    Long-term growth of capital by investing primarily in stocks of companies in the services and information area of the global economy.
Global Growth Fund    Long-term growth of capital by investing primarily in common stocks of companies located around the world.
Global Small Capitalization Fund    Long-term growth of capital by investing primarily in stocks of smaller companies located around the world.
Growth Fund    Long-term growth of capital by investing primarily in common stocks of companies that offer opportunities for growth of capital.
International Fund    Long-term growth of capital by investing primarily in common stocks of companies located outside the U.S.
New World Fund    Long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets.
Blue Chip Income and Growth Fund    To produce income exceeding the average yield on U.S. stocks and to provide an opportunity for growth of principal.
Global Growth and Income Fund    Long-term growth of capital and current income by investing primarily in stocks of well-established companies located around the world.
Growth-Income Fund    Growth of capital and income by investing primarily in common stocks or other securities that demonstrate the potential for appreciation and/or dividends.
Asset Allocation Fund    High total return (including income and capital gains) consistent with long-term preservation of capital.
Bond Fund    As high a level of current income as is consistent with the preservation of capital by investing primarily in fixed-income securities.
High-Income Bond Fund    High current income and, secondarily, capital appreciation by investing primarily in intermediate and long-term corporate obligations, with emphasis on higher yielding, higher risk, lower rated or unrated securities.
U.S. Government/AAA-Rated Securities Fund    A high level of current income consistent with prudent investment risk and preservation of capital by investing primarily in a combination of securities guaranteed by the U.S. government and other debt securities rated AAA or Aaa.
Cash Management Fund    High current yield while preserving capital by investing in a diversified selection of high-quality money market instruments.

Each fund offers two or three share classes (1, 2 and 3). Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for certain distribution expenses. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

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Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the series:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. Securities and other assets for which representative market quotations are not readily available or are considered unreliable are fair valued as determined in good faith under procedures adopted by authority of the series’ board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

Security transactions and related investment income – Security transactions are recorded by the series as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the series will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution expenses, are accrued daily and charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation – Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

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Forward currency contracts – The series may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The series enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the series could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the series values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The series records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

Mortgage dollar rolls – The series may enter into mortgage dollar roll transactions in which a fund in the series sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

2. Non-U.S. investments

Investment risk – The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the funds on the sale of securities in certain countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

3. Federal income taxation and distributions

The series complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The series is not subject to income taxes to the extent such distributions are made.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; paydowns on fixed-income securities; net capital losses; non-U.S. taxes on capital gains; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of December 31, 2005, the funds’ most recent fiscal year end. Tax-basis unrealized appreciation (depreciation) and cost of investments are reported as of June 30, 2006.

Table of Contents

Additional tax basis disclosures are as follows:

(dollars in thousands)

 

     Growth
Fund		    

Global

Growth

Fund

    

Asset

Global
Allocation
Fund

    

Bond

Fund

  

As of December 31, 2005:

         

Undistributed ordinary income

    $ 29,555     $ 31,502     $ 22,899     $ 113,791  

Undistributed long-term capital gains

      —         151,590       85,106       —    

Capital loss carryforwards

      (66,686 )     —         —         (3,617 )

As of June 30, 2006:

         

Gross unrealized appreciation on investment securities

      632,332       5,224,347       1,067,049       30,547  

Gross unrealized depreciation on investment securities

      (56,728 )     (569,283 )     (156,712 )     (66,148 )

Net unrealized appreciation (depreciation) on investment securities

      575,604       4,655,064       910,337       (35,601 )

Cost of portfolio securities

      2,759,115       19,581,226       5,670,140       2,955,336  

Capital loss carryforwards expire in:

         

2006

    $ —         —         —       $ —    

2007

      —         —         —         —    

2008

      —         —         —         —    

2009

      —         —         —         —    

2010

      10,546       —         —         —    

2011

      56,140       —         —         3,029  

2012

      —         —         —         —    

2013

      —         —         —         588  
   $ 66,686       —         —       $ 3,617  
* For the period May 1, 2006, commencement of operations, through June 30, 2006.
† Amount less than one thousand.

4. Fees and transactions with related parties

Capital Research and Management Company (“CRMC”), the series’ investment adviser, is the parent company of American Funds Service Company SM (“AFS”), the series’ transfer agent, and American Funds Distributors, Inc. SM (“AFD”), the principal underwriter of the series’ shares.

Investment advisory services – The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on annual rates that generally decrease as average net asset levels increase.

The board of trustees approved an amended agreement for Growth-Income Fund and Global Small Capitalization Fund, effective April 1, 2006, and July 1, 2006, respectively, that provided for reduced annual rates as reflected in the chart below. During the six months ended June 30, 2006, CRMC voluntarily reduced investment advisory services fees to the rates provided by the amended agreement for Global Small Capitalization Fund. Additionally, CRMC is currently waiving 10% of investment advisory services fees for all funds in the series. During the six months ended June 30, 2006, total aggregate investment advisory services fees waived by CRMC were $13,732,000. As a result, the aggregate fees shown on the accompanying financial statements of $137,318,000 were reduced to $123,586,000. The amended range of rates and asset levels and the current annualized rates of average net assets for the series, before and after the expense waiver, are as follows:

 

Fund

    Rates    Net asset level (in billions)   

For the six

months ended
June 30, 2006,

before waiver

   

For the six

months ended

June 30, 2006,

after waiver

   Beginning with    Ending with    Up to    In excess of      

Global Growth

    .690    .480    .6    3.0    .56    .50

Growth

    .500    .285    .6    27.0    .33    .29

Asset Allocation

    .500    .250    .6    8.0    .33    .29

Bond

    .480    .360    .6    3.0    .42    .38
* Results based on activity during the period May 1, 2006, commencement of operations, through June 30, 2006.

Transfer agent services – The aggregate fee of $25,000 was incurred during the six months ended June 30, 2006, pursuant to an agreement with AFS. Under this agreement, the series compensates AFS for transfer agent services, including shareholder recordkeeping, communications and transaction processing.

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Deferred trustees’ compensation – Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the series, are treated as if invested in one or more of the American Funds. These amounts represent general, unsecured liabilities of the series and vary according to the total returns of the selected funds. Trustees’ compensation of $421,000, shown on the accompanying financial statements, includes $244,000 in current fees (either paid in cash or deferred) and a net increase of $177,000 in the value of the deferred amounts.

Affiliated officers and trustees – Officers and certain trustees of the series are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the series.

5. Distribution services

The series has adopted plans of distribution for Class 2 and 3 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets, of 0.25% for Class 2 and 0.18% for Class 3 to pay service fees to firms that have entered into agreements with the series. During the six months ended June 30, 2006, distribution expenses under the plans for the series aggregated $77,715,000 for Class 2 and $1,101,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

6. Investment transactions and other disclosures

As of June 30, 2006, Asset Allocation Fund, Bond Fund and High-Income Bond Fund had outstanding forward currency contracts to sell non-U.S. currencies as follows:

(dollars in thousands)

 

          Contract
amount		         U.S.
valuation		       

Fund

   

Non-U.S. currency sale contracts

    Non-U.S.    U.S.    Amount    Unrealized
(depreciation)
appreciation		  

Asset Allocation

    Euro, expiring 7/19-9/29/2006    € 6,710    $ 8,520    $ 8,599    $ (79 )

Bond

    Euro, expiring 9/14/2006    € 5,585      7,078      7,173      (95 )
   Pound, expiring 7/13-8/23/2006    £ 5,780      12,125      11,905      220  

The following table presents additional information for the six months ended June 30, 2006:

 

     Global
Growth
Fund		    Growth
Fund		    Asset
Allocation
Fund		     Bond
Fund

Purchases of investment securities (1)

    $ 615,964    $ 5,156,655    $ 1,231,288     $ 886,794

Sales of investment securities (1)

      451,141      5,061,567      1,240,593       608,522

Non-U.S taxes paid on dividend income

      3,333      5,318      1,139       —  

Non-U.S taxes paid on interest income-

      —        —        (3 )     61

Non-U.S taxes paid on realized gains

      132      —        —         —  

Non-U.S taxes provided on unrealized gains as of June 30, 2006

      545      17      —         —  

Dividends from affiliated issuers

      —        —        —         —  

Realized gain on affiliated issuers

      —        —        16,897       —  
(1) Excludes short-term securities, except for Cash Management Fund.
(2) For the period May 1, 2006, commencement of operations, through June 30, 2006.

Table of Contents

Expense example

unaudited

The funds in the American Funds Insurance Series serve as the underlying investment vehicle for various insurance products. As an owner of an insurance contract that invests in one of the funds in the series, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. Additional fees are charged by the insurance companies related to the various benefits they provide. This example is intended to help you understand your ongoing costs (in dollars) of investing in the underlying funds only so you can compare these costs with the ongoing costs of investing in other mutual funds that serve a similar function in other annuity products. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006, through June 30, 2006).

Actual expenses:

The first line of 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 during period” to estimate the expenses you paid on your account during this period. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Hypothetical example for comparison purposes:

The second line of each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. 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 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in 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.

 

     Beginning
account value
1/1/2006		    Ending
account
value
6/30/2006		    Expenses
paid during
period*		    Annualized
expense
ratio		  

Global Discovery Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,025.73    $ 2.86    .57 %

Class 1 – assumed 5% return

      1,000.00      1,021.97      2.86    .57  

Class 2 – actual return

      1,000.00      1,024.95      4.12    .82  

Class 2 – assumed 5% return

      1,000.00      1,020.73      4.11    .82  

Global Growth Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,063.06    $ 2.76    .54 %

Class 1 – assumed 5% return

      1,000.00      1,022.12      2.71    .54  

Class 2 – actual return

      1,000.00      1,061.57      4.04    .79  

Class 2 – assumed 5% return

      1,000.00      1,020.88      3.96    .79  

Global Small Capitalization Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,094.50    $ 3.64    .70 %

Class 1 – assumed 5% return

      1,000.00      1,021.32      3.51    .70  

Class 2 – actual return

      1,000.00      1,093.52      4.93    .95  

Class 2 – assumed 5% return

      1,000.00      1,020.08      4.76    .95  

 

22

Table of Contents

Growth Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,025.61    $ 1.56    .31 %

Class 1 – assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 – actual return

      1,000.00      1,024.37      2.81    .56  

Class 2 – assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 – actual return

      1,000.00      1,024.77      2.46    .49  

Class 3 – assumed 5% return

      1,000.00      1,022.36      2.46    .49  

International Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,060.13    $ 2.55    .50 %

Class 1 – assumed 5% return

      1,000.00      1,022.32      2.51    .50  

Class 2 – actual return

      1,000.00      1,058.33      3.83    .75  

Class 2 – assumed 5% return

      1,000.00      1,021.08      3.76    .75  

Class 3 – actual return

      1,000.00      1,058.74      3.47    .68  

Class 3 – assumed 5% return

      1,000.00      1,021.42      3.41    .68  

New World Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,089.69    $ 4.20    .81 %

Class 1 – assumed 5% return

      1,000.00      1,020.78      4.06    .81  

Class 2 – actual return

      1,000.00      1,089.24      5.49    1.06  

Class 2 – assumed 5% return

      1,000.00      1,019.54      5.31    1.06  

Blue Chip Income and Growth Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,046.45    $ 1.98    .39 %

Class 1 – assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 – actual return

      1,000.00      1,045.57      3.25    .64  

Class 2 – assumed 5% return

      1,000.00      1,021.62      3.21    .64  

Global Growth and Income Fund†

            

Class 1 – actual return

    $ 1,000.00    $ 961.00    $ 1.05    .65 %

Class 1 – assumed 5% return

      1,000.00      1,021.57      3.26    .65  

Class 2 – actual return

      1,000.00      960.00      1.45    .90  

Class 2 – assumed 5% return

      1,000.00      1,020.33      4.51    .90  

Growth-Income Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,040.86    $ 1.32    .26 %

Class 1 – assumed 5% return

      1,000.00      1,023.51      1.30    .26  

Class 2 – actual return

      1,000.00      1,039.62      2.58    .51  

Class 2 – assumed 5% return

      1,000.00      1,022.27      2.56    .51  

Class 3 – actual return

      1,000.00      1,039.98      2.23    .44  

Class 3 – assumed 5% return

      1,000.00      1,022.61      2.21    .44  

Asset Allocation Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,055.97    $ 1.58    .31 %

Class 1 – assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 – actual return

      1,000.00      1,054.62      2.85    .56  

Class 2 – assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 – actual return

      1,000.00      1,054.43      2.50    .49  

Class 3 – assumed 5% return

      1,000.00      1,022.36      2.46    .49  

Bond Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,014.08    $ 1.95    .39 %

Class 1 – assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 – actual return

      1,000.00      1,012.33      3.19    .64  

Class 2 – assumed 5% return

      1,000.00      1,021.62      3.21    .64  

Table of Contents

High-Income Bond Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,033.23    $ 2.27    .45 %

Class 1 – assumed 5% return

      1,000.00      1,022.56      2.26    .45  

Class 2 – actual return

      1,000.00      1032.38      3.53    .70  

Class 2 – assumed 5% return

      1,000.00      1021.32      3.51    .70  

Class 3 – actual return

      1,000.00      1,032.67      3.18    .63  

Class 3 – assumed 5% return

      1,000.00      1,021.67      3.16    .63  

U.S. Government/AAA-Rated Securities Fund

            

Class 1 – actual return

    $ 1,000.00    $ 993.10    $ 2.12    .43 %

Class 1 – assumed 5% return

      1,000.00      1,022.66      2.16    .43  

Class 2 – actual return

      1,000.00      992.63      3.31    .67  

Class 2 – assumed 5% return

      1,000.00      1,021.47      3.36    .67  

Class 3 – actual return

      1,000.00      992.50      3.01    .61  

Class 3 – assumed 5% return

      1,000.00      1,021.77      3.06    .61  

Cash Management Fund

            

Class 1 – actual return

    $ 1,000.00    $ 1,021.95    $ 1.50    .30 %

Class 1 – assumed 5% return

      1,000.00      1,023.31      1.51    .30  

Class 2 – actual return

      1,000.00      1,021.44      2.76    .55  

Class 2 – assumed 5% return

      1,000.00      1,022.07      2.76    .55  

Class 3 – actual return

      1,000.00      1,021.19      2.41    .48  

Class 3 – assumed 5% return

      1,000.00      1,022.41      2.41    .48  
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
† The annualized expense ratio and the information in the first line of each share class are based on operations for the period May 1, 2006 (when the fund commenced operations), through June 30, 2006, and, accordingly, are not representative of a full period.

Table of Contents

Board of trustees

“Non-interested” trustees

 

Name and age

   

Year first
elected

a trustee
of the series1

   

Principal occupation(s)

during past five years

    Number of
portfolios in fund
complex2 overseen
by trustee		   

Other directorships3

held by trustee

Lee A. Ault III, 70

Chairman of the Board

    1999    Chairman of the Board, In-Q-Tel, Inc. (an independent technology venture company funded principally by the Central Intelligence Agency); former Chairman of the Board, President and CEO, Telecredit, Inc.    1   

Anworth Mortgage Asset

Corporation; Office

Depot, Inc.

H. Frederick Christie, 73

    1994    Private investor; former President and CEO, The Mission Group (non-utility holding company, subsidiary of Southern California Edison Company)    19    Ducommun Incorporated; IHOP Corporation; Southwest Water Company

Joe E. Davis, 72

    1991    Private investor; former Chairman of the Board, Linear Corporation (linear motor design and production); former President and CEO, National Health Enterprises, Inc;    1   

Anworth Mortgage Asset

Corporation;

Natural Alternatives, Inc.

Martin Fenton, 71

    1995    Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities)    16    None

Leonard R. Fuller, 60

    1999    President and CEO, Fuller Consulting (financial management consulting firm)    14    None

Mary Myers Kauppila, 52

    1994    Private investor; Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc.    5    None

Kirk P. Pendleton, 66

    1996    Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment)      
“Interested” trustees      

Name, age and

position with series

    Year first
elected a
trustee or officer
of the series1		   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

    Number of
portfolios in fund
complex2 overseen
by trustee		   

Other directorships3

held by trustee

James K. Dunton, 68

Vice Chairman of the Board

    1993    Senior Vice President and Director, Capital Research and Management Company    2    None

Donald D. O’Neal, 46

President

    1998    Senior Vice President, Capital Research and Management Company    3    None

The statement of additional information includes additional information about the series’ trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the series is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

Table of Contents

Other officers

 

Name, age and

position with series

   

Year first elected

a trustee or officer
of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

Alan N. Burro, 45

Senior Vice President

    1998    Vice President, Capital Research and Management Company; Senior Vice President, Capital Research Company5

Michael J. Downer, 51

Senior Vice President

    1991    Vice President and Secretary, Capital Research and Management Company; Director, American Funds Distributors, Inc.; 5 Director, Capital Bank and Trust Company5

Abner D. Goldstine, 76

Senior Vice President

    1993    Senior Vice President and Director, Capital Research and Management Company

John H. Smut, 49

Senior Vice President

    1994    Senior Vice President, Capital Research and Management Company; Director, American Funds Distributors, Inc. 5

Claudia P. Huntington, 54

Vice President

    1994    Senior Vice President, Capital Research and Management Company; Director, The Capital Group Companies, Inc. 5

Robert W. Lovelace, 43

Vice President

    1997    Senior Vice President, Capital Research and Management Company; Chairman of the Board, Capital Research Company, 5 Director, The Capital Group Companies, Inc. 5

Susan M. Tolson, 44

Vice President

    1999    Senior Vice President, Capital Research Company5

Chad L. Norton, 46

Secretary

    1994    Vice President — Fund Business Management Group, Capital Research and Management Company

David A. Pritchett, 40

Treasurer

    1999    Vice President — Fund Business Management Group, Capital Research and Management Company

Steven I. Koszalka, 42

Assistant Secretary

    2003    Assistant Vice President — Fund Business Management Group, Capital Research and Management Company

Karl C. Grauman, 38

Assistant Treasurer

    2006    Vice President — Fund Business Management Group, Capital Research and Management Company

Sheryl F. Johnson, 38

Assistant Treasurer

    1997    Vice President — Fund Business Management Group, Capital Research and Management Company
1 Trustees and officers of the series serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds, consisting of 29 funds, and Endowments, whose shareholders are limited to certain nonprofit organizations.
3 This includes all directorships (other than those in the American Funds) that are held by each trustee as a director of a public company or a registered investment company.
4 “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the series’ investment adviser, Capital Research and Management Company, or affiliated entities (including the series’ principal underwriter).
5 Company affiliated with Capital Research and Management Company.

Table of Contents

 

American Funds GVIT Growth Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
2    Statement of Assets and Liabilities
2    Statement of Operations
3    Statements of Changes in Net Assets
4    Financial Highlights
5    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-AGGR (8/06)

Table of Contents

 

Shareholder

Expense Example

American Funds GVIT Growth Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, May 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

 

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

              Beginning
Account Value,
May 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period
      Annualized
Expense Ratio
  
American Funds GVIT Growth Fund                                           

Class II

      Actual      $ 1,000.00      $ 965.70      $ 4.19 (a)    0.86% (a)
       Hypothetical1      $ 1,000.00      $ 1,020.54      $ 4.32 (b)    0.86% (b)

Class VII

      Actual      $ 1,000.00      $ 965.20      $ 6.72 (a)    1.38% (a)
       Hypothetical1      $ 1,000.00      $ 1,017.96      $ 6.93 (b)    1.38% (a)

 

 

(a) Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

(b) Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT GROWTH FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments in Portfolio (cost $7,559,383)

    $ 7,569,255  

Receivable for capital shares issued

      223,657  
    

Total Assets

      7,792,912  
    

Liabilities:

         

Payable for capital shares redeemed

      39  

Accrued expenses and other payables:

         

Fund administration and transfer agent fees

      1,060  

Master feeder service provider fee

      459  

Distribution fees

      1,147  

Administrative servicing fees

      1,115  

Trustee fees

      55  

Other

      2,048  
    

Total Liabilities

      5,923  
    

Net Assets

    $ 7,786,989  
    

Represented by:

         

Capital

    $ 7,767,023  

Accumulated net investment income (loss)

      37,080  

Accumulated net realized gains (losses) from investments

      (26,986 )

Net unrealized appreciation (depreciation) on investments

      9,872  
    

Net Assets

    $ 7,786,989  
    

Net Assets:

         

Class II Shares

    $ 7,786,023  

Class VII Shares

      966  
    

Total

    $ 7,786,989  
    

Shares outstanding (unlimited number of shares authorized):

         

Class II Shares

      128,170  

Class VII Shares

      16  
    

Total

      128,186  
    

Net asset value and offering price per share:*

         

Class II Shares

    $ 60.75  

Class VII Shares

    $ 60.74 (a)

Statement of Operations

For the period ended June 30, 2006 (Unaudited) (b)

 

Investment Income:

         

Dividend income

    $ 47,922  
    

Total Income

      47,922  
    

Expenses:

         

Fund administration and transfer agent fees

      1,170  

Master feeder service provider fee

      1,567  

Distribution fees Class II Shares

      1,567  

Distribution fees Class VII Shares

      1  

Administrative servicing fees Class II Shares

      1,567  

Administrative servicing fees Class VII Shares

      1  

Professional fees

      2,162  

Printing fees

      469  

Trustee fees

      74  

Other

      660  
    

Total expenses before waived expenses

      9,238  

Expenses waived

      (940 )
    

Total Expenses

      8,298  
    

Net Investment Income (Loss)

      39,624  
    

REALIZED/UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (26,986 )

Net change in unrealized appreciation/depreciation on investments

      9,872  
    

Net realized/unrealized gains (losses) on investments

      (17,114 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 22,510  
    

 

 

* Not subject to a front-end sales charge.

 

(a) Due to rounding, Net Assets divided by shares outstanding does not equal the NAV.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

AMERICAN FUNDS GVIT GROWTH FUND

 

Statement of Changes in Net Assets

 

     Period Ended
June 30, 2006(a)
  
     (Unaudited)  

From Investment Activities:

         

Operations:

         

Net investment income (loss)

    $ 39,624  

Net realized gains (losses) on investment transactions

      (26,986 )

Net change in unrealized appreciation/depreciation on investments

      9,872  
    

Change in net assets resulting from operations

      22,510  
    

Distributions to Class II shareholders from:

         

Net investment income

      (2,544 )
    

Change in net assets from shareholder distributions

      (2,544 )
    

Change in net assets from capital transactions

      7,767,023  
    

Change in net assets

      7,786,989  

Net Assets:

         

Beginning of period

      —  
    

End of period

    $ 7,786,989  
    

Accumulated net investment income (loss)

    $ 37,080  
    

CAPITAL TRANSACTIONS:

         

Class II Shares

         

Proceeds from shares issued

    $ 8,489,912  

Dividends reinvested

      2,545  

Cost of shares redeemed

      (726,434 )
    
       7,766,023  
    

Class VII Shares

         

Proceeds from shares issued

      1,000  
    
       1,000  
    

Change in net assets from capital transactions

    $ 7,767,023  
    

SHARE TRANSACTIONS:

         

Class II Shares

         

Issued

      140,131  

Reinvested

      43  

Redeemed

      (12,004 )
    
       128,170  
    

Class VII Shares

         

Issued

      16  
    
       16  
    

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

American Funds GVIT Growth Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net Asset
Value,
End of
Period		   Total
Return		     Net Assets at
End of Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses (Prior
to
Reimbursements)
to Average Net
Assets		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average Net
Assets		     Portfolio
Turnover(a)

Class II Shares

                                                                                

Period Ended June 30,

    2006 (Unaudited)(b)

   $ 62.91   0.31   (2.45 )   (2.14 )   (0.02 )   (0.02 )   $ 60.75   (3.40% )(c)   $ 7,786   0.77% (d)   4.13% (d)   0.86% (d)   4.03% (d)   23.00%

Class VII Shares

                                                                                

Period Ended June 30,

    2006 (Unaudited)(b)

   $ 62.91   0.34   (2.51 )   (2.17 )   —     —     $ 60.74   (3.45% )(c)   $ 1   1.38% (d)   3.48% (d)   1.38% (d)   3.48% (d)   23.00%

 

(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets.

 

(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(c) Not annualized.

 

(d) Annualized.

 

See notes to financial statements.

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the American Funds GVIT Growth Fund (the “Fund”).

 

The Fund operates as a “feeder fund” which means that the Fund does not buy individual securities directly. Instead, the Fund invests all of its assets in another mutual fund, the American Growth Fund (the “Master Fund”), a series of the American Funds Insurance Series® (“American Funds”), which invests directly in individual securities. The Fund, therefore, has the same investment objective and limitations as the Master Fund in which the Fund invests and the same gross investment returns as the Master Fund.

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

The net asset value (“NAV”) per share of each class of the Fund is calculated by taking the NAV of the Master Fund, subtracting the Fund’s liabilities attributable to the Fund, and dividing by the number of shares of that class that are outstanding. The Fund’s NAV is determined at the close of regular trading on the New York Stock Exchange (the “Exchange”) (usually 4 p.m. Eastern Time) (“Close of Trading”) on each day the Exchange is open for trading (“Business Day”). Each Fund may reject any order to buy Fund shares and may suspend the sale of Fund shares at any time.

 

The Master Fund calculates its NAV at the Close of Trading on each Business Day. Assets held by the Master Fund are valued primarily on the basis of market quotations. The Master Fund, however, has adopted procedures for making “fair value” determinations if market quotations are not readily available. For example, if events occur between the close of markets outside the United States and the close of regular trading on the New York Stock Exchange that, in the opinion of Capital Research and Management Company (“Capital Research”), the Master Fund’s investment adviser, materially affect the value of the portfolio securities of the Master Fund, the securities will be valued in accordance with the Master Fund’s fair value procedures. Use of these procedures is intended to result in more appropriate NAVs. In addition, such use will reduce, if not eliminate, potential arbitrage opportunities otherwise available to short-term investors in the Master Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(b) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(c) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the NAV of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(d) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
    Securities  

   

Unrealized

Appreciation

   

Unrealized

Depreciation

  

Net Unrealized

Appreciation

(Depreciation)*

$7,586,368

    $9,872    $(26,985)   $(17,113)

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(e) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

3. Transactions with Affiliates

 

Under the terms of the Master Fund’s Investment Advisory Agreement, Capital Research manages the investment of the assets and supervises the daily business affairs of the Master Fund. Gartmore SA Capital Trust (“GSA”) provides non-investment master-feeder operational support services to the Fund. Under the terms of the Trust’s Master-Feeder Services Agreement with GSA on behalf of the Fund, the Fund pays GSA a fee of 0.25% based on the Fund’s average daily net assets. GSA has entered into a contractual agreement with the Trust under which GSA will waive 0.15% of the fees GSA receives for the providing the Fund with non-investment master-feeder operational support services until May 1, 2007.

