UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-08361
Goldman Sachs Variable Insurance Trust
(Exact name of registrant as specified in charter)
71 South Warker, Suite 500, Chicago, Illinois 60606
(Address of principal executive offices) (Zip code)
Howard B. Surloff, Esq. | Copies to: | |
Goldman, Sachs & Co. | Jeffrey A. Dalke, Esq. | |
One New York Plaza | Drinker Biddle & Reath LLP | |
New York, New York 10004 | One Logan Square | |
18th and Cherry Streets | ||
Philadelphia, PA 19103 | ||
(Name and address of agents for service) |
Registrant’s telephone number, including area code: (312) 655-4400
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
ITEM 1. | REPORTS TO STOCKHOLDERS. | |
The Semi-Annual Report to Stockholders is filed herewith. |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust – Growth and Income Fund during the six-month reporting period that ended June 30, 2005.
Market Review
The U.S. equity markets finished the reporting period with relatively flat returns despite reaching both highs and lows of the year. Overall, during the reporting period the equity market, as measured by the S&P 500 Index, returned -0.81%. Throughout the period, investor sentiment related to interest rates and commodity prices drove the market’s direction. After bottoming in April and then surging in May, the markets weakened in June as oil prices exceeded $60 a barrel. Despite low interest rates and an improved outlook for economic growth, investor confidence was shaken by continued troubles in the U.S. auto industry.
Investment Objective
The Fund seeks long-term growth of capital and growth of income.
Portfolio Composition
Top 10 Portfolio Holdings as of June 30, 2005*
% of Net | ||||||||
Company | Business | Assets | ||||||
Exxon Mobil Corp. | Energy Resources | 5.6 | % | |||||
Bank of America Corp. | Large Banks | 4.9 | ||||||
Citigroup, Inc. | Large Banks | 4.8 | ||||||
ChevronTexaco Corp. | Energy Resources | 3.9 | ||||||
Pfizer, Inc. | Drugs | 3.4 | ||||||
J.P. Morgan Chase & Co. | Large Banks | 3.2 | ||||||
Burlington Resources, Inc. | Energy Resources | 2.5 | ||||||
Sprint Corp. | Telephone | 2.1 | ||||||
iStar Financial, Inc. | REITs | 2.0 | ||||||
Microsoft Corp. | Computer Software | 1.9 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of 0.60%. Over the same time period, the Fund’s benchmark, the Russell 1000 Value Index (with dividends reinvested), generated a cumulative total return of 1.76% and its former benchmark, the Standard & Poor’s 500 Index (with dividends reinvested), generated a cumulative total return of –0.81%.#
During the period, the Fund generated positive returns, but lagged the benchmark. The Fund’s holdings in the Utilities and Basic Materials sectors enhanced relative results, while its Energy and Insurance sectors detracted from relative results.
In Industrials, Tyco International Ltd. ranked as the weakest performer. The stock declined after the company lowered near-term earnings expectations. Additionally, the company announced plans to sell off its unprofitable plastics and adhesives division. In Services, Nortel Networks performed poorly due to the delay in its financial restatement. We subsequently eliminated the holding from the portfolio.
In the Energy sector, we continue to rely on stock selection, rather than sector positioning, to drive performance. We favor companies with strong management teams, quality assets, and low cost structures. Burlington Resources, Inc., a long-term holding, represents such an investment that has outperformed its peers over the reporting period. Despite this success, the Fund’s overall investments in the Energy sector detracted from results because they were unable to outpace the historical gains in the benchmark. In the Insurance sector, the Fund’s holding in Willis Group detracted from performance results. On the upside, the Fund’s Utility holdings have fared well, with PPL Corp. and Entergy Corp. examples of stocks in the sector that enhanced performance over the period.
We thank you for your investment and look forward to serving your investment needs in the future.
Goldman Sachs Value Portfolio Management Team
July 18, 2005
# Effective June 1, 2005, The Russell 1000 Value Index replaced the S&P 500 Index as the Fund’s benchmark. The Russell 1000 Value Index is an unmanaged market capitalization weighted index of the 1,000 largest U.S. companies with lower price-to-book ratios and higher forecasted growth values. The S&P 500 Index (with dividends reinvested) is the Standard & Poor’s 500 Composite Stock Price Index of 500 stocks, an unmanaged index of common stock prices. In the Investment Adviser’s opinion, the Russell 1000 Value Index is a more appropriate benchmark against which to measure the performance of the Fund. The Index figures do not reflect any deduction for fees, expenses or taxes.
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) Growth and Income Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity
contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT Growth and Income Fund invests primarily in large-capitalization U.S. equity investments and also invests in fixed income securities. The Fund’s equity investments will be subject to market risk so that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular industry sectors and/or general economic conditions. Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk.
SECTOR ALLOCATION AS OF JUNE 30, 2005† |
Percentage of Portfolio Investments
† The Fund is actively managed and, as such, its composition may differ over time. The percentage shown for each investment category reflects the value of investments in that category as a percentage of market value. Short-term investments include repurchase agreements.
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 98.3% | ||||||||||
Brokers – 2.0% | ||||||||||
22,900 | Lehman Brothers Holdings, Inc. | $ | 2,273,512 | |||||||
68,400 | Morgan Stanley | 3,588,948 | ||||||||
5,862,460 | ||||||||||
Chemicals – 2.5% | ||||||||||
68,390 | Rohm & Haas Co. GDR | 3,169,193 | ||||||||
91,002 | The Dow Chemical Co. | 4,052,319 | ||||||||
7,221,512 | ||||||||||
Computer Hardware – 1.6% | ||||||||||
43,750 | CDW Corp. | 2,497,687 | ||||||||
95,900 | Hewlett-Packard Co. | 2,254,609 | ||||||||
4,752,296 | ||||||||||
Computer Software - 3.7% | ||||||||||
191,589 | Activision, Inc.* | 3,165,050 | ||||||||
12,900 | International Business Machines Corp. | 957,180 | ||||||||
224,830 | Microsoft Corp. | 5,584,777 | ||||||||
100,473 | Oracle Corp.* | 1,326,244 | ||||||||
11,033,251 | ||||||||||
Consumer Durables – 1.0% | ||||||||||
96,265 | Masco Corp. | 3,057,376 | ||||||||
Defense/Aerospace – 1.7% | ||||||||||
44,945 | General Dynamics Corp. | 4,923,275 | ||||||||
Drugs – 3.4% | ||||||||||
361,163 | Pfizer, Inc. | 9,960,876 | ||||||||
Electrical Utilities – 8.8% | ||||||||||
55,371 | Ameren Corp. | 3,062,016 | ||||||||
20,500 | Cinergy Corp. | 918,810 | ||||||||
57,497 | Dominion Resources, Inc. | 4,219,705 | ||||||||
69,756 | Entergy Corp. | 5,270,066 | ||||||||
87,166 | Exelon Corp. | 4,474,231 | ||||||||
52,587 | FirstEnergy Corp. | 2,529,960 | ||||||||
92,195 | PPL Corp. | 5,474,539 | ||||||||
25,949,327 | ||||||||||
Energy Resources – 13.1% | ||||||||||
133,314 | Burlington Resources, Inc. | 7,364,265 | ||||||||
204,576 | ChevronTexaco Corp. | 11,439,890 | ||||||||
58,914 | ConocoPhillips | 3,386,966 | ||||||||
287,387 | Exxon Mobil Corp. | 16,516,131 | ||||||||
38,707,252 | ||||||||||
Environmental & Other Services – 1.0% | ||||||||||
107,649 | Waste Management, Inc. | 3,050,773 | ||||||||
Financial Technology – 0.9% | ||||||||||
63,368 | First Data Corp. | 2,543,591 | ||||||||
Food & Beverage – 1.3% | ||||||||||
78,855 | Kraft Foods, Inc. | 2,508,377 | ||||||||
20,443 | Unilever N.V. | 1,325,320 | ||||||||
3,833,697 | ||||||||||
Home Products – 2.7% | ||||||||||
41,503 | Avon Products, Inc. | 1,570,889 | ||||||||
77,300 | Newell Rubbermaid, Inc. | 1,842,832 | ||||||||
21,653 | The Clorox Co. | 1,206,505 | ||||||||
62,184 | The Procter & Gamble Co. | 3,280,206 | ||||||||
7,900,432 | ||||||||||
Large Banks – 13.8% | ||||||||||
314,613 | Bank of America Corp. | 14,349,499 | ||||||||
303,539 | Citigroup, Inc. | 14,032,608 | ||||||||
267,969 | J.P. Morgan Chase & Co. | 9,464,665 | ||||||||
100,800 | U.S. Bancorp | 2,943,360 | ||||||||
40,790,132 | ||||||||||
Media – 3.0% | ||||||||||
93,757 | News Corp. | 1,516,988 | ||||||||
154,259 | The Walt Disney Co. | 3,884,242 | ||||||||
211,865 | Time Warner, Inc.* | 3,540,264 | ||||||||
8,941,494 | ||||||||||
Medical Products – 1.2% | ||||||||||
99,153 | Baxter International, Inc. | 3,678,576 | ||||||||
Motor Vehicle – 0.8% | ||||||||||
51,285 | Autoliv, Inc. | 2,246,283 | ||||||||
Oil Services – 1.0% | ||||||||||
31,300 | Baker Hughes, Inc. | 1,601,308 | ||||||||
25,935 | BJ Services Co. | 1,361,069 | ||||||||
2,962,377 | ||||||||||
Paper & Packaging – 1.1% | ||||||||||
152,791 | Packaging Corp. of America | 3,216,251 | ||||||||
Parts & Equipment – 4.9% | ||||||||||
44,897 | American Standard Companies, Inc. | 1,882,082 | ||||||||
84,633 | General Electric Co. | 2,932,534 | ||||||||
147,397 | Tyco International Ltd. | 4,303,992 | ||||||||
103,538 | United Technologies Corp. | 5,316,676 | ||||||||
14,435,284 | ||||||||||
Property Insurance – 5.0% | ||||||||||
59,764 | PartnerRe Ltd. | 3,849,997 | ||||||||
51,848 | RenaissanceRe Holdings Ltd. | 2,552,996 | ||||||||
65,999 | The Allstate Corp. | 3,943,440 | ||||||||
64,992 | Willis Group Holdings Ltd. | 2,126,538 | ||||||||
31,178 | XL Capital Ltd. | 2,320,267 | ||||||||
14,793,238 | ||||||||||
4
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Regional Banks – 2.8% | ||||||||||
143,336 | KeyCorp | $ | 4,751,589 | |||||||
62,355 | PNC Financial Services Group | 3,395,853 | ||||||||
8,147,442 | ||||||||||
REITs – 4.8% | ||||||||||
69,173 | Apartment Investment & Management Co. | 2,830,559 | ||||||||
63,165 | Developers Diversified Realty Corp. | 2,903,064 | ||||||||
138,543 | iStar Financial, Inc. | 5,762,003 | ||||||||
69,948 | Plum Creek Timber Co., Inc. | 2,539,112 | ||||||||
14,034,738 | ||||||||||
Retail Apparel – 2.8% | ||||||||||
63,266 | J. C. Penney Co., Inc. | 3,326,526 | ||||||||
126,100 | The Gap, Inc. | 2,490,475 | ||||||||
59,415 | The May Department Stores Co. | 2,386,107 | ||||||||
8,203,108 | ||||||||||
Specialty Financials – 4.6% | ||||||||||
73,387 | Alliance Capital Management Holding L.P. | 3,430,108 | ||||||||
79,767 | American Capital Strategies Ltd. | 2,880,386 | ||||||||
79,598 | Countrywide Financial Corp. | 3,073,279 | ||||||||
22,700 | Freddie Mac | 1,480,721 | ||||||||
28,536 | SLM Corp. | 1,449,629 | ||||||||
29,760 | Washington Mutual, Inc. | 1,210,935 | ||||||||
13,525,058 | ||||||||||
Telephone – 4.9% | ||||||||||
181,900 | SBC Communications, Inc. | 4,320,125 | ||||||||
241,221 | Sprint Corp. | 6,052,235 | ||||||||
117,564 | Verizon Communications, Inc. | 4,061,836 | ||||||||
14,434,196 | ||||||||||
Thrifts – 1.3% | ||||||||||
58,407 | Golden West Financial Corp. | 3,760,243 | ||||||||
Tobacco – 1.3% | ||||||||||
59,944 | Altria Group, Inc. | 3,875,979 | ||||||||
Transports – 0.5% | ||||||||||
21,200 | United Parcel Service, Inc. Class B | 1,466,192 | ||||||||
Trust/Processors – 0.8% | ||||||||||
83,511 | The Bank of New York Co., Inc. | 2,403,447 | ||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $253,424,191) | $ | 289,710,156 | ||||||||
Principal | Interest | Maturity | ||||||||||||
Amount | Rate | Date | Value | |||||||||||
Repurchase Agreement(a) – 3.5% | ||||||||||||||
Joint Repurchase Agreement Account II | ||||||||||||||
$ | 10,200,000 | 3.41 | % | 07/01/2005 | $10,200,000 | |||||||||
Maturity Value: $10,200,965 | ||||||||||||||
(Cost $10,200,000) | ||||||||||||||
TOTAL INVESTMENTS – 101.8% | ||||||||||||||
(Cost $263,624,191) | $299,910,156 | |||||||||||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. | |
(a) | Joint repurchase agreement was entered into on June 30, 2005. |
Investment Abbreviations: | ||||||
GDR | — | Global Depositary Receipt | ||||
REIT | — | Real Estate Investment Trust | ||||
5
ADDITIONAL INVESTMENT INFORMATION |
JOINT REPURCHASE AGREEMENT ACCOUNT II — At June 30, 2005, the Fund had an undivided interest in the following Joint Repurchase Agreement Account II which equaled $10,200,000 in principal amount.
Principal | Interest | Maturity | Maturity | |||||||||||||
Repurchase Agreements | Amount | Rate | Date | Value | ||||||||||||
Banc of America Securities LLC | $ | 1,500,000,000 | 3.40 | % | 07/01/2005 | $ | 1,500,141,667 | |||||||||
Barclays Capital PLC | 700,000,000 | 3.40 | 07/01/2005 | 700,066,111 | ||||||||||||
Deutsche Bank Securities, Inc. | 1,000,000,000 | 3.40 | 07/01/2005 | 1,000,094,444 | ||||||||||||
Deutsche Bank Securities, Inc. | 300,000,000 | 3.45 | 07/01/2005 | 300,028,750 | ||||||||||||
Greenwich Capital Markets | 400,000,000 | 3.43 | 07/01/2005 | 400,038,111 | ||||||||||||
J.P. Morgan Securities, Inc. | 400,000,000 | 3.41 | 07/01/2005 | 400,037,889 | ||||||||||||
Morgan Stanley & Co. | 1,000,500,000 | 3.40 | 07/01/2005 | 1,000,594,492 | ||||||||||||
UBS Securities LLC | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||||
Wachovia Capital Markets | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||||
Westdeutsche Landesbank AG | 500,000,000 | 3.43 | 07/01/2005 | 500,047,639 | ||||||||||||
TOTAL | $ | 6,300,500,000 | $ | 6,301,096,325 | ||||||||||||
At June 30, 2005, the Joint Repurchase Agreement Account II was fully collateralized by Federal Farm Credit Bank, 2.50% to 6.70%, due 09/13/2005 to 06/15/2007; Federal Home Loan Bank, 4.37% to 5.49% due 12/22/2008 to 08/15/2011; Federal Home Loan Mortgage Association, 0.00% to 8.00%, due 07/06/2005 to 07/01/2035; Federal National Mortgage Association, 0.00% to 9.50%, due 08/24/2005 to 07/01/2035 and Government National Mortgage Association, 5.50% to 6.50%, due 04/15/2032 to 06/15/2035. |
6
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $263,624,191) | $ | 299,910,156 | |||||
Cash | 80,322 | ||||||
Receivables: | |||||||
Investment securities sold | 1,083,289 | ||||||
Fund shares sold | 751,500 | ||||||
Dividends and interest | 437,999 | ||||||
Other assets | 10,946 | ||||||
Total assets | 302,274,212 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Investment securities purchased | 7,400,015 | ||||||
Amounts owed to affiliates | 190,428 | ||||||
Fund shares repurchased | 150,665 | ||||||
Accrued expenses | 33,973 | ||||||
Total liabilities | 7,775,081 | ||||||
Net Assets: | |||||||
Paid-in capital | 272,630,003 | ||||||
Accumulated undistributed net investment income | 2,851,966 | ||||||
Accumulated net realized loss on investment transactions | (17,268,803 | ) | |||||
Net unrealized gain on investments | 36,285,965 | ||||||
NET ASSETS | $ | 294,499,131 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 25,011,250 | ||||||
Net asset value, offering and redemption price per share | $ | 11.77 | |||||
7
Statement of Operations
Investment income: | ||||||
Dividends(a) | $ | 3,612,551 | ||||
Interest (including securities lending income of $1,741) | 71,117 | |||||
Total income | 3,683,668 | |||||
Expenses: | ||||||
Management fees | 1,050,191 | |||||
Transfer Agent fees | 56,010 | |||||
Custody and accounting fees | 34,587 | |||||
Professional fees | 24,688 | |||||
Printing fees | 24,236 | |||||
Trustee fees | 7,140 | |||||
Other | 7,414 | |||||
Total expenses | 1,204,266 | |||||
Less — expense reductions | (702 | ) | ||||
Net Expenses | 1,203,564 | |||||
NET INVESTMENT INCOME | 2,480,104 | |||||
Realized and unrealized gain (loss) on investment transactions: | ||||||
Net realized gain from investment transactions | 9,822,627 | |||||
Net increase from payment by affiliates to reimburse certain security claims | 5,984 | |||||
Net change in unrealized loss on investments | (10,799,517 | ) | ||||
Net realized and unrealized loss on investment transactions | (970,906 | ) | ||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,509,198 | ||||
(a) | Foreign taxes withheld on dividends were $5,161. |
8
Statements of Changes in Net Assets
For the | For the | |||||||||
Six Months Ended | Year Ended | |||||||||
June 30, 2005 (Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 2,480,104 | $ | 4,203,524 | ||||||
Net realized gain from investment transactions | 9,822,627 | 31,697,872 | ||||||||
Net increase from payment by affiliates to reimburse certain security claims | 5,984 | — | ||||||||
Net increase from payments by affiliates to reimburse certain brokerage commissions | — | 51,635 | ||||||||
Net change in unrealized gain (loss) on investments | (10,799,517 | ) | 6,786,601 | |||||||
Net increase in net assets resulting from operations | 1,509,198 | 42,739,632 | ||||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (3,899,045 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 30,018,363 | 33,498,391 | ||||||||
Reinvestment of dividends and distributions | — | 3,899,045 | ||||||||
Cost of shares repurchased | (13,423,883 | ) | (30,158,379 | ) | ||||||
Net increase in net assets resulting from share transactions | 16,594,480 | 7,239,057 | ||||||||
TOTAL INCREASE | 18,103,678 | 46,079,644 | ||||||||
Net assets: | ||||||||||
Beginning of period | 276,395,453 | 230,315,809 | ||||||||
End of period | $ | 294,499,131 | $ | 276,395,453 | ||||||
Accumulated undistributed net investment income | $ | 2,851,966 | $ | 371,862 | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 2,567,967 | 3,088,976 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 335,835 | ||||||||
Shares repurchased | (1,154,924 | ) | (2,861,998 | ) | ||||||
NET INCREASE | 1,413,043 | 562,813 | ||||||||
9
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | expense reductions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Distributions to | Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | shareholders | Net asset | Net assets | Ratio of | net investment | total | net investment | ||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | from net | value, | at end of | net expenses | income | expenses | income | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | end of | Total | period | to average | to average | to average | to average | turnover | ||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | |||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 11.71 | $ | 0.10 | $ | (0.04 | ) | $ | 0.06 | $ | — | $ | 11.77 | 0.60 | % | $ | 294,499 | 0.86 | %(c) | 1.77 | %(c) | 0.86 | %(c) | 1.77 | %(c) | 27 | % | |||||||||||||||||||||||||||||
For the Years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 10.00 | 0.19 | 1.69 | 1.88 | (0.17 | ) | 11.71 | 18.80 | 276,395 | 0.86 | 1.75 | 0.86 | 1.75 | 58 | ||||||||||||||||||||||||||||||||||||||||||
2003 | 8.14 | 0.13 | 1.85 | 1.98 | (0.12 | ) | 10.00 | 24.36 | 230,316 | 1.02 | 1.44 | 1.20 | 1.26 | 51 | ||||||||||||||||||||||||||||||||||||||||||
2002 | 9.33 | 0.13 | (1.19 | ) | (1.06 | ) | (0.13 | ) | 8.14 | (11.34 | ) | 36,911 | 1.05 | 1.51 | 1.27 | 1.29 | 98 | |||||||||||||||||||||||||||||||||||||||
2001 | 10.34 | 0.05 | (1.02 | ) | (0.97 | ) | (0.04 | ) | 9.33 | (9.34 | ) | 40,593 | 1.00 | 0.49 | 1.17 | 0.32 | 48 | |||||||||||||||||||||||||||||||||||||||
2000 | 10.89 | 0.04 | (0.55 | ) | (0.51 | ) | (0.04 | ) | 10.34 | (4.69 | ) | 37,116 | 0.99 | 0.40 | 1.22 | 0.17 | 68 | |||||||||||||||||||||||||||||||||||||||
(a) | Calculated based on the average shares outstanding methodology. |
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
Goldman Sachs Variable Insurance Trust (the “Trust”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended, (the “Act”) as an open-end, management investment company. The Trust includes the Goldman Sachs Growth and Income Fund (the “Fund”). The Fund is a diversified portfolio under the Act.
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/ dealer-supplied valuations or matrix pricing systems. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share on valuation date. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available or are deemed to be inaccurate by the Investment Adviser are valued at fair value using methods approved by the Trust’s Board of Trustees.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
F. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest, is required to equal or exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Fund may be delayed or limited and there may be a decline in the value of the collateral during the period while the Fund seeks to assert its rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under triparty repurchase agreements.
3. AGREEMENTS |
Average Daily Net Assets | Annual Rate | |||
First $1 Billion | 0.75% | |||
Next $1 Billion | 0.68% | |||
Over $2 Billion | 0.65% | |||
3. AGREEMENTS (continued) |
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
6. LINE OF CREDIT FACILITY |
7. ADDITIONAL TAX INFORMATION |
Capital loss carryforward:* | |||||
Expiring 2009 | $ | (20,932,445 | ) | ||
Expiring 2010 | (5,509,772 | ) | |||
Total capital loss carryforward | $ | (26,442,217 | ) | ||
Timing differences (related to the recognition of certain REIT dividends for tax purposes) | $ | 23,392 | |||
* | Utilization of these losses may be limited under the Code. |
7. ADDITIONAL TAX INFORMATION (continued) |
At June 30, 2005, the Fund’s aggregate security unrealized gains and losses based on a cost for U.S. federal income tax purposes was as follows:
Tax cost | $ | 264,279,388 | ||
Gross unrealized gain | 39,052,866 | |||
Gross unrealized loss | (3,422,098 | ) | ||
Net unrealized security gain | $ | 35,630,768 | ||
The difference between book-basis and tax basis unrealized gains (losses) is attributable primarily to wash sales.
8. LEGAL PROCEEDINGS |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Fund.
affiliates of the Investment Adviser receive compensation in connection with the execution of Fund’s portfolio securities transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000 | $ | 1,006.00 | $ | 4.28 | ||||||
Hypothetical 5% return | 1,000 | 1,020.53 | + | 4.31 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 0.86%. | ||
+ | Hypothetical expenses are based on the Fund’s actual annualized expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. In recent years, the U.S. stock market has experienced substantial price volatility. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Growth and Income Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITG&ISAR |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust – CORE U.S. Equity Fund during the six-month reporting period that ended June 30, 2005.
Market Review
The S&P 500 Index returned -0.81% over the six-month reporting period ended June 30, 2005. Within the Index, the Materials (-7.9%) and Consumer Discretionary (-6.6%) sectors were the largest detractors in absolute returns, while the heavily weighted Information Technology sector (-5.7%) detracted most (weight times performance) for the period. Value stocks outperformed their growth counterparts by a significant margin for the six-month period, with the Russell 1000 Value Index returning 1.76% versus the Russell 1000 Growth Index return of -1.72%. Large-cap stocks also outperformed small-cap stocks as the Russell 1000 Index and Russell 2000 Index returned 0.11% and -1.25%, respectively. This was largely due to large-cap Information Technology stocks outpacing their smaller counterparts.
Investment Objective
The Fund seeks long-term capital growth and dividend income.
Portfolio Composition
Top 10 Portfolio Holdings as of June 30, 2005*
% of | ||||||
Company | Business | Net Assets | ||||
General Electric Co. | Industrial Conglomerates | 4.8 | % | |||
Johnson & Johnson | Pharmaceuticals | 3.3 | ||||
Bank of America Corp. | Banks | 3.2 | ||||
Intel Corp. | Semiconductor Equipment & Products | 3.0 | ||||
Pfizer, Inc. | Pharmaceuticals | 2.8 | ||||
J.P. Morgan Chase & Co. | Diversified Financials | 2.7 | ||||
Altria Group, Inc. | Tobacco | 2.5 | ||||
Wachovia Corp. | Banks | 2.3 | ||||
Amgen, Inc. | Biotechnology | 2.3 | ||||
Time Warner, Inc. | Media | 2.2 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of -2.66%. Over the same time period, the Fund’s benchmark, the Standard & Poor’s 500 Index (with dividends reinvested) generated a cumulative total return of -0.81%.
The Fund underperformed its benchmark for the period. While returns to the CORE investment themes were positive over the six-month period, stock selection detracted from results. Momentum and Valuation were the biggest positive contributors to relative returns, as inexpensive companies with strong momentum characteristics outperformed their industry counterparts. Earnings Quality, Management Impact, Profitability, and Analyst Sentiment also added value, albeit to a lesser extent. Despite good performance from the CORE themes, the majority of the performance shortfall can be attributed to stock specific/ residual factors, which we expect to even out over time.
Stock selection detracted from performance during the period. In particular, the Fund’s holdings in the Consumer Discretionary and Healthcare sectors lagged their peers in the benchmark the most. On the upside, the Fund’s holdings in the Energy sector outpaced their peers in the benchmark the most.