 

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, GSA provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all Funds within the Trust in relation to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Funds’ Distributor, is compensated by the Fund for expenses associated with the distribution of the shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II shares and Class VII shares of the Fund at an annual rate not to exceed 0.25% of Class II shares and 0.40% of Class VII shares.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of the Fund. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of each class of shares of the Fund.

 

For the period ended June 30, 2006, Nationwide Financial Services received $1,627 in Administrative Services Fees from the Fund.

 

4. Investment Transactions

 

For the period ended June 30, 2006, (excluding short-term securities) the Master Fund had purchases of $5,156,655 and sales of $5,061,567.

 

5. Portfolio Investment Risks

 

Credit and Market Risk. The Fund invests in emerging markets instruments that are subject to certain additional credit and market risks. The yields of emerging markets debt obligations reflect, among other things, perceived credit risk. The Fund’s investment in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk of not receiving timely and/or ultimate payment of interest and principal, greater market price volatility, and less liquid secondary market trading. The consequences of political, social, economic, or diplomatic changes may have disruptive effects on the market prices of emerging markets investments held by the Fund.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Charles E. Allen  

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.     92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

   Trustee since 1990   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

8

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

9

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee or
Nominee2

David C. Wetmore

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

10

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3   N/A   N/A

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.   N/A  

N/A

Eric E. Miller

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.   N/A  

N/A

1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

12

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Financial Statements

for the American Funds Master Fund

AMERICAN FUNDS INSURANCE SERIES

Growth Fund

 

TOP 5 INDUSTRY SECTORS*

       

Where the fund’s assets were invested based on total net assets as of June 30, 2006

   
     Percent of
net assets		  

Information technology

    16.5 %

Energy

    15.8  

Consumer discretionary

    14.2  

Health care

    12.3  

Consumer staples

    6.8  

Other industries

    20.4  

Short-term securities & other assets less liabilities

    14.0  
      
   100.0 %
      

Table of Contents

AMERICAN FUNDS INSURANCE SERIES

Growth Fund

 

LARGEST INDIVIDUAL EQUITY SECURITIES

       

As of June 30, 2006

   
     Percent of
net assets		  

Google

    3.8 %

Altria Group

    2.5  

Roche Holding

    2.3  

Microsoft

    2.2  

Lowe’s Companies

    2.1  

Schlumberger

    1.9  

Target

    1.6  

Cisco Systems

    1.5  

Qwest Communications International

    1.4  

Kohl’s

    1.3  

Table of Contents

American Funds Insurance Series Growth Fund

Investment portfolio, June 30, 2006

 

unaudited          

Common stocks

    Shares    Market
value
          (000)

3M Co.

    395,000    $ 31,904

Abraxis BioScience, Inc. (1)

    667,900      15,923

Allergan, Inc.

    160,000      17,162

Allied Waste Industries, Inc. (1)

    4,100,000      46,576

Altera Corp. (1)

    3,750,000      65,813

Altria Group, Inc.

    8,380,000      615,343

American International Group, Inc.

    2,600,000      153,530

Amgen Inc. (1)

    1,300,000      84,799

Anheuser-Busch Companies, Inc.

    525,000      23,935

Apollo Group, Inc., Class A (1)

    695,000      35,911

Applied Materials, Inc.

    1,605,000      26,129

Arch Coal, Inc.

    2,000,000      84,740

AstraZeneca PLC (ADR)

    2,715,000      162,411

AstraZeneca PLC (Sweden)

    1,200,000      72,402

AU Optronics Corp.

    31,944,120      45,150

Automatic Data Processing, Inc.

    400,000      18,140

Aveta, Inc. (1) (3) (4)

    3,918,000      62,688

Avon Products, Inc.

    775,000      24,025

Banco Bradesco SA, preferred nominative (ADR)

    5,646,700      175,556

Bank of New York Co., Inc.

    1,529,300      49,243

Barrick Gold Corp.

    6,300,000      186,480

Best Buy Co., Inc.

    4,490,400      246,254

BG Group PLC

    3,050,000      40,701

Bharti Airtel Ltd. (1)

    7,499,800      60,495

Bill Barrett Corp. (1)

    1,933,000      57,236

Biogen Idec Inc. (1)

    1,335,000      61,851

Boeing Co.

    2,565,000      210,099

Boston Scientific Corp. (1)

    2,314,398      38,974

Bunge Ltd.

    1,961,000      98,540

Caltex Australia Ltd.

    1,484,030      26,012

Cameco Corp.

    2,150,000      85,935

Canadian Natural Resources, Ltd.

    4,625,700      255,823

Cardinal Health, Inc.

    2,150,000      138,310

Carnival Corp., units

    6,905,000      288,215

CDW Corp.

    765,000      41,807

Ceridian Corp. (1)

    1,100,000      26,884

Cisco Systems, Inc. (1)

    18,433,000      359,996

Clear Channel Communications, Inc.

    1,375,000      42,556

Coca-Cola Co.

    2,645,000      113,788

Commerce Bancorp, Inc.

    1,100,000      39,237

ConocoPhillips

    1,298,520      85,092

Constellation Brands, Inc., Class A (1)

    2,624,000      65,600

Core Laboratories NV (1)

    1,197,700      73,108

Corning Inc. (1)

    6,959,200      168,343

CRH PLC

    1,716,565      55,748

DataPath, Inc. (1) (2) (3) (4)

    2,819,968      31,020

Dell Inc. (1)

    1,270,000      31,001

Denbury Resources Inc. (1)

    1,400,000      44,338

Devon Energy Corp.

    3,409,072      205,942

Diageo PLC

    2,650,000      44,516

Diamond Offshore Drilling, Inc.

    1,025,000      86,028

eBay Inc. (1)

    4,000,000      117,160

Eli Lilly and Co.

    970,000      53,612

Table of Contents

Endo Pharmaceuticals Holdings Inc. (1)

    2,500,000    82,450

Energy XXI Acquisition Corp. (Bermuda) Ltd. (1) (4)

    2,390,758    12,073

ENSCO International Inc.

    725,000    33,364

EOG Resources, Inc.

    3,265,000    226,395

Exxon Mobil Corp.

    550,000    33,742

Fannie Mae

    5,530,000    265,993

FMC Technologies, Inc. (1)

    850,000    57,341

Forest Laboratories, Inc. (1)

    2,710,000    104,850

Freddie Mac

    2,297,700    130,992

Freeport-McMoRan Copper & Gold Inc., Class B

    1,404,500    77,823

Garmin Ltd.

    1,432,000    150,990

General Dynamics Corp.

    1,300,000    85,098

General Electric Co.

    5,270,000    173,699

General Mills, Inc.

    265,000    13,690

Gentex Corp.

    2,700,000    37,800

Getty Images, Inc. (1)

    1,000,000    63,510

Gilead Sciences, Inc. (1)

    1,120,000    66,259

Google Inc., Class A (1)

    2,231,400    935,693

Halliburton Co.

    3,480,000    258,251

Harrah’s Entertainment, Inc.

    2,644,000    188,200

HDFC Bank Ltd.

    1,296,700    22,501

Hess Corp.

    2,640,000    139,524

Hon Hai Precision Industry Co., Ltd.

    3,919,135    24,242

Hudson City Bancorp. Inc.

    3,000,000    39,990

Hynix Semiconductor Inc. (1)

    2,000,000    64,840

Illinois Tool Works Inc.

    949,200    45,087

International Business Machines Corp.

    500,000    38,410

International Game Technology

    1,881,000    71,365

Iron Mountain Inc. (1)

    1,100,000    41,118

Johnson Controls, Inc.

    2,250,000    184,995

KLA-Tencor Corp.

    1,705,000    70,877

Kohl’s Corp. (1)

    5,540,000    327,525

LG.Philips LCD Co., Ltd. (ADR) (1)

    1,400,000    25,368

Liberty Global, Inc., Class A (1)

    257,731    5,541

Liberty Media Holding Corp., Liberty Capital, Series A (1)

    500,000    41,885

Liberty Media Holding Corp., Liberty Interactive, Series A (1)

    2,500,000    43,150

Limited Brands, Inc.

    1,087,457    27,828

Linear Technology Corp.

    2,895,000    96,954

Lockheed Martin Corp.

    1,150,000    82,501

Lowe’s Companies, Inc.

    8,263,000    501,316

Magna International Inc., Class A

    725,000    52,178

Marsh & McLennan Companies, Inc.

    253,600    6,819

Martek Biosciences Corp. (1)

    1,000,000    28,950

Maxim Integrated Products, Inc.

    4,005,000    128,601

McKesson Corp.

    665,000    31,441

Medco Health Solutions, Inc. (1)

    1,419,000    81,280

Mediatek Incorporation

    2,965,000    27,511

MedImmune, Inc. (1)

    1,765,000    47,831

Medtronic, Inc.

    3,500,000    164,220

Mellon Financial Corp.

    3,520,700    121,218

Michaels Stores, Inc.

    4,070,000    167,847

Microchip Technology Inc.

    122,475    4,109

Micron Technology, Inc. (1)

    1,600,000    24,096

Microsoft Corp.

    23,155,000    539,511

Mitsubishi Heavy Industries, Ltd.

    16,100,000    69,517

Mitsubishi UFJ Financial Group, Inc.

    1,457    20,376

Mitsui Trust Holdings, Inc.

    5,443,000    65,415

Monsanto Co.

    858,100    72,244

Monster Worldwide Inc. (1)

    2,202,300    93,950

MSC Industrial Direct Co., Inc., Class A

    1,000,000    47,570

Murphy Oil Corp.

    2,698,800    150,755

Newcrest Mining Ltd.

    2,740,000    42,898

Table of Contents

Newfield Exploration Co. (1)

    3,917,200    191,708

Newmont Mining Corp.

    1,015,000    53,724

News Corp., Class A

    6,500,000    124,670

Nokia Corp. (ADR)

    2,000,000    40,520

Norsk Hydro ASA

    2,450,000    64,914

Northrop Grumman Corp.

    1,150,000    73,669

Novell, Inc. (1)

    9,500,000    62,985

Novellus Systems, Inc. (1)

    1,990,000    49,153

OPTI Canada Inc. (1)

    4,280,000    87,633

Oracle Corp. (1)

    14,622,800    211,884

OSI Restaurant Partners, Inc.

    600,000    20,760

Peabody Energy Corp.

    2,653,000    147,905

PepsiCo, Inc.

    1,845,000    110,774

Petro-Canada

    2,660,300    126,245

Potash Corp. of Saskatchewan Inc.

    1,500,000    128,955

Procter & Gamble Co.

    380,000    21,128

Questar Corp.

    400,000    32,196

Quicksilver Resources Inc. (1)

    1,974,150    72,668

Qwest Communications International Inc. (1)

    43,050,000    348,275

Raytheon Co.

    246,000    10,964

Reliant Energy, Inc. (1)

    9,240,000    110,695

Rio Tinto PLC

    1,437,852    75,927

Robert Half International Inc.

    800,000    33,600

Roche Holding AG

    3,460,000    570,969

Rosetta Resources Inc. (1) (3) (4)

    2,980,000    49,528

Royal Caribbean Cruises Ltd.

    1,000,000    38,250

Saipem SpA, Class S

    4,035,000    91,601

Samsung Electronics Co., Ltd.

    235,000    149,401

Sanmina-SCI Corp. (1)

    1,430,000    6,578

Sanofi-Aventis

    2,023,900    197,292

Schering-Plough Corp.

    2,000,000    38,060

Schlumberger Ltd.

    7,219,600    470,068

Seagate Technology (1)

    5,000,000    113,200

Sepracor Inc. (1)

    1,500,000    85,710

Seven & I Holdings Co., Ltd.

    3,942,000    129,896

Shangri-La Asia Ltd.

    18,000,000    34,649

Shire PLC (ADR)

    2,000,000    88,460

Southwest Airlines Co.

    7,670,300    125,563

Southwestern Energy Co. (1)

    3,081,200    96,010

Sprint Nextel Corp., Series 1

    3,850,000    76,961

Starbucks Corp. (1)

    6,920,000    261,299

Suncor Energy Inc.

    3,002,076    243,018

SUPERVALU INC.

    1,300,000    39,910

Taiwan Semiconductor Manufacturing Co. Ltd.

    81,019,112    146,337

Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)

    7,158,433    65,714

Takashimaya Co., Ltd.

    339,000    4,255

Talisman Energy Inc.

    2,400,000    41,952

Target Corp.

    7,890,000    385,584

Telephone and Data Systems, Inc.

    320,000    13,248

Telephone and Data Systems, Inc., Special Common Shares

    1,190,000    46,291

Texas Instruments Inc.

    3,151,000    95,444

Time Warner Inc.

    3,750,000    64,875

Toyota Motor Corp.

    765,000    40,052

Transocean Inc. (1)

    2,731,400    219,386

Triad Hospitals, Inc. (1)

    1,480,000    58,578

Tyco International Ltd.

    2,396,500    65,904

UAL Corp. (1)

    2,000,000    62,040

UnitedHealth Group Inc.

    2,115,000    94,710

Vertex Pharmaceuticals Inc. (1)

    3,000,000    110,130

Walgreen Co.

    6,000,000    269,040

WellPoint, Inc. (1)

    3,040,000    221,221

Wells Fargo & Co.

    1,400,000    93,912

Wm. Wrigley Jr. Co.

    1,916,500    86,932

Xilinx, Inc.

    3,200,900    72,500

Yahoo! Inc. (1)

    1,750,000    57,750

Zimmer Holdings, Inc. (1)

    3,610,000    204,759

Other common stocks in initial period of acquisition

       1,139,265

Total common stocks (cost: $16,278,780,000)

       20,940,902

Table of Contents

Short-term securities

    Principal
amount		   

Market

value

     (000)    (000)

3M Co. 5.09%-5.18% due 8/28/2006

    59,800    $ 59,288

Anheuser-Busch Companies, Inc. 4.89% due 7/17/2006 (4)

    25,000      24,941

AT&T Inc. 5.12% due 7/13/2006 (4)

    22,500      22,458

Atlantic Industries 5.22% due 8/14/2006 (4)

    8,700      8,643

Bank of America Corp. 5.23%-5.325% due 9/12-9/22/2006

    131,800      130,315

BellSouth Corp. 5.12% due 7/13/2006 (4)

    20,000      19,963

CAFCO, LLC 5.03%-5.37% due 7/14-9/13/2006 (4)

    194,700      193,383

Caterpillar Financial Services Corp. 5.11% due 7/31/2006

    50,000      49,780

Chevron Funding Corp. 5.06% due 7/27/2006

    25,000      24,905

Ciesco LLC 5.02% due 7/14/2006 (4)

    26,000      25,951

Clipper Receivables Co., LLC 5.00%-5.22% due 7/7-8/28/2006 (4)

    230,864      229,943

Coca-Cola Co. 4.95%-5.00% due 7/24-8/7/2006

    61,400      61,131

Concentrate Manufacturing Co. of Ireland 5.02%-5.17% due 7/11-7/21/2006 (4)

    64,400      64,259

Edison Asset Securitization LLC 5.02%-5.25% due 7/24-8/18/2006 (4)

    100,450      99,958

Fannie Mae 4.84%-5.23% due 7/12-9/13/2006

    371,200      368,477

FCAR Owner Trust I 5.04% due 7/17/2006

    50,000      49,882

FCAR Owner Trust II 4.97% due 7/10/2006

    27,300      27,262

Federal Home Loan Bank 4.905%-5.29% due 7/5-9/27/2006

    509,500      506,061

Freddie Mac 4.91%-5.285% due 7/25-9/26/2006

    179,400      178,007

Gannett Co. 5.01% due 7/14/2006 (4)

    15,800      15,769

General Dynamics Corp. 5.10% due 8/9/2006 (4)

    50,000      49,726

General Electric Capital Services, Inc. 5.18% due 8/9/2006

    50,000      49,712

Hershey Co. 5.00%-5.01% due 7/10-8/11/2006 (4)

    32,100      32,020

Hewlett-Packard Co. 5.20%-5.21% due 7/28-7/31/2006 (4)

    50,000      49,787

HSBC Finance Corp. 5.32% due 9/14/2006

    32,300      31,948

IBM Capital Inc. 5.14% due 9/11/2006 (4)

    42,400      41,957

International Bank for Reconstruction and Development 5.15% due 8/15-8/24/2006

    73,700      73,168

International Lease Finance Corp. 5.08%-5.28% due 8/3-8/31/2006

    97,600      96,915

Medtronic Inc. 5.10% due 7/19/2006 (4)

    22,000      21,941

Park Avenue Receivables Co., LLC 5.08%-5.25% due 7/11-8/3/2006 (4)

    57,200      56,944

Preferred Receivables Funding Corp. 5.19%-5.28% due 7/18-8/4/2006 (4)

    75,000      74,742

Ranger Funding Co. LLC 5.03%-5.10% due 7/12-8/28/2006 (4)

    99,000      98,464

Three Pillars Funding, LLC 5.06% due 7/3/2006 (4)

    54,900      54,877

Triple-A One Funding Corp. 5.08% due 8/22/2006 (4)

    17,672      17,535

UnionBanCal Commercial Funding Corp. 5.00%-5.30% due 7/25-8/25/2006

    59,500      59,426

Variable Funding Capital Corp. 5.025%-5.23% due 7/12-7/28/2006 (4)

    216,700      216,032

Wal-Mart Stores Inc. 4.96%-5.01% due 7/11-8/22/2006 (4)

    110,300      109,818

Total short-term securities (cost: $3,295,426,000)

         3,295,388

Total investment securities (cost: $19,574,206,000)

         24,236,290

Other assets less liabilities

         102,093

Net assets

       $ 24,338,383
(1) Security did not produce income during the last 12 months.
(2) Valued under fair value procedures adopted by authority of the Board of Trustees.
(3) Represents an affiliated company as defined under the Investment Company Act of 1940.
(4) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $1,684,420,000 which represented 6.92% of the net assets of the fund.

 

ADR = American Depositary Receipts

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Assets:

            

Investment securities at market:

            

Unaffiliated issuers

    $ 3,334,719    $ 24,093,055    $ 6,531,116    $ 2,919,735

Affiliated issuers

      —        143,235      49,361      —  

Cash denominated in non-U.S. currencies

      2,690      4,325      —        —  

Cash

      236      1,728      2,008      7,411

Receivables for:

            

Sales of investments

      4,219      136,311      38,340      1,388

Sales of fund’s shares

      3,034      22,713      4,098      2,121

Open forward currency contracts

      —        —        19      392

Dividends and interest

      6,391      23,180      24,729      34,881
     3,351,289      24,424,547      6,649,671      2,965,928

Liabilities:

            

Payables for:

            

Purchases of investments

      2,443      70,125      147,523      40,145

Repurchases of fund’s shares

      44      5,358      843      17

Open forward currency contracts

      —        —        98      267

Investment advisory services

      1,338      5,694      1,536      887

Distribution services

      624      4,125      1,123      554

Deferred trustees’ compensation

      40      625      166      33

Other fees and expenses

      622      237      14      11
     5,111      86,164      151,303      41,914

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014

Investment securities at cost

            

Unaffiliated issuers

    $ 2,758,589    $ 19,440,548    $ 5,618,447    $ 2,954,017

Affiliated issuers

      —      $ 133,658    $ 48,481      —  

Cash denominated in non-U.S. currencies at cost

    $ 2,659    $ 4,338      —        —  

Table of Contents

Statements of assets and liabilities

at June 30, 2006

unaudited

(dollars and shares in thousands, except per-share amounts)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund  

Net assets consist of:

            

Capital paid in on shares of beneficial interest

    $ 2,664,757    $ 18,351,261    $ 5,366,389    $ 2,899,532  

Undistributed (distributions in excess of) net investment income

      33,224      103,564      77,407      69,335  

Undistributed (accumulated) net realized gain (loss)

      72,534      1,221,378      141,096      (10,776 )

Net unrealized appreciation (depreciation)

      575,663      4,662,180      913,476      (34,077 )

Net assets at June 30, 2006

    $ 3,346,178    $ 24,338,383    $ 6,498,368    $ 2,924,014  

Shares of beneficial interest issued and outstanding—unlimited shares authorized:

            

Class 1:

            

Net assets (total: $11,157,497)

    $ 214,609    $ 3,490,659    $ 903,248    $ 187,817  

Shares outstanding

      10,399      57,813      52,575      17,074  

Net asset value per share

    $ 20.64    $ 60.38    $ 17.18    $ 11.00  

Class 2:

            

Net assets (total: $65,221,819)

    $ 3,131,569    $ 20,385,930    $ 5,519,490    $ 2,736,197  

Shares outstanding

      152,508      340,114      323,378      250,811  

Net asset value per share

    $ 20.53    $ 59.94    $ 17.07    $ 10.91  

Class 3:

            

Net assets (total: $1,181,927)

      —      $ 461,794    $ 75,630      —    

Shares outstanding

      —        7,655      4,406      —    

Net asset value per share

      —      $ 60.33    $ 17.16      —    
* Amount less than one thousand

See Notes to Financial Statements

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund    Asset Allocation Fund    Bond Fund

Investment income:

            

Income (net of non-U.S. taxes):

            

Dividends

    $ 34,509    $ 118,613    $ 42,570    $ 329

Interest

      11,885      51,547      52,240      78,520
     46,394      170,160      94,810      78,849

Fees and expenses:

            

Investment advisory services

      8,777      38,583      10,390      5,618

Distribution services - Class 2

      3,654      24,498      6,773      3,131

Distribution services - Class 3

      —        437      69      —  

Transfer agent services

      1      8      2      1

Reports to shareholders

      47      358      96      41

Registration statement and prospectus

      62      479      130      53

Postage, stationery and supplies

      8      60      16      7

Trustees’ compensation

      13      132      35      11

Auditing and legal

      6      21      7      2

Custodian

      386      725      89      55

State and local taxes

      28      220      60      25

Other

      15      48      15      5

Total fees and expenses before waiver

      12,997      65,569      17,682      8,949

Less waiver of fees and expenses:

            

Investment advisory services

      878      3,858      1,039      562

Total fees and expenses after waiver

      12,119      61,711      16,643      8,387

Net investment income

      34,275      108,449      78,167      70,462

Table of Contents

Statements of operations

for the six months ended June 30, 2006

unaudited

(dollars in thousands)

 

     Global Growth Fund    Growth Fund     Asset Allocation Fund     Bond Fund  

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency:

          

Net realized gain (loss) on:

          

Investments

      135,390      1,227,220       145,831       (2,595 )

Non-U.S. currency transactions

      5,200      261       (466 )     (3,677 )
     140,590      1,227,481       145,365       (6,272 )

Net unrealized appreciation (depreciation) on:

          

Investments

      538      (795,483 )     117,305       (31,900 )

Non-U.S. currency translations

      89      208       (97 )     485  
     627      (795,275 )     117,208       (31,415 )

Net realized gain (loss) and unrealized appreciation (depreciation) on investments and non-U.S. currency

      141,217      432,206       262,573       (37,687 )

Net increase (decrease) in net assets resulting from operations

    $ 175,492    $ 540,655     $ 340,740     $ 32,775  

See Notes to Financial Statements

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Operations:

                 

Net investment income

    $ 34,275     $ 30,708     $ 108,449     $ 128,993     $ 78,167     $ 126,432     $ 70,462     $ 110,408  

Net realized gain (loss) on investments and non-U.S. currency transactions

      140,590       83,182       1,227,481       637,504       145,365       133,120       (6,272 )     2,178  

Net unrealized appreciation (depreciation) on investments and non-U.S. currency translations

      627       222,184       (795,275 )     2,278,471       117,208       234,416       (31,415 )     (77,663 )

Net increase (decrease) in net assets resulting from operations

      175,492       336,074       540,655       3,044,968       340,740       493,968       32,775       34,923  

Dividends and distributions paid to shareholders:

                 

Dividends from net investment income and non-U.S. currency gains:

                 

Class 1

      (2,252 )     (1,641 )     (5,705 )     (31,560 )     (3,555 )     (20,656 )     (7,578 )     (7,502 )

Class 2

      (27,641 )     (14,177 )     (25,853 )     (112,734 )     (19,628 )     (106,102 )     (106,551 )     (73,453 )

Class 3

      —         —         (605 )     (3,387 )     (279 )     (1,653 )     —         —    

Total dividends from net investment income and non-U.S. currency gains

      (29,893 )     (15,818 )     (32,163 )     (147,681 )     (23,462 )     (128,411 )     (114,129 )     (80,955 )

Distributions from net realized gain on investments:

                 

Short-term net realized gains:

                 

Class 1

      —         —         —         —         —         —         —         —    

Class 2

      —         —         —         —         —         —         —         —    

Class 3

      —         —         —         —         —         —         —         —    

Long-term net realized gains:

                 

Class 1

      —         —         (21,900 )     —         (11,851 )     —         —         —    

Class 2

      —         —         (127,584 )     —         (72,811 )     —         —         —    

Class 3

      —         —         (2,908 )     —         (1,004 )     —         —         —    

Total distributions from net realized gain on investments

      —         —         (152,392 )     —         (85,666 )     —         —         —    

Total dividends and distributions paid to shareholders

      (29,893 )     (15,818 )     (184,555 )     (147,681 )     (109,128 )     (128,411 )     (114,129 )     (80,955 )

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Capital share transactions:

                 

Class 1:

                 

Proceeds from initial capitalization

      —         —         —         —         —         —         —         —    

Proceeds from shares sold

      9,129       4,184       9,292       5,159       25,104       6,110       12,562       10,970  

Proceeds from reinvestment of dividends and distributions

      2,252       1,641       27,605       31,560       15,406       20,656       7,578       7,502  

Cost of shares repurchased

      (13,591 )     (26,337 )     (323,657 )     (588,755 )     (50,269 )     (104,648 )     (9,822 )     (26,416 )

Net increase (decrease) from Class 1 transactions

      (2,210 )     (20,512 )     (286,760 )     (552,036 )     (9,759 )     (77,882 )     10,318       (7,944 )

Class 2:

                 

Proceeds from shares sold

      373,544       541,733       1,846,045       4,085,834       391,458       970,962       416,369       561,561  

Proceeds from reinvestment of dividends and distributions

      27,641       14,177       153,437       112,734       92,439       106,102       106,551       73,453  

Cost of shares repurchased

      (21,874 )     (30,170 )     (235,018 )     (220,641 )     (279,357 )     (56,161 )     (22,339 )     (40,314 )

Net increase from Class 2 transactions

      379,311       525,740       1,764,464       3,977,927       204,540       1,020,903       500,581       594,700  

Class 3:

                 

Proceeds from shares sold

      —         —         5,657       16,188       1,925       2,351       —         —    

Proceeds from reinvestment of dividends and distributions

      —         —         3,513       3,387       1,283       1,653       —         —    

Cost of shares repurchased

      —         —         (55,454 )     (106,454 )     (6,411 )     (14,040 )     —         —    

Net increase (decrease) from Class 3 transactions

      —         —         (46,284 )     (86,879 )     (3,203 )     (10,036 )     —         —    

Net increase in net assets resulting from capital share transactions

      377,101       505,228       1,431,420       3,339,012       191,578       932,985       510,899       586,756  

Total increase (decrease) in net assets

      522,700       825,484       1,787,520       6,236,299       423,190       1,298,542       429,545       540,724  

Net assets:

                 

Beginning of period

      2,823,478       1,997,994       22,550,863       16,314,564       6,075,178       4,776,636       2,494,469       1,953,745  

End of period

    $ 3,346,178     $ 2,823,478     $ 24,338,383     $ 22,550,863     $ 6,498,368     $ 6,075,178     $ 2,924,014     $ 2,494,469  

Undistributed (distributions in excess of) net investment income

    $ 33,224     $ 28,842     $ 103,564     $ 27,278     $ 77,407     $ 22,702     $ 69,335     $ 113,002  

Table of Contents

Statements of changes in net assets

(dollars and shares in thousands)

 

     Global Growth Fund     Growth Fund     Asset Allocation Fund     Bond Fund  
     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		     Six months
ended June 30,
2006(1)		     Year ended
December 31,
2005		  

Shares of beneficial interest:

                 

Class 1:

                 

Shares issued from initial capitalization

    —       —       —       —       —       —       —       —    

Shares sold

    438     233     153     94     1,454     385     1,109     962  

Shares issued on reinvestment of dividends and distributions

    114     95     477     549     920     1,258     691     670  

Shares repurchased

    (658 )   (1,486 )   (5,299 )   (11,005 )   (2,902 )   (6,585 )   (864 )   (2,323 )

Net increase (decrease) in shares outstanding

    (106 )   (1,158 )   (4,669 )   (10,362 )   (528 )   (4,942 )   936     (691 )

Class 2:

                 

Shares sold

    18,130     30,710     30,379     77,199     22,735     61,664     36,917     49,855  

Shares issued on reinvestment of dividends and distributions

    1,402     824     2,668     1,976     5,559     6,492     9,793     6,611  

Shares repurchased

    (1,077 )   (1,695 )   (3,920 )   (4,104 )   (15,780 )   (3,564 )   (1,984 )   (3,572 )

Net increase in shares outstanding

    18,455     29,839     29,127     75,071     12,514     64,592     44,726     52,894  

Class 3:

                 

Shares sold

    —       —       91     320     111     148     —       —    

Shares issued on reinvestment of dividends and distributions

    —       —       61     60     76     101     —       —    

Shares repurchased

    —       —       (912 )   (2,009 )   (370 )   (887 )   —       —    

Net increase (decrease) in shares outstanding

    —       —       (760 )   (1,629 )   (183 )   (638 )   —       —    
(1) Unaudited.

See Notes to Financial Statements

Table of Contents

Financial Highlights (1)

 

        Income (loss) from investment operations (2)     Dividends and distributions                                  

Period
ended

  

Net asset

value,

beginning

of period

  

Net

investment

income (loss)

  

Net

gains (losses)

on securities

(both realized

and unrealized)

    

Total from

investment

operations

    

Dividends

(from net

investment

income)

    

Distributions

(from capital

gains)

    

Total

dividends and

distributions

    

Net asset

value, end

of period

  

Total

return

    

Net assets,

end of period

(in millions)

  

Ratio of

expenses to

avearge

net assets

before waiver

    

Ratio of

expenses to

average net

assets after

waiver (3)

    

Ratio of

net income

(loss)

to average

net assets

  

Global Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 19.63   $ .24   $ .99     $ 1.23     $ (.22 )   $ —       $ (.22 )   $ 20.64   6.31 %   $ 215   .60 %(6)   .54 %(6)   2.37 %(6)

12/31/05

     17.31     .28     2.19       2.47       (.15 )     —         (.15 )     19.63   14.37       206   .62     .57     1.56  

12/31/04

     15.30     .18     1.92       2.10       (.09 )     —         (.09 )     17.31   13.80       202   .65     .64     1.15  

12/31/03

     11.35     .12     3.91       4.03       (.08 )     —         (.08 )     15.30   35.63       188   .70     .70     .94  

12/31/02

     13.42     .09     (2.02 )     (1.93 )     (.14 )     —         (.14 )     11.35   (14.46 )     152   .71     .71     .73  

12/31/01

     17.25     .18     (2.50 )     (2.32 )     (.15 )     (1.36 )     (1.51 )     13.42   (13.99 )     215   .70     .70     1.24  

Class 2

                          

6/30/06 (5)

     19.52     .22     .97       1.19       (.18 )   $ —         (.18 )     20.53   6.16       3,131   .85 (6)   .79 (6)   2.17 (6)

12/31/05

     17.23     .23     2.18       2.41       (.12 )     —         (.12 )     19.52   14.07       2,617   .87     .82     1.30  

12/31/04

     15.25     .14     1.91       2.05       (.07 )     —         (.07 )     17.23   13.49       1,796   .90     .89     .92  

12/31/03

     11.32     .09     3.89       3.98       (.05 )     —         (.05 )     15.25   35.27       1,082   .95     .95     .68  

12/31/02

     13.38     .06     (2.01 )     (1.95 )     (.11 )     —         (.11 )     11.32   (14.64 )     592   .96     .96     .48  

12/31/01

     17.21     .13     (2.49 )     (2.36 )     (.11 )     (1.36 )     (1.47 )     13.38   (14.22 )     600   .95     .95     .88  

Growth Fund

                        

Class 1

                          

6/30/06 (5)

   $ 59.36   $ .34   $ 1.16     $ 1.50     $ (.10 )   $ (.38 )   $ (.48 )   $ 60.38   2.56 %   $ 3,490   .34 %(6)   .31 %(6)   1.12 %(6)

12/31/05

     51.39     .46     8.00       8.46       (.49 )     —         (.49 )     59.36   16.50       3,709   .35     .32     .87  

12/31/04

     45.74     .32     5.51       5.83       (.18 )     —         (.18 )     51.39   12.75       3,744   .36     .36     .68  

12/31/03

     33.47     .16     12.26       12.42       (.15 )     —         (.15 )     45.74   37.15       3,877   .39     .39     .41  

12/31/02

     44.30     .12     (10.87 )     (10.75 )     (.08 )     —         (.08 )     33.47   (24.27 )     3,195   .40     .40     .30  

12/31/01

     73.51     .18     (11.99 )     (11.81 )     (.41 )     (16.99 )     (17.40 )     44.30   (17.93 )     5,207   .38     .38     .34  

Class 2

                          

6/30/06 (5)

     58.98     .27     1.15       1.42       (.08 )     (.38 )     (.46 )     59.94   2.44       20,386   .59 (6)   .56 (6)   .88 (6)

12/31/05

     51.10     .34     7.92       8.26       (.38 )     —         (.38 )     58.98   16.19       18,343   .60     .57     .64  

12/31/04

     45.50     .23     5.45       5.68       (.08 )     —         (.08 )     51.10   12.50       12,055   .61     .61     .50  

12/31/03

     33.29     .06     12.19       12.25       (.04 )     —         (.04 )     45.50   36.80       7,107   .64     .64     .16  

12/31/02

     44.09     .03     (10.82 )     (10.79 )     (.01 )     —         (.01 )     33.29   (24.46 )     3,009   .65     .65     .07  

12/31/01

     73.28     .04     (11.94 )     (11.90 )     (.30 )     (16.99 )     (17.29 )     44.09   (18.15 )     2,937   .63     .63     .07  

Class 3

                          

6/30/06 (5)

     59.34     .28     1.17       1.45       (.08 )     (.38 )     (.46 )     60.33   2.48       462   .52 (6)   .49 (6)   .94 (6)

12/31/05

     51.38     .37     7.98       8.35       (.39 )     —         (.39 )     59.34   16.28       499   .53     .50     .69  

12/31/04 (7)

     47.74     .24     3.50       3.74       (.10 )     —         (.10 )     51.38   7.85       516   .54 (6)   .53 (6)   .54 (6)

Asset Allocation Fund

                        

Class 1

                          

6/30/06 (5)

   $ 16.56   $ .23   $ .69     $ .92     $ (.07 )   $ (.23 )   $ (.30 )   $ 17.18   5.60 %   $ 903   .34 %(6)   .31 %(6)   2.66 %(6)

12/31/05

     15.49     .41     1.05       1.46       (.39 )     —         (.39 )     16.56   9.45       879   .35     .32     2.57  

12/31/04

     14.58     .39     .84       1.23       (.32 )     —         (.32 )     15.49   8.50       899   .38     .37     2.64  

12/31/03

     12.23     .41     2.29       2.70       (.35 )     —         (.35 )     14.58   22.14       911   .42     .42     3.12  

12/31/02

     14.30     .45     (2.19 )     (1.74 )     (.33 )     —         (.33 )     12.23   (12.19 )     797   .45     .45     3.31  

12/31/01

     15.71     .49     (.37 )     .12       (.59 )     (.94 )     (1.53 )     14.30   .77       1,012   .45     .45     3.30  

Class 2

                          

6/30/06 (5)

     16.47     .21     .68       .89       (.06 )     (.23 )     (.29 )     17.07   5.46       5,519   .59 (6)   .56 (6)   2.41 (6)

12/31/05

     15.42     .37     1.04       1.41       (.36 )     —         (.36 )     16.47   9.14       5,120   .60     .57     2.31  

12/31/04

     14.51     .36     .84       1.20       (.29 )     —         (.29 )     15.42   8.34       3,797   .62     .62     2.42  

12/31/03

     12.18     .37     2.27       2.64       (.31 )     —         (.31 )     14.51   21.74       2,314   .67     .67     2.81  

12/31/02

     14.25     .42     (2.18 )     (1.76 )     (.31 )     —         (.31 )     12.18   (12.38 )     1,056   .70     .70     3.11  

12/31/01

     15.67     .45     (.36 )     .09       (.57 )     (.94 )     (1.51 )     14.25   .52       730   .70     .70     3.03  

Table of Contents

Financial Highlights (1)

 

        Income (loss) from investment operations (2)   Dividends and distributions                                  

Period
ended

  

Net asset

value,

beginning

of period

  

Net

investment

income (loss)

  

Net

gains (losses)

on securities

(both realized

and unrealized)

    

Total from

investment

operations

  

Dividends

(from net

investment

income)

    

Distributions

(from capital

gains)

    

Total

dividends and

distributions

    

Net asset

value, end

of period

  

Total

return

    

Net assets,

end of period

(in millions)

  

Ratio of

expenses to

average

net assets

before waiver

    

Ratio of

expenses to

average net

assets after

waiver (3)

    

Ratio of

net income

(loss)

to average

net assets

  

Asset Allocation Fund (Continued)

                        

Class 3

                          

6/30/06(5)

     16.56     .21     .68       .89     (.06 )     (.23 )     (.29 )     17.16   5.44       76   .52 (6)   .49 (6)   2.48 (6)

12/31/05

     15.49     .38     1.05       1.43     (.36 )     —         (.36 )     16.56   9.26       76   .53     .50     2.39  

12/31/04(7)

     14.85     .36     .58       .94     (.30 )     —         (.30 )     15.49   6.38       81   .55 (6)   .55 (6)   2.50 (6)

Bond Fund

                          

Class 1

                          

6/30/06(5)

   $ 11.31   $ .31   $ (.15 )   $ .16   $ (.47 )   $ —       $ (.47 )   $ 11.00   1.41 %   $ 188   .43 %(6)   .39 %(6)   5.48 %(6)

12/31/05

     11.57     .60     (.40 )     .20     (.46 )     —         (.46 )     11.31   1.77       182   .44     .40     5.30  

12/31/04

     11.34     .56     .10       .66     (.43 )     —         (.43 )     11.57   6.04       195   .45     .44     4.94  

12/31/03

     10.41     .57     .78       1.35     (.42 )     —         (.42 )     11.34   13.07       213   .47     .47     5.19  

12/31/02

     10.44     .67     (.24 )     .43     (.46 )     —         (.46 )     10.41   4.26       218   .49     .49     6.60  

12/31/01

     10.18     .77     .08       .85     (.59 )     —         (.59 )     10.44   8.48       194   .49     .49     7.38  

Class 2

                          

6/30/06(5)

     11.22     .29     (.15 )     .14     (.45 )     —         (.45 )     10.91   1.23       2,736   .68 (6)   .64 (6)   5.23 (6)

12/31/05

     11.48     .57     (.39 )     .18     (.44 )     —         (.44 )     11.22   1.59       2,312   .69     .65     5.06  

12/31/04

     11.27     .53     .09       .62     (.41 )     —         (.41 )     11.48   5.72       1,759   .70     .69     4.68  

12/31/03

     10.36     .53     .78       1.31     (.40 )     —         (.40 )     11.27   12.80       1,280   .72     .72     4.88  

12/31/02

     10.40     .64     (.24 )     .40     (.44 )     —         (.44 )     10.36   4.05       697   .74     .74     6.34  

12/31/01

     10.16     .73     .08       .81     (.57 )     —         (.57 )     10.40   8.15       349   .74     .74     7.06  

 

Portfolio turnover rate for all classes of shares      
    

Six months

ended

June 30, 2006 (5)

   

Year Ended

December 31

2005

    2004    2003    2002    2001

Global Growth Fund

    17    26    24    27    30    38

Growth Fund

    23    29    30    34    34    31

Asset Allocation Fund

    21    23    20    20    25    32

Bond Fund

    29    46    34    20    29    59
(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) The ratios in this column reflect the impact, if any, of certain waivers by CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.
(4) Commenced operations July 5, 2001.
(5) Unaudited.
(6) Annualized.
(7) From January 16, 2004, when Class 3 shares were first issued.

See Notes to Financial Statements

Table of Contents

Notes to financial statements

   unaudited

 

1. Organization and significant accounting policies

Organization – American Funds Insurance Series (the “series”) is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company with 14 different funds. The assets of each fund are segregated, with each fund accounted for separately. The funds’ investment objectives are as follows:

 

Global Discovery Fund

    Long-term growth of capital by investing primarily in stocks of companies in the services and information area of the global economy.

Global Growth Fund

    Long-term growth of capital by investing primarily in common stocks of companies located around the world.

Global Small Capitalization Fund

    Long-term growth of capital by investing primarily in stocks of smaller companies located around the world.

Growth Fund

    Long-term growth of capital by investing primarily in common stocks of companies that offer opportunities for growth of capital.

International Fund

    Long-term growth of capital by investing primarily in common stocks of companies located outside the U.S.

New World Fund

    Long-term growth of capital by investing primarily in stocks of companies with significant exposure to countries with developing economies and/or markets.

Blue Chip Income and Growth Fund

    To produce income exceeding the average yield on U.S. stocks and to provide an opportunity for growth of principal.

Global Growth and Income Fund

    Long-term growth of capital and current income by investing primarily in stocks of well-established companies located around the world.

Growth-Income Fund

    Growth of capital and income by investing primarily in common stocks or other securities that demonstrate the potential for appreciation and/or dividends.

Asset Allocation Fund

    High total return (including income and capital gains) consistent with long-term preservation of capital.

Bond Fund

    As high a level of current income as is consistent with the preservation of capital by investing primarily in fixed-income securities.

High-Income Bond Fund

    High current income and, secondarily, capital appreciation by investing primarily in intermediate and long-term corporate obligations, with emphasis on higher yielding, higher risk, lower rated or unrated securities.

U.S. Government/AAA-Rated Securities Fund

    A high level of current income consistent with prudent investment risk and preservation of capital by investing primarily in a combination of securities guaranteed by the U.S. government and other debt securities rated AAA or Aaa.

Cash Management Fund

    High current yield while preserving capital by investing in a diversified selection of high-quality money market instruments.

Each fund offers two or three share classes (1, 2 and 3). Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for certain distribution expenses. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Table of Contents

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the series:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the funds to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. Securities and other assets for which representative market quotations are not readily available or are considered unreliable are fair valued as determined in good faith under procedures adopted by authority of the series’ board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

Security transactions and related investment income – Security transactions are recorded by the series as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the series will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution expenses, are accrued daily and charged directly to the respective share class.

Dividends and distributions to shareholders –Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation – Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

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Forward currency contracts – The series may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The series enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the series could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the series values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The series records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

Mortgage dollar rolls – The series may enter into mortgage dollar roll transactions in which a fund in the series sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

 

2. Non-U.S. investments

Investment risk – The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the funds on the sale of securities in certain countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

 

3. Federal income taxation and distributions

The series complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The series is not subject to income taxes to the extent such distributions are made.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in non-U.S. securities; deferred expenses; paydowns on fixed-income securities; net capital losses; non-U.S. taxes on capital gains; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of December 31, 2005, the funds’ most recent fiscal year end. Tax-basis unrealized appreciation (depreciation) and cost of investments are reported as of June 30, 2006.

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Additional tax basis disclosures are as follows:

(dollars in thousands)

 

     Growth
Fund		     Global
Growth Fund		    

Asset

Allocation
Fund

     Bond Fund  

As of December 31, 2005:

         

Undistributed ordinary income

    $ 29,555     $ 31,502     $ 22,899     $ 113,791  

Undistributed long-term capital gains

      —         151,590       85,106       —    

Capital loss carryforwards

      (66,686 )     —         —         (3,617 )

As of June 30, 2006:

         

Gross unrealized appreciation on investment securities

      632,332       5,224,347       1,067,049       30,547  

Gross unrealized depreciation on investment securities

      (56,728 )     (569,283 )     (156,712 )     (66,148 )

Net unrealized appreciation (depreciation) on investment securities

      575,604       4,655,064       910,337       (35,601 )

Cost of portfolio securities

      2,759,115       19,581,226       5,670,140       2,955,336  

Capital loss carryforwards expire in:

         

2006

    $ —         —         —       $ —    

2007

      —         —         —         —    

2008

      —         —         —         —    

2009

      —         —         —         —    

2010

      10,546       —         —         —    

2011

      56,140       —         —         3,029  

2012

      —         —         —         —    

2013

      —         —         —         588  
   $ 66,686       —         —       $ 3,617  
* For the period May 1, 2006, commencement of operations, through June 30, 2006.
† Amount less than one thousand.

 

4. Fees and transactions with related parties

Capital Research and Management Company (“CRMC”), the series’ investment adviser, is the parent company of American Funds Service Company SM (“AFS”), the series’ transfer agent, and American Funds Distributors, Inc. SM (“AFD”), the principal underwriter of the series’ shares.

Investment advisory services – The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on annual rates that generally decrease as average net asset levels increase.

The board of trustees approved an amended agreement for Growth-Income Fund and Global Small Capitalization Fund, effective April 1, 2006, and July 1, 2006, respectively, that provided for reduced annual rates as reflected in the chart below. During the six months ended June 30, 2006, CRMC voluntarily reduced investment advisory services fees to the rates provided by the amended agreement for Global Small Capitalization Fund. Additionally, CRMC is currently waiving 10% of investment advisory services fees for all funds in the series. During the six months ended June 30, 2006, total aggregate investment advisory services fees waived by CRMC were $13,732,000. As a result, the aggregate fees shown on the accompanying financial statements of $137,318,000 were reduced to $123,586,000. The amended range of rates and asset levels and the current annualized rates of average net assets for the series, before and after the expense waiver, are as follows:

 

     Rates    Net asset level (in billions)    For the six
months ended
June 30, 2006,
before waiver		    For the six
months ended
June 30, 2006,
after waiver

Fund

    Beginning with    Ending with    Up to    In excess of      

Global Growth

    .690    .480    .6    3.0    .56    .50

Growth

    .500    .285    .6    27.0    .33    .29

Asset Allocation

    .500    .250    .6    8.0    .33    .29

Bond

    .480    .360    .6    3.0    .42    .38
* Results based on activity during the period May 1, 2006, commencement of operations, through June 30, 2006.

Transfer agent services – The aggregate fee of $25,000 was incurred during the six months ended June 30, 2006, pursuant to an agreement with AFS. Under this agreement, the series compensates AFS for transfer agent services, including shareholder recordkeeping, communications and transaction processing.

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Deferred trustees’ compensation – Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the series, are treated as if invested in one or more of the American Funds. These amounts represent general, unsecured liabilities of the series and vary according to the total returns of the selected funds. Trustees’ compensation of $421,000, shown on the accompanying financial statements, includes $244,000 in current fees (either paid in cash or deferred) and a net increase of $177,000 in the value of the deferred amounts.

Affiliated officers and trustees – Officers and certain trustees of the series are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the series.

 

5. Distribution services

The series has adopted plans of distribution for Class 2 and 3 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets, of 0.25% for Class 2 and 0.18% for Class 3 to pay service fees to firms that have entered into agreements with the series. During the six months ended June 30, 2006, distribution expenses under the plans for the series aggregated $77,715,000 for Class 2 and $1,101,000 for Class 3. Class 1 shares have not adopted a plan of distribution.

 

6. Investment transactions and other disclosures

As of June 30, 2006, Asset Allocation Fund, Bond Fund and High-Income Bond Fund had outstanding forward currency contracts to sell non-U.S. currencies as follows:

(dollars in thousands)

 

          Contract
amount		         U.S.
valuation		       

Fund

   

Non-U.S. currency sale contracts

    Non-U.S.    U.S.    Amount    Unrealized
(depreciation)
appreciation		  

Asset Allocation

    Euro, expiring 7/19-9/29/2006    € 6,710    $ 8,520    $ 8,599    ($ 79 )

Bond

    Euro, expiring 9/14/2006    € 5,585      7,078      7,173      (95 )
   Pound, expiring 7/13-8/23/2006    £ 5,780      12,125      11,905      220  

The following table presents additional information for the six months ended June 30, 2006:

 

     Global
Growth
Fund		    Growth
Fund		    Asset
Allocation
Fund		     Bond
Fund

Purchases of investment securities (1)

    $ 615,964    $ 5,156,655    $ 1,231,288     $ 886,794

Sales of investment securities (1)

      451,141      5,061,567      1,240,593       608,522

Non-U.S taxes paid on dividend income

      3,333      5,318      1,139       —  

Non-U.S taxes paid on interest income—

      —        —        (3 )     61

Non-U.S taxes paid on realized gains

      132      —        —         —  

Non-U.S taxes provided on unrealized gains as of June 30, 2006

      545      17      —         —  

Dividends from affiliated issuers

      —        —        —         —  

Realized gain on affiliated issuers

      —        —        16,897       —  
(1) Excludes short-term securities, except for Cash Management Fund.
(2) For the period May 1, 2006, commencement of operations, through June 30, 2006.

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Expense example  

unaudited

The funds in the American Funds Insurance Series serve as the underlying investment vehicle for various insurance products. As an owner of an insurance contract that invests in one of the funds in the series, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. Additional fees are charged by the insurance companies related to the various benefits they provide. This example is intended to help you understand your ongoing costs (in dollars) of investing in the underlying funds only so you can compare these costs with the ongoing costs of investing in other mutual funds that serve a similar function in other annuity products. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006, through June 30, 2006).

Actual expenses:

The first line of 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 during period” to estimate the expenses you paid on your account during this period. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.

Hypothetical example for comparison purposes:

The second line of each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. 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 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. Additional fees are charged by the insurance companies related to the various benefits they provide. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in 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.

 

     Beginning
account value
1/1/2006		    Ending
account
value
6/30/2006		    Expenses
paid during
period*		    Annualized
expense
ratio		  

Global Discovery Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.73    $ 2.86    .57 %

Class 1 — assumed 5% return

      1,000.00      1,021.97      2.86    .57  

Class 2 — actual return

      1,000.00      1,024.95      4.12    .82  

Class 2 — assumed 5% return

      1,000.00      1,020.73      4.11    .82  

Global Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,063.06    $ 2.76    .54 %

Class 1 — assumed 5% return

      1,000.00      1,022.12      2.71    .54  

Class 2 — actual return

      1,000.00      1,061.57      4.04    .79  

Class 2 — assumed 5% return

      1,000.00      1,020.88      3.96    .79  

Global Small Capitalization Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,094.50    $ 3.64    .70 %

Class 1 — assumed 5% return

      1,000.00      1,021.32      3.51    .70  

Class 2 — actual return

      1,000.00      1,093.52      4.93    .95  

Class 2 — assumed 5% return

      1,000.00      1,020.08      4.76    .95  

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Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,025.61    $ 1.56    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,024.37      2.81    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,024.77      2.46    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

International Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,060.13    $ 2.55    .50 %

Class 1 — assumed 5% return

      1,000.00      1,022.32      2.51    .50  

Class 2 — actual return

      1,000.00      1,058.33      3.83    .75  

Class 2 — assumed 5% return

      1,000.00      1,021.08      3.76    .75  

Class 3 — actual return

      1,000.00      1,058.74      3.47    .68  

Class 3 — assumed 5% return

      1,000.00      1,021.42      3.41    .68  

New World Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,089.69    $ 4.20    .81 %

Class 1 — assumed 5% return

      1,000.00      1,020.78      4.06    .81  

Class 2 — actual return

      1,000.00      1,089.24      5.49    1.06  

Class 2 — assumed 5% return

      1,000.00      1,019.54      5.31    1.06  

Blue Chip Income and Growth Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,046.45    $ 1.98    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,045.57      3.25    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

Global Growth and Income Fund†

            

Class 1 — actual return

    $ 1,000.00    $ 961.00    $ 1.05    .65 %

Class 1 — assumed 5% return

      1,000.00      1,021.57      3.26    .65  

Class 2 — actual return

      1,000.00      960.00      1.45    .90  

Class 2 — assumed 5% return

      1,000.00      1,020.33      4.51    .90  

Growth-Income Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,040.86    $ 1.32    .26 %

Class 1 — assumed 5% return

      1,000.00      1,023.51      1.30    .26  

Class 2 — actual return

      1,000.00      1,039.62      2.58    .51  

Class 2 — assumed 5% return

      1,000.00      1,022.27      2.56    .51  

Class 3 — actual return

      1,000.00      1,039.98      2.23    .44  

Class 3 — assumed 5% return

      1,000.00      1,022.61      2.21    .44  

Asset Allocation Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,055.97    $ 1.58    .31 %

Class 1 — assumed 5% return

      1,000.00      1,023.26      1.56    .31  

Class 2 — actual return

      1,000.00      1,054.62      2.85    .56  

Class 2 — assumed 5% return

      1,000.00      1,022.02      2.81    .56  

Class 3 — actual return

      1,000.00      1,054.43      2.50    .49  

Class 3 — assumed 5% return

      1,000.00      1,022.36      2.46    .49  

Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,014.08    $ 1.95    .39 %

Class 1 — assumed 5% return

      1,000.00      1,022.86      1.96    .39  

Class 2 — actual return

      1,000.00      1,012.33      3.19    .64  

Class 2 — assumed 5% return

      1,000.00      1,021.62      3.21    .64  

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High-Income Bond Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,033.23    $ 2.27    .45 %

Class 1 — assumed 5% return

      1,000.00      1,022.56      2.26    .45  

Class 2 — actual return

      1,000.00      1032.38      3.53    .70  

Class 2 — assumed 5% return

      1,000.00      1021.32      3.51    .70  

Class 3 — actual return

      1,000.00      1,032.67      3.18    .63  

Class 3 — assumed 5% return

      1,000.00      1,021.67      3.16    .63  

U.S. Government/AAA-Rated Securities Fund

            

Class 1 — actual return

    $ 1,000.00    $ 993.10    $ 2.12    .43 %

Class 1 — assumed 5% return

      1,000.00      1,022.66      2.16    .43  

Class 2 — actual return

      1,000.00      992.63      3.31    .67  

Class 2 — assumed 5% return

      1,000.00      1,021.47      3.36    .67  

Class 3 — actual return

      1,000.00      992.50      3.01    .61  

Class 3 — assumed 5% return

      1,000.00      1,021.77      3.06    .61  

Cash Management Fund

            

Class 1 — actual return

    $ 1,000.00    $ 1,021.95    $ 1.50    .30 %

Class 1 — assumed 5% return

      1,000.00      1,023.31      1.51    .30  

Class 2 — actual return

      1,000.00      1,021.44      2.76    .55  

Class 2 — assumed 5% return

      1,000.00      1,022.07      2.76    .55  

Class 3 — actual return

      1,000.00      1,021.19      2.41    .48  

Class 3 — assumed 5% return

      1,000.00      1,022.41      2.41    .48  
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
† The annualized expense ratio and the information in the first line of each share class are based on operations for the period May 1, 2006 (when the fund commenced operations), through June 30, 2006, and, accordingly, are not representative of a full period.