In terms of individual stocks, overweight positions in Biogen Idec, Harman International and an underweight position in eBay were among the largest detractors from excess returns for the six-month period. Biogen and eBay were subsequently eliminated from the portfolio. On the upside, overweight positions in Google, Inc., Burlington Resources, Inc. and Sunoco, Inc. were among the largest positive contributors to relative performance for the period.
In managing the CORESM products, we do not make size or sector bets. We hope to add value versus the Fund’s index through individual stock selection. Our quantitative process seeks out stocks with good momentum that also appear to be good values. We prefer stocks about which fundamental research analysts are becoming more positive and companies with strong profit margins, sustainable earnings, and that use their capital to enhance shareholder value. These factors are not highly correlated to each other, which diversifies the Fund’s sources of returns.
We thank you for your investment and look forward to your continued confidence.
July 18, 2005
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) CORE U.S. Equity Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT CORE U.S. Equity Fund invests in a broadly diversified portfolio of U.S. equity investments. The Fund is subject to market risk as the value of the securities in which it invests may go up or down. This could occur in response to the prospects of individual companies, particular industry sectors and/or general economic conditions.
SECTOR ALLOCATION AS OF JUNE 30, 2005† |
Percentage of Portfolio Investments
† The Fund is actively managed and, as such, its composition may differ over time. The percentage shown for each investment category reflects the value of investments in that category as a percentage of market value. Short-term investments include repurchase agreements and securities lending collateral. |
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 97.6% | ||||||||||
Aerospace & Defense – 1.6% | ||||||||||
9,800 | Lockheed Martin Corp. | $ | 635,726 | |||||||
91,700 | Northrop Grumman Corp. | 5,066,425 | ||||||||
115,400 | Raytheon Co. | 4,514,448 | ||||||||
10,216,599 | ||||||||||
Auto Components – 0.2% | ||||||||||
24,300 | Autoliv, Inc. | 1,064,340 | ||||||||
Automobiles – 0.4% | ||||||||||
228,400 | Ford Motor Co. | 2,338,816 | ||||||||
Banks – 9.3% | ||||||||||
446,266 | Bank of America Corp. | 20,354,192 | ||||||||
36,600 | Bank of Hawaii Corp. | 1,857,450 | ||||||||
57,000 | Golden West Financial Corp. | 3,669,660 | ||||||||
157,800 | U.S. Bancorp | 4,607,760 | ||||||||
32,000 | UnionBanCal Corp. | 2,141,440 | ||||||||
289,000 | Wachovia Corp. | 14,334,400 | ||||||||
296,900 | Washington Mutual, Inc. | 12,080,861 | ||||||||
59,045,763 | ||||||||||
Biotechnology – 2.7% | ||||||||||
236,400 | Amgen, Inc.* | 14,292,744 | ||||||||
17,500 | Genentech, Inc.* | 1,404,900 | ||||||||
24,100 | Genzyme Corp.* | 1,448,169 | ||||||||
17,145,813 | ||||||||||
Chemicals – 1.6% | ||||||||||
162,600 | Monsanto Co. | 10,222,662 | ||||||||
Commercial Services & Supplies – 1.6% | ||||||||||
451,000 | Cendant Corp. | 10,088,870 | ||||||||
Communications Equipment – 1.0% | ||||||||||
104,500 | Cisco Systems, Inc.* | 1,996,995 | ||||||||
25,700 | Comverse Technology, Inc.* | 607,805 | ||||||||
24,800 | Juniper Networks, Inc.* | 624,464 | ||||||||
98,400 | QUALCOMM, Inc. | 3,248,184 | ||||||||
6,477,448 | ||||||||||
Computers & Peripherals – 2.3% | ||||||||||
133,500 | Dell, Inc.* | 5,274,585 | ||||||||
307,200 | Hewlett-Packard Co. | 7,222,272 | ||||||||
155,600 | Western Digital Corp.* | 2,088,152 | ||||||||
14,585,009 | ||||||||||
Diversified Financials – 6.4% | ||||||||||
34,700 | AmeriCredit Corp.* | 884,850 | ||||||||
25,600 | CIT Group, Inc. | 1,100,032 | ||||||||
84,332 | Citigroup, Inc. | 3,898,668 | ||||||||
481,900 | J.P. Morgan Chase & Co. | 17,020,708 | ||||||||
137,900 | Merrill Lynch & Co., Inc. | 7,585,879 | ||||||||
220,000 | Moody’s Corp. | 9,891,200 | ||||||||
40,381,337 | ||||||||||
Diversified Telecommunication – 3.1% | ||||||||||
145,000 | CenturyTel, Inc. | 5,021,350 | ||||||||
162,200 | Sprint Corp. | 4,069,598 | ||||||||
306,400 | Verizon Communications, Inc. | 10,586,120 | ||||||||
19,677,068 | ||||||||||
Electric Utilities – 3.4% | ||||||||||
182,700 | Edison International | 7,408,485 | ||||||||
295,100 | PG&E Corp. | 11,078,054 | ||||||||
37,000 | TXU Corp. | 3,074,330 | ||||||||
21,560,869 | ||||||||||
Electrical Equipment – 0.7% | ||||||||||
71,400 | Energizer Holdings, Inc.* | 4,438,938 | ||||||||
Food & Drug Retailing – 1.2% | ||||||||||
85,400 | Albertson’s, Inc.(a) | 1,766,072 | ||||||||
127,400 | SUPERVALU, Inc. | 4,154,514 | ||||||||
41,900 | Walgreen Co. | 1,926,981 | ||||||||
7,847,567 | ||||||||||
Food Products – 2.7% | ||||||||||
366,500 | Archer-Daniels-Midland Co. | 7,835,770 | ||||||||
17,600 | The Hershey Co. | 1,092,960 | ||||||||
464,400 | Tyson Foods, Inc. | 8,266,320 | ||||||||
17,195,050 | ||||||||||
Healthcare Equipment & Supplies – 0.7% | ||||||||||
28,100 | Applera Corp. – Applied Biosystems Group | 552,727 | ||||||||
30,000 | Becton, Dickinson and Co. | 1,574,100 | ||||||||
19,200 | Guidant Corp. | 1,292,160 | ||||||||
21,000 | Kinetic Concepts, Inc.* | 1,260,000 | ||||||||
4,678,987 | ||||||||||
Healthcare Providers & Services – 2.4% | ||||||||||
54,600 | Aetna, Inc. | 4,521,972 | ||||||||
78,300 | AmerisourceBergen Corp. | 5,414,445 | ||||||||
37,100 | Coventry Health Care, Inc.* | 2,624,825 | ||||||||
40,900 | HCA, Inc. | 2,317,803 | ||||||||
14,879,045 | ||||||||||
Hotels, Restaurants & Leisure – 0.2% | ||||||||||
28,200 | Darden Restaurants, Inc. | 930,036 | ||||||||
Household Durables – 0.4% | ||||||||||
31,200 | The Black & Decker Corp. | 2,803,320 | ||||||||
Household Products – 0.5% | ||||||||||
63,900 | The Procter & Gamble Co. | 3,370,725 | ||||||||
Industrial Conglomerates – 5.1% | ||||||||||
879,600 | General Electric Co. | 30,478,140 | ||||||||
20,200 | Reynolds American, Inc.(a) | 1,591,760 | ||||||||
32,069,900 | ||||||||||
4
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Insurance – 5.3% | ||||||||||
72,800 | Genworth Financial, Inc. | $ | 2,200,744 | |||||||
136,200 | Loews Corp. | 10,555,500 | ||||||||
180,800 | MBIA, Inc. | 10,723,248 | ||||||||
93,300 | Prudential Financial, Inc. | 6,126,078 | ||||||||
41,800 | W.R. Berkley Corp. | 1,491,424 | ||||||||
32,900 | XL Capital Ltd. | 2,448,418 | ||||||||
33,545,412 | ||||||||||
Internet Software & Services – 1.8% | ||||||||||
35,250 | Google, Inc.* | 10,368,788 | ||||||||
31,600 | McAfee, Inc.* | 827,288 | ||||||||
11,196,076 | ||||||||||
IT Consulting & Services – 1.7% | ||||||||||
241,700 | Computer Sciences Corp.* | 10,562,290 | ||||||||
Leisure Equipment & Products – 0.5% | ||||||||||
55,700 | Polaris Industries, Inc. | 3,007,800 | ||||||||
Marine – 0.2% | ||||||||||
21,700 | Overseas Shipholding Group, Inc. | 1,294,405 | ||||||||
Media – 6.5% | ||||||||||
25,864 | Comcast Corp.* | 794,025 | ||||||||
239,200 | Comcast Corp. Special Class A* | 7,164,040 | ||||||||
636,200 | Liberty Media Corp. Series A* | 6,482,878 | ||||||||
12,000 | Pixar* | 600,600 | ||||||||
446,800 | The Walt Disney Co. | 11,250,424 | ||||||||
851,100 | Time Warner, Inc.* | 14,221,881 | ||||||||
26,600 | Viacom, Inc. Class B | 851,732 | ||||||||
41,365,580 | ||||||||||
Metals & Mining – 1.3% | ||||||||||
11,900 | Newmont Mining Corp. | 464,457 | ||||||||
45,100 | Nucor Corp. | 2,057,462 | ||||||||
157,800 | United States Steel Corp. | 5,423,586 | ||||||||
7,945,505 | ||||||||||
Multiline Retail – 0.4% | ||||||||||
105,300 | Dillard’s, Inc. | 2,466,126 | ||||||||
Oil & Gas – 8.4% | ||||||||||
114,600 | Anadarko Petroleum Corp. | 9,414,390 | ||||||||
31,100 | Apache Corp. | 2,009,060 | ||||||||
199,800 | Burlington Resources, Inc. | 11,036,952 | ||||||||
107,776 | ConocoPhillips | 6,196,042 | ||||||||
55,400 | EOG Resources, Inc. | 3,146,720 | ||||||||
195,866 | Exxon Mobil Corp. | 11,256,419 | ||||||||
90,400 | Sunoco, Inc. | 10,276,672 | ||||||||
53,336,255 | ||||||||||
Personal Products – 0.4% | ||||||||||
55,000 | The Gillette Co. | 2,784,650 | ||||||||
Pharmaceuticals – 8.4% | ||||||||||
258,200 | Abbott Laboratories | 12,654,382 | ||||||||
7,700 | Allergan, Inc. | 656,348 | ||||||||
57,500 | Bristol Myers Squibb Co. | 1,436,350 | ||||||||
320,500 | Johnson & Johnson | 20,832,500 | ||||||||
648,105 | Pfizer, Inc. | 17,874,736 | ||||||||
53,454,316 | ||||||||||
Real Estate – 0.5% | ||||||||||
102,700 | Equity Office Properties Trust | 3,399,370 | ||||||||
Road & Rail – 2.0% | ||||||||||
174,900 | Burlington Northern Santa Fe Corp. | 8,234,292 | ||||||||
38,800 | CSX Corp. | 1,655,208 | ||||||||
89,800 | Norfolk Southern Corp. | 2,780,208 | ||||||||
�� | ||||||||||
12,669,708 | ||||||||||
Semiconductor Equipment & Products – 4.7% | ||||||||||
334,900 | Advanced Micro Devices, Inc.* | 5,807,166 | ||||||||
52,400 | Freescale Semiconductor, Inc.* | 1,100,924 | ||||||||
190,808 | Freescale Semiconductor, Inc. Class B* | 4,041,314 | ||||||||
728,900 | Intel Corp. | 18,995,134 | ||||||||
29,944,538 | ||||||||||
Software – 2.5% | ||||||||||
286,200 | Autodesk, Inc. | 9,836,694 | ||||||||
171,000 | Microsoft Corp. | 4,247,640 | ||||||||
66,300 | Symantec Corp.* | 1,441,362 | ||||||||
15,525,696 | ||||||||||
Specialty Retail – 1.2% | ||||||||||
223,400 | AutoNation, Inc.* | 4,584,168 | ||||||||
163,956 | Circuit City Stores, Inc. | 2,834,799 | ||||||||
7,418,967 | ||||||||||
Textiles & Apparel – 1.6% | ||||||||||
300,200 | Coach, Inc.* | 10,077,714 | ||||||||
Tobacco – 2.6% | ||||||||||
247,300 | Altria Group, Inc. | 15,990,418 | ||||||||
13,500 | UST, Inc. | 616,410 | ||||||||
16,606,828 | ||||||||||
Wireless Telecommunication Services – 0.1% | ||||||||||
10,700 | United States Cellular Corp.* | 534,358 | ||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $585,099,388) | $ | 618,153,756 | ||||||||
5
Principal | Interest | Maturity | ||||||||||||
Amount | Rate | Date | Value | |||||||||||
Repurchase Agreement(b) – 1.7% | ||||||||||||||
Joint Repurchase Agreement Account II | ||||||||||||||
$ | 11,000,000 | 3.41 | % | 07/01/2005 | $11,000,000 | |||||||||
Maturity Value: $11,001,041 | ||||||||||||||
(Cost $11,000,000) | ||||||||||||||
TOTAL INVESTMENTS BEFORE SECURITIES LENDING COLLATERAL | ||||||||||||||
(Cost $596,099,388) | $629,153,756 | |||||||||||||
Shares | Description | Value | ||||||||
Securities Lending Collateral – 0.5% | ||||||||||
2,961,250 | Boston Global Investment Trust – Enhanced Portfolio | $ | 2,961,250 | |||||||
(Cost $2,961,250) | ||||||||||
TOTAL INVESTMENTS – 99.8% | ||||||||||
(Cost $599,060,638) | $ | 632,115,006 | ||||||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. | |
(a) | All or portion of security is on loan. | |
(b) | Joint repurchase agreement was entered into on June 30, 2005. |
ADDITIONAL INVESTMENT INFORMATION |
FUTURES CONTRACTS — At June 30, 2005, the following futures contracts were open as follows:
Number of | Settlement | Unrealized | ||||||||||||
Type | Contracts Long | Month | Market Value | Loss | ||||||||||
S & P 500 Index | 198 | September 2005 | $ | 11,835,450 | $ | (126,876 | ) | |||||||
JOINT REPURCHASE AGREEMENT ACCOUNT II — At June 30, 2005, the Fund had an undivided interest in the following Joint Repurchase Agreement Account II which equaled $11,000,000 in principal amount.