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Board of trustees

“Non-interested” trustees

 

Name and age

   

Year first

elected

a trustee

of the series1

   

Principal occupation(s)

during past five years

    Number of
portfolios in fund
complex2 overseen
by trustee		   

Other directorships3

held by trustee

Lee A. Ault III, 70

Chairman of the Board

    1999    Chairman of the Board, In-Q-Tel, Inc. (an independent technology venture company funded principally by the Central Intelligence Agency); former Chairman of the Board, President and CEO, Telecredit, Inc.    1    Anworth Mortgage Asset Corporation; Office Depot, Inc.

H. Frederick Christie, 73

    1994    Private investor; former President and CEO, The Mission Group (non-utility holding company, subsidiary of Southern California Edison Company)    19    Ducommun Incorporated; IHOP Corporation; Southwest Water Company

Joe E. Davis, 72

    1991    Private investor; former Chairman of the Board, Linear Corporation (linear motor design and production); former President and CEO, National Health Enterprises, Inc;    1    Anworth Mortgage Asset Corporation; Natural Alternatives, Inc.

Martin Fenton, 71

    1995    Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities)    16    None

Leonard R. Fuller, 60

    1999    President and CEO, Fuller Consulting (financial management consulting firm)    14    None

Mary Myers Kauppila, 52

    1994    Private investor; Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc.    5    None

Kirk P. Pendleton, 66

    1996    Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment)      

“Interested” trustees

 

Name, age and

position with series

   

Year first

elected

a trustee or officer

of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

   

Number of

portfolios in fund

complex2 overseen

by trustee

   

Other directorships3

held by trustee

James K. Dunton, 68

Vice Chairman of the Board

    1993    Senior Vice President and Director, Capital Research and Management Company    2    None

Donald D. O’Neal, 46

President

    1998    Senior Vice President, Capital Research and Management Company    3    None

The statement of additional information includes additional information about the series’ trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the series is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

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Other officers

 

Name, age and

position with series

   

Year first

elected

a trustee or officer

of the series1

   

Principal occupations during past five years

and positions held with affiliated entities or the

principal underwriter of the series

Alan N. Burro, 45

Senior Vice President

    1998   

Vice President, Capital Research and Management Company;

Senior Vice President, Capital Research Company5

Michael J. Downer, 51

Senior Vice President

    1991   

Vice President and Secretary, Capital Research and Management Company;

Director, American Funds Distributors, Inc.;5 Director, Capital Bank and Trust Company5

Abner D. Goldstine, 76

Senior Vice President

    1993    Senior Vice President and Director, Capital Research and Management Company

John H. Smut, 49

Senior Vice President

    1994   

Senior Vice President, Capital Research and Management Company;

Director, American Funds Distributors, Inc.5

Claudia P. Huntington, 54

Vice President

    1994   

Senior Vice President, Capital Research and Management Company;

Director, The Capital Group Companies, Inc.5

Robert W. Lovelace, 43

Vice President

    1997    Senior Vice President, Capital Research and Management Company; Chairman of the Board, Capital Research Company,5 Director, The Capital Group Companies, Inc.5

Susan M. Tolson, 44

Vice President

    1999    Senior Vice President, Capital Research Company5

Chad L. Norton, 46

Secretary

    1994    Vice President — Fund Business Management Group, Capital Research and Management Company

David A. Pritchett, 40

Treasurer

    1999    Vice President — Fund Business Management Group, Capital Research and Management Company

Steven I. Koszalka, 42

Assistant Secretary

    2003    Assistant Vice President — Fund Business Management Group, Capital Research and Management Company

Karl C. Grauman, 38

Assistant Treasurer

    2006    Vice President — Fund Business Management Group, Capital Research and Management Company

Sheryl F. Johnson, 38

Assistant Treasurer

    1997    Vice President — Fund Business Management Group, Capital Research and Management Company
1 Trustees and officers of the series serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds, consisting of 29 funds, and Endowments, whose shareholders are limited to certain nonprofit organizations.
3 This includes all directorships (other than those in the American Funds) that are held by each trustee as a director of a public company or a registered investment company.
4 “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the series’ investment adviser, Capital Research and Management Company, or affiliated entities (including the series’ principal underwriter).
5 Company affiliated with Capital Research and Management Company.

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GVIT International Index Fund

SemiannualReport

 

LOGO

|  June 30, 2006 (Unaudited)

 

LOGO

 

     Contents
3    Statement of Investments
27    Statement of Assets and Liabilities
27    Statement of Operations
28    Statement of Changes in Net Assets
30    Financial Highlights
31    Notes to Financial Statements

 

Statement Regarding Availability of Quarterly Portfolio Schedule.

The Gartmore Variable Insurance Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330; and the Funds make the information on Form N-Q available to shareholders upon request without charge.

Statement Regarding Availability of Proxy Voting Record.

Information regarding how the Fund voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30, 2006 is available without charge, upon request, by calling 800-848-0920, and on the Commission’s website at http://www.sec.gov.

 

SAR-GIIX (8/06)

Table of Contents

 

Shareholder

Expense Example

GVIT International Index Fund

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are 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. Per SEC requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period, May 1, 2006, and continued to hold your shares at the end of the reporting period, June 30, 2006.

 

Actual Expenses

For each Class of the Fund in the table below, the first line 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 of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.

Hypothetical Example for Comparison Purposes

The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ 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 Class of 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 transaction costs, such as sales charges (loads) or redemption fees. Therefore, the second line for each Class in 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 transaction costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.

 

 

Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment

(June 30, 2006)

 

              Beginning
Account Value,
May 1, 2006
      Ending
Account Value,
June 30, 2006
      Expenses
Paid
During Period
      Annualized
Expense Ratio
  
Gartmore GVIT International Index Fund                                    

Class II

      Actual      $ 1,000.00      $ 784.90      $ 3.27 (a)    0.74% (a)
       Hypothetical 1    $ 1,000.00      $ 1,021.13      $ 3.72 (b)    0.74% (b)

Class VI

      Actual      $ 1,000.00      $ 780.30      $ 3.66 (a)    0.83% (a)
       Hypothetical 1    $ 1,000.00      $ 1,020.68      $ 4.17 (b)    0.83% (b)

Class VII

      Actual      $ 1,000.00      $ 782.10      $ 5.08 (a)    1.15% (a)
       Hypothetical 1    $ 1,000.00      $ 1,019.10      $ 5.77 (b)    1.15% (b)

Class VIII

      Actual      $ 1,000.00      $ 780.50      $ 4.19 (a)    0.95% (a)
       Hypothetical 1    $ 1,000.00      $ 1,020.09      $ 4.77 (b)    0.95% (b)

Class ID

      Actual      $ 1,000.00      $ 787.60      $ 1.64 (a)    0.37% (a)
       Hypothetical 1    $ 1,000.00      $ 1,022.97      $ 1.86 (b)    0.37% (b)

 

(a) Information shown reflects values using the expense ratios and rates of return for the period May 1, 2006 (commencement of operations) to June 30, 2006.

 

(b) Information shown reflects values using the expense ratios from May 1, 2006 (commencement of operations) to June 30, 2006 and has been annualized to reflect for the period from May 1, 2006 to June 30, 2006.

 

1 Represents the hypothetical 5% return before expenses.

 

1

Table of Contents

 

Portfolio Summary

June 30, 2006 (Unaudited)

GVIT International Index Fund

 

The SEC adopted a requirement that Funds present their portfolio holdings in a table, chart or graph format in their annual and semiannual reports to shareholders, whether or not a statement of investments is utilized. The following tables, which present portfolio holdings as a percentage of net assets, are provided in compliance with this requirement.

Asset Allocation       
Common Stocks      97.7%
Mutual Fund      2.1%
Cash Equivalents      0.0%
Preferred Stock      0.0%
Rights      0.0%
Other assets in excess of liabilities        0.2%
      
       100.0%
      

 

 

 

Top Holdings*       
iShares MSCI EAFE Index Fund      2.1%
BP PLC      2.1%
HSBC Holdings PLC      1.7%
GlaxoSmithKline PLC      1.4%
Toyota Motor Corp.      1.3%
Total SA      1.2%
Royal Dutch Shell PLC      1.1%
Vodafone Group PLC      1.1%
Novartis AG      1.1%
Nestle SA      1.1%
Other Assets      85.8%
      
       100.0%
      
Top Industries       
Banks      17.0%
Oil & Gas      7.6%
Pharmaceuticals      6.9%
Telecommunications      6.3%
Insurance      5.3%
Food      4.0%
Electric      4.0%
Financial Services      3.8%
Auto Manufacturers      2.9%
Mining      2.7%
Other Assets      39.5%
      
       100.0%
      

 

 

Top Countries       
Japan      23.9%
United Kingdom      22.6%
France      9.2%
Germany      6.8%
Switzerland      6.7%
Australia      5.0%
Netherlands      4.6%
Spain      3.8%
Italy      3.7%
Sweden      2.3%
Other Assets      11.4%
      
       100.0%
      

 

* For purpose of listing top holdings, repurchase agreements are considered cash equivalents and are included as part of Other Assets.

 

2

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (97.7%)           
AUSTRALIA (5.0%)           
Airlines (0.0%)           
Qantas Airways Ltd. (c)   4,620    $ 10,152
        
Apparel (0.0%)           
Billabong International Ltd. (c)   219      2,496
        
Banks (1.3%)           
Australia & New Zealand Banking Group Ltd. (c)   5,968      117,961
Commonwealth Bank of Australia (c)   4,237      139,540
National Australia Bank Ltd. (c)   5,251      136,595
Westpac Banking Corp. (c)   6,430      110,795
        
           504,891
        
Beverages (0.1%)           
Coca-Cola Amatil Ltd. (c)   2,629      13,843
Foster’s Group Ltd. (c)   7,879      31,980
Lion Nathan Ltd. (c)   249      1,441
        
           47,264
        
Building Materials (0.2%)           
Boral Ltd. (c)   1,323      8,008
CSR Ltd. (c)   4,558      11,342
Rinker Group Ltd. (c)   3,410      41,287
        
           60,637
        
Commercial Services (0.1%)           
ABC Learning Centres Ltd. (c)   1,660      7,885
Brambles Industries Ltd. (c)   3,712      30,339
Transurban Group (c)   3,562      18,387
        
           56,611
        
Computers (0.0%)           
Computershare Ltd. (c)   985      5,739
        
Engineering & Construction (0.1%)           
Downer EDI Ltd. (c)   492      2,718
Leighton Holdings Ltd. (c)   208      2,680
Macquarie Airports (c)   3,411      7,774
Multiplex Group (c)   2,807      6,813
WorleyParsons Ltd. (c)   358      5,352
        
           25,337
        
Entertainment (0.1%)           
Aristocrat Leisure Ltd. (c)   886      8,469
TABCorp. Holdings Ltd. (c)   1,644      18,553
UNiTAB Ltd. (c)   817      8,960
        
           35,982
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
AUSTRALIA (continued)           
Financial Services (0.2%)           
Australian Stock Exchange Ltd. (c)   536    $ 12,976
Babcock & Brown Ltd. (c)   682      10,941
Challenger Financial Services Group Ltd. (c)   2,908      6,812
Macquarie Bank Ltd. (c)   873      44,676
Perpetual Ltd. (c)   50      2,711
SFE Corp., Ltd. (c)   737      9,081
        
           87,197
        
Food (0.1%)           
Goodman Fielder Ltd. (c)   1,597      2,535
Woolworths Ltd. (c)   3,616      54,118
        
           56,653
        
Forest Products & Paper (0.0%)           
PaperlinX Ltd. (c)   262      607
        
Gas (0.1%)           
Alinta Ltd. (c)   1,422      11,015
Australian Gas Light Co., Ltd. (c)   1,221      15,886
        
           26,901
        
Healthcare—Products (0.0%)           
Cochlear Ltd. (c)   107      4,342
        
Healthcare—Services (0.0%)           
Sonic Healthcare Ltd. (c)   475      5,010
        
Insurance (0.3%)           
AMP Ltd. (c)   5,879      39,767
AXA Asia Pacific Holdings Ltd. (c)   1,946      9,026
Insurance Australia Group Ltd. (c)   6,521      25,906
QBE Insurance Group Ltd. (c)   2,465      37,465
        
           112,164
        
Investment Companies (0.1%)           
Macquarie Communications   243      1,066
Infrastructure Group (c)           
Macquarie Infrastructure Group (c)   9,894      24,679
        
           25,745
        
Iron/Steel (0.1%)           
BlueScope Steel Ltd. (c)   2,997      17,713
OneSteel Ltd. (c)   714      2,159
        
           19,872
        
Media (0.0%)           
John Fairfax Holdings Ltd. (c)   1,559      4,345
Publishing & Broadcasting Ltd. (c)   773      10,447
        
           14,792
        

 

3

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
AUSTRALIA (continued)           
Mining (1.0%)           
Alumina Ltd. (c)   4,460    $ 22,365
BHP Billiton Ltd. (c)   11,531      249,333
Iluka Resources Ltd. (c)   790      3,844
Newcrest Mining Ltd. (c)   1,310      20,569
Paladin Resources Ltd. (c)   2,488      7,610
Rio Tinto Ltd. (c)   1,040      60,174
Zinifex Ltd. (c)   1,220      9,146
        
           373,041
        
Miscellaneous Manufacturing (0.1%)       
Ansell Ltd. (c)   5      36
Orica Ltd. (c)   830      14,736
Wesfarmers Ltd. (c)   1,447      37,962
        
           52,734
        
Oil & Gas (0.3%)       
Caltex Australia Ltd. (c)   662      11,614
Origin Energy Ltd. (c)   1,810      9,894
Santos Ltd. (c)   2,540      22,852
Woodside Petroleum Ltd. (c)   1,712      55,995
        
           100,355
        
Packaging & Containers (0.0%)       
AmCor Ltd. (c)   2,110      10,461
        
Pharmaceuticals (0.1%)       
CSL Ltd. (c)   689      27,469
Mayne Pharma Ltd. (b) (c)   3,520      6,780
Symbion Health Ltd. (c)   3,405      7,732
        
           41,981
        
Real Estate (0.5%)       
Centro Properties Group (c)   1,810      8,994
CFS Retail Property Trust (c)   1,767      2,437
Commonwealth Property Office Fund (c)   539      557
DB RREEF Trust (c)   4,677      5,088
GPT Group (c)   7,643      24,613
ING Industrial Fund (c)   5,640      9,319
Investa Property Group (c)   7,985      12,985
Lend Lease Corp. Ltd. (c)   792      8,225
Macquarie Goodman Group (c)   3,016      13,439
Macquarie Office Trust (c)   1,864      1,908
Mirvac Group (c)   4,366      14,083
Stockland (c)   5,414      28,233
Westfield Group (c)   5,374      69,168
        
           199,049
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
AUSTRALIA (continued)           
Retail (0.1%)           
Coles Myer Ltd. (c)   4,531    $ 38,240
Harvey Norman Holdings Ltd. (c)   942      2,755
        
           40,995
        
Telecommunications (0.1%)       
Telstra Corp. Ltd. (c)   8,721      23,825
        
Transportation (0.0%)       
Toll Holdings Ltd. (c)   1,185      12,357
        
           1,957,190
        
AUSTRIA (0.5%)           
Banks (0.1%)           
Erste Bank der Oesterreichischen Sparkassen AG (c)   552      31,029
Raiffeisen International Bank Holding AG (b) (c)   78      6,758
        
           37,787
        
Building Materials (0.0%)       
Wienerberger AG (c)   300      14,235
        
Electric (0.0%)       
Verbund-Oesterreichische Elektrizitaetswirtschafts AG (c)   170      8,172
        
Entertainment (0.0%)       
BetandWin.Com Interactive Entertainment AG (c)   43      3,404
        
Insurance (0.0%)       
Wiener Staedtische Versicherung AG (c)   32      1,882
        
Iron/Steel (0.1%)       
Boehler-Uddeholm AG (c)   220      12,014
Voestalpine AG (c)   88      13,350
        
           25,364
        
Machinery—Diversified (0.0%)       
Andritz AG (c)   54      8,913
        
Miscellaneous Manufacturing (0.0%)       
RHI AG (b) (c)   186      6,019
        
Oil & Gas (0.1%)       
OMV AG (c)   525      31,218
        

 

4

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
AUSTRIA (continued)           
Real Estate (0.1%)           
IMMOFINANZ Immobilien Anlagen AG (b) (c)   1,079    $ 11,981
Meinl European Land Ltd. (b) (c)   714      14,550
        
           26,531
        
Telecommunications (0.1%)       
Telekom Austria AG (c)   1,386      30,855
        
           194,380
        
BELGIUM (1.1%)           
Banks (0.5%)       
Dexia (c)   1,686      40,542
Fortis (c)   3,845      130,894
KBC Groep NV (c)   659      70,719
        
           242,155
        
Beverages (0.1%)       
InBev NV (c)   522      25,584
        
Chemicals (0.1%)       
Solvay SA (c)   197      22,633
Umicore (c)   113      15,085
        
           37,718
        
Electrical Components & Equipment (0.0%)
Bekaert SA (c)   6      576
        
Electronics (0.0%)       
BarCo NV (c)   28      2,587
        
Food (0.1%)       
Colruyt SA (c)   23      3,591
Delhaize Group (c)   285      19,744
        
           23,335
        
Holding Companies-Diversified (0.1%)       
Groupe Bruxelles Lambert SA (c)   290      30,353
        
Miscellaneous Manufacturing (0.0%)       
AGFA-Gevaert NV (c)   509      12,323
        
Pharmaceuticals (0.1%)       
Omega Pharma SA (c)   21      1,466
UCB SA (c)   365      19,737
        
           21,203
        
Telecommunications (0.1%)       
BelgaCom SA (c)   692      22,948
Mobistar SA (c)   136      10,778
        
           33,726
        
           429,560
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
DENMARK (0.7%)           
Banks (0.2%)           
Danske Bank (c)   1,400    $ 53,173
Sydbank (c)   147      4,876
        
           58,049
        
Beverages (0.0%)       
Carlsberg (c)   50      3,653
        
Biotechnology (0.0%)       
Novozymes (c)   100      6,753
        
Building Materials (0.0%)       
FLSmidth & Co. (c)   100      3,784
        
Electrical Components & Equipment (0.1%)
Vestas Wind Systems (b) (c)   800      21,919
        
Food (0.1%)       
Danisco A/S (c)   200      14,565
East Asiatic Co., Ltd. (c)   150      5,662
        
           20,227
        
Healthcare—Products (0.1%)       
Coloplast (c)   150      11,128
GN Store Nord (c)   800      9,182
William Demant Holding (b) (c)   50      3,734
        
           24,044
        
Home Furnishings (0.0%)       
Bang & Olufsen (c)   60      6,630
        
Insurance (0.0%)       
Topdanmark (b) (c)   50      6,951
TrygVesta AS (c)   153      9,538
        
           16,489
        
Pharmaceuticals (0.1%)       
Novo-Nordisk (c)   750      47,691
        
Transportation (0.1%)       
AP Moller — Maersk A/S (c)   4      31,209
DSV (c)   100      16,740
        
           47,949
        
           257,188
        
FINLAND (1.5%)           
Auto Parts & Equipment (0.0%)       
Nokian Renkaat OYJ (c)   550      7,218
        
Banks (0.0%)       
OKO Bank PLC (c)   22      323
        

 

5

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FINLAND (continued)           
Computers (0.0%)           
Tietoenator Oyj (c)   380    $ 10,964
        
Electric (0.1%)       
Fortum Oyj (c)   1,600      40,872
        
Engineering & Construction (0.0%)       
YIT OYJ (c)   578      14,145
        
Financial Services (0.1%)       
Sampo Oyj (c)   1,600      30,512
        
Food (0.0%)       
Kesko OYJ (c)   100      3,837
        
Forest Products & Paper (0.3%)       
Stora Enso Oyj (c)   2,300      32,102
UPM-Kymmene Oyj (c)   1,900      40,822
        
           72,924
        
Hand/Machine Tools (0.0%)       
KCI Konecranes Oyj (c)   380      6,829
        
Iron/Steel (0.0%)       
Outokumpu OYJ (c)   400      9,349
Rautaruukki OYJ (c)   200      6,021
        
           15,370
        
Leisure (0.0%)       
Amer Sports OYJ (c)   250      5,216
        
Machinery—Diversified (0.1%)       
Kone OYJ (c)   340      14,129
Metso Oyj (c)   500      18,104
        
           32,233
        
Media (0.0%)       
Sanoma-WSOY Oyj (c)   30      721
        
Miscellaneous Manufacturing (0.0%)       
Uponor Oyj (c)   100      2,700
Wartsila Oyj (c)   100      4,208
        
           6,908
        
Oil & Gas (0.0%)       
Neste Oil OYJ (c)   550      19,327
        
Pharmaceuticals (0.0%)       
Orion OYJ (c)   100      1,986
        
Telecommunications (0.9%)       
Elisa OYJ (c)   700      13,307
Nokia OYJ (c)   14,000      283,787
        
           297,094
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FINLAND (continued)           
Transportation (0.0%)           
Cargotec Corp. (c)   80    $ 3,499
        
           569,978
        
FRANCE (9.2%)           
Advertising (0.1%)       
PagesJaunes Groupe SA (b) (c)   272      8,537
Publicis Groupe   568      21,938
        
           30,475
        
Aerospace/Defense (0.1%)       
Safran SA (c)   425      9,247
Thales SA (c)   368      14,348
Zodiac SA (c)   196      10,996
        
           34,591
        
Airlines (0.0%)       
Air France-KLM (c)   548      12,868
        
Apparel (0.0%)       
Hermes International (c)   165      14,587
        
Auto Manufacturers (0.3%)       
Peugeot SA (c)   583      36,204
Renault SA (c)   601      64,484
        
           100,688
        
Auto Parts & Equipment (0.1%)       
Compagnie Generale des Etablissements Michelin (c)   546      32,801
Valeo SA (c)   328      11,673
        
           44,474
        
Banks (1.4%)       
BNP Paribas (c)   2,765      264,371
Credit Agricole SA (c)   1,913      72,590
Societe Generale (c)   1,165      171,033
        
           507,994
        
Beverages (0.1%)       
Pernod-Ricard SA (c)   276      54,658
        
Building Materials (0.4%)       
Cie de Saint-Gobain (c)   1,054      75,203
Imerys SA (c)   53      4,234
Lafarge SA (c)   542      67,929
        
           147,366
        
Chemicals (0.2%)       
Air Liquide (c)   430      83,717
        

 

6

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FRANCE (continued)           
Commercial Services (0.0%)       
Societe Des Autoroutes Paris-Rhin-Rhone (c)   133    $ 9,138
        
Computers (0.1%)       
Atos Origin SA (b) (c)   271      17,714
Capgemini SA (b) (c)   477      27,200
        
           44,914
        
Cosmetics/Personal Care (0.2%)       
L’Oreal SA (c)   955      90,138
        
Electric (0.4%)       
Suez SA (c)   3,326      138,106
        
Electrical Components & Equipment (0.2%)
Schneider Electric SA (c)   796      82,839
        
Engineering & Construction (0.3%)       
Bouygues (c)   703      36,094
Vinci SA (c)   724      74,444
        
           110,538
        
Food (0.7%)       
Carrefour SA (b) (c)   1,939      113,554
Casino Guichard Perrachon SA (c)   191      14,511
Groupe Danone (c)   838      106,399
        
           234,464
        
Food Service (0.0%)       
Sodexho Alliance SA (c)   245      11,756
        
Gas (0.0%)       
Gaz de France (b) (c)   549      18,406
        
Healthcare—Products (0.1%)       
Cie Generale d’Optique Essilor International SA (c)   376      37,815
        
Holding Companies—Diversified (0.2%)       
LVMH Moet Hennessy Louis Vuitton SA (c)   787      77,996
        
Home Furnishings (0.0%)       
Thomson (c)   1,034      17,084
        
Household Products (0.0%)       
Societe BIC SA (c)   35      2,266
        
Insurance (0.5%)       
AXA SA (c)   5,499      177,969
CNP Assurances (c)   91      8,637
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FRANCE (continued)           
Insurance (continued)           
Scor (c)   2,811    $ 6,139
        
           192,745
        
Lodging (0.1%)       
Accor SA (c)   739      44,952
        
Machinery—Diversified (0.1%)       
Alstom RGPT (b) (c)   337      30,801
        
Media (0.5%)       
Lagardere SCA (c)   466      34,346
M6-Metropole Television (c)   120      3,752
Societe Television Francaise 1 (c)   504      16,419
Vivendi SA (c)   3,813      133,183
        
           187,700
        
Metal Fabricate/Hardware (0.1%)       
Vallourec (c)   22      26,476
        
Office/Business Equipment (0.0%)       
Neopost SA (c)   78      8,880
        
Oil & Gas (1.3%)       
Total SA (c)   7,369      484,028
        
Oil & Gas Services (0.0%)       
Technip SA (c)   342      18,842
        
Pharmaceuticals (0.9%)       
Sanofi-Aventis (c)   3,371      328,400
        
Real Estate Investment Trusts (0.1%)       
Gecina SA (c)   5      655
Klepierre (c)   74      8,567
Unibail (c)   182      31,705
        
           40,927
        
Retail (0.1%)       
PPR SA (c)   191      24,333
        
Semiconductors (0.1%)       
STMicroelectronics NV (c)   2,343      37,622
        
Software (0.0%)       
Business Objects SA (b) (c)   416      11,306
Dassault Systemes SA (c)   135      7,216
        
           18,522
        
Telecommunications (0.4%)       
Alcatel SA (b) (c)   4,336      54,688
France TeleCom SA (c)   5,545      118,300
        
           172,988
        

 

7

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
FRANCE (continued)           
Water (0.1%)       
Veolia Environnement (c)   1,036    $ 53,449
        
           3,577,543
        
GERMANY (6.8%)           
Airlines (0.0%)       
Deutsche Lufthansa AG (c)   995      18,326
        
Apparel (0.1%)       
Adidas AG (c)   776      37,318
Puma AG Rudolf Dassler Sport (c)   48      18,648
        
           55,966
        
Auto Manufacturers (0.6%)       
DaimlerChrysler AG (c)   3,011      148,287
Porsche AG (c)   31      29,985
Volkswagen AG (b) (c)   621      43,439
Volkswagen AG (b) (c)   291      14,567
        
           236,278
        
Auto Parts & Equipment (0.1%)       
Continental AG (c)   482      49,241
        
Banks (0.9%)       
Commerzbank AG (c)   2,096      75,886
Deutsche Bank AG (c)   1,692      190,044
Deutsche Postbank AG (c)   143      10,267
Hypo Real Estate Holding AG (c)   523      31,665
Jyske Bank (c)   125      7,214
        
           315,076
        
Chemicals (0.6%)       
BASF AG (b) (c)   1,717      137,642
Bayer AG (c)   2,238      102,836
        
           240,478
        
Computers (0.0%)       
Wincor Nixdorf AG (c)   35      4,434
        
Cosmetics/Personal Care (0.0%)       
Beiersdorf AG (c)   27      4,074
        
Electric (1.1%)       
E.ON AG (b) (c)   2,113      242,808
RWE AG (c)   73      5,482
RWE AG (c)   1,475      122,489
        
           370,779
        
Energy (0.0%)       
Solarworld AG (c)   172      10,790
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
GERMANY (continued)           
Engineering & Construction (0.1%)       
Bilfinger Berger AG (b) (c)   56    $ 3,041
Hochtief AG (c)   195      10,863
Linde AG (c)   336      25,870
        
           39,774
        
Financial Services (0.1%)           
Deutsche Boerse AG (c)   374      50,958
MLP AG (c)   88      1,804
        
           52,762
        
Food (0.1%)           
Metro AG (c)   523      29,624
Suedzucker AG (c)   51      1,131
        
           30,755
        
Healthcare—Services (0.1%)           
Fresenius Medical Care AG (c)   238      27,220
        
Household Products (0.1%)           
Henkel KGaA (c)   196      22,374
        
Insurance (0.9%)           
Allianz AG (c)   1,341      211,002
Muenchener Rueckversicherungs AG (c)   681      92,916
        
           303,918
        
Iron/Steel (0.1%)           
Salzgitter AG (c)   95      7,974
ThyssenKrupp AG (c)   1,334      45,474
        
           53,448
        
Leisure (0.0%)           
TUI AG (c)   884      17,541
        
Machinery—Diversified (0.1%)           
Heidelberger Druckmaschinen (c)   243      11,129
MAN AG (c)   478      34,592
Rheinmetall AG (c)   155      10,752
        
           56,473
        
Media (0.0%)           
Premiere AG (b) (c)   428      4,169
        
Miscellaneous Manufacturing (0.6%)
Siemens AG (c)   2,797      243,012
        
Pharmaceuticals (0.1%)           
Altana AG (c)   289      16,082
Celesio AG (c)   94      8,535

 

8

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
GERMANY (continued)           
Pharmaceuticals (continued)       
Merck KGaA (b) (c)   198    $ 17,997
        
           42,614
        
Real Estate (0.0%)           
IVG Immobilien AG (c)   301      9,223
        
Retail (0.0%)           
Douglas Holding AG (c)   15      692
KarstadtQuelle AG (b) (c)   320      8,410
        
           9,102
        
Semiconductors (0.1%)       
Infineon Technologies AG (b) (c)   2,420      26,896
        
Software (0.4%)       
SAP AG (c)   735      154,419
        
Telecommunications (0.4%)       
Deutsche Telekom AG (b) (c)   9,070      145,551
        
Transportation (0.2%)       
Deutsche Post AG (c)   2,578      69,234
Frontline Ltd. (c)   250      9,334
        
           78,568
        
           2,623,261
        
GREECE (0.6%)       
Banks (0.4%)       
Alpha Bank AE (c)   1,486      37,071
EFG Eurobank Ergasias SA (c)   636      17,707
Emporiki Bank of Greece SA (b) (c)   194      6,723
National Bank of Greece SA (c)   1,425      54,997
Piraeus Bank SA (c)   914      21,699
        
           138,197
        
Beverages (0.0%)       
Coca Cola Hellenic Bottling Co. SA (c)   221      6,580
        
Building Materials (0.0%)       
Titan Cement Co. SA (c)   100      4,695
        
Electric (0.0%)       
Public Power Corp. (c)   533      12,608
        
Engineering & Construction (0.0%)       
Hellenic Technodomiki Tev SA (c)   560      5,385
        
Entertainment (0.1%)       
OPAP SA (c)   812      29,506
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
GREECE (continued)           
Financial Services (0.0%)       
Hellenic Exchanges Holding SA (c)   326    $ 5,236
        
Holding Companies—Diversified (0.0%)       
ViohalCo (c)   41      375
        
Oil & Gas (0.0%)       
Hellenic Petroleum SA (c)   122      1,618
Motor Oil Hellas Corinth Refineries SA (c)   2      53
        
           1,671
        
Retail (0.0%)       
Germanos SA (c)   36      861
        
Telecommunications (0.1%)       
Cosmote Mobile TeleCommunications SA (c)   489      11,041
Hellenic TeleCommunications Organization SA (b) (c)   1,061      23,368
        
           34,409
        
           239,523
        
HONG KONG (1.7%)           
Airlines (0.0%)       
Cathay Pacific Airways Ltd. (c)   1,000      1,750
        
Apparel (0.0%)       
Yue Yuen Industrial Holdings (c)   500      1,376
        
Banks (0.3%)       
Bank of East Asia Ltd. (c)   5,800      23,892
BOC Hong Kong Holdings Ltd. (c)   15,500      30,348
Hang Seng Bank Ltd. (c)   2,200      27,861
SunCorp. — Metway Ltd. (c)   2,184      31,324
        
           113,425
        
Chemicals (0.0%)       
Kingboard Chemical Holdings Ltd. (c)   500      1,409
        
Distribution/Wholesale (0.1%)       
Esprit Holdings Ltd. (c)   3,500      28,607
Li & Fung Ltd. (c)   8,800      17,836
        
           46,443
        
Electric (0.1%)       
CLP Holdings Ltd. (c)   5,500      32,184
HongKong Electric Holdings (c)   3,500      15,855
        
           48,039
        

 

9

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
HONG KONG (continued)           
Electrical Components & Equipment (0.0%)
Johnson Electric Holdings Ltd. (c)   500    $ 364
        
Financial Services (0.1%)           
Hong Kong Exchanges & Clearing Ltd. (c)   4,000      25,756
        
Gas (0.1%)           
Hong Kong & China Gas (c)   14,000      30,769
Xinao Gas Holdings Ltd. (c)   4,000      3,810
        
           34,579
        
Hand/Machine Tools (0.0%)           
Techtronic Industries Co. (c)   3,500      4,735
        
Holding Companies—Diversified (0.4%)
Hutchison Whampoa Ltd. (c)   8,000      73,048
MelCo International Development (c)   3,000      7,546
Swire Pacific Ltd. (c)   3,500      36,125
Wharf Holdings Ltd. (c)   3,000      10,673
        
           127,392
        
Lodging (0.0%)           
ShanGri-La Asia Ltd. (c)   2,000      3,856
        
Real Estate (0.5%)           
Cheung Kong Holdings Ltd. (c)   5,000      54,247
Hang Lung Properties Ltd. (c)   4,000      7,185
Henderson Land Development Co., Ltd. (c)   3,000      15,601
Hopewell Holdings (c)   1,000      2,822
Hysan Development Co., Ltd. (c)   1,000      2,822
Kerry Properties Ltd. (c)   500      1,708
New World Development Ltd. (c)   10,000      16,517
Shun TAK Holdings Ltd. (b) (c)   2,000      2,620
Sino Land Co. (c)   8,000      12,796
Sun Hung Kai Properties Ltd. (c)   5,000      51,042
        
           167,360
        
Real Estate Investment Trusts (0.0%)       
Link REIT(The) (b) (c)   9,500      19,028
        
Retail (0.0%)           
Giordano International Ltd. (c)   14,000      6,629
        
Semiconductors (0.0%)           
Solomon Systech International Ltd. (c)   18,000      4,556
        
Telecommunications (0.1%)           
FoxConn International Holdings Ltd. (c)   5,730      12,279
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
HONG KONG (continued)           
Telecommunications (continued)           
Hutchison TeleCommunications International Ltd. (b) (c)   3,000    $ 4,840
PCCW Ltd. (c)   8,000      5,718
        
           22,837
        
Transportation (0.0%)           
MTR Corp. (c)   6,500      15,736
        
           645,270
        
IRELAND (0.8%)           
Banks (0.4%)           
Allied Irish Banks PLC (c)   3,138      75,085
Bank of Ireland (c)   3,089      54,904
Depfa Bank PLC (c)   1,368      22,723
        
           152,712
        
Beverages (0.0%)           
C&C Group PLC (c)   1,341      11,645
        
Building Materials (0.2%)           
CRH PLC (c)   1,804      58,722
Kingspan Group PLC (c)   419      7,316
        
           66,038
        
Financial Services (0.1%)           
Irish Life & Permanent PLC (c)   1,103      26,240
        
Food (0.0%)           
GreenCore Group PLC (c)   1,424      6,710
Iaws Group PLC (c)   100      1,767
Kerry Group PLC (c)   255      5,481
        
           13,958
        
Holding Companies—Diversified (0.0%)
DCC PLC (c)   75      1,803
        
Media (0.0%)           
Independent News & Media PLC (c)   3,172      9,283
        
Pharmaceuticals (0.1%)           
Elan Corp. PLC (b) (c)   1,261      20,970
        
Retail (0.0%)           
Grafton Group PLC (b) (c)   1,055      13,290
        
Telecommunications (0.0%)           
EirCom Group PLC (c)   1,372      3,814
        
           319,753
        

 

10

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
ITALY (3.7%)           
Aerospace/Defense (0.1%)           
Finmeccanica SpA (c)   1,199    $ 26,597
        
Auto Manufacturers (0.1%)           
Fiat SpA (b) (c)   2,096      27,817
        
Auto Parts & Equipment (0.0%)           
Pirelli & C SpA (c)   6,104      5,306
        
Banks (1.3%)           
Banca Intesa SpA (c)   2,406      13,023
Banca Intesa SpA (c)   13,637      79,559
Banca Monte dei Paschi di Siena SpA (c)   2,931      17,626
Banca Popolare di Milano SCRL (c)   1,712      21,792
Banca Popolare di Verona e Novara   1,427      38,227
SCRL (c)           
Banche Popolari Unite Scpa (c)   1,344      34,798
Capitalia SpA (c)   6,037      49,444
Sanpaolo IMI SpA (c)   3,996      70,638
UniCredito Italiano SpA (c)   25,749      201,362
        
           526,469
        
Building Materials (0.0%)           
Italcementi SpA (c)   59      1,491
        
Commercial Services (0.1%)           
Autostrade SpA (c)   924      25,968
        
Electric (0.4%)           
Enel SpA (c)   14,066      120,997
Terna SpA (c)   5,635      15,019
        
           136,016
        
Entertainment (0.0%)           
Lottomatica SpA (c)   264      10,002
        
Financial Services (0.1%)           
Banca Fideuram SpA (c)   333      1,937
Mediobanca SpA (c)   1,837      35,931
        
           37,868
        
Gas (0.0%)           
Snam Rete Gas SpA (c)   4,326      19,006
        
Healthcare—Products (0.0%)           
Luxottica Group SpA (c)   321      8,700
        
Insurance (0.4%)           
Alleanza Assicurazioni SpA (c)   1,822      20,655
Assicurazioni Generali SpA (c)   3,171      115,298
Fondiaria-Sai SpA (c)   150      6,125
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
ITALY (continued)           
Insurance (continued)           
Mediolanum SpA (c)   423    $ 2,968
Unipol SpA (c)   1,368      3,977
        
           149,023
        
Media (0.1%)           
Gruppo Editoriale L’Espresso SpA (c)   10      53
Mediaset SpA (c)   2,969      34,976
Seat Pagine Gialle SpA (b) (c)   20,997      9,762
        
           44,791
        
Oil & Gas (0.7%)           
ENI SpA (c)   8,609      252,843
        
Retail (0.0%)           
Autogrill SpA (c)   224      3,450
Bulgari SpA (c)   846      9,582
        
           13,032
        
Telecommunications (0.4%)           
TeleCom Italia SpA (c)   18,538      47,839
TeleCom Italia SpA (c)   37,603      104,640
Tiscali SpA (b) (c)   1,731      5,135
        
           157,614
        
           1,442,543
        
JAPAN (23.9%)           
Advertising (0.0%)           
Dentsu, Inc. (c)   5      13,838
        
Agriculture (0.2%)           
Japan Tobacco, Inc. (c)   16      58,442
        
Airlines (0.0%)           
All Nippon Airways Co., Ltd. (c)   3,000      11,542
Japan Airlines Corp. (c)   1,000      2,509
        
           14,051
        
Apparel (0.1%)           
Asics Corp. (c)   1,000      10,217
Onward Kashiyama Co., Ltd. (c)   1,000      15,391
        
           25,608
        
Auto Manufacturers (1.9%)           
Hino Motors Ltd. (c)   1,000      5,823
Honda Motor Co., Ltd. (c)   5,200      165,202
Nissan Motor Co., Ltd. (c)   7,300      79,728
Toyota Motor Corp. (c)   9,600      501,824
        
           752,577
        

 

11

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Auto Parts & Equipment (0.4%)           
Aisin Seiki Co., Ltd. (c)   700    $ 20,832
Bridgestone Corp. (c)   2,000      38,587
Denso Corp. (c)   1,700      55,663
JTEKT Corp. (c)   400      7,737
NGK Spark Plug Co., Ltd. (c)   1,000      20,119
NOK Corp. (c)   400      11,617
Sumitomo Rubber Industries, Inc. (c)   700      7,711
Toyoda Gosei Co., Ltd. (c)   100      2,010
        
           164,276
        
Banks (3.1%)           
77 Bank Ltd. (The) (c)   1,000      6,949
Bank of Fukuoka Ltd. (The) (c)   2,000      15,218
Bank of Yokohama Ltd. (The) (c)   5,000      38,638
Chiba Bank Ltd. (The) (c)   3,000      28,061
Gunma Bank Ltd. (The) (c)   1,000      7,443
Hokuhoku Financial Group, Inc. (c)   3,000      12,521
Joyo Bank Ltd. (The) (c)   2,000      12,162
Mitsubishi UFJ Financial Group, Inc. (c)   29      406,591
Mitsui Trust Holdings, Inc. (c)   2,000      23,963
Mizuho Financial Group, Inc. (c)   32      271,435
Nishi-Nippon City Bank Ltd. (The) (c)   2,000      9,588
Resona Holdings, Inc. (b) (c)   15      47,381
Sapporo Hokuyo Holdings, Inc. (c)   1      10,562
Shinsei Bank Ltd. (c)   4,000      25,356
Shizuoka Bank Ltd. (The) (c)   2,000      21,585
Sumitomo Mitsui Financial Group, Inc. (c)   20      211,834
Sumitomo Trust & Banking Co., Ltd. (The) (c)   4,000      43,800
Suruga Bank Ltd. (c)   1,000      13,543
        
           1,206,630
        
Beverages (0.2%)           
Asahi Breweries Ltd. (c)   1,500      21,057
Ito En Ltd. (c)   300      10,969
Kirin Brewery Co., Ltd. (c)   3,000      47,202
        
           79,228
        
Building Materials (0.3%)           
Asahi Glass Co., Ltd. (c)   3,000      38,083
Daikin Industries Ltd. (c)   700      24,270
JS Group Corp. (c)   700      14,718
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Building Materials (continued)           
Matsushita Electric Works Ltd. (c)   1,000    $ 11,126
Nippon Sheet Glass Co., Ltd. (c)   2,000      11,131
Sanwa Shutter Corp. (c)   1,000      5,893
Sumitomo Osaka Cement Co., Ltd. (c)   2,000      6,160
Taiheiyo Cement Corp. (c)   4,000      14,765
        
           126,146
        
Chemicals (0.9%)           
Asahi Kasei Corp. (c)   4,000      26,163
Dainippon Ink & Chemicals, Inc. (c)   3,000      11,281
Denki Kagaku Kogyo KK (c)   1,000      4,165
Hitachi Chemical Co., Ltd. (c)   200      5,247
JSR Corp. (c)   700      17,722
Kaneka Corp. (c)   1,000      9,094
Mitsubishi Chemical Holdings Corp. (b) (c)   3,500      21,886
Mitsubishi Gas Chemical Co., Inc. (c)   1,000      11,505
Mitsui Chemicals, Inc. (c)   3,000      19,609
Nippon Shokubai Co., Ltd. (c)   1,000      12,249
Nissan Chemical Industries Ltd. (c)   1,000      12,498
Nitto Denko Corp. (c)   500      35,629
Shin-Etsu Chemical Co., Ltd. (c)   1,200      65,280
Showa Denko KK (c)   4,000      17,808
Sumitomo Chemical Co., Ltd. (c)   5,000      41,728
Tokuyama Corp. (c)   1,000      14,882
Tosoh Corp. (c)   2,000      7,977
Ube Industries Ltd. (c)   4,000      11,581
Zeon Corp. (c)   1,000      11,931
        
           358,235
        
Commercial Services (0.3%)           
Benesse Corp. (c)   100      3,452
Dai Nippon Printing Co., Ltd. (c)   2,000      30,929
Goodwill Group, Inc. (The) (c)   7      5,180
KK Davinci Advisors (c)   5      4,951
Meitec Corp. (c)   200      6,522
Park24 Co., Ltd. (c)   300      8,862
Secom Co., Ltd. (c)   1,000      47,278
TIS, Inc. (c)   200      5,597
Toppan Printing Co., Ltd. (c)   2,000      22,586
        
           135,357
        
Computers (0.2%)           
CSK Holdings Corp. (c)   200      9,132
Fujitsu Ltd. (c)   6,000      46,509

 

12

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Computers (continued)           
NET One Systems Co., Ltd. (c)   3    $ 5,597
Obic Co., Ltd. (c)   10      2,020
TDK Corp. (c)   400      30,334
        
           93,592
        
Cosmetics/Personal Care (0.2%)           
Aderans Co., Ltd. (c)   200      5,397
Kao Corp. (c)   2,000      52,360
Shiseido Co., Ltd. (c)   1,000      19,624
Uni-Charm Corp. (c)   200      11,059
        
           88,440
        
Distribution/Wholesale (0.8%)           
Hitachi High — Technologies Corp. (c)   100      3,047
Itochu Corp. (c)   5,000      44,012
Marubeni Corp. (c)   5,000      26,723
Mitsubishi Corp. (c)   4,500      90,144
Mitsui & Co., Ltd. (c)   6,000      84,848
Sojitz Corp. (b) (c)   1,800      7,119
Sumitomo Corp. (c)   3,000      39,668
Toyota Tsusho Corp. (c)   1,000      24,035
        
           319,596
        
Electric (0.8%)           
Chubu Electric Power Co., Inc. (c)   2,200      59,433
Electric Power Development Co (c)   600      22,872
Hokkaido Electric Power Co, Inc. (c)   400      9,499
Kansai Electric Power Co., Inc. (The) (c)   2,400      53,713
Kyushu Electric Power Co., Inc. (c)   1,100      25,583
Tohoku Electric Power Co., Inc. (c)   1,200      26,317
Tokyo Electric Power Co., Inc. (The) (c)   3,900      107,775
        
           305,192
        
Electrical Components & Equipment (0.9%)
Casio Computer Co., Ltd. (c)   800      15,293
Fujikura Ltd. (c)   1,000      11,041
Furukawa Electric Co., Ltd. (c)   3,000      19,428
Hitachi Ltd. (c)   11,000      72,686
Mitsubishi Electric Corp. (c)   6,000      48,105
Sanyo Electric Co., Ltd. (b) (c)   6,000      12,900
Sharp Corp. (c)   3,000      47,435
Stanley Electric Co., Ltd. (c)   300      6,204
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Electrical Components & Equipment (continued)
Sumitomo Electric Industries Ltd. (c)   2,000    $ 29,300
Toshiba Corp. (c)   10,000      65,306
Ushio, Inc. (c)   200      4,229
        
           331,927
        
Electronics (1.2%)           
Advantest Corp. (c)   300      30,685
Alps Electric Co., Ltd. (c)   700      8,753
Dainippon Screen Manufacturing Co., Ltd. (c)   1,000      9,154
Fanuc Ltd. (c)   700      62,888
Hirose Electric Co., Ltd. (c)   100      12,156
Hoya Corp. (c)   1,600      56,970
Ibiden Co., Ltd. (c)   500      24,064
Keyence Corp. (c)   100      25,520
Kyocera Corp. (c)   600      46,545
Minebea Co., Ltd. (c)   2,000      10,908
Mitsumi Electric Co., Ltd. (c)   500      5,917
Murata Manufacturing Co., Ltd. (c)   700      45,491
NEC Corp. (c)   7,000      37,341
NGK Insulators Ltd. (c)   1,000      11,711
Nippon Electric Glass Co., Ltd. (c)   1,000      20,038
Omron Corp. (c)   600      15,271
Taiyo Yuden Co., Ltd. (c)   1,000      12,693
Tokyo Seimitsu Co., Ltd. (c)   100      5,192
Yaskawa Electric Corp. (c)   1,000      11,655
Yokogawa Electric Corp. (c)   800      11,429
        
           464,381
        
Engineering & Construction (0.3%)           
Chiyoda Corp. (c)   1,000      20,463
JGC Corp. (c)   1,000      17,219
Kajima Corp. (c)   4,000      18,359
Nishimatsu Construction Co., Ltd. (c)   2,000      7,461
Obayashi Corp. (c)   3,000      20,635
Shimizu Corp. (c)   2,000      11,197
Taisei Corp. (c)   4,000      14,616
        
           109,950
        
Entertainment (0.2%)           
Nintendo Co., Ltd. (c)   400      67,221
Oriental Land Co., Ltd. (c)   100      5,631
Toho Co., Ltd. (c)   200      4,004
        
           76,856
        

 

13

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Environmental Control (0.0%)           
Kurita Water Industries Ltd. (c)   200    $ 4,110
        
Financial Services (1.0%)           
Acom Co., Ltd. (c)   180      9,770
Aeon Credit Service Co., Ltd. (c)   400      9,741
Aiful Corp. (c)   250      13,339
Credit Saison Co., Ltd. (c)   600      28,434
Daiwa Securities Group, Inc. (c)   5,000      59,589
Mitsubishi UFJ Securities Co. (c)   1,000      12,972
Nikko Cordial Corp. (c)   2,500      31,945
Nomura Holdings, Inc. (c)   5,700      107,067
ORIX Corp. (c)   270      65,895
Promise Co., Ltd. (c)   300      17,385
Shinko Securities Co., Ltd. (c)   1,000      4,237
Takefuji Corp. (c)   420      25,039
        
           385,413
        
Food (0.3%)           
Ajinomoto Co., Inc. (c)   2,000      22,173
Katokichi Co., Ltd. (c)   900      9,062
Kikkoman Corp. (c)   1,000      12,465
Meiji Dairies Corp. (b) (c)   1,000      6,984
Nichirei Corp. (c)   2,000      10,710
Nippon Meat Packers, Inc. (c)   1,000      11,596
Nisshin Seifun Group, Inc. (c)   1,000      11,162
Nissin Food Products Co., Ltd. (c)   200      7,065
Toyo Suisan Kaisha Ltd. (c)   1,000      15,668
Yakult Honsha Co., Ltd. (c)   200      5,432
        
           112,317
        
Forest Products & Paper (0.1%)           
Nippon Paper Group, Inc. (c)   4      16,361
OJI Paper Co., Ltd. (c)   3,000      17,071
        
           33,432
        
Gas (0.2%)           
Osaka Gas Co., Ltd. (c)   8,000      25,730
Tokyo Gas Co., Ltd. (c)   8,000      37,709
        
           63,439
        
Hand/Machine Tools (0.2%)           
Fuji Electric Holdings Co., Ltd. (c)   1,000      5,238
Makita Corp. (c)   200      6,308
Nidec Corp. (c)   300      21,527
OSG Corp. (c)   100      1,685
SMC Corp. (c)   200      28,339
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Hand/Machine Tools (continued)           
THK Co., Ltd. (c)   300    $ 8,960
        
           72,057
        
Healthcare—Products (0.1%)           
Terumo Corp. (c)   700      23,384
        
Home Builders (0.2%)           
Daiwa House Industry Co., Ltd. (c)   2,000      31,988
Haseko Corp. (b) (c)   1,500      5,103
Sekisui Chemical Co., Ltd. (c)   1,000      8,641
Sekisui House Ltd. (c)   2,000      27,450
        
           73,182
        
Home Furnishings (0.8%)           
Matsushita Electric Industrial Co., Ltd. (c)   7,000      147,817
Pioneer Corp. (c)   700      11,279
Sony Corp. (c)   3,400      149,932
Yamaha Corp. (c)   400      7,522
        
           316,550
        
Household Products (0.0%)           
TOTO Ltd. (c)   1,000      9,548
        
Insurance (0.6%)           
Millea Holdings, Inc. (c)   5      93,091
Mitsui Sumitomo Insurance Co., Ltd. (c)   4,000      50,182
Sompo Japan Insurance, Inc. (c)   3,000      41,873
T&D Holdings, Inc. (c)   750      60,474
        