Principal | Interest | Maturity | Maturity | |||||||||||
Repurchase Agreements | Amount | Rate | Date | Value | ||||||||||
Banc of America Securities LLC | $ | 1,500,000,000 | 3.40 | % | 07/01/2005 | $ | 1,500,141,667 | |||||||
Barclays Capital PLC | 700,000,000 | 3.40 | 07/01/2005 | 700,066,111 | ||||||||||
Deutsche Bank Securities, Inc. | 1,000,000,000 | 3.40 | 07/01/2005 | 1,000,094,444 | ||||||||||
Deutsche Bank Securities, Inc. | 300,000,000 | 3.45 | 07/01/2005 | 300,028,750 | ||||||||||
Greenwich Capital Markets | 400,000,000 | 3.43 | 07/01/2005 | 400,038,111 | ||||||||||
J.P. Morgan Securities, Inc. | 400,000,000 | 3.41 | 07/01/2005 | 400,037,889 | ||||||||||
Morgan Stanley & Co. | 1,000,500,000 | 3.40 | 07/01/2005 | 1,000,594,492 | ||||||||||
UBS Securities LLC | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||
Wachovia Capital Markets | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||
Westdeutsche Landesbank AG | 500,000,000 | 3.43 | 07/01/2005 | 500,047,639 | ||||||||||
TOTAL | $ | 6,300,500,000 | $ | 6,301,096,325 | ||||||||||
At June 30, 2005, the Joint Repurchase Agreement Account II was fully collateralized by Federal Farm Credit Bank, 2.50% to 6.70%, due 09/13/2005 to 06/15/2007; Federal Home Loan Bank, 4.37% to 5.49%, due 12/22/2008 to 08/15/2011; Federal Home Loan Mortgage Association, 0.00% to 8.00%, due 07/06/2005 to 07/01/2035; Federal National Mortgage Association, 0.00% to 9.50%, due 08/24/2005 to 07/01/2035 and Government National Mortgage Association, 5.50% to 6.50%, due 04/15/2032 to 06/15/2035. |
6
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $596,099,388) | $ | 629,153,756 | |||||
Securities lending collateral, at value | 2,961,250 | ||||||
Cash(a) | 1,201,532 | ||||||
Receivables: | |||||||
Fund shares sold | 2,155,502 | ||||||
Dividends and interest | 848,000 | ||||||
Variation margin | 671,195 | ||||||
Securities lending income | 794 | ||||||
Other assets | 5,320 | ||||||
Total assets | 636,997,349 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Payable upon return of securities loaned | 2,961,250 | ||||||
Amounts owed to affiliates | 354,174 | ||||||
Fund shares repurchased | 312,737 | ||||||
Accrued expenses | 42,549 | ||||||
Total liabilities | 3,670,710 | ||||||
Net Assets: | |||||||
Paid-in capital | 637,543,586 | ||||||
Accumulated undistributed net investment income | 2,809,710 | ||||||
Accumulated net realized loss on investment and futures related transactions | (39,954,149 | ) | |||||
Net unrealized gain on investments and futures | 32,927,492 | ||||||
NET ASSETS | $ | 633,326,639 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 52,383,520 | ||||||
Net asset value, offering and redemption price per share | $ | 12.09 | |||||
(a) | Includes restricted cash of $1,161,150 relating to initial margin requirements and collateral on futures transactions. |
7
Statement of Operations
Investment income: | |||||||
Dividends | $ | 4,621,360 | |||||
Interest (including securities lending income of $8,507) | 169,916 | ||||||
Total income | 4,791,276 | ||||||
Expenses: | |||||||
Management fees | 1,891,881 | ||||||
Transfer Agent fees | 111,083 | ||||||
Custody and accounting fees | 64,625 | ||||||
Printing fees | 23,324 | ||||||
Professional fees | 23,204 | ||||||
Trustee fees | 7,140 | ||||||
Other | 9,729 | ||||||
Total expenses | 2,183,060 | ||||||
Less — expense reductions | (87,548 | ) | |||||
Net Expenses | 2,043,438 | ||||||
NET INVESTMENT INCOME | 2,747,838 | ||||||
Realized and unrealized gain (loss) on investment and futures transactions: | |||||||
Net realized gain from: | |||||||
Investment transactions | 5,249,672 | ||||||
Futures transactions | 56,606 | ||||||
Net change in unrealized gain (loss) on: | |||||||
Investments | (20,603,227 | ) | |||||
Futures | (165,359 | ) | |||||
Net realized and unrealized loss on investment and futures transactions | (15,462,308 | ) | |||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (12,714,470 | ) | ||||
8
Statements of Changes in Net Assets
For the | For the | |||||||||
Six Months Ended | Year Ended | |||||||||
June 30, 2005 (Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 2,747,838 | $ | 5,395,406 | ||||||
Net realized gain from investment and futures related transactions | 5,306,278 | 51,876,006 | ||||||||
Net change in unrealized gain (loss) on investments and futures | (20,768,586 | ) | 5,841,843 | |||||||
Net increase (decrease) in net assets resulting from operations | (12,714,470 | ) | 63,113,255 | |||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (5,358,837 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 145,409,444 | 113,401,573 | ||||||||
Reinvestment of dividends and distributions | — | 5,358,837 | ||||||||
Cost of shares repurchased | (20,505,775 | ) | (38,402,436 | ) | ||||||
Net increase in net assets resulting from share transactions | 124,903,669 | 80,357,974 | ||||||||
TOTAL INCREASE | 112,189,199 | 138,112,392 | ||||||||
Net assets: | ||||||||||
Beginning of period | 521,137,440 | 383,025,048 | ||||||||
End of period | $ | 633,326,639 | $ | 521,137,440 | ||||||
Accumulated undistributed net investment income | $ | 2,809,710 | $ | 61,872 | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 12,127,391 | 9,833,811 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 433,562 | ||||||||
Shares repurchased | (1,712,528 | ) | (3,365,832 | ) | ||||||
NET INCREASE | 10,414,863 | 6,901,541 | ||||||||
9
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | Distributions to shareholders | expense reductions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | From | Net asset | Net assets | Ratio of | net investment | total | net investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | From net | net | value, | at end | net expenses | income | expenses | income | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | realized | Total | end of | Total | of period | to average | to average | to average | to average | turnover | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | gain | distributions | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 12.42 | $ | 0.06 | $ | (0.39 | ) | $ | (0.33 | ) | $ | — | $ | — | $ | — | $ | 12.09 | (2.66 | )% | $ | 633,327 | 0.74 | %(c) | 0.99 | %(c) | 0.77 | %(c) | 0.96 | %(c) | 56 | % | ||||||||||||||||||||||||||||||||
For the Years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 10.92 | 0.14 | 1.49 | 1.63 | (0.13 | ) | — | (0.13 | ) | 12.42 | 14.94 | 521,137 | 0.75 | 1.26 | 0.78 | 1.23 | 128 | |||||||||||||||||||||||||||||||||||||||||||||||
2003 | 8.49 | 0.07 | 2.43 | 2.50 | (0.07 | ) | — | (0.07 | ) | 10.92 | 29.47 | 383,025 | 0.85 | 0.79 | 0.85 | 0.79 | 92 | |||||||||||||||||||||||||||||||||||||||||||||||
2002 | 10.94 | 0.06 | (2.45 | ) | (2.39 | ) | (0.06 | ) | — | (0.06 | ) | 8.49 | (21.89 | ) | 143,439 | 0.85 | 0.60 | 0.86 | 0.59 | 84 | ||||||||||||||||||||||||||||||||||||||||||||
2001 | 12.48 | 0.05 | (1.54 | ) | (1.49 | ) | (0.05 | ) | — | (0.05 | ) | 10.94 | (11.94 | ) | 163,904 | 0.81 | 0.48 | 0.82 | 0.47 | 72 | ||||||||||||||||||||||||||||||||||||||||||||
2000 | 13.98 | 0.11 | (1.46 | ) | (1.35 | ) | (0.08 | ) | (0.07 | ) | (0.15 | ) | 12.48 | (9.62 | ) | 139,303 | 0.85 | 0.87 | 0.87 | 0.85 | 32 | |||||||||||||||||||||||||||||||||||||||||||
(a) | Calculated based on the average shares outstanding methodology. |
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share on valuation date. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available or are deemed to be inaccurate by the Investment Adviser are valued at fair value using methods approved by the Trust’s Board of Trustees.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
F. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest, is required to equal or exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Fund may be delayed or limited and there may be a decline in the value of the collateral during the period while the Fund seeks to assert its rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under triparty repurchase agreements.
G. Futures Contracts — The Fund may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Futures contracts are valued at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund is required to deposit with a broker, or the Fund’s custodian bank on behalf of the broker an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, dependent on the daily fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Fund realizes a gain or loss which is reported in the Statement of Operations.
3. AGREEMENTS |
3. AGREEMENTS (continued) |
Average Daily Net Assets | Annual Rate | |||
First $1 Billion | 0.65% | |||
Next $1 Billion | 0.59% | |||
Over $2 Billion | 0.56% | |||
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
5. SECURITIES LENDING (continued) |
6. LINE OF CREDIT FACILITY |
7. ADDITIONAL TAX INFORMATION |
Capital loss carryforward:* | |||||
Expiring 2009 | $ | (14,471,666 | ) | ||
Expiring 2010 | (27,610,289 | ) | |||
Expiring 2011 | (2,163,043 | ) | |||
Total capital loss carryforward | $ | (44,244,998 | ) | ||
* | Utilization of these losses may be limited under the Code. |
At June 30, 2005, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows:
Tax cost | $ | 600,037,584 | ||
Gross unrealized gain | 50,135,864 | |||
Gross unrealized loss | (18,058,442 | ) | ||
Net unrealized security gain | $ | 32,077,422 | ||
The difference between book-basis and tax-basis unrealized gains (losses) is attributable primarily to wash sales and regulated futures contracts.
8. LEGAL PROCEEDINGS |
8. LEGAL PROCEEDINGS (continued) |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Fund.
affiliates of the Investment Adviser receive compensation in connection with the execution of Fund’s portfolio securities transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000 | $ | 973.40 | $ | 3.60 | ||||||
Hypothetical 5% return | 1,000 | 1,021.15 | + | 3.69 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 0.74%. | ||
+ | Hypothetical expenses are based on the Fund’s actual annualized expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. In recent years, the U.S. stock market has experienced substantial price volatility. | ||
COREsm is a service mark of Goldman, Sachs & Co. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: COREsm U.S. Equity Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITCOREUSSAR |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust – CORE Small Cap Equity Fund during the six-month reporting period that ended June 30, 2005.
Market Review
The S&P 500 Index returned -0.81% over the six-month reporting period ended June 30, 2005. Within the Index, the Materials (-7.9%) and Consumer Discretionary (-6.6%) sectors were the largest detractors in absolute returns, while the heavily weighted Information Technology sector (-5.7%) detracted most (weight times performance) for the period. Value stocks outperformed their growth counterparts by a significant margin for the six-month period, with the Russell 1000 Value Index returning 1.76% versus the Russell 1000 Growth Index return of -1.72%. Large-cap stocks also outperformed small-cap stocks as the Russell 1000 Index and Russell 2000 Index returned 0.11% and -1.25%, respectively. This was largely due to large-cap Information Technology stocks outpacing their smaller counterparts.
Investment Objective
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity investments of U.S. issuers.
Portfolio Composition
Top 10 Portfolio Holdings as of June 30, 2005*
% of | ||||||
Company | Business | Net Assets | ||||
Coldwater Creek, Inc. | Internet & Catalog Retail | 1.6 | % | |||
SVB Financial Group | Banks | 1.5 | ||||
Arbitron, Inc. | Commercial Services & Supplies | 1.5 | ||||
LandAmerica Financial Group, Inc. | Insurance | 1.5 | ||||
Sierra Pacific Resources | Electric Utilities | 1.5 | ||||
Longs Drug Stores Corp. | Food & Drug Retailing | 1.5 | ||||
United Therapeutics Corp. | Biotechnology | 1.5 | ||||
American Home Mortgage | ||||||
Investment Corp. | Real Estate | 1.4 | ||||
Bank of Hawaii Corp. | Banks | 1.4 | ||||
Kindred Healthcare, Inc. | Healthcare Providers & Services | 1.4 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of 0.97%. Over the same period, the Fund’s benchmark, the Russell 2000 Index (with dividends reinvested) generated a cumulative total return of -1.25%.
The Fund outperformed its benchmark for the period as returns to the CORE investment themes were positive. Momentum was the biggest positive contributor to relative returns, as companies with strong momentum characteristics outperformed their industry counterparts. Management Impact, Profitability, Earnings Quality, and Valuation also added value, while Analyst Sentiment was only slightly positive for the period.
Among sectors, stock selection was positive overall. The Fund’s holdings in the Industrials and Financials sectors were most successful for the period. Conversely, the Fund’s holdings in the Information Technology sector lagged their peers in the benchmark the most, but did little to offset the gains experienced elsewhere.
In terms of individual stocks, overweight positions in USG Corp., Kindred Healthcare, Inc. and Veritas DGC, Inc. were among the largest contributors to excess returns for the six-month period. On the downside, overweight positions in Cree, Inc., SeaChange International, Inc. and Infocus were among the largest detractors from relative performance for the period.
In managing the CORE products, we do not make size or sector bets. We hope to add value versus the Fund’s index through individual stock selection. Our quantitative process seeks out stocks with good momentum that also appear to be good values. We prefer stocks about which fundamental research analysts are becoming more positive, and companies with strong profit margins, sustainable earnings, and that use their capital to enhance shareholder value. These factors are not highly correlated to each other, which diversifies the Fund’s sources of returns.
We thank you for your investment and look forward to your continued confidence.
July 18, 2005
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) CORE Small Cap Equity Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT CORE Small Cap Equity Fund invests in a broadly diversified portfolio of small-capitalization U.S. equity investments and is subject to market risk so that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular industry sectors and/or general economic conditions. Stocks of smaller companies are often more volatile and less liquid and present greater risks than stocks of larger companies. At times, the Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all.
SECTOR ALLOCATION AS OF JUNE 30, 2005† |
Percentage of Portfolio Investments
† The Fund is actively managed and, as such, its composition may differ over time. The percentage shown for each investment category reflects the value of investments in that category as a percentage of market value. Short-term investments include securities lending collateral. |
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 98.9% | ||||||||||
Aerospace & Defense – 0.4% | ||||||||||
4,800 | Kaman Corp. | $ | 86,592 | |||||||
19,600 | United Industrial Corp. | 700,504 | ||||||||
787,096 | ||||||||||
Airlines – 0.7% | ||||||||||
42,400 | Alaska Air Group, Inc.* | 1,261,400 | ||||||||
Banks – 7.7% | ||||||||||
42,100 | Bank Mutual Corp. | 465,626 | ||||||||
52,000 | Bank of Hawaii Corp. | 2,639,000 | ||||||||
6,700 | Berkshire Hills Bancorp, Inc. | 223,244 | ||||||||
9,500 | Central Pacific Financial Corp. | 338,200 | ||||||||
2,600 | City National Corp. | 186,446 | ||||||||
21,000 | Corus Bankshares, Inc. | 1,165,290 | ||||||||
10,000 | CVB Financial Corp. | 196,800 | ||||||||
21,300 | First Bancorp. | 855,195 | ||||||||
4,000 | First Citizens Bancshares, Inc. | 578,200 | ||||||||
3,333 | First Financial Bankshares, Inc. | 112,789 | ||||||||
4,500 | FirstFed Financial Corp.* | 268,245 | ||||||||
14,700 | Hancock Holding Co. | 505,680 | ||||||||
20,600 | Hanmi Financial Corp. | 344,020 | ||||||||
5,100 | IBERIABANK Corp. | 314,211 | ||||||||
39,400 | PFF Bancorp, Inc. | 1,193,426 | ||||||||
14,700 | Provident Bankshares Corp. | 469,077 | ||||||||
19,200 | Provident Financial Services, Inc. | 337,344 | ||||||||
13,570 | Republic Capital Trust | 203,278 | ||||||||
58,800 | SVB Financial Group*(a) | 2,816,520 | ||||||||
5,795 | Texas Regional Bancshares, Inc. | 176,632 | ||||||||
6,510 | U.S.B. Holding Co., Inc. | 152,334 | ||||||||
10,470 | UMB Financial Corp. | 597,104 | ||||||||
1,200 | WSFS Financial Corp. | 65,652 | ||||||||
14,204,313 | ||||||||||
Beverages – 0.1% | ||||||||||
8,600 | The Boston Beer Co., Inc.* | 192,984 | ||||||||
Biotechnology – 4.7% | ||||||||||
26,500 | Albany Molecular Research, Inc.* | 371,000 | ||||||||
134,700 | Applera Corp. – Celera Genomics Group* | 1,477,659 | ||||||||
34,000 | Cephalon, Inc.* | 1,353,540 | ||||||||
45,400 | Connetics Corp.* | 800,856 | ||||||||
4,700 | Gen-Probe, Inc.* | 170,281 | ||||||||
18,400 | Kos Pharmaceuticals, Inc.* | 1,205,200 | ||||||||
15,300 | Maxygen, Inc.* | 104,958 | ||||||||
15,700 | Protein Design Labs, Inc.* | 317,297 | ||||||||
9,800 | Serologicals Corp.* | 208,250 | ||||||||
55,600 | United Therapeutics Corp.* | 2,679,920 | ||||||||
8,688,961 | ||||||||||
Building Products – 1.6% | ||||||||||
23,450 | Griffon Corp.* | 520,590 | ||||||||
47,600 | USG Corp.*(a) | 2,023,000 | ||||||||
9,200 | Watsco, Inc. | 391,920 | ||||||||
2,935,510 | ||||||||||
Chemicals – 0.6% | ||||||||||
11,200 | H.B. Fuller Co. | 381,472 | ||||||||
30,300 | NewMarket Corp.* | 448,137 | ||||||||
4,600 | The Lubrizol Corp. | 193,246 | ||||||||
1,022,855 | ||||||||||
Commercial Services & Supplies – 6.0% | ||||||||||
13,100 | Alliance Data Systems Corp.* | 531,336 | ||||||||
65,200 | Arbitron, Inc. | 2,797,080 | ||||||||
45,000 | Century Business Services, Inc.* | 182,250 | ||||||||
21,500 | Coinstar, Inc.* | 487,835 | ||||||||
27,600 | Consolidated Graphics, Inc.* | 1,125,252 | ||||||||
3,600 | CRA International, Inc.* | 193,860 | ||||||||
19,500 | CSG Systems International, Inc.* | 370,110 | ||||||||
22,900 | FTI* | 478,610 | ||||||||
14,800 | Global Payments, Inc. | 1,003,440 | ||||||||
89,100 | Labor Ready, Inc.* | 2,076,921 | ||||||||
24,700 | Pre-Paid Legal Services, Inc.(a) | 1,102,855 | ||||||||
32,700 | Spherion Corp.* | 215,820 | ||||||||
63,200 | TeleTech Holdings, Inc.* | 515,080 | ||||||||
11,080,449 | ||||||||||
Communications Equipment – 1.9% | ||||||||||
38,500 | Arris Group, Inc.* | 335,335 | ||||||||
14,900 | Audiovox Corp.* | 230,950 | ||||||||
29,600 | Comtech Telecommunications Corp.* | 965,848 | ||||||||
14,000 | DSP Group, Inc.* | 334,180 | ||||||||
23,200 | InterDigital Communications Corp.* | 406,000 | ||||||||
45,000 | Optical Communication Products, Inc.* | 85,500 | ||||||||
45,800 | Powerwave Technologies, Inc.* | 468,076 | ||||||||
33,500 | Symmetricom, Inc.* | 347,395 | ||||||||
32,300 | Tellabs, Inc.* | 281,010 | ||||||||
3,454,294 | ||||||||||
Computers & Peripherals – 1.7% | ||||||||||
8,300 | Hutchinson Technology, Inc.* | 319,633 | ||||||||
58,800 | Intergraph Corp.* | 2,026,248 | ||||||||
25,900 | Komag, Inc.* | 734,783 | ||||||||
3,080,664 | ||||||||||
Construction & Engineering – 1.1% | ||||||||||
5,200 | EMCOR Group, Inc.* | 254,280 | ||||||||
32,800 | Washington Group International, Inc.* | 1,676,736 | ||||||||
1,931,016 | ||||||||||
Construction Materials – 0.4% | ||||||||||
11,800 | Texas Industries, Inc. | 663,514 | ||||||||
Containers & Packaging – 0.2% | ||||||||||
6,000 | Greif, Inc. | 366,600 | ||||||||
Distributors – 1.4% | ||||||||||
12,100 | Brightpoint, Inc.* | 268,499 | ||||||||
63,800 | Handleman Co. | 1,053,338 | ||||||||
41,300 | WESCO International, Inc.* | 1,295,994 | ||||||||
2,617,831 | ||||||||||
4
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Diversified Financials – 2.1% | ||||||||||
9,300 | AmeriCredit Corp.* | $ | 237,150 | |||||||
6,600 | Calamos Asset Management, Inc. | 179,784 | ||||||||
53,100 | CompuCredit Corp.*(a) | 1,820,268 | ||||||||
10,300 | Investment Technology Group, Inc.* | 216,506 | ||||||||
44,000 | World Acceptance Corp.* | 1,322,200 | ||||||||
3,775,908 | ||||||||||
Diversified Telecommunication – 0.6% | ||||||||||
27,300 | Commonwealth Telephone Enterprises, Inc. | 1,144,143 | ||||||||
Electric Utilities – 2.1% | ||||||||||
14,100 | El Paso Electric Co.* | 288,345 | ||||||||
23,700 | NRG Energy, Inc.* | 891,120 | ||||||||
218,400 | Sierra Pacific Resources*(a) | 2,719,080 | ||||||||
3,898,545 | ||||||||||
Electrical Equipment – 0.8% | ||||||||||
8,100 | A.O. Smith Corp. | 216,351 | ||||||||
19,600 | General Cable Corp.* | 290,668 | ||||||||
10,100 | The Genlyte Group, Inc.* | 492,274 | ||||||||
6,400 | Woodward Governor Co. | 537,792 | ||||||||
1,537,085 | ||||||||||
Electronic Equipment & Instruments – 3.7% | ||||||||||
59,600 | Anixter International, Inc.* | 2,215,332 | ||||||||
25,100 | Coherent, Inc.* | 903,851 | ||||||||
53,800 | Ingram Micro, Inc.* | 842,508 | ||||||||
6,400 | Itron, Inc.* | 285,952 | ||||||||
42,700 | MTS Systems Corp. | 1,433,866 | ||||||||
33,400 | Teledyne Technologies, Inc.* | 1,088,172 | ||||||||
6,769,681 | ||||||||||
Energy Equipment & Services – 3.7% | ||||||||||
16,600 | Cal Dive International, Inc.* | 869,342 | ||||||||
7,200 | GulfMark Offshore, Inc.* | 196,632 | ||||||||
22,400 | Helmerich & Payne, Inc. | 1,051,008 | ||||||||
9,500 | Offshore Logistics, Inc.* | 311,980 | ||||||||
10,200 | SEACOR Holdings, Inc.* | 655,860 | ||||||||
8,000 | Unit Corp.* | 352,080 | ||||||||
32,800 | Universal Compression Holdings, Inc.* | 1,188,672 | ||||||||
77,100 | Veritas DGC, Inc.* | 2,138,754 | ||||||||
6,764,328 | ||||||||||
Food & Drug Retailing – 3.9% | ||||||||||
62,800 | Longs Drug Stores Corp. | 2,703,540 | ||||||||
47,300 | Nash-Finch Co. | 1,737,802 | ||||||||
207,600 | Terra Industries, Inc.*(a) | 1,413,756 | ||||||||
14,200 | The Great Atlantic & Pacific Tea Co., Inc.* | 412,652 | ||||||||
20,600 | The Pantry, Inc.* | 797,838 | ||||||||
7,065,588 | ||||||||||
Food Products – 1.5% | ||||||||||
17,500 | Chiquita Brands International, Inc. | 480,550 | ||||||||
3,800 | J & J Snack Foods Corp. | 198,930 | ||||||||
21,400 | Pilgrim’s Pride Corp.(a) | 730,382 | ||||||||
32,900 | USANA Health Sciences, Inc.*(a) | 1,391,670 | ||||||||
2,801,532 | ||||||||||
Healthcare Equipment & Supplies – 3.4% | ||||||||||
19,900 | American Medical Systems Holdings, Inc.* | 410,935 | ||||||||
73,900 | Applera Corp. – Applied Biosystems Group | 1,453,613 | ||||||||
8,600 | ArthroCare Corp.* | 300,484 | ||||||||
3,200 | Bio-Rad Laboratories, Inc.* | 189,472 | ||||||||
3,600 | Biosite, Inc.* | 197,964 | ||||||||
6,700 | Computer Programs and Systems, Inc. | 249,709 | ||||||||
7,100 | Edwards Lifesciences Corp.* | 305,442 | ||||||||
10,000 | Hologic, Inc.* | 397,500 | ||||||||
80,800 | Immucor, Inc.* | 2,339,160 | ||||||||
5,000 | Ventana Medical Systems, Inc.* | 201,150 | ||||||||
9,300 | West Pharmaceutical Services, Inc. | 260,865 | ||||||||
6,306,294 | ||||||||||
Healthcare Providers & Services – 4.4% | ||||||||||
56,400 | First Horizon Pharmaceutical Corp.* | 1,073,856 | ||||||||
37,800 | Genesis HealthCare Corp.* | 1,749,384 | ||||||||
65,500 | Kindred Healthcare, Inc.* | 2,594,455 | ||||||||
28,300 | Sierra Health Services, Inc.* | 2,022,318 | ||||||||
87,200 | Stewart Enterprises, Inc. | 570,288 | ||||||||
8,010,301 | ||||||||||
Hotels, Restaurants & Leisure – 3.3% | ||||||||||
33,100 | Choice Hotels International, Inc. | 2,174,670 | ||||||||
81,600 | CKE Restaurants, Inc. | 1,135,872 | ||||||||
53,500 | Dave & Buster’s, Inc.* | 986,540 | ||||||||