           245,620
        
Internet (0.4%)           
eAccess Ltd. (c)   8      5,243
Index Holdings (c)   5      4,950
Matsui Securities Co., Ltd. (c)   500      4,744
Rakuten, Inc. (c)   18      10,726
SBI E*trade Securities Co., Ltd. (c)   4      5,343
SBI Holdings, Inc. (c)   31      13,709
Softbank Corp. (c)   2,400      53,824
Trend Micro, Inc. (c)   500      16,883
Yahoo! Japan Corp. (c)   45      23,853
        
           139,275
        
Iron/Steel (0.7%)           
Daido Steel Co., Ltd. (c)   1,000      7,860
JFE Holdings, Inc. (c)   1,800      76,437

 

14

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GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Iron/Steel (continued)           
Kobe Steel Ltd. (c)   8,000    $ 25,050
Nippon Steel Corp. (c)   22,000      83,383
Nisshin Steel Co., Ltd. (c)   2,000      6,440
Sumitomo Metal Industries Ltd. (c)   13,000      53,720
Tokyo Steel Manufacturing Co., Ltd. (c)   300      6,575
        
           259,465
        
Leisure (0.2%)           
Namco Bandai Holdings, Inc. (b) (c)   800      12,189
Round One Corp. (c)   1      3,574
Sankyo Co., Ltd. (c)   100      6,348
Sega Sammy Holdings, Inc. (c)   500      18,542
Shimano , Inc. (c)   100      3,059
Yamaha Motor Co., Ltd. (c)   700      18,344
        
           62,056
        
Machinery—Construction & Mining (0.2%)
Hitachi Construction Machinery Co., Ltd. (c)   400      9,652
Komatsu Ltd. (c)   3,000      59,707
        
           69,359
        
Machinery—Diversified (0.3%)           
Amada Co., Ltd. (c)   1,000      10,502
Daifuku Co., Ltd. (b) (c)   500      8,260
Ebara Corp. (c)   2,000      8,548
Japan Steel Works Ltd. (The) (c)   2,000      13,718
Kubota Corp. (c)   3,000      28,547
Sumitomo Heavy Industries Ltd. (c)   2,000      18,483
Toyota Industries Corp. (c)   600      23,723
        
           111,781
        
Media (0.0%)           
Fuji Television Network, Inc. (c)   1      2,221
        
Metal Fabricate/Hardware (0.1%)           
NSK Ltd. (c)   2,000      16,607
NTN Corp. (c)   2,000      15,847
        
           32,454
        
Mining (0.2%)           
Dowa Mining Co., Ltd. (c)   1,000      8,890
Mitsubishi Materials Corp. (c)   4,000      17,112
Mitsui Mining & Smelting Co., Ltd. (c)   2,000      11,837
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Mining (continued)           
Sumitomo Metal Mining Co., Ltd. (c)   2,000    $ 26,212
Toho Titanium Co., Ltd. (c)   41      2,220
        
           66,271
        
Miscellaneous Manufacturing (0.5%)
Amano Corp. (c)   500      7,439
Arrk Corp. (c)   200      4,714
Fuji Photo Film Co., Ltd. (c)   1,700      57,081
Ishikawajima-Harima Heavy Industries Co., Ltd. (c)   4,000      12,672
Kawasaki Heavy Industries Ltd. (c)   5,000      16,850
Konica Minolta Holdings, Inc. (c)   2,000      25,311
Mitsubishi Heavy Industries Ltd. (c)   10,000      43,213
Nikon Corp. (c)   1,000      17,498
Olympus Corp. (c)   1,000      26,747
        
           211,525
        
Office/Business Equipment (0.6%)           
Canon , Inc. (c)   3,750      183,817
Ricoh Co., Ltd. (c)   2,000      39,241
Seiko Epson Corp. (c)   500      13,617
        
           236,675
        
Oil & Gas (0.3%)           
Inpex Holdings , Inc. (b)   3      26,481
Nippon Mining Holdings, Inc. (c)   3,000      25,327
Nippon Oil Corp. (c)   5,000      36,592
Showa Shell Sekiyu KK (c)   800      9,400
TonenGeneral Sekiyu KK (c)   1,000      10,287
        
           108,087
        
Packaging & Containers (0.0%)           
Toyo Seikan Kaisha Ltd. (c)   300      5,448
        
Pharmaceuticals (1.1%)           
Astellas Pharma, Inc. (c)   1,900      69,856
Chugai Pharmaceutical Co., Ltd. (c)   1,000      20,423
Daiichi Sankyo Co., Ltd. (b) (c)   2,400      66,063
Eisai Co., Ltd. (c)   900      40,546
Kaken Pharmaceutical Co., Ltd. (c)   1,000      7,507
Kyowa Hakko Kogyo Co., Ltd. (c)   2,000      13,484
Mediceo Paltac Holdings Co., Ltd. (c)   400      7,144
Santen Pharmaceutical Co., Ltd. (c)   100      2,378
Shionogi & Co., Ltd. (c)   1,000      17,858

 

15

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Pharmaceuticals (continued)           
Suzuken Co., Ltd. (c)   200    $ 7,936
Takeda Pharmaceutical Co., Ltd. (c)   3,100      193,001
        
           446,196
        
Real Estate (0.6%)           
Daito Trust Construction Co., Ltd. (c)   200      11,097
Leopalace21 Corp. (c)   300      10,336
Mitsubishi Estate Co., Ltd. (c)   4,000      85,140
Mitsui Fudosan Co., Ltd. (c)   3,000      65,210
Sumitomo Realty & Development Co., Ltd. (c)   1,000      24,680
Tokyo Tatemono Co., Ltd. (c)   1,000      10,727
Tokyu Land Corp. (c)   2,000      15,584
        
           222,774
        
Real Estate Investment Trusts (0.1%)       
Japan Real Estate Investment Corp. (c)   2      17,823
Nippon Building Fund, Inc. (c)   2      19,382
        
           37,205
        
Retail (0.9%)           
Aeon Co., Ltd. (c)   2,100      46,144
Aoyama Trading Co., Ltd. (c)   100      3,133
Citizen Watch Co., Ltd. (c)   1,500      13,576
Daimaru, Inc. (c)   1,000      13,241
EDION Corp. (c)   100      1,989
FamilyMart Co., Ltd. (c)   300      8,652
Fast Retailing Co., Ltd. (c)   100      8,186
Isetan Co., Ltd. (c)   700      11,924
Lawson, Inc. (c)   300      10,935
Marui Co., Ltd. (c)   1,200      18,719
Mitsukoshi Ltd. (c)   2,000      9,152
Nitori Co., Ltd. (c)   150      7,301
Ryohin Keikaku Co., Ltd. (c)   100      8,224
Seven & I Holdings Co., Ltd. (c)   2,600      85,740
Shimachu Co., Ltd. (c)   300      7,845
Shimamura Co., Ltd. (c)   100      10,974
Skylark Co., Ltd. (c)   100      2,189
Takashimaya Co., Ltd. (c)   1,000      12,560
UNY Co., Ltd. (c)   1,000      14,751
USS Co., Ltd. (c)   130      8,592
Yamada Denki Co., Ltd. (c)   300      30,571
        
           334,398
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Semiconductors (0.3%)           
Elpida Memory, Inc. (b) (c)   200    $ 7,527
Rohm Co., Ltd. (c)   300      26,853
Sanken Electric Co., Ltd. (c)   1,000      12,715
Shinko Electric Industries (c)   100      2,901
Sumco Corp. (c)   200      11,413
Tokyo Electron Ltd. (c)   600      41,934
        
           103,343
        
Shipbuilding (0.0%)           
Mitsui Engineering & Shipbuilding Co., Ltd. (c)   3,000      9,195
        
Software (0.1%)           
FUJI SOFT , Inc. (c)   200      6,615
Konami Corp. (c)   400      8,834
Nomura Research Institute Ltd. (c)   100      12,373
        
           27,822
        
Storage & Warehousing (0.0%)           
Mitsubishi Logistics Corp. (c)   1,000      15,637
        
Telecommunications (0.6%)           
KDDI Corp. (c)   9      55,399
Nippon TeleGraph & Telephone Corp. (c)   17      83,018
NTT Data Corp. (c)   4      17,358
NTT DoCoMo, Inc. (c)   61      89,261
Oki Electric Industry Co., Ltd. (c)   3,000      7,070
        
           252,106
        
Textiles (0.3%)           
Kuraray Co., Ltd. (c)   1,500      16,793
Mitsubishi Rayon Co., Ltd. (c)   2,000      16,299
Nisshinbo Industries, Inc. (c)   1,000      10,944
Teijin Ltd. (c)   3,000      19,067
Toray Industries, Inc. (c)   5,000      43,399
Toyobo Co., Ltd. (c)   3,000      8,505
        
           115,007
        
Transportation (0.9%)           
Central Japan Railway Co. (c)   6      59,788
East Japan Railway Co. (c)   11      81,795
Kawasaki Kisen Kaisha Ltd. (c)   2,000      11,578
Keihin Electric Express Railway Co., Ltd. (c)   1,000      7,081
Keio Corp. (c)   1,000      6,482
Kintetsu Corp. (c)   4,000      13,343

 

16

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
JAPAN (continued)           
Transportation (continued)           
Mitsui OSK Lines Ltd. (c)   4,000    $ 27,243
Nippon Express Co., Ltd. (c)   2,000      10,823
Nippon Yusen KK (c)   4,000      26,037
Odakyu Electric Railway Co., Ltd. (c)   1,000      6,448
Tobu Railway Co., Ltd. (c)   4,000      19,082
Tokyu Corp. (c)   4,000      23,402
West Japan Railway Co. (c)   7      29,031
Yamato Holdings Co., Ltd. (c)   2,000      35,496
        
           357,629
        
Venture Capital (0.0%)           
Jafco Co., Ltd. (c)   100      6,017
        
           9,295,320
        
LUXEMBURG (0.2%)           
Iron/Steel (0.2%)           
Arcelor (c)   1,838      88,943
        
NETHERLANDS (4.6%)           
Aerospace/Defense (0.1%)           
European Aeronautic Defence and Space Co NV (c)   1,012      29,027
        
Banks (0.4%)           
ABN AMRO Holding NV (c)   5,942      162,708
        
Beverages (0.1%)           
Heineken NV (c)   711      30,122
        
Biotechnology (0.0%)           
Qiagen NV (b) (c)   447      6,054
        
Building Materials (0.0%)           
James Hardie Industries NV (c)   1,163      6,636
        
Chemicals (0.2%)           
Akzo Nobel NV (c)   999      53,804
Koninklijke DSM NV (c)   617      25,667
        
           79,471
        
Commercial Services (0.1%)           
Randstad Holdings NV (c)   109      6,386
Vedior NV (c)   716      15,025
        
           21,411
        
Computers (0.0%)           
Getronics NV (c)   680      7,303
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
NETHERLANDS (continued)           
Distribution/Wholesale (0.0%)           
Buhrmann NV (c)   228    $ 3,305
Hagemeyer NV (b) (c)   2,321      10,691
        
           13,996
        
Electronics (0.3%)           
Koninklijke Philips Electronics NV (c)   4,163      129,675
        
Financial Services (0.1%)           
Euronext NV (c)   333      31,243
        
Food (0.5%)           
Koninklijke Ahold NV (b) (c)   5,621      48,671
Royal NumiCo NV (b) (c)   644      28,883
Unilever NV (c)   5,619      127,238
        
           204,792
        
Insurance (0.8%)           
Aegon NV (c)   4,679      79,867
ING GRDoep NV (c)   6,191      243,016
        
           322,883
        
Media (0.2%)           
Reed Elsevier NV (c)   2,690      40,314
Wolters Kluwer NV (c)   1,127      26,602
        
           66,916
        
Office/Business Equipment (0.0%)           
OCE NV (c)   62      910
        
Oil & Gas (1.2%)           
Royal Dutch Shell PLC (c)   13,109      440,551
        
Oil & Gas Services (0.1%)           
FuGro NV (c)   107      4,609
SBM Offshore NV (c)   612      16,286
        
           20,895
        
Real Estate Investment Trusts (0.1%)       
Corio NV (c)   67      4,167
RodamCo Europe NV (c)   197      19,303
Wereldhave NV (c)   69      6,702
        
           30,172
        
Semiconductors (0.1%)           
ASML Holding NV (b) (c)   1,782      36,029
        
Telecommunications (0.2%)           
Royal KPN NV (c)   6,568      73,802
        

 

17

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
NETHERLANDS (continued)           
Transportation (0.1%)           
TNT NV (c)   1,478    $ 52,874
        
           1,767,470
        
NEW ZEALAND (0.1%)           
Building Materials (0.0%)           
Fletcher Building Ltd. (c)   1,431      7,974
        
Electric (0.0%)           
Contact Energy Ltd. (c)   48      208
        
Financial Services (0.0%)           
Tower Ltd. (b) (c)   683      1,431
        
Healthcare—Products (0.0%)           
Fisher & Paykel Healthcare Corp. (c)   1,642      4,316
        
Lodging (0.0%)           
Sky City Entertainment Group Ltd. (c)   68      224
        
Real Estate (0.0%)           
Kiwi Income Property Trust (c)   7,834      6,532
        
Telecommunications (0.1%)           
TeleCom Corp. of New Zealand Ltd. (c)   7,976      19,643
        
           40,328
        
NORWAY (0.8%)           
Banks (0.1%)           
DNB NOR ASA (c)   2,200      27,358
        
Chemicals (0.0%)           
Yara International ASA (c)   400      5,334
        
Engineering & Construction (0.0%)           
Aker Kvaerner ASA (c)   41      3,850
        
Environmental Control (0.0%)           
Tomra Systems ASA (c)   800      6,491
        
Food (0.1%)           
Orkla ASA (c)   750      34,731
        
Forest Products & Paper (0.0%)           
Norske Skogindustrier ASA (c)   300      4,397
        
Insurance (0.0%)           
Storebrand ASA (c)   1,000      10,326
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
NORWAY (continued)           
Oil & Gas (0.4%)           
DET Norske Oljeselskap (c)   4,240    $ 8,517
Norsk Hydro ASA (c)   2,570      68,191
SeaDrill Ltd. (c)   445      5,873
Statoil ASA (c)   2,100      59,887
        
           142,468
        
Oil & Gas Services (0.1%)           
Ocean RIG ASA (c)   1,068      7,505
Petroleum Geo-Services ASA (b) (c)   250      15,152
ProSafe ASA (c)   200      12,220
TGS Nopec Geophysical Co ASA (c)   304      5,390
        
           40,267
        
Telecommunications (0.1%)           
Tandberg ASA (c)   700      5,787
Tandberg Television ASA (b) (c)   400      6,633
Telenor ASA (c)   2,200      26,591
        
           39,011
        
Transportation (0.0%)           
Petrojarl ASA   250      1,647
        
           315,880
        
PORTUGAL (0.3%)           
Banks (0.1%)           
Banco BPI SA (c)   1,680      12,775
Banco Comercial Portugues SA (c)   8,180      23,236
Banco Espirito Santo SA (c)   348      4,690
        
           40,701
        
Building Materials (0.0%)           
Cimpor Cimentos de Portugal SA (c)   114      759
Sonae Industria SGPS SA (b) (c)   236      2,031
        
           2,790
        
Commercial Services (0.0%)           
Brisa-Auto Estradas de Portugal SA (c)   904      9,418
        
Electric (0.1%)           
Energias de Portugal SA (c)   7,398      29,094
        
Retail (0.0%)           
Sonae SGPS SA (c)   3,052      4,564
        

 

18

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
PORTUGAL (continued)           
Telecommunications (0.1%)           
Portugal TeleCom SGPS SA (c)   2,303    $ 27,790
PT Multimedia Servicos SA (c)   4      46
        
           27,836
        
           114,403
        
SINGAPORE (0.8%)           
Airlines (0.0%)           
Singapore Airlines Ltd. (c)   1,000      8,025
        
Banks (0.4%)           
DBS Group Holdings Ltd. (c)   4,000      45,712
Oversea — Chinese Banking Corp. (c)   10,000      41,719
United Overseas Bank Ltd. (c)   4,000      39,393
        
           126,824
        
Engineering & Construction (0.0%)           
Sembcorp. Industries Ltd. (c)   2,000      4,101
Singapore Technologies Engineering Ltd. (c)   3,000      5,489
        
           9,590
        
Financial Services (0.0%)           
Singapore Exchange Ltd. (c)   4,000      8,878
        
Food (0.0%)           
Olam International Ltd. (c)   5,000      4,558
        
Holding Companies—Diversified (0.0%)
Keppel Corp. Ltd. (c)   2,000      18,606
        
Media (0.0%)           
Singapore Press Holdings Ltd. (c)   7,000      18,232
        
Oil & Gas (0.0%)           
Singapore Petroleum Co., Ltd. (c)   1,000      3,198
        
Real Estate (0.2%)           
CapitaLand Ltd. (c)   5,000      14,271
City Developments Ltd. (c)   1,000      5,932
Keppel Land Ltd. (c)   2,000      5,124
UOL Group Ltd. (c)   4,000      7,247
Wing Tai Holdings Ltd. (c)   5,000      4,499
        
           37,073
        
Semiconductors (0.0%)           
Chartered SemiConductor Manufacturing Ltd. (b) (c)   7,000      6,070
STATS ChipPAC Ltd. (b) (c)   8,000      5,085
        
           11,155
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SINGAPORE (continued)           
Shipbuilding (0.0%)           
Sembcorp. Marine Ltd. (c)   4,000    $ 7,601
        
Telecommunications (0.2%)           
Singapore TeleCommunications Ltd. (c)   23,000      36,953
        
Transportation (0.0%)           
ComfortDelGro Corp. Ltd. (c)   3,000      2,903
CosCo Corp. Singapore Ltd. (c)   8,000      6,390
        
           9,293
        
           299,986
        
SPAIN (3.8%)           
Advertising (0.0%)           
Telefonica Publicidad e Informacion SA (c)   166      1,796
        
Agriculture (0.1%)           
Altadis SA (c)   1,004      47,403
        
Airlines (0.0%)           
Iberia Lineas Aereas de Espana (c)   2,795      7,210
        
Banks (1.6%)           
Banco Bilbao Vizcaya Argentaria SA (c)   11,638      239,451
Banco Popular Espanol SA (c)   3,177      47,365
Banco Santander Central Hispano SA (c)   19,815      289,511
        
           576,327
        
Biotechnology (0.0%)           
Zeltia SA (b) (c)   548      4,026
        
Commercial Services (0.1%)           
Abertis Infraestructuras SA (c)   581      13,598
Cintra Concesiones de Infraestructuras de Transporte SA (c)   1,011      13,198
        
           26,796
        
Computers (0.0%)           
Indra Sistemas SA (c)   651      12,771
        
Electric (0.7%)           
Endesa SA (c)   3,089      107,315
Iberdrola SA (c)   2,875      98,931
Union Fenosa SA (c)   389      15,060
        
           221,306
        

 

19

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SPAIN (continued)           
Electrical Components & Equipment (0.0%)
Gamesa Corp. Tecnologica SA (c)   742    $ 15,879
        
Engineering & Construction (0.2%)           
Acciona SA (c)   94      14,583
ACS, Actividades de Construccion y Servicios SA (c)   950      39,583
Fomento de Construcciones y Contratas SA (c)   96      7,294
Grupo Ferrovial SA (c)   273      20,817
Sacyr Vallehermoso SA (c)   251      8,381
        
           90,658
        
Food (0.0%)           
Ebro Puleva SA (c)   519      10,648
        
Gas (0.0%)           
Gas Natural SDG SA (c)   451      13,771
        
Insurance (0.0%)           
Corp. Mapfre SA (c)   148      2,733
        
Iron & Steel (0.0%)           
Acerinox SA (c)   886      15,363
        
Lodging (0.0%)           
NH Hoteles SA (c)   497      8,907
        
Media (0.0%)           
Antena 3 Television SA (c)   405      9,250
Promotora de Informaciones SA (c)   113      1,812
Sogecable SA (b) (c)   219      6,294
        
           17,356
        
Oil & Gas (0.3%)           
Repsol YPF SA   3,247      92,977
        
Real Estate (0.0%)           
Fadesa Inmobiliaria SA (c)   70      2,397
Inmobiliaria Colonial (c)   40      3,176
Metrovacesa SA (c)   145      13,092
        
           18,665
        
Retail (0.1%)           
Inditex SA (c)   632      26,641
        
Telecommunications (0.7%)           
Telefonica SA (c)   14,719      244,641
        
Water (0.0%)           
Sociedad General de Aguas de Barcelona SA (c)   28      777
        
           1,456,651
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWEDEN (2.3%)           
Agriculture (0.1%)           
Swedish Match AB (c)   1,400    $ 22,558
        
Auto Manufacturers (0.0%)           
Scania AB (c)   200      9,086
        
Banks (0.6%)           
Nordea Bank AB (c)   7,500      89,460
Skandinaviska Enskilda Banken AB (c)   1,800      42,888
Svenska Handelsbanken (c)   1,900      48,963
        
           181,311
        
Commercial Services (0.1%)           
Securitas AB (c)   1,200      23,021
        
Cosmetics/Personal Care (0.0%)           
Oriflame Cosmetics SA (c)   50      1,664
        
Engineering & Construction (0.1%)           
Skanska AB (c)   1,600      24,675
        
Financial Services (0.0%)           
D Carnegie AB (c)   400      7,323
OMX AB (c)   200      3,574
        
           10,897
        
Forest Products & Paper (0.1%)           
Holmen AB (c)   100      4,036
Svenska Cellulosa AB (c)   700      28,910
        
           32,946
        
Hand/Machine Tools (0.1%)           
Sandvik AB (c)   4,000      46,562
        
Healthcare—Products (0.0%)           
Elekta AB (c)   200      3,387
Getinge AB (c)   400      6,806
        
           10,193
        
Healthcare—Services (0.0%)           
Capio AB (b) (c)   100      1,795
        
Home Furnishings (0.0%)           
Electrolux AB (c)   1,100      15,873
Nobia AB (c)   45      1,462
        
           17,335
        
Household Products (0.0%)           
Husqvarna AB   1,100      13,264
        
Iron/Steel (0.0%)           
Ssab Svenskt Stal AB (c)   900      17,918
        

 

20

Table of Contents

GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWEDEN (continued)           
Machinery—Construction & Mining (0.1%)
Atlas Copco AB (c)   1,200    $ 33,427
Atlas Copco AB (c)   600      15,619
        
           49,046
        
Machinery—Diversified (0.1%)           
Volvo AB (c)   200      9,649
Volvo AB (c)   800      39,325
        
           48,974
        
Media (0.0%)           
Eniro AB (c)   800      8,414
Modern Times Group AB (c)   100      5,590
        
           14,004
        
Metal Fabricate/Hardware (0.1%)           
Assa Abloy AB (c)   1,200      20,187
SKF AB (c)   1,600      25,242
        
           45,429
        
Mining (0.0%)           
Boliden AB (c)   938      17,254
        
Miscellaneous Manufacturing (0.0%)       
Alfa Laval AB (c)   200      6,014
        
Oil & Gas (0.0%)           
Lundin Petroleum AB (b) (c)   800      9,686
        
Real Estate (0.0%)           
Castellum AB (c)   33      338
Fabege AB (c)   500      9,313
Kungsleden AB (c)   150      1,759
Wihlborgs Fastigheter AB (c)   317      5,455
        
           16,865
        
Real Estate Investment Trusts (0.0%)       
Suntec Real Estate Investment Trust (c)   8,000      6,268
        
Retail (0.3%)           
Hennes & Mauritz AB (c)   1,700      65,848
        
Software (0.0%)           
Telelogic AB (c)   2,000      4,438
        
Telecommunications (0.6%)           
Tele2 AB (c)   1,300      13,139
Telefonaktiebolaget LM Ericsson (c)   50,000      165,065
TeliaSonera AB (c)   6,000      34,043
        
           212,247
        
           909,298
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWITZERLAND (6.7%)           
Building Materials (0.2%)           
Geberit AG (b) (c)   10    $ 11,561
Holcim Ltd. (c)   736      56,438
        
           67,999
        
Chemicals (0.3%)           
Ciba Specialty Chemicals AG (c)   305      17,008
Clariant AG (b) (c)   577      8,172
Givaudan (c)   24      18,877
Lonza Group AG (c)   196      13,421
Syngenta AG (b) (c)   394      52,181
        
           109,659
        
Commercial Services (0.1%)           
Adecco SA (c)   491      29,012
SGS SA (c)   11      10,443
        
           39,455
        
Computers (0.0%)           
Logitech International SA (b) (c)   213      8,237
        
Engineering & Construction (0.2%)           
ABB Ltd. (b) (c)   6,587      85,550
        
Financial Services (1.6%)           
Credit Suisse Group (c)   4,073      227,306
UBS AG (c)   3,464      379,296
        
           606,602
        
Food (1.1%)           
Nestle SA (c)   1,358      425,870
        
Hand/Machine Tools (0.0%)           
Schindler Holding AG (c)   92      4,759
        
Healthcare—Products (0.1%)           
Nobel Biocare Holding AG (c)   94      22,287
Phonak Holding AG (c)   101      6,311
Straumann Holding AG (c)   13      3,319
Synthes, Inc. (c)   192      23,125
        
           55,042
        
Insurance (0.5%)           
Swiss Reinsurance (c)   1,158      80,816
Zurich Financial Services AG (b) (c)   493      107,960
        
           188,776
        
Leisure (0.0%)           
Kuoni Reisen Holding (b) (c)   4      2,242
        

 

21

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
SWITERLAND (continued)           
Machinery—Diversified (0.0%)           
Rieter Holding AG (c)   4    $ 1,537
SIG Holding AG (b) (c)   39      8,578
        
           10,115
        
Miscellaneous Manufacturing (0.0%)       
Sulzer AG (c)   8      5,993
        
Pharmaceuticals (2.2%)           
Novartis AG (c)   7,921      427,592
Roche Holding AG (c)   2,391      394,658
Serono SA (c)   23      15,835
        
           838,085
        
Real Estate (0.0%)           
PSP Swiss Property AG (b) (c)   66      3,410
        
Retail (0.3%)           
Compagnie Financiere Richemont AG (c)   1,682      76,875
Swatch Group AG (c)   52      1,813
Swatch Group AG (c)   139      23,431
        
           102,119
        
Semiconductors (0.0%)           
Micronas SemiConductor Hold (b) (c)   5      135
Unaxis Holding AG (b) (c)   29      8,053
        