9,600 | Jack in the Box, Inc.* | 364,032 | ||||||||
29,000 | Papa John’s International, Inc.* | 1,159,130 | ||||||||
4,900 | Red Robin Gourmet Burgers, Inc.* | 303,702 | ||||||||
6,123,946 | ||||||||||
Household Durables – 1.1% | ||||||||||
61,800 | American Greetings Corp. | 1,637,700 | ||||||||
22,600 | Kimball International, Inc. Class B | 298,320 | ||||||||
1,936,020 | ||||||||||
Insurance – 3.9% | ||||||||||
663 | Alleghany Corp.* | 196,911 | ||||||||
9,900 | Argonaut Group, Inc.* | 228,591 | ||||||||
6,500 | FBL Financial Group, Inc. | 179,465 | ||||||||
46,400 | LandAmerica Financial Group, Inc.(a) | 2,754,768 | ||||||||
1,300 | National Western Life Insurance Co.* | 252,057 | ||||||||
5,700 | Safety Insurance Group, Inc. | 192,432 | ||||||||
60,100 | Stewart Information Services Corp. | 2,524,200 | ||||||||
5,300 | The Midland Co. | 186,507 | ||||||||
9,400 | Zenith National Insurance Corp. | 637,884 | ||||||||
7,152,815 | ||||||||||
5
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Internet & Catalog Retail – 1.6% | ||||||||||
115,050 | Coldwater Creek, Inc.* | $ | 2,865,896 | |||||||
Internet Software & Services – 3.0% | ||||||||||
8,900 | Digital River, Inc.* | 282,575 | ||||||||
26,800 | InfoSpace, Inc.* | 882,524 | ||||||||
38,600 | J2 Global Communications New*(a) | 1,329,384 | ||||||||
10,500 | NETGEAR, Inc.* | 195,300 | ||||||||
16,900 | United Online, Inc. | 183,534 | ||||||||
10,700 | WebEx Communications, Inc.* | 282,587 | ||||||||
49,100 | Websense, Inc.* | 2,359,255 | ||||||||
5,515,159 | ||||||||||
IT Consulting & Services – 0.9% | ||||||||||
77,200 | Agilysys, Inc. | 1,212,040 | ||||||||
24,800 | Keane, Inc.* | 339,760 | ||||||||
1,551,800 | ||||||||||
Leisure Equipment & Products – 0.8% | ||||||||||
7,700 | Arctic Cat, Inc. | 158,081 | ||||||||
25,200 | Polaris Industries, Inc. | 1,360,800 | ||||||||
1,518,881 | ||||||||||
Machinery – 3.4% | ||||||||||
41,300 | Applied Industrial Technologies, Inc. | 1,333,577 | ||||||||
8,000 | CIRCOR International, Inc. | 197,360 | ||||||||
70,700 | EnPro Industries, Inc.* | 2,041,109 | ||||||||
17,300 | Esterline Technologies Corp.* | 693,384 | ||||||||
11,800 | NACCO Industries, Inc. | 1,265,196 | ||||||||
6,300 | Tennant Co. | 223,083 | ||||||||
15,200 | The Greenbrier Cos., Inc. | 411,920 | ||||||||
6,165,629 | ||||||||||
Marine – 0.3% | ||||||||||
10,500 | Overseas Shipholding Group, Inc. | 626,325 | ||||||||
Media – 0.7% | ||||||||||
14,600 | Catalina Marketing Corp. | 370,986 | ||||||||
14,200 | Cumulus Media, Inc.* | 167,276 | ||||||||
16,800 | Hearst-Argyle Television, Inc. | 411,600 | ||||||||
10,400 | Journal Communications, Inc. | 174,720 | ||||||||
14,000 | World Wrestling Entertainment, Inc. | 159,880 | ||||||||
1,284,462 | ||||||||||
Metals & Mining – 3.2% | ||||||||||
14,700 | Carpenter Technology Corp. | 761,460 | ||||||||
40,000 | Metals USA, Inc.* | 760,800 | ||||||||
22,700 | Quanex Corp. | 1,203,327 | ||||||||
165,700 | Ryerson Tull, Inc.(a) | 2,364,539 | ||||||||
50,300 | USEC, Inc. | 736,392 | ||||||||
5,826,518 | ||||||||||
Multiline Retail – 0.8% | ||||||||||
36,600 | Big Lots, Inc.* | 484,584 | ||||||||
42,700 | Dillard’s, Inc. | 1,000,034 | ||||||||
1,484,618 | ||||||||||
Office – 0.2% | ||||||||||
12,100 | PAR Technology Corp.* | 387,200 | ||||||||
Oil & Gas – 2.3% | ||||||||||
10,400 | Berry Petroleum Co. | 549,952 | ||||||||
31,700 | Swift Energy Co.* | 1,135,494 | ||||||||
45,600 | The Houston Exploration Co.* | 2,419,080 | ||||||||
6,300 | Vintage Petroleum, Inc. | 191,961 | ||||||||
4,296,487 | ||||||||||
Personal Products – 0.2% | ||||||||||
18,600 | Mannatech, Inc.(a) | 353,772 | ||||||||
Pharmaceuticals – 0.1% | ||||||||||
17,000 | Perrigo Co. | 236,980 | ||||||||
Real Estate – 7.8% | ||||||||||
2,400 | Alexandria Real Estate Equities, Inc. | 176,280 | ||||||||
9,000 | American Campus Communities, Inc. | 204,120 | ||||||||
75,800 | American Home Mortgage Investment Corp. | 2,649,968 | ||||||||
21,800 | BioMed Reality Trust, Inc. | 519,930 | ||||||||
10,800 | Brookfield Homes Corp. | 492,480 | ||||||||
69,200 | Commercial Net Lease Realty | 1,416,524 | ||||||||
41,100 | Cousins Properties, Inc. | 1,215,738 | ||||||||
14,800 | Digital Realty Trust, Inc. | 257,224 | ||||||||
26,600 | Entertainment Properties Trust | 1,223,600 | ||||||||
48,600 | HRPT Properties Trust | 604,098 | ||||||||
5,900 | Jones Lang LaSalle, Inc.* | 260,957 | ||||||||
20,300 | La Quinta Corp.* | 189,399 | ||||||||
12,500 | Lexington Corporate Properties Trust | 303,875 | ||||||||
28,600 | National Health Investors, Inc. | 802,802 | ||||||||
9,400 | RAIT Investment Trust | 281,530 | ||||||||
100,800 | Senior Housing Properties Trust | 1,906,128 | ||||||||
38,400 | Spirit Finance Corp. | 451,200 | ||||||||
43,200 | Trammell Crow Co.* | 1,047,168 | ||||||||
5,300 | Universal Health Realty Income Trust | 201,983 | ||||||||
14,205,004 | ||||||||||
Road & Rail – 1.6% | ||||||||||
14,800 | Covenant Transport, Inc.* | 195,360 | ||||||||
51,800 | Dollar Thrifty Automotive Group, Inc.* | 1,967,364 | ||||||||
12,800 | GATX Corp. | 441,600 | ||||||||
7,900 | Swift Transportation Co., Inc.* | 183,991 | ||||||||
16,700 | U. S. Xpress Enterprises, Inc.* | 198,897 | ||||||||
2,987,212 | ||||||||||
Semiconductor Equipment & Products – 2.2% | ||||||||||
152,900 | Atmel Corp.* | 362,373 | ||||||||
5,900 | Cabot Microelectronics Corp.* | 171,041 | ||||||||
46,000 | Cree, Inc.*(a) | 1,171,620 | ||||||||
35,200 | Integrated Device Technology, Inc.* | 378,400 | ||||||||
11,500 | Photronics, Inc.* | 268,410 | ||||||||
36,200 | Sigmatel, Inc.* | 621,192 |
6
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Semiconductor Equipment & Products – (continued) | ||||||||||
72,900 | Silicon Image, Inc.* | $ | 747,954 | |||||||
7,000 | Varian Semiconductor Equipment Associates* | 259,000 | ||||||||
3,979,990 | ||||||||||
Software – 1.9% | ||||||||||
25,900 | ANSYS, Inc.* | 919,709 | ||||||||
63,800 | Atari, Inc.* | 177,364 | ||||||||
48,900 | Parametric Technology Corp.* | 311,982 | ||||||||
12,000 | QAD, Inc. | 92,400 | ||||||||
123,900 | SeaChange International, Inc.* | 869,778 | ||||||||
9,900 | SPSS, Inc.* | 190,179 | ||||||||
31,300 | SS&C Technologies, Inc. | 991,584 | ||||||||
3,552,996 | ||||||||||
Specialty Retail – 4.4% | ||||||||||
3,000 | Building Materials Holding Corp. | 207,870 | ||||||||
89,600 | Circuit City Stores, Inc. | 1,549,184 | ||||||||
25,000 | Goody’s Family Clothing, Inc. | 184,375 | ||||||||
28,000 | Hot Topic, Inc.* | 535,360 | ||||||||
18,800 | Lithia Motors, Inc. | 542,380 | ||||||||
63,500 | Movie Gallery, Inc.(a) | 1,678,305 | ||||||||
35,100 | Stage Stores, Inc.* | 1,530,360 | ||||||||
4,200 | The Buckle, Inc. | 186,228 | ||||||||
30,300 | The Cato Corp. | 625,695 | ||||||||
10,350 | The Men’s Wearhouse, Inc.* | 356,350 | ||||||||
31,800 | United Rentals, Inc.* | 642,678 | ||||||||
8,038,785 | ||||||||||
Textiles & Apparel – 0.3% | ||||||||||
13,100 | Skechers U.S.A., Inc.* | 186,806 | ||||||||
31,700 | Wellman, Inc. | 323,023 | ||||||||
509,829 | ||||||||||
Wireless Telecommunication Services – 0.2% | ||||||||||
26,500 | Ubiquitel, Inc.* | 216,240 | ||||||||
3,700 | United States Cellular Corp.* | 184,778 | ||||||||
401,018 | ||||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $157,716,212) | $ | 181,362,234 | ||||||||
Securities Lending Collateral – 11.3% | ||||||||||
20,700,150 | Boston Global Investment Trust – Enhanced Portfolio | |||||||||
(Cost $20,700,150) | $ | 20,700,150 | ||||||||
TOTAL INVESTMENTS – 110.2% | ||||||||||
(Cost $178,416,362) | $ | 202,062,384 | ||||||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. | |
(a) | All or a portion of security is on loan. |
ADDITIONAL INVESTMENT INFORMATION |
FUTURES CONTRACTS — At June 30, 2005, the following futures contracts were open as follows:
Number of | Settlement | Unrealized | ||||||||||||||
Type | Contracts Long | Month | Market Value | Gain | ||||||||||||
Russell 1000 Index | 30 | September 2005 | $ | 1,929,300 | $ | 9,613 | ||||||||||
7
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $157,716,212) | $ | 181,362,234 | |||||
Securities lending collateral, at value | 20,700,150 | ||||||
Cash(a) | 2,006,191 | ||||||
Receivables: | |||||||
Variation margin | 106,660 | ||||||
Fund shares sold | 106,309 | ||||||
Dividends | 103,036 | ||||||
Securities lending income | 16,345 | ||||||
Reimbursement from adviser | 10,204 | ||||||
Other assets | 17,573 | ||||||
Total assets | 204,428,702 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Payable upon return of securities loaned | 20,700,150 | ||||||
Fund shares repurchased | 129,397 | ||||||
Amounts owed to affiliates | 118,529 | ||||||
Accrued expenses | 86,406 | ||||||
Total liabilities | 21,034,482 | ||||||
Net Assets: | |||||||
Paid-in capital | 149,625,602 | ||||||
Accumulated undistributed net investment income | 415,328 | ||||||
Accumulated net realized gain on investment and futures transactions | 9,697,655 | ||||||
Net unrealized gain on investments and futures transactions | 23,655,635 | ||||||
NET ASSETS | $ | 183,394,220 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 12,610,569 | ||||||
Net asset value, offering and redemption price per share | $ | 14.54 | |||||
(a) | Includes restricted cash of $350,000 relating to initial margin requirements and collateral on futures transactions. |
8
Statement of Operations
Investment income: | |||||||
Dividends(a) | $ | 1,120,092 | |||||
Interest (including securities lending income of $77,269) | 78,231 | ||||||
Total income | 1,198,323 | ||||||
Expenses: | |||||||
Management fees | 668,913 | ||||||
Printing fees | 71,868 | ||||||
Custody and accounting fees | 47,636 | ||||||
Transfer agent fees | 35,675 | ||||||
Professional fees | 24,688 | ||||||
Trustee fees | 7,140 | ||||||
Other | 6,632 | ||||||
Total expenses | 862,552 | ||||||
Less — expense reductions | (59,857 | ) | |||||
Net Expenses | 802,695 | ||||||
NET INVESTMENT INCOME | 395,628 | ||||||
Realized and unrealized gain (loss) on investment and futures transactions: | |||||||
Net realized gain from: | |||||||
Investment transactions | 2,454,831 | ||||||
Futures transactions | 38,841 | ||||||
Net increase from payment by affiliates to reimburse certain security claims | 13,860 | ||||||
Net change in unrealized gain (loss) on: | |||||||
Investments | (1,607,786 | ) | |||||
Futures | 7,419 | ||||||
Net realized and unrealized gain on investment and futures transactions | 907,165 | ||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,302,793 | |||||
(a) | Foreign taxes withheld on dividends were $482. |
9
Statements of Changes in Net Assets
For the | ||||||||||
Six Months Ended | For the | |||||||||
June 30, 2005 | Year Ended | |||||||||
(Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 395,628 | $ | 257,676 | ||||||
Net realized gain from investment and futures transactions | 2,493,672 | 15,481,829 | ||||||||
Net increase from payment by affiliates to reimburse certain security claims | 13,860 | — | ||||||||
Net increase from payment by affiliates to reimburse certain brokerage commissions | — | 32,935 | ||||||||
Net change in unrealized gain (loss) on investments and futures transactions | (1,600,367 | ) | 11,810,368 | |||||||
Net increase in net assets resulting from operations | 1,302,793 | 27,582,808 | ||||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (339,002 | ) | |||||||