           8,188
        
Telecommunications (0.1%)           
Kudelski SA (c)   2      48
SwissCom AG (c)   76      25,004
        
           25,052
        
Transportation (0.0%)           
Kuehne & Nagel International AG (c)   134      9,776
        
           2,596,929
        
UNITED KINGDOM (22.6%)           
Advertising (0.1%)           
Aegis Group PLC (c)   1,008      2,422
WPP Group PLC (c)   4,321      52,227
        
           54,649
        
Aerospace/Defense (0.3%)           
BAE Systems PLC (c)   11,375      77,701
Cobham PLC (c)   2,409      7,427
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Aerospace/Defense (continued)           
Meggitt PLC (c)   710    $ 4,184
Rolls-Royce Group PLC (c)   5,729      43,812
        
           133,124
        
Agriculture (0.6%)           
British American Tobacco PLC (c)   5,164      130,001
Gallaher Group PLC (c)   2,451      38,281
Imperial Tobacco Group PLC (c)   2,368      73,027
        
           241,309
        
Airlines (0.0%)           
British Airways PLC (b) (c)   2,433      15,411
        
Apparel (0.0%)           
Burberry Group PLC (c)   1,042      8,276
        
Auto Parts & Equipment (0.0%)           
GKN PLC (c)   3,145      15,848
        
Banks (4.3%)           
Barclays PLC (c)   21,532      244,066
HBOS PLC (c)   12,748      221,206
HSBC Holdings PLC (c)   38,054      669,496
Lloyds TSB Group PLC (c)   18,859      184,724
Royal Bank of Scotland Group PLC (c)   10,651      349,583
        
           1,669,075
        
Beverages (0.6%)           
Diageo PLC (c)   9,509      159,698
SABMiller PLC (c)   2,819      50,743
Scottish & Newcastle PLC (c)   3,180      29,939
        
           240,380
        
Building Materials (0.1%)           
Hanson PLC (c)   2,794      33,910
Travis Perkins PLC (c)   226      6,316
        
           40,226
        
Chemicals (0.2%)           
BOC Group PLC (c)   1,569      45,867
Imperial Chemical Industries PLC (c)   4,268      28,573
Johnson Matthey PLC (c)   566      13,865
        
           88,305
        
Commercial Services (0.3%)           
AgGreko PLC (c)   5      27
Brambles Industries PLC (c)   2,892      22,983

 

22

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Commercial Services (continued)           
Bunzl PLC (c)   789    $ 8,992
Capita Group PLC (c)   2,702      23,035
Davis Service Group PLC (c)   25      218
De La Rue PLC (c)   249      2,512
Group 4 Securicor PLC (c)   2,950      9,135
Hays PLC (c)   6,209      15,478
Intertek Group PLC (c)   203      2,623
Michael Page International PLC (c)   447      2,894
Rank Group PLC (c)   3,105      11,439
Rentokil Initial PLC (c)   7,761      22,367
Serco Group PLC (c)   795      4,698
        
           126,401
        
Computers (0.0%)           
LogicaCMG PLC (c)   2,457      7,918
        
Distribution/Wholesale (0.2%)           
Inchcape PLC (c)   1,548      13,498
Wolseley PLC (c)   2,194      48,294
        
           61,792
        
Electric (0.6%)           
International Power PLC (c)   5,716      30,018
National Grid PLC (c)   8,722      94,231
Scottish & Southern Energy PLC (c)   2,682      57,034
Scottish Power PLC (c)   5,403      58,196
        
           239,479
        
Electronics (0.0%)           
ElectroComponents PLC (c)   504      2,155
        
Engineering & Construction (0.2%)           
Amec PLC (c)   1,521      8,938
BAA PLC (c)   3,945      68,196
Balfour Beatty PLC (c)   734      4,652
        
           81,786
        
Entertainment (0.2%)           
EMI Group PLC (c)   3,302      18,510
Ladbrokes PLC (c)   2,525      19,034
PartyGaming PLC (c)   1,672      3,575
Sportingbet PLC (c)   832      6,049
William Hill PLC (c)   1,669      19,320
        
           66,488
        
Financial Services (0.4%)           
Amvescap PLC (c)   2,787      25,495
Cattles PLC (c)   1,790      10,881
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Financial Services (continued)           
Close Brothers Group PLC (c)   200    $ 3,363
Collins Stewart Tullett PLC (c)   360      5,043
ICAP PLC (c)   2,057      18,903
Investec PLC (c)   136      6,473
London Stock Exchange Group PLC (c)   861      18,091
Man Group PLC (c)   1,070      50,366
Provident Financial PLC (c)   458      5,199
Schroders PLC (c)   195      3,636
        
           147,450
        
Food (1.0%)           
Cadbury Schweppes PLC (c)   7,499      72,206
J Sainsbury PLC (c)   5,408      33,396
Tate & Lyle PLC (c)   2,063      23,077
Tesco PLC (c)   25,807      159,290
Unilever PLC (c)   3,945      88,557
        
           376,526
        
Food Service (0.1%)           
Compass Group PLC (c)   6,224      30,151
        
Gas (0.2%)           
Centrica PLC (c)   13,076      68,848
        
Healthcare—Products (0.1%)           
Smith & Nephew PLC (c)   3,667      28,139
        
Holding Companies—Diversified (0.0%)
Tomkins PLC (c)   1,848      9,821
        
Home Builders (0.2%)           
Barratt Developments PLC (c)   1,052      18,401
Bellway PLC (c)   165      3,534
Berkeley Group Holdings PLC (b) (c)   197      4,414
Bovis Homes Group PLC (c)   113      1,675
George Wimpey PLC (c)   1,694      14,224
Persimmon PLC (c)   1,040      23,700
Taylor Woodrow PLC (c)   2,530      15,601
        
           81,549
        
Household Products (0.2%)           
Reckitt Benckiser PLC (c)   1,969      73,462
        
Insurance (1.0%)           
Aviva PLC (c)   7,789      110,224
Friends Provident PLC (c)   7,036      23,263
Legal & General Group PLC (c)   23,819      56,373

 

23

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Insurance (continued)           
Old Mutual PLC (c)   18,963    $ 57,254
Prudential PLC (c)   8,498      96,084
Resolution PLC (c)   306      3,792
Royal & Sun Alliance Insurance Group (c)   11,057      27,486
        
           374,476
        
Iron/Steel (0.1%)           
Corus Group PLC (c)   3,017      25,401
        
Leisure (0.1%)           
Carnival PLC (c)   642      26,100
First Choice Holidays PLC (c)   521      2,200
        
           28,300
        
Lodging (0.1%)           
InterContinental Hotels Group PLC (c)   1,479      25,832
        
Media (0.7%)           
British Sky Broadcasting PLC (c)   4,436      46,873
Daily Mail & General Trust (c)   644      7,296
Emap PLC (c)   1,161      18,247
ITV PLC (c)   15,452      30,818
Pearson PLC (c)   3,043      41,376
Reed Elsevier PLC (c)   4,767      48,046
Reuters Group PLC (c)   5,179      36,803
Trinity Mirror PLC (c)   1,456      13,123
United Business Media PLC (c)   1,199      14,336
Yell Group PLC (c)   2,113      19,967
        
           276,885
        
Mining (1.5%)           
Anglo American PLC (c)   4,705      191,933
BHP Billiton PLC (c)   8,147      158,487
Rio Tinto PLC (c)   3,545      186,645
Xstrata PLC (c)   1,415      53,852
        
           590,917
        
Miscellaneous Manufacturing (0.2%)       
BBA Group PLC (c)   2,447      12,004
Charter PLC (b) (c)   225      3,359
Cookson Group PLC (b) (c)   965      9,357
IMI PLC (c)   699      6,445
Invensys PLC (b) (c)   8,007      2,846
Smiths Group PLC (c)   2,169      35,699
        
           69,710
        
Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Oil & Gas (3.3%)           
BG Group PLC (c)   11,688    $ 155,992
BP PLC (c)   69,532      806,120
Royal Dutch Shell PLC (c)   9,155      319,746
        
           1,281,858
        
Oil & Gas Services (0.0%)           
Acergy SA (b) (c)   500      7,644
        
Packaging & Containers (0.1%)           
Rexam PLC (c)   2,351      22,897
        
Pharmaceuticals (2.3%)           
Alliance UniChem PLC (c)   587      11,080
AstraZeneca PLC (c)   5,287      317,880
GlaxoSmithKline PLC (c)   19,587      546,559
        
           875,519
        
Real Estate (0.4%)           
British Land Co PLC (c)   1,946      45,383
Brixton PLC (c)   353      3,123
Great Portland Estates PLC (c)   12      111
Hammerson PLC (c)   1,177      25,727
Land Securities Group PLC (c)   1,716      56,857
Liberty International PLC (c)   616      12,116
Slough Estates PLC (c)   1,521      17,173
        
           160,490
        
Retail (0.9%)           
Boots Group PLC (c)   1,972      28,029
Carphone Warehouse Group PLC (c)   555      3,251
DSG International PLC (c)   7,338      25,885
Enterprise Inns PLC (c)   1,378      24,132
GUS PLC (c)   3,209      57,274
HMV Group PLC (c)   2,505      7,942
Kesa Electricals PLC (c)   2,599      13,865
Kingfisher PLC (c)   8,973      39,546
Marks & Spencer Group PLC (c)   6,038      65,476
Mitchells & Butlers PLC (c)   2,145      20,418
Next PLC (c)   968      29,169
Punch Taverns PLC (c)   1,017      16,432
Signet Group PLC (c)   3,434      6,089
Whitbread PLC (c)   939      20,225
        
           357,733
        
Semiconductors (0.0%)           
ARM Holdings PLC (c)   5,645      11,791
CSR PLC (c)   303      7,045
        
           18,836
        

 

24

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

Shares or
Principal Amount		    Value
            
COMMON STOCKS (continued)           
UNITED KINGDOM (continued)           
Software (0.1%)           
Misys PLC (c)   2,470    $ 9,802
Sage Group PLC (c)   3,357      14,310
        
           24,112
        
Telecommunications (1.5%)           
BT Group PLC (c)   28,147      124,341
Cable & Wireless PLC (c)   9,602      20,389
Vodafone Group PLC (c)   203,210      432,456
        
           577,186
        
Transportation (0.1%)           
Arriva PLC (c)   1,121      12,344
Associated British Ports Holdings PLC (c)   1,336      22,386
FirstGroup PLC (c)   707      6,120
National Express Group PLC (c)   160      2,621
StageCoach Group PLC (c)   1,307      2,782
        
           46,253
        
Venture Capital (0.1%)           
3i Group PLC (c)   1,597      26,585
        
Water (0.2%)           
Kelda Group PLC (c)   1,585      22,401
Severn Trent PLC (c)   1,388      30,007
United Utilities PLC (c)   3,313      39,228
        
           91,636
        
           8,790,838
        
Total Common Stocks          37,932,235
        
MUTUAL FUND (2.1%)           
UNITED STATES (2.1%)           
iShares MSCI EAFE Index Fund   12,740      833,069
        
Total Mutual Fund          833,069
        
Shares or
Principal Amount		    Value
            
PREFERRED STOCK (0.0%)           
GERMANY (0.0%)           
Media (0.0%)           
ProSiebenSat.1 Media AG   162    $ 4,043
        
Total Preferred Stock          4,043
        
RIGHTS (0.0%)           
GERMANY (0.0%)           
Engineering & Construction (0.0%)       
Linde AG (b)   336      1,298
        
UNITED KINGDOM (0.0%)           
Miscellaneous Manufacturing (0.0%)       
Invensys PLC (b)   3,202      240
        
Total Rights          1,538
        
CASH EQUIVALENTS (0.0%)           
Investments in repurchase agreements (Collateralized by U.S. Government Agency Mortgages, in a joint trading account at 5.17%, dated 06/30/06, due 07/03/06, repurchase price $772)   772      772
        
Total Cash Equivalents          772
        
Total Investments
(Cost $40,778,925) (a) — 99.8%		          38,771,657
Other assets in excess of
liabilities — 0.2%		          67,148
        
NET ASSETS — 100.0%        $ 38,838,805
        

 

 

(a) See notes to financial statements for tax unrealized appreciation (depreciation) of securities.

 

(b) Denotes a non-income producing security.

 

(c) Fair Valued Security

 

ADR American Depositary Receipt

 

25

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Investments — June 30, 2006 (Unaudited) (continued)

 

At June 30, 2006, the Fund’s open forward foreign currency contracts were as follows:

 

Currency      Delivery
Date		      Contract
Value		      Market
Value		      Unrealized
Appreciation/
(Depreciation)		  
Short Contracts:                                    

Swiss Franc

      07/03/06      $ 4,966      $ 5,075      $ (109 )

Danish Kroner

      07/03/06        622        635        (13 )

Euro

      07/03/06        29,099        29,677        (578 )

Hong Kong Dollar

      07/03/06        1,455        1,455        0  

Japanese Yen

      07/03/06        23,764        24,133        (369 )

Norwegian Krone

      07/03/06        808        820        (12 )

Swedish Krone

      07/03/06        2,755        2,822        (67 )

Singapore Dollars

      07/03/06        814        822        (8 )
Total Short Contracts             $ 64,283      $ 65,439      $ (1,156 )

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

 

Assets:

         

Investments, at value (cost $40,778,153)

    $ 38,770,885  

Repurchase agreements, at cost and value

      772  
    

Total Investments

      38,771,657  
    

Foreign currency, at value (cost $91,113)

      92,398  

Interest and dividends receivable

      61,230  

Receivable for capital shares issued

      38,649  

Reclaims receivable

      8,509  
    

Total Assets

      38,972,443  
    

Liabilities:

         

Payable for investments purchased

      110,553  

Unrealized depreciation on forward foreign currency contracts

      1,156  

Payable to adviser

      9,085  

Accrued expenses and other payables:

         

Investment advisory fees

      8,289  

Fund administration and transfer agent fees

      2,502  

Distribution fees

      100  

Administrative servicing fees

      99  

Other

      1,854  
    

Total Liabilities

      133,638  
    

Net Assets

    $ 38,838,805  
    

Represented by:

         

Capital

    $ 40,646,666  

Accumulated net investment income (loss)

      141,980  

Accumulated net realized gains (losses) from investment and foreign currency transactions

      57,455  

Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign Currencies

      (2,007,296 )
    

Net Assets

    $ 38,838,805  
    

Net Assets:

         

Class II Shares

    $ 958  

Class VI Shares

      86,441  

Class VII Shares

      957  

Class VIII Shares

      413,578  

Class ID Shares

      38,336,871  
    

Total

    $ 38,838,805  
    

Shares outstanding (unlimited number of shares authorized):

         

Class II Shares

      100  

Class VI Shares

      9,061  

Class VII Shares

      100  

Class VIII Shares

      43,363  

Class ID Shares

      4,015,309  
    

Total

      4,067,933  
    

Net asset value and offering price per share:*

         

Class II Shares

    $ 9.55 (a)

Class VI Shares

    $ 9.54  

Class VII Shares

    $ 9.55 (a)

Class VIII Shares

    $ 9.54  

Class ID Shares

    $ 9.55  

 

Statement of Operations

For the period ended June 30, 2006 (Unaudited) (b)

 

Investment Income:

         

Interest income

    $ 22,313  

Dividend income (net of foreign withholding tax of $42,115)

      284,728  
    

Total Income

      307,041  
    

Expenses:

         

Investment advisory fees

      17,414  

Fund administration and transfer agent fees

      4,663  

Distribution fees Class II Shares

      1  

Distribution fees Class VI Shares

      25  

Distribution fees Class VII Shares

      1  

Distribution fees Class VIII Shares

      116  

Administrative servicing fees Class VI Shares

      25  

Administrative servicing fees Class VII Shares

      1  

Administrative servicing fees Class VIII Shares

      73  

Professional fees

      2,162  

Trustee fees

      74  

Other

      400  
    

Total expenses before waived or reimbursed expenses

      24,955  

Expenses waived or reimbursed

      (849 )
    

Total Expenses

      24,106  
    

Net Investment Income (Loss)

      282,935  
    

REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

         

Net realized gains (losses) on investment transactions

      (21,810 )

Net realized gains (losses) on foreign currency transactions

      79,265  
    

Net realized gains (losses) on investment and foreign currency transactions

      57,455  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

      (2,007,296 )
    

Net realized/unrealized gains (losses) on investments and foreign currencies

      (1,949,841 )
    

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ (1,666,906 )
    

 

 

 

* Not subject to a front-end sales charge.
(a) Due to rounding, Net Assets divided by shares outstanding does not equal the NAV.
(b) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

GVIT INTERNATIONAL INDEX FUND

 

Statement of Changes in Net Assets

 

       Period Ended
June 30, 2006(a)
  
       (Unaudited)  

From Investment Activities:

           

Operations:

           

Net investment income (loss)

      $ 282,935  

Net realized gains (losses) on investment and foreign currency transactions

        57,455  

Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign currencies

        (2,007,296 )
      

Change in net assets resulting from operations

        (1,666,906 )
      

Distributions to Class II shareholders from:

           

Net investment income

        (3 )

Distributions to Class VI shareholders from:

           

Net investment income

        (274 )

Distributions to Class VII shareholders from:

           

Net investment income

        (2 )

Distributions to Class VIII shareholders from:

           

Net investment income

        (1,057 )

Distributions to Class ID shareholders from:

           

Net investment income

        (139,619 )
      

Change in net assets from shareholder distributions

        (140,955 )
      

Change in net assets from capital transactions

        40,646,666  
      

Change in net assets

        38,838,805  

Net Assets:

           

Beginning of period

        —  
      

End of period

      $ 38,838,805  
      

Accumulated net investment income (loss)

      $ 141,980  
      

CAPITAL TRANSACTIONS:

           

Class II Shares

           

Proceeds from shares issued

      $ 1,000  

Dividends reinvested

        3  
      
         1,003  
      

Class VI Shares

           

Proceeds from shares issued

        89,924  

Dividends reinvested

        274  

Cost of shares redeemed

        (1,722 )
      
         88,476  
      

Class VII Shares

           

Proceeds from shares issued

        1,000  

Dividends reinvested

        2  
      
         1,002  
      

Class VIII Shares

           

Proceeds from shares issued

        481,004  

Dividends reinvested

        1,057  

Cost of shares redeemed

        (67,378 )
      
         414,683  
      

Class ID Shares

           

Proceeds from shares issued

        40,001,883  

Dividends reinvested

        139,619  
      
         40,141,502  
      

Change in net assets from capital transactions

      $ 40,646,666  
      
(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

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GVIT INTERNATIONAL INDEX FUND

 

Statement of Changes in Net Assets (continued)

 

       Period Ended
June 30, 2006(a)
  
       (Unaudited)  

SHARE TRANSACTIONS:

         

Class II Shares

         

Issued

      100  

Reinvested

      — (b)
      
       100  
      

Class VI Shares

         

Issued

      9,216  

Reinvested

      30  

Redeemed

      (185 )
      
       9,061  
      

Class VII Shares

         

Issued

      100  

Reinvested

      — (b)
      
       100  
      

Class VIII Shares

         

Issued

      50,838  

Reinvested

      115  

Redeemed

      (7,590 )
      
       43,363  
      

Class ID Shares

         

Issued

      4,000,100  

Reinvested

      15,209  
      
       4,015,309  
      

 

 

(a) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(b) Amount is less than 1 share.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

FINANCIAL HIGHLIGHTS

 

Selected Data for Each Share of Capital Outstanding

 

GVIT International Index Fund

 

        Investment Activities
     Distributions
               Ratios/Supplemental Data
    Net Asset
Value,
Beginning
of Period		   Net
Investment
Income
(Loss)		   Net
Realized
and
Unrealized
Gains
(Losses) on
Investments		     Total from
Investment
Activities		     Net
Investment
Income		     Total
Distributions		     Net
Asset
Value,
End of
Period		   Total
Return		     Net
Assets at
End of
Period
(000s)		   Ratio of
Expenses
to Average
Net Assets		     Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Ratio of Net
Investment
Income (Loss)
(Prior to
Reimbursements)
to Average
Net Assets(a)		     Portfolio
Turnover(b)

Class II Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(c)

   $ 10.00   0.06   (0.48 )   (0.42 )   (0.03 )   (0.03 )   $ 9.55   (4.19% )(d)   $ 1   0.74% (e)   3.99% (e)   0.82% (e)   3.91% (e)   2.45%

Class VI Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(c)(f)

   $ 10.00   0.04   (0.47 )   (0.43 )   (0.03 )   (0.03 )   $ 9.54   (4.28% )(d)   $ 86   0.83% (e)   2.66% (e)   0.83% (e)   2.66% (e)   2.45%

Class VII Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(c)(f)

   $ 10.00   0.06   (0.49 )   (0.43 )   (0.02 )   (0.02 )   $ 9.55   (4.25% )(d)   $ 1   1.15% (e)   3.65% (e)   1.18% (e)   3.58% (e)   2.45%

Class VIII Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(c)(f)

   $ 10.00   0.03   (0.46 )   (0.43 )   (0.03 )   (0.03 )   $ 9.54   (4.28% )(d)   $ 414   0.95% (e)   2.14% (e)   0.95% (e)   2.14% (e)   2.45%

Class ID Shares

                                                                                

Period Ended June 30, 2006 (Unaudited)(c)

   $ 10.00   0.07   (0.49 )   (0.42 )   (0.03 )   (0.03 )   $ 9.55   (4.14% )(d)   $ 38,337   0.37% (e)   4.40% (e)   0.38% (e)   4.39% (e)   2.45%

 

(a) During the period, certain fees were waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated.

 

(b) Portfolio turnover is calculated on the basis of the Fund as whole without distinguishing among the classes of shares.

 

(c) For the period from May 1, 2006 (commencement of operations) through June 30, 2006.

 

(d) Not annualized.

 

(e) Annualized.

 

(f) Net investment income (loss) is calculated based on average shares outstanding during the period.

 

See notes to financial statements.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS

 

June 30, 2006 (Unaudited)

 

1. Organization

 

Gartmore Variable Insurance Trust (“GVIT” or the “Trust”) is an open-end management investment company, organized under the laws of Delaware by an amended and restated Agreement and Declaration of Trust, dated October 28, 2004, as amended to date. The Trust, originally created under the laws of Massachusetts as a Massachusetts business trust pursuant to a Declaration of Trust dated, as of June 30, 1981, and as subsequently amended, redomesticated as a Delaware Statutory Trust after the close of trading on April 29, 2005, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The redomestication was a change in statutory status and did not affect the operations of the Trust. As of June 30, 2006, the Trust had authorized an unlimited number of shares of beneficial interest, without par value (“shares”). The Trust currently offers shares to life insurance company separate accounts to fund the benefits under variable life insurance or annuity policies. To date, only the separate accounts of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company (collectively, “Nationwide”) have purchased shares of the Trust’s series. The Trust currently operates thirty-six (36) separate series, or mutual funds, each with its own investment objectives and strategies. This report contains the financial statements and financial highlights of the GVIT International Index Fund (the “Fund”).

 

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into Indemnification Agreements with the Trust’s trustees and certain officers covering similar liabilities. Trust Officers receive no compensation from the Trust for serving as the Trust’s Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. Based on experience, however, the Trust expects that risk of loss to be remote.

 

2. Summary of Significant Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

 

(a) Security Valuation

 

Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time). Equity securities are valued at the last quoted sale price or, if there is no sale price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees. Securities traded on NASDAQ are valued at the NASDAQ official closing price. Prices are taken from the primary market or exchange in which each security trades.

 

Most securities listed on a foreign exchange are valued either at fair value (see description below) or at the last sale price at the close of the exchange on which the security is principally traded. Foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.

 

Securities for which market quotations are not readily available, or for which an independent pricing service does not provide a value or provides a value that does not represent fair value in the judgment of the Fund’s investment adviser or designee, are valued at fair value under procedures approved by the Trust’s Board of Trustees. The “Fair Value” of these securities is determined in good faith by taking into account relevant factors and surrounding circumstances. Methods utilized to obtain a “Fair Value” may include the following non-exclusive list of acceptable methods: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a consolidation of the methods. The Gartmore Fair Value Committee considers a non-exclusive list of factors to arrive at the appropriate method upon determining “Fair Value.” For example, fair value determinations are required for securities whose value is affected by

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

a “significant” event that materially affects the value of a domestic or foreign security which occurs subsequent to the time of the close of the principal market on which such domestic or foreign security trades and before the Valuation Time (i.e., a “subsequent event”). Typically, this will involve events occurring after the close of a foreign market on which a security trades and before the next Valuation Time.

 

The Fund values foreign securities at fair value in the circumstances described below. Generally, trading in foreign securities markets is completed each day at various times prior to the Valuation Time. Due to the time differences between the closings of the relevant foreign securities exchanges and the Valuation Time for the Fund, the Fund will fair value its foreign investments when it is determined that the market quotations for the foreign investments either are not readily available or are unreliable and, therefore, do not represent fair value. When the fair value prices are utilized, these prices will attempt to reflect the impact of the U.S. financial markets’ perceptions and trading activities on the Fund’s foreign investments since the last closing prices of the foreign investments were calculated on their primary foreign securities markets or exchanges. For these purposes, the Board of Trustees of the Trust has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations are unreliable, and may trigger fair value pricing for certain securities. Consequently, fair valuation of portfolio securities may occur on a daily basis.

 

(b) Repurchase Agreements

 

The Fund may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a “primary dealer” (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller under a repurchase agreement is required to maintain the value of the collateral held pursuant to the agreement at a market value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Fund’s custodian or another qualified sub-custodian or in the Federal Reserve/Treasury book-entry system. If the counterparty defaults and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. The Fund may transfer uninvested cash balances into a pooled cash account. These balances are invested in one or more repurchase agreements, with the counterparties of Credit Suisse First Boston, Lehman Brothers, and Nomura Securities, which are fully collateralized by U.S. Government Agency Mortgages.

 

(c) Foreign Currency Transactions

 

The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. The Fund may enter into foreign currency contracts in connection with purchases or sales of securities denominated in a foreign currency. Purchases and sales of securities, and income and expenses, are translated at the prevailing rate of exchange on the respective date of these transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. These fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies.

 

(d) Forward Foreign Currency Contracts

 

The Fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward foreign currency contracts are valued at the current cost of covering these contracts, as provided by an independent pricing service approved by the Board of Trustees. The forward foreign currency contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date.

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

(e) Risks Associated with Foreign Securities and Currencies

 

Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws and restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments, which could adversely affect investments in those countries.

 

Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers of industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.

 

(f) Futures Contracts

 

The Fund may invest in financial futures contracts (“futures contracts”) for the purpose of hedging its existing portfolio securities or securities that the Fund intends to purchase against fluctuations in value caused by changes in prevailing market interest rates or prices. Futures contracts may also be entered into for non-hedging purposes.