From net realized gain | — | (8,690,421 | ) | |||||||
Total distributions to shareholders | — | (9,029,423 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 6,359,320 | 8,359,311 | ||||||||
Reinvestment of dividends and distributions | — | 9,029,423 | ||||||||
Cost of shares repurchased | (16,089,196 | ) | (25,886,127 | ) | ||||||
Net decrease in net assets resulting from share transactions | (9,729,876 | ) | (8,497,393 | ) | ||||||
TOTAL INCREASE (DECREASE) | (8,427,083 | ) | 10,055,992 | |||||||
Net assets: | ||||||||||
Beginning of period | 191,821,303 | 181,765,311 | ||||||||
End of period | $ | 183,394,220 | $ | 191,821,303 | ||||||
Accumulated undistributed net investment income | $ | 415,328 | $ | 19,700 | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 448,679 | 616,586 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 629,223 | ||||||||
Shares repurchased | (1,156,177 | ) | (1,920,659 | ) | ||||||
NET DECREASE | (707,498 | ) | (674,850 | ) | ||||||
10
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | Distributions to shareholders | expense reductions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Net | Ratio of | net | Ratio of | net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | From | From | Net asset | assets | net | investment | total | investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | From net | tax | net | value, | at end | expenses | income | expenses | income | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | return of | realized | Total | end of | Total | of period | to average | to average | to average | to average | turnover | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | capital | gain | distributions | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 14.40 | $ | 0.03 | $ | 0.11 | $ | 0.14 | $ | — | $ | — | $ | — | $ | — | $ | 14.54 | 0.97 | % | $ | 183,394 | 0.90 | %(c) | 0.44 | %(c) | 0.97 | %(c) | 0.37 | %(c) | 61 | % | ||||||||||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 12.99 | 0.02 | 2.10 | 2.12 | (0.03 | ) | — | (0.68 | ) | (0.71 | ) | 14.40 | 16.33 | 191,821 | 0.90 | 0.14 | 0.97 | 0.07 | 146 | |||||||||||||||||||||||||||||||||||||||||||||||||
2003 | 9.19 | 0.04 | 4.18 | 4.22 | (0.03 | ) | — | (0.39 | ) | (0.42 | ) | 12.99 | 46.00 | 181,765 | 1.03 | 0.40 | 1.25 | 0.18 | 141 | |||||||||||||||||||||||||||||||||||||||||||||||||
2002 | 10.84 | 0.03 | (1.65 | ) | (1.62 | ) | (0.03 | ) | — | — | (0.03 | ) | 9.19 | (14.97) | 47,005 | 1.04 | 0.25 | 1.29 | 0.00 | 128 | ||||||||||||||||||||||||||||||||||||||||||||||||
2001 | 10.40 | 0.03 | 0.44 | 0.47 | (0.02 | ) | (0.01 | ) | — | (0.03 | ) | 10.84 | 4.53 | 54,365 | 1.00 | 0.32 | 1.22 | 0.10 | 105 | |||||||||||||||||||||||||||||||||||||||||||||||||
2000 | 10.60 | 0.06 | 0.09 | 0.15 | (0.04 | ) | — | (0.31 | ) | (0.35 | ) | 10.40 | 1.75 | 40,561 | 0.99 | 0.59 | 1.55 | 0.03 | 91 | |||||||||||||||||||||||||||||||||||||||||||||||||
(a) Calculated based on the average shares outstanding methodology.
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share on valuation date. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available or are deemed to be inaccurate by the investment adviser are valued at fair value using methods approved by the Trust’s Board of Trustees.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
F. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest, is required to equal or exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Fund may be delayed or limited and there may be a decline in the value of the collateral during the period while the Fund seeks to assert its rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under triparty repurchase agreements.
G. Futures Contracts — The Fund may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Futures contracts are valued at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund is required to deposit with a broker, or the Fund’s custodian bank on behalf of the broker an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, dependent on the daily fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Fund realizes a gain or loss which is reported in the Statement of Operations.
3. AGREEMENTS |
Average Daily Net Assets | Annual Rate | |||
First $2 Billion | 0.75 | % | ||
Over $2 Billion | 0.68 | % | ||
Additionally, effective July 1, 2005, GSAM has voluntarily agreed to waive a portion of its Management Fee equal to 0.02% of the Fund’s average daily net assets.
3. AGREEMENTS (continued) |
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
6. LINE OF CREDIT FACILITY |
6. LINE OF CREDIT FACILITY (continued) |
7. ADDITIONAL TAX INFORMATION |
Tax cost | $ | 178,587,860 | ||
Gross unrealized gain | 28,797,440 | |||
Gross unrealized loss | (5,322,916 | ) | ||
Net unrealized security gain (loss) | $ | 23,474,524 | ||
The difference between book-basis and tax basis unrealized gains (losses) is attributable primarily to wash sales and futures contracts.
8. LEGAL PROCEEDINGS |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Fund.
affiliates of the Investment Adviser receive compensation in connection with the execution of Fund’s portfolio securities transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000 | $ | 1,009.70 | $ | 4.48 | ||||||
Hypothetical 5% return | 1,000 | 1,020.33 | + | 4.51 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 0.90%. |
+ | Hypothetical expenses are based on the Fund’s actual annualized expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. In recent years, the U.S. stock market has experienced substantial price volatility. | ||
Stocks of smaller companies are often more volatile and present greater risks than stocks of larger companies. At times, the Goldman Sachs Variable Insurance Trust CORESM Small Cap Equity Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all. | ||
COREsm is a service mark of Goldman, Sachs & Co. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: COREsm Small Cap Equity Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITCORESCSAR |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust — Capital Growth Fund during the six-month reporting period that ended June 30, 2005.
Market Review
After positive returns in 2004, major indices in U.S. markets traded in a relatively narrow range as the S&P 500 returned -0.81% over the past six months. Equity styles traded back and forth for dominance, with the Russell 1000 Growth and Russell 1000 Value Indexes returning -1.72% and 1.76%, respectively, over the period. Value also outperformed growth in the mid cap asset class, as the Russell Midcap Growth and Russell Midcap Value Indexes returned 1.70% and 5.51%, respectively. The supply and demand of oil continues to capture the attention of both the headlines and the marketplace as prices reached in excess of $60 per barrel. The Federal Reserve Bank continued its “measured” rate increases, and the U.S. dollar began to appreciate versus the Euro as voters in France and Holland voted against the ratification of the European Union constitution. Leading the markets during the reporting period were commodity-based businesses in the Energy and Utilities sectors.
Investment Objective
The Fund seeks long-term growth of capital.
Portfolio Composition
% of | ||||||
Company | Business | Net Assets | ||||
Freddie Mac | Financials | 4.3 | % | |||
Microsoft Corp. | Computer Software | 4.2 | ||||
Dell, Inc. | Computer Hardware | 3.5 | ||||
The McGraw-Hill Cos., Inc. | Commercial Services | 3.5 | ||||
QUALCOMM, Inc. | Semiconductors/Semiconductor Capital Equipment | 3.4 | ||||
PepsiCo, Inc. | Beverages | 3.2 | ||||
Wal-Mart Stores, Inc. | Retailing | 3.1 | ||||
Lowe’s Companies, Inc. | Retailing | 3.1 | ||||
Viacom, Inc. | Movies & Entertainment | 2.9 | ||||
Cisco Systems, Inc. | Networking Telecommunications Equipment | 2.9 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of -2.98%. Over the same time period, the Fund’s benchmark, the Russell 1000 Growth Index (with dividends reinvested) generated cumulative total return of -1.72%.
As these returns indicate, it was a difficult environment for large-cap growth stocks. During the reporting period, the Fund’s underperformance versus its benchmark was primarily due to stock selection.
The Fund’s holding in QUALCOMM, Inc. lagged the market as the company lowered its outlook for the next two quarters. We believe this stems primarily from excess handset inventories following strong sales last year. QUALCOMM continued to buy back its stock aggressively, as it increased its buyback authorization to $2 billion last quarter. Despite the short-term weakness, we continue to believe in the company’s long-term growth potential. QUALCOMM was the top contributor to the portfolio’s performance in 2004.
Within the Media sector, Viacom, Inc. and Time Warner, Inc. detracted from performance. Although Viacom has announced plans to split the broadcasting business from the more profitable cable networks, its stock still declined. Moreover, we believe the recent disappointment in lower advertising commitments for the broadcasters led to weakness in the stocks of cable network operators such as Viacom.
In contrast, in the Healthcare sector, Caremark Rx, Inc. and Medco Health Solutions, Inc. were up and positively contributed to performance during the reporting period. Caremark benefited from news that a pending investigation by the Justice Department is near settlement. Caremark reported strong results, bolstered by a large contract it recently won as well as a significant increase in mail pharmacy revenues. Due to the company’s strong performance and its significant cash flow generation, Caremark increased its share repurchase program by $500 million.
Crown Castle International Corp.’s and American Tower Corp.’s stocks were up and enhanced results. Crown Castle’s shares appreciated as the company refinanced its balance sheet, turning its high yield debt into lower yielding debt, effectively decreasing its annual interest expense. Because this translates into a $50 million increase in free cash flow for Crown Castle, the market bid the stock up. We added American Tower Corp. to the portfolio during the second quarter. The company is the largest independent owner and operator of wireless telecommunication towers in the U.S. and shares a duopoly with Crown Castle. We believe the nature of the tower industry ensures transparency in revenue and earnings growth because these businesses are able to lock their wireless telephony and broadcast customers into long-term contracts.
We thank you for your investment and look forward to your continued confidence.
Goldman Sachs Growth Equity Management Team
July 18, 2005
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) Capital Growth Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity
contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT Capital Growth Fund invests primarily in large-capitalization U.S. equity investments and is subject to market risk so that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular industry sectors and/or general economic conditions.
SECTOR ALLOCATION AS OF JUNE 30, 2005† |
Percentage of Portfolio Investments
† The Fund is actively managed and, as such, its composition may differ over time. The percentage shown for each investment category reflects the value of investments in that category as a percentage of market value.