 

Upon entering into a futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made each day, depending on the daily fluctuations in the fair value/market value of the underlying assets. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts are valued daily at their last quoted sale price.

 

A “sale” of a futures contract means the creation of a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A “purchase” of a futures contract means the creation of a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future.

 

Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions for hedging purposes involves the risk if imperfect correlation in movements in the price of futures contracts, interest rates, and the value of the underlying hedged assets.

 

(g) Written Options Contracts

 

The Fund may write options contracts. A written option obligates the Fund to deliver (written call) or to receive (written put) a specified quantity of an underlying asset at the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. Options traded on an exchange are valued at the last quoted sale price, or in the absence of a sale, the bid price provided by an independent pricing service approved by the Board of Trustees. Non-exchange traded options are valued using dealer supplied quotes.

 

(h) Security Transactions and Investment Income

 

Security transactions are accounted for on the date the security is purchased or sold (“trade date”). Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date.

 

(i) Securities Lending

 

To generate additional income, the Fund may lend their respective portfolio securities, up to 33 1/3% of the Fund, to brokers, dealers and other financial institutions provided that (1) the borrower delivers cash or securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (2) at all times thereafter shall require the borrower to mark-to-market the collateral on a daily basis so that the market value of such collateral does not fall below 100% of the value of securities loaned. The Fund receives payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of cash collateral. There may be risks of delay in recovery of the securities should the borrower of the securities fail financially. Loans will be made, however, only to borrowers deemed by the Fund’s investment adviser to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in judgment of the adviser, the consideration which can be earned currently from these securities loans justifies the attendant risks. Loans are subject to termination by the Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. JPMorgan Chase Bank serves as custodian for the securities lending program of the Fund. JPMorgan Chase Bank receives a fee based on the value of the collateral received from borrowers. The Fund did not have securities on loan as of June 30, 2006.

 

(j) Distributions to Shareholders

 

The Fund’s dividends from net investment income, if any, are declared and paid quarterly. The Fund’s distributable net realized capital gains, if any, are declared and distributed at least annually.

 

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either permanent or temporary in nature. In accordance with the American Institute of Certified Public Accountants Statement of Position 93-2, permanent differences (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. These reclassifications have no effect upon the net asset value of the Fund. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, these distributions are reported as distributions of paid-in-capital.

 

(k) Federal Income Taxes

 

It is the policy of the Fund to qualify or to continue to qualify as a “regulated investment company” by complying with the provisions available to certain investment companies, as defined in applicable sections of the U.S. Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes.

 

As of June 30, 2006, the tax cost of securities and the breakdown of unrealized appreciation (depreciation) for the Fund was as follows:

 

Tax Cost of
Securities
   Unrealized
Appreciation
   Unrealized
Depreciation
  

Net Unrealized

Appreciation

(Depreciation)*

$40,793,160   $343,460   $(2,364,963)   $(2,021,503)

 

* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales.

 

(l) Allocation of Expenses, Income, and Gains and Losses

 

Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionately among various or all funds within the Trust. The method used by the Fund for allocating income, fund level expenses, and realized and unrealized gains or losses is based on the fair value of shares outstanding relative to net assets. Under this method, each class of shares participates based on the total net asset value of that class’s shares in proportion to the total net assets of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that class.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

3. Transactions with Affiliates

 

Under the terms of the Trust’s Investment Advisory Agreement, Gartmore Mutual Fund Capital Trust (“GMF”) manages the investment of the assets and supervises the daily business affairs of the Fund. GMF is a wholly-owned subsidiary of Nationwide Corporation. All of the common stock of Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), each of which is a mutual company owned by the mutual company’s policyholders. In addition, GMF provides investment management evaluation services in initially selecting and monitoring, on an ongoing basis, the performance of the subadviser, for the Fund that GMF advises. Fund Asset Management, L.P. (the “subadviser”), manages all of the Fund’s investments and has the responsibility for making all investment decisions for the Fund. Under the terms of the Investment Advisory Agreement, the Fund pays the Fund’s adviser an investment advisory fee based on the Fund’s average daily net assets. From such fees, pursuant to the subadvisory agreements, the adviser pays fees to the subadviser. Additional information regarding investment advisory fees and subadvisory fees for GMF and the subadviser is as follows for the period ended June 30, 2006:

 

Fee Schedule           Total
Fees		      Fees
Retained		      Paid to
Sub-adviser

$0 up to $1.5 billion

           0.27%      0.160%      0.110%

$1.5 billion up to $3 billion

           0.26%      0.175%      0.085%

$3 billion or more

           0.25%      0.175%      0.075%

 

GMF and the Fund have entered into a written contract (“Expense Limitation Agreement”) that limits operating expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses, short sale dividend expenses, Rule 12b-1 fees, and administrative service fees) from exceeding 0.37% until at least May 1, 2007.

 

GMF may request and receive reimbursement from the Fund of the advisory fees waived and other expenses reimbursed by GMF, respectively, pursuant to the Expense Limitation Agreement at a later date not to exceed three years from the fiscal year in which the corresponding reimbursement to the Fund was made, (as described below), if the Fund has reached a sufficient asset size to permit reimbursement to be made without causing the total annual operating expense ratio of the Fund to exceed the limits set forth above. No reimbursement will be made unless: (i) the Fund’s assets exceed $100 million; (ii) the total annual expense ratio of the Class making such reimbursement is less than the limit set forth above; and (iii) the payment of such reimbursement is approved by the Board of Trustees on a quarterly basis. Except as provided for in the Expense Limitation Agreement, reimbursement of amounts previously waived or assumed by GMF is not permitted.

 

As of the period ended June 30, 2006, the cumulative potential reimbursements for all classes of the Fund, based on reimbursements which expire within three years from the fiscal year in which the corresponding reimbursement to the Fund was made for expenses reimbursed by GMF, would be:

 

   

Period ended
June 30, 2006

    
   

$849

    

 

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NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

Under the terms of a Fund Administration and Transfer Agency Agreement, Gartmore SA Capital Trust (“GSA”) provides the Fund with various administrative and accounting services, and Gartmore Investors Services, Inc. (“GISI”), an indirect subsidiary of GSA, serves as Transfer and Dividend Disbursing Agent for the Fund. The fees for the services provided under this Agreement are calculated based on the Trust’s average daily net assets according to the fee schedule below. The fees are then allocated proportionately among all funds within the Trust in relation to the average daily net assets of each fund and are paid to GSA. GSA pays GISI from these fees for GISI’s services.

 

Combined Fee Schedule*

Up to $1 billion

    0.15%

$1 billion up to $3 billion

    0.10%

$3 billion up to $8 billion

    0.05%

$8 billion up to $10 billion

    0.04%

$10 billion up to $12 billion

    0.02%

$12 billion or more

    0.01%

 

* The assets of the Gartmore GVIT Investor Destinations Aggressive Fund, the Gartmore GVIT Investor Destinations Moderately Aggressive Fund, the Gartmore GVIT Investor Destinations Moderate Fund, the Gartmore GVIT Investor Destinations Moderately Conservative Fund, and the Gartmore GVIT Investor Destinations Conservative Fund (collectively, the “Investor Destinations Funds”) are excluded from the Trust asset level amount in order to calculate this asset-based fee. The Investor Destinations Funds do not pay any part of this fee.

 

GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. (“BISYS”), pursuant to which BISYS provides sub-administration and sub-transfer agency services, respectively, to the Fund.

 

Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, Gartmore Distribution Services, Inc. (“GDSI”), the Fund’s Distributor, is compensated by the Fund for expenses associated with the distribution of the Class II, Class VI, Class VII and Class VIII shares of the Fund. GDSI is a majority-owned subsidiary of GGAMT. These fees are based on average daily net assets of Class II, Class VI, Class VII and Class VIII shares of the Fund at an annual rate not to exceed 0.25% for Class II and Class VI shares and 0.40% for Class VII and Class VIII shares.

 

Under the terms of an Administrative Services Plan, the Fund may pay fees to servicing organizations, such as broker-dealers, including Nationwide Financial Services, Inc. (“Nationwide Financial Services”), an affiliate of GGAMT, and financial institutions, which agree to provide administrative support services to the shareholders of certain classes. These services include, but are not limited, to the following: establishing and maintaining shareholder accounts; processing purchase and redemption transactions; arranging bank wires; performing shareholder sub-accounting; answering inquires regarding the Fund; and other such services. These fees are based on an annual rate of up to 0.25% of the average daily net assets of Class II, Class VI Class VII and Class VIII of shares of the Fund.

 

4. Short-Term Trading Fees

 

The Fund reserves the right to assess a short-term trading fee on certain transactions out of Class VI shares and Class VIII that a separate account makes on behalf of a variable insurance contract owner (the “contract owner”). A separate account that redeems Class VI shares and Class VIII shares on behalf of a contract owner may be subject to a 1.00% short-term trading fee if the separate account held the Class VI shares and Class VIII on behalf of the contract owner for 60 calendar days or less, unless an exception applies as disclosed in the Fund’s prospectus. The short-term trading fee is paid directly to the Fund and is intended to offset the cost to the Fund of excess brokerage commissions and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading. For purposes of determining whether the short-term trading fee applies, the Class VI shares and Class VIII shares that were held on behalf of the contract owner the longest will be treated as being redeemed first.

 

For the period ended June 30, 2006, the Fund had contributions to capital due to collection of redemption fees in the amount of $891.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

NOTES TO FINANCIAL STATEMENTS (Continued)

 

June 30, 2006 (Unaudited)

 

5. Investment Transactions

 

For the period ended June 30, 2006, (excluding short-term securities) the Fund had purchases of $41,745,921 and sales of $945,810.

 

6. Bank Loans and Earnings Credit

 

The Trust has a credit agreement with JPMorgan Chase & Co., the Fund’s custodian bank, permitting the Trust to borrow up to $100,000,000. Borrowings under this arrangement bear interest at the Federal Funds rate plus 0.50%. The interest costs, if any, would be included in other fees in the Statement of Operations. No compensating balances were required under the terms of the line of credit. There were no borrowings outstanding under this line of credit as of June 30, 2006.

 

The Trust’s custodian bank has agreed to reduce the bank’s fees (earnings credit) when the Funds of the Trust maintain cash on deposit in non-interest-bearing custody and Demand Deposit Accounts.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Supplemental Information (Unaudited)

 

June 30, 2006

 

1. Approval of Investment Advisory Contract

 

The Board of Trustees (the “Board”) met on December 8, 2005 to preliminarily review the information the Board had requested, and which the Fund’s adviser had provided, including reports from Lipper, Inc. (“Lipper”), in connection with the Fund’s annual contract renewal process pursuant to Section 15(c) of the Investment Company Act of 1940, as amended, and to have an opportunity to request and review any additional information the Board may deem useful in considering whether to renew the investment advisory agreements on behalf of the Fund in advance of its annual Section 15(c) contract renewal meeting on January 12, 2006. The Independent Trustees received assistance and advice from, and met separately with, independent counsel regarding their legal duties and responsibilities in considering the Fund’s investment advisory and sub-advisory agreements. Following receipt and review of all of the preliminary information and such additional information as they had requested, the Board met on January 12, 2006 to consider all relevant information they had received about the Fund in connection with the annual Section 15(c) contract renewal process as well as other relevant information the Board had received at its regular meetings throughout the year.

 

In considering whether to approve the investment advisory and sub advisory agreements for the Fund, the Board considered among others, the following specific factors (to the extent each is applicable to new funds) with respect to the new Fund:

 

1. the Fund’s advisory fee and ancillary benefits;

 

2. the Fund’s advisory fee (including any breakpoints) compared to the advisory fees of the Fund’s peer group of funds;

 

3. the Fund’s projected total expenses (and any expense limitations/fee waivers by the adviser) compared to those of the Fund’s peer group of funds;

 

4. the performance of the Fund’s proposed adviser in managing the Fund compared to its benchmark and its peer group of funds; and

 

5. the projected profitability (or lack thereof) to the Fund’s adviser.

 

Additionally, where the adviser manages accounts for other institutional clients (other than the Fund), the Board also considered the advisory fees charged to those clients compared to the Fund’s advisory fees. Following its review and discussions, a majority of the Board, including a majority of the Independent Trustees, determined that it was appropriate to renew the Fund’s advisory (and, if applicable, sub-advisory) agreement for the following reasons:

 

In particular, the Board reviewed the memorandum and related information management had provided in connection with management’s proposal to create several new insurance- dedicated funds, including the Fund, that will be sold through various Nationwide variable annuity and variable life products. The Board considered that the Fund will be managed by the same adviser and subadviser who currently manage the Gartmore International Index Fund, an affiliated retail mutual fund. Management represented that the Fund will receive the same nature and quality of services that the investment adviser and subadviser provide to the retail fund at the same contractual advisory fee (including the subadvisory fee) and breakpoint levels as the retail fund. While the Board could not consider or evaluate the investment performance of the Fund, as it did not commence operations until May 1, 2006, the Board considered the adviser’s and subadviser’s performance in managing substantially similar products, including the retail fund, relative to the Fund’s benchmark index, the MSCI EAFE Index. The Board also considered the adviser’s and subadviser’s performance as compared to the performance of other funds in the Fund’s Lipper International Multi-Cap Core Funds category.

 

Next, the Board considered the Fund’s proposed contractual advisory fee (including subadvisory fee) and noted that this fee is the same as the contractual advisory fee (and subadvisory fee) of the Fund’s retail counterpart, the Gartmore International Index Fund, a retail fund. The Board considered comparative fee and expense information for the retail fund in approving the advisory contract for the retail fund. As a new Fund, the Board had no adviser profitability to analyze at this juncture.

 

Having considered all of the information the Board deemed relevant and being satisfied with the adviser’s responses to its questions, the Board determined to approve the investment advisory (and sub-advisory) agreements for the Fund for an initial two year period which commenced on May 1, 2006.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information

 

June 30, 2006 (Unaudited)

 

Trustees who are not Interested Persons (as defined in the 1940 Act) and Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Charles E. Allen

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Allen is Chairman, Chief Executive Officer and President of the Graimark Realty Advisors, Inc. (real estate development, investment and asset management).   92   None

Paula H.J. Cholmondeley

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

   Trustee since July 2000   Ms. Cholmondeley is an independent strategy consultant. Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America from April 2000 through December 2003.   92   Director of Dentsply International, Inc., Ultralife Batteries, Inc., Terex Corporation, Minerals Technology, Inc. and Albany International Corp.

C. Brent DeVore3

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1940

   Trustee
since 1990		   Dr. DeVore is President of Otterbein College.   92   None

Phyllis K. Dryden

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1947

  

Trustee since

December 2004

   Beginning in February 2006 Ms. Dryden is employed by Mitchell Madison, a management consulting company. Ms. Dryden was a former Managing Partner of marchFIRST, a global management consulting firm prior to February 2002.   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

Barbara L. Hennigar

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1935

   Trustee since July 2000   Retired.   92   None

Barbara I. Jacobs

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1950

  

Trustee since

December 2004

   Ms. Jacobs has served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, since December 2000. Prior to 2004, Ms. Jacobs was also a Managing Director and European Portfolio Manager with Teachers Insurance Annuity Association–College Retirement Equity Fund.   92   None

Douglas F. Kridler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1955

   Trustee since September 1997   Mr. Kridler has served as the President and Chief Executive Officer of the Columbus Foundation (a Columbus, OH-based foundation which manages over 1,300 individual endowment funds) since February 2002. Prior to January 31, 2002, Mr. Kridler was the President of the Columbus Association for the Performing Arts and Chairman of the Greater Columbus Convention and Visitors Bureau.   92   None

Michael D. McCarthy

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

1947

  

Trustee since

December 2004

   Retired. Mr. McCarthy was Chairman of VMAC (commodity swaps) from October 2002 until June 2005; and a partner of Pineville Properties LLC (a commercial real estate development firm).   92   None

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee
or Nominee2

David C. Wetmore

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since 1995 and Chairman since February 2005   Retired.   92   None
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 Mr. DeVore has served as President of Otterbein College since 1984. Mark Thresher, President and Chief Operating Officer of Nationwide Financial Services, Inc. (“NFS”) has served as a member of the Board of Trustees of Otterbein College since 2000, currently serves as one of 30 of its trustees, and is currently one of two Vice Chairmen of the Board. NFS is under common control with each of the Gartmore companies that serve as investment advisers and principal underwriter to the Trust, as each is a majority-owned subsidiary of Nationwide Corporation (“NC”) and, through NC, of Nationwide Mutual Insurance Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).

 

Additional information regarding the Trustees and Officers may be found in the Trust’s statement of additional information, which is available without charge upon request, by calling 800-848-0920.

 

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Trustees who are Interested Persons (as defined in the 1940 Act) and/or Officers of the Trust as of June 30, 2006

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Paul J. Hondros

 

Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1948

   Trustee since July 2000   Mr. Hondros has been President and Chief Executive Officer of various Gartmore entities, including Gartmore Distribution Services, Inc. (“GDSI”),3 Gartmore Investor Services, Inc. (“GISI”),3 Gartmore Morley Capital Management, Inc. (“GMCM”),3 Gartmore Morley Financial Services, Inc. (“GMFS”), 3 NorthPointe Capital, LLC (“NorthPointe”),3 Gartmore Global Asset Management Trust (“GGAMT”),3 Gartmore Global Investments, Inc. (“GGI”),3 Gartmore Mutual Fund Capital Trust (“GMFCT”)3 and Gartmore SA Capital Trust (“GSA”)3; and a Director of Nationwide Securities, Inc.,3 as well as several entities within Nationwide Financial Services, Inc.   92   None

Arden L. Shisler

 

c/o Gartmore Global Investments, Inc.

1200 River Road, Suite 1000

Conshohocken, PA 19428

 

1941

   Trustee since February 2000   Retired. Mr. Shisler is the former President and Chief Executive Officer of K&B Transport, Inc., a trucking firm (2000 through 2002). He served as a consultant to K&B from January 2003 through December 2004. Since 1992, Mr. Shisler has also been Chairman of the Board for Nationwide Mutual Insurance Company.3   92   Director of Nationwide Financial Services, Inc.

Gerald J. Holland

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

1951

   Treasurer since March 2001   Mr. Holland is Senior Vice President - Operations for GGI,3 GMFCT,3 and GSA.3  

N/A

  

N/A

 

42

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GARTMORE VARIABLE INSURANCE TRUST

 

Management Information (Continued)

 

June 30, 2006 (Unaudited)

 

Name, Address and Year
of Birth		   Position(s)
Held with the
Trust
and Length of
Time Served1		   Principal Occupation(s)
During Past 5 Years		   Number of
Portfolios in
the Gartmore
Fund Complex
Overseen by
Trustee		   Other
Directorships
Held by Trustee2

Michael A. Krulikowski

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1959

   Chief Compliance Officer since June 2004   Since November 1999, Mr. Krulikowski has served as a Vice President and Chief Compliance Officer of GGI3. Since June 2004, Mr. Krulikowski has also served as Chief Compliance Officer of the Trust.  

N/A

  

N/A

Eric E. Miller

 

Gartmore Global Investments, Inc. 1200 River Road,

Suite 1000

Conshohocken, PA 19428

 

1953

   Secretary since December 2002   Mr. Miller is Senior Vice President, Chief Counsel for GGI,3 GMFCT3 and GSA3 since August 2002. From August 2000 to August 2002, Mr. Miller was a Partner with Stradley Ronan Stevens & Young, LLP.  

N/A

   N/A
1 Length of time served includes time served with the Trust’s predecessors.

 

2 Directorships held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.

 

3 This position is held with an affiliated person or principal underwriter of the Trust.

 

Federal law requires the Trust, each of its investment advisers and sub-advisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Funds. The Funds’ proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Fund’s website at www.gartmorefunds.com, or (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

 

43

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Item 2. Code of Ethics.

Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so.

Not applicable – The information required by this item is required only in an annual report on the Form N-CSR.

Item 3. Audit Committee Financial Expert.

(a) (1) Disclose that the registrant’s board of directors has determined that the registrant either:

(i) Has at least one audit committee financial expert serving on its audit committee; or

(ii) Does not have an audit committee financial expert serving on its audit committee.

(2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is “independent.” In order to be considered “independent” for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee:

(i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or

(ii) Be an “interested person” of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)).

(3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert.

Not applicable – The information required by this item is required only in an annual report on the Form N-CSR.

Item 4. Principal Accountant Fees and Services. (FROM PwC)

(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

(d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

(e)  (1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

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(f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

(g) Disclose the aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.

(h) Disclose whether the registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Not applicable – The information required by this item is required only in an annual report on the Form N-CSR.

Item 5. Audit Committee of Listed Registrants.

 

  (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state.

Not applicable.

 

  (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees.

Not applicable.

Item 6. Schedule of Investments.

File Schedule I – Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in § 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form.

This schedule is included as part of the report to shareholders filed under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to vote proxies relating to portfolio securities.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Company.

If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers.

Not applicable.

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Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant’s equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781).

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item.

The Independent Trustees and the Board of Trustees of the registrant adopted a formal, written “Policy Regarding Shareholder Submission of Trustee Candidates,” as well as a formal, written “Statement of Policy On Criteria For Selecting Trustees,” on June 9, 2004, and June 10, 2004, respectively. Neither this policy nor this statement of policy has been materially changed since the Board of Trustees adoption of the policy and the statement of policy, respectively. The Nominating and Fund Governance Committee of the Board of Trustees (the “NFGC”) and the Board of Trustees, however, on November 11, 2005, and January 12, 2006, respectively, approved amendments to this policy; these amendments to this policy, though, concern the criteria for selecting candidates for Trustees and the characteristics expected of candidates for Trustees, as set forth in the Exhibit A, “Statement of Policy On Criteria For Selecting Trustees,” to the policy and, arguably, may not be deemed to be material changes to the policy.

Item 11. Controls and Procedures.

(a) Disclose the conclusions of the registrant’s principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).

The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within ninety (90) days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is: (i) accumulated and communicated to the investment company’s management, including the investment company’s certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) Disclose any change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) 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.

There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

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Not applicable – The information required by this item is required only in an annual report on the Form N-CSR.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2).

Certifications executed pursuant to Rule 30a-2(a) are attached hereto.

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.

Not applicable.

(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference.

Certifications executed pursuant to Rule 30a-2(b) are attached hereto.

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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.

 

(Registrant)

  

GARTMORE VARIABLE INSURANCE TRUST

By (Signature and Title)

  

/s/ GERALD J. HOLLAND

 

Name:

  

Gerald J. Holland

 

Title:

  

Treasurer & Principal Financial Officer

 

Date:

  

September 5, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

  

/s/ PAUL J. HONDROS

 

Name:

  

Paul J. Hondros

 

Title:

  

Principal Executive Officer

 

Date:

  

September 5, 2006

By (Signature and Title)

  

/s/ GERALD J. HOLLAND

 

Name:

  

Gerald J. Holland

 

Title:

  

Treasurer & Principal Financial Officer

 

Date:

  

September 5, 2006

 EX-99.CERT 2 dex99cert.htm SECTION 302 CERTIFICATIONS Section 302 Certifications

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, Gerald J. Holland, certify that:

 

1. I have reviewed this report on Form N-CSR of Gartmore Variable Insurance Trust (the “registrant”);

 

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 registrants 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, as amended) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) 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 the registrant’s 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 ninety (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 registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

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.

 

6. On September 21, 2004, the Enforcement Staff of the Securities and Exchange Commission’s Fort Worth District Office (the “Staff”) contacted Gartmore Mutual Fund Capital Trust (the “Adviser”), the investment adviser to the Gartmore GVIT U.S. Growth Leaders Fund (the “Fund”), a series of Gartmore Variable Insurance Trust. The Staff asserted that the methodology used to calculate the performance fee for the Fund did not comply with the requirements of Rule 205-2 under the Investment Advisers Act of 1940, as amended. The Adviser agreed temporarily to forego the collection of any performance fees pending an evaluation of the Staff’s assertion. Discussions with the Staff are ongoing, and the outcome of those discussions will determine the remedial steps, if any, to be taken.

 

September 5, 2006

 

   

/s/ GERALD J. HOLLAND

 

Date

   

Gerald J. Holland

Principal Financial Officer

 

2

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, Paul J. Hondros, certify that:

 

1. I have reviewed this report on Form N-CSR of Gartmore Variable Insurance Trust (the “registrant”);

 

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 registrants 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, as amended) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) 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 the registrant’s 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 ninety (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 registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

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.

 

6. On September 21, 2004, the Enforcement Staff of the Securities and Exchange Commission’s Fort Worth District Office (the “Staff”) contacted Gartmore Mutual Fund Capital Trust (the “Adviser”), the investment adviser to the Gartmore GVIT U.S. Growth Leaders Fund (the “Fund”), a series of Gartmore Variable Insurance Trust. The Staff asserted that the methodology used to calculate the performance fee for the Fund did not comply with the requirements of Rule 205-2 under the Investment Advisers Act of 1940, as amended. The Adviser agreed temporarily to forego the collection of any performance fees pending an evaluation of the Staff’s assertion. Discussions with the Staff are ongoing, and the outcome of those discussions will determine the remedial steps, if any, to be taken.

 

September 5, 2006

 

   

/s/ PAUL J. HONDROS

 

Date

   

Paul J. Hondros

Principal Executive Officer

 

2

EX-99.906CERT 3 dex99906cert.htm SECTION 906 CERTIFICATIONS Section 906 Certifications

SARBANES-OXLEY ACT SECTION 906 CERTIFICATIONS

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended June 30, 2006, of Gartmore Variable Insurance Trust (the “Registrant”).

I, Gerald J. Holland, the Principal Financial Officer of the Registrant, certify that, to the best of my knowledge:

 

  1. the Form N-CSR fully complies with the requirements of Section 13(a) and Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(a) and § 78o(d)); 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.

 

September 5, 2006

Date

/s/ GERALD J. HOLLAND

 

Gerald J. Holland

Principal Financial Officer

Gartmore Variable Insurance Trust

This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the Commission”) or the Commission’s staff upon request.

SARBANES-OXLEY ACT SECTION 906 CERTIFICATIONS

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended June 30, 2006, of Gartmore Variable Insurance Trust (the “Registrant”).

I, Paul J. Hondros, the Principal Executive Officer of the Registrant, certify that, to the best of my knowledge:

 

  1. the Form N-CSR fully complies with the requirements of Section 13(a) and Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(a) and § 78o(d)); 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.

 

September 5, 2006

 

Date

/s/ PAUL J. HONDROS

 

Paul J. Hondros

Principal Executive Officer

Gartmore Variable Insurance Trust

This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the Commission”) or the Commission’s staff upon request.

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