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 100.0% | ||||||||||
Banks – 1.4% | ||||||||||
14,956 | Citigroup, Inc. | $ | 691,416 | |||||||
47,802 | J.P. Morgan Chase & Co. | 1,688,367 | ||||||||
2,379,783 | ||||||||||
Beverages – 3.9% | ||||||||||
99,790 | PepsiCo, Inc. | 5,381,674 | ||||||||
28,065 | The Coca-Cola Co. | 1,171,714 | ||||||||
6,553,388 | ||||||||||
Biotechnology – 2.1% | ||||||||||
59,950 | Amgen, Inc.* | 3,624,577 | ||||||||
Broadcasting & Cable/Satellite TV – 1.9% | ||||||||||
14,678 | Clear Channel Communications, Inc. | 453,991 | ||||||||
69,750 | Univision Communications, Inc.* | 1,921,612 | ||||||||
38,900 | Westwood One, Inc. | 794,727 | ||||||||
3,170,330 | ||||||||||
Commercial Services – 5.0% | ||||||||||
56,290 | Moody’s Corp. | 2,530,798 | ||||||||
132,140 | The McGraw-Hill Cos., Inc. | 5,847,195 | ||||||||
8,377,993 | ||||||||||
Computer Hardware – 3.5% | ||||||||||
148,435 | Dell, Inc.* | 5,864,667 | ||||||||
Computer Services – 2.0% | ||||||||||
86,110 | First Data Corp. | 3,456,455 | ||||||||
Computer Software – 6.2% | ||||||||||
57,645 | Electronic Arts, Inc.* | 3,263,283 | ||||||||
287,565 | Microsoft Corp. | 7,143,115 | ||||||||
10,406,398 | ||||||||||
Drugs & Medicine – 3.4% | ||||||||||
25,740 | Eli Lilly & Co. | 1,433,975 | ||||||||
74,090 | Pfizer, Inc. | 2,043,402 | ||||||||
49,735 | Wyeth | 2,213,208 | ||||||||
5,690,585 | ||||||||||
Electrical Equipment – 1.5% | ||||||||||
86,520 | Tyco International Ltd. | 2,526,384 | ||||||||
Financials – 12.0% | ||||||||||
60,280 | Fannie Mae | 3,520,352 | ||||||||
111,955 | Freddie Mac | 7,302,825 | ||||||||
16,630 | Golden West Financial Corp. | 1,070,639 | ||||||||
166,680 | MBNA Corp. | 4,360,349 | ||||||||
23,235 | Merrill Lynch & Co., Inc. | 1,278,157 | ||||||||
25,345 | Morgan Stanley | 1,329,852 | ||||||||
130,960 | The Charles Schwab Corp. | 1,477,229 | ||||||||
20,339,403 | ||||||||||
Foods – 1.7% | ||||||||||
40,660 | Wm. Wrigley Jr. Co. | 2,799,034 | ||||||||
Gaming/Lodging – 7.9% | ||||||||||
33,090 | Carnival Corp. | 1,805,060 | ||||||||
131,885 | Cendant Corp. | 2,950,267 | ||||||||
45,130 | GTECH Holdings Corp. | 1,319,601 | ||||||||
41,360 | Harrah’s Entertainment, Inc. | 2,980,815 | ||||||||
37,250 | Marriott International, Inc. | 2,541,195 | ||||||||
31,080 | Starwood Hotels & Resorts Worldwide, Inc. | 1,820,356 | ||||||||
13,417,294 | ||||||||||
Household/Personal Care – 2.9% | ||||||||||
61,520 | Avon Products, Inc. | 2,328,532 | ||||||||
47,860 | The Procter & Gamble Co. | 2,524,615 | ||||||||
4,853,147 | ||||||||||
Insurance – 0.7% | ||||||||||
34,730 | Willis Group Holdings Ltd. | 1,136,366 | ||||||||
Internet & Online – 2.8% | ||||||||||
11,720 | Google, Inc.* | 3,447,438 | ||||||||
34,790 | Yahoo!, Inc.* | 1,205,474 | ||||||||
4,652,912 | ||||||||||
Manufacturing – 0.3% | ||||||||||
7,935 | 3M Co. | 573,701 | ||||||||
Medical Products – 5.2% | ||||||||||
11,250 | Fisher Scientific International, Inc.* | 730,125 | ||||||||
60,630 | Medtronic, Inc. | 3,140,028 | ||||||||
18,260 | St. Jude Medical, Inc.* | 796,319 | ||||||||
53,870 | Stryker Corp. | 2,562,057 | ||||||||
20,200 | Zimmer Holdings, Inc.* | 1,538,634 | ||||||||
8,767,163 | ||||||||||
Movies & Entertainment – 5.8% | ||||||||||
92,700 | Liberty Media Corp. Series A* | 944,613 | ||||||||
235,190 | Time Warner, Inc.* | 3,930,025 | ||||||||
153,888 | Viacom, Inc. Class B | 4,927,494 | ||||||||
9,802,132 | ||||||||||
Networking Telecommunications Equipment – 2.9% | ||||||||||
254,140 | Cisco Systems, Inc.* | 4,856,615 | ||||||||
Oil & Gas – 2.4% | ||||||||||
39,780 | Canadian Natural Resources Ltd. | 1,447,197 | ||||||||
20,692 | Exxon Mobil Corp. | 1,189,169 | ||||||||
29,950 | Suncor Energy, Inc. | 1,417,234 | ||||||||
4,053,600 | ||||||||||
Oil Well Services & Equipment – 1.2% | ||||||||||
26,660 | Schlumberger Ltd. | 2,024,560 | ||||||||
Pharmacy Benefit Manager – 3.2% | ||||||||||
75,895 | Caremark Rx, Inc.* | 3,378,846 | ||||||||
38,690 | Medco Health Solutions, Inc.* | 2,064,498 | ||||||||
5,443,344 | ||||||||||
Publishing – 3.3% | ||||||||||
9,150 | Gannett Co., Inc. | 650,840 | ||||||||
56,975 | Lamar Advertising Co.* | 2,436,821 | ||||||||
33,370 | The E.W. Scripps Co. | 1,628,456 | ||||||||
21,610 | Valassis Communications, Inc.* | 800,650 | ||||||||
5,516,767 | ||||||||||
5
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Publishing – (continued) | ||||||||||
Retailing – 7.6% | ||||||||||
89,160 | Lowe’s Companies, Inc. | $ | 5,190,895 | |||||||
58,360 | PETCO Animal Supplies, Inc.* | 1,711,115 | ||||||||
14,580 | Target Corp. | 793,298 | ||||||||
107,960 | Wal-Mart Stores, Inc. | 5,203,672 | ||||||||
12,898,980 | ||||||||||
Semiconductors/Semiconductor Capital Equipment – 6.3% | ||||||||||
52,670 | Intel Corp. | 1,372,580 | ||||||||
98,120 | Linear Technology Corp. | 3,600,023 | ||||||||
173,240 | QUALCOMM, Inc. | 5,718,652 | ||||||||
10,691,255 | ||||||||||
Telecommunications – 2.9% | ||||||||||
94,120 | American Tower Corp.* | 1,978,402 | ||||||||
77,490 | Crown Castle International Corp.* | 1,574,597 | ||||||||
21,580 | Nextel Communications, Inc.* | 697,250 | ||||||||
25,790 | Sprint Corp. | 647,071 | ||||||||
4,897,320 | ||||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $162,629,104) | $ | 168,774,153 | ||||||||
TOTAL INVESTMENTS – 100.0% | ||||||||||
(Cost $162,629,104) | $ | 168,774,153 | ||||||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. |
6
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $162,629,104) | $ | 168,774,153 | |||||
Cash | 119,316 | ||||||
Receivables: | |||||||
Investment securities sold | 207,673 | ||||||
Dividends | 91,440 | ||||||
Fund shares sold | 27,344 | ||||||
Reimbursement from adviser | 1,358 | ||||||
Other assets | 5,293 | ||||||
Total assets | 169,226,577 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Fund shares repurchased | 198,715 | ||||||
Amounts owed to affiliates | 110,455 | ||||||
Accrued expenses | 97,907 | ||||||
Total liabilities | 407,077 | ||||||
Net Assets: | |||||||
Paid-in capital | 189,461,104 | ||||||
Accumulated undistributed net investment income | 174,944 | ||||||
Accumulated net realized loss on investment transactions | (26,961,617 | ) | |||||
Net unrealized gain on investments | 6,145,069 | ||||||
NET ASSETS | $ | 168,819,500 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 16,746,312 | ||||||
Net asset value, offering and redemption price per share | $ | 10.08 | |||||
7
Statement of Operations
Investment income: | ||||||
Dividends(a) | $ | 932,755 | ||||
Interest (including securities lending income of $549) | 16,186 | |||||
Total income | 948,941 | |||||
Expenses: | ||||||
Management fees | 645,394 | |||||
Transfer Agent fees | 34,421 | |||||
Custody and accounting fees | 31,856 | |||||
Printing fees | 30,991 | |||||
Professional fees | 23,204 | |||||
Trustee fees | 7,140 | |||||
Other | 6,544 | |||||
Total expenses | 779,550 | |||||
Less — expense reductions | (5,553 | ) | ||||
Net Expenses | 773,997 | |||||
NET INVESTMENT INCOME | 174,944 | |||||
Realized and unrealized gain (loss) on investment transactions: | ||||||
Net realized gain on investment transactions (including commissions recaptured of $7,738) | 3,170,196 | |||||
Net increase from payment by affiliates to reimburse certain security claims | 2,404 | |||||
Net change in unrealized loss on investments | (9,179,645 | ) | ||||
Net realized and unrealized loss on investment transactions | (6,007,045 | ) | ||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (5,832,101 | ) | |||
(a) | Foreign taxes withheld on dividends were $667. |
8
Statements of Changes in Net Assets
For the | For the | |||||||||
Six Months Ended | Year Ended | |||||||||
June 30, 2005 (Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 174,944 | $ | 1,224,380 | ||||||
Net realized gain from investment transactions | 3,170,196 | 1,083,044 | ||||||||
Net increase from payment by affiliates to reimburse certain security claims | 2,404 | — | ||||||||
Net increase from payment by affiliates to reimburse certain brokerage commissions | — | 665 | ||||||||
Net change in unrealized gain (loss) on investments | (9,179,645 | ) | 13,497,200 | |||||||
Net increase (decrease) in net assets resulting from operations | (5,832,101 | ) | 15,805,289 | |||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (1,269,081 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 7,498,198 | 16,794,368 | ||||||||
Reinvestment of dividends and distributions | — | 1,269,081 | ||||||||
Cost of shares repurchased | (19,534,302 | ) | (25,605,992 | ) | ||||||
Net decrease in net assets resulting from share transactions | (12,036,104 | ) | (7,542,543 | ) | ||||||
TOTAL INCREASE (DECREASE) | (17,868,205 | ) | 6,993,665 | |||||||
Net assets: | ||||||||||
Beginning of period | 186,687,705 | 179,694,040 | ||||||||
End of period | $ | 168,819,500 | $ | 186,687,705 | ||||||
Accumulated undistributed net investment income | $ | 174,944 | $ | — | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 748,907 | 1,723,683 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 122,973 | ||||||||
Shares repurchased | (1,964,988 | ) | (2,631,519 | ) | ||||||
NET DECREASE | (1,216,081 | ) | (784,863 | ) | ||||||
9
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | Distributions to shareholders | expense reductions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | From | Net asset | Net assets | Ratio of | net investment | total | net investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | From net | net | value, | at end | net expenses | income | expenses | income (loss) | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | realized | Total | end of | Total | of period | to average | to average | to average | to average | turnover | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | gain | distributions | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 10.39 | $ | 0.01 | $ | (0.32 | ) | $ | (0.31 | ) | $ | — | $ | — | $ | — | $ | 10.08 | (2.98 | )% | $ | 168,820 | 0.90 | % (c) | 0.20 | % (c) | 0.91 | %(c) | 0.19 | % (c) | 17 | % | ||||||||||||||||||||||||||||||||
For the Years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 9.59 | 0.07 | 0.80 | 0.87 | (0.07 | ) | — | (0.07 | ) | 10.39 | 9.09 | 186,688 | 0.89 | 0.69 | 0.89 | 0.69 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||
2003 | 7.77 | 0.03 | 1.81 | 1.84 | (0.02 | ) | — | (0.02 | ) | 9.59 | 23.74 | 179,694 | 1.02 | 0.38 | 1.43 | (0.03 | ) | 16 | ||||||||||||||||||||||||||||||||||||||||||||||
2002 | 10.28 | 0.01 | (2.50 | ) | (2.49 | ) | (0.02 | ) | — | (0.02 | ) | 7.77 | (24.33 | ) | 18,052 | 1.10 | 0.16 | 1.77 | (0.51 | ) | 24 | |||||||||||||||||||||||||||||||||||||||||||
2001 | 12.09 | 0.02 | (1.78 | ) | (1.76 | ) | (0.02 | ) | (0.03 | ) | (0.05 | ) | 10.28 | (14.46 | ) | 16,266 | 1.00 | 0.15 | 1.69 | (0.54 | ) | 39 | ||||||||||||||||||||||||||||||||||||||||||
2000 | 14.01 | 0.01 | (1.16 | ) | (1.15 | ) | (0.01 | ) | (0.76 | ) | (0.77 | ) | 12.09 | (7.98 | ) | 16,775 | 0.99 | 0.13 | 1.84 | (0.72 | ) | 37 | ||||||||||||||||||||||||||||||||||||||||||
(a) | Calculated based on the average shares outstanding methodology. |
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/ dealer-supplied valuations or matrix pricing systems. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Investments in investment companies (other that those that are exchange traded) are valued at the net asset value per share on valuation date. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available or are deemed to be inaccurate by the Investment Adviser are valued at fair value using methods approved by the Trust’s Board of Trustees.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
F. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest, is required to equal or exceed the
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
G. Commission Recapture — The Fund may direct portfolio trades, subject to obtaining best price and execution, to various brokers who have agreed to rebate a portion of the commissions generated. Such rebates, if any, are made directly to the Fund as cash payments and are included in the net realized gain (loss) on investments in the Statement of Operations.
3. AGREEMENTS |
Average Daily Net Assets | Annual Rate | |||
First $1 Billion | 0.75 | % | ||
Next $1 Billion | 0.68 | % | ||
Over $2 Billion | 0.65 | % | ||
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
6. LINE OF CREDIT FACILITY |
7. ADDITIONAL TAX INFORMATION |
Capital loss carryforward:* | |||||
Expiring 2008 | $ | (7,813,202 | ) | ||
Expiring 2009 | (13,983,325 | ) | |||
Expiring 2010 | (6,239,358 | ) | |||
Expiring 2011 | (1,064,803 | ) | |||
Total capital loss carryforward | $ | (29,100,688 | ) | ||
Timing differences (post-October losses) | $ | (525,543 | ) | ||
* | Utilization of these losses may be limited under the Code. |
7. ADDITIONAL TAX INFORMATION (continued) |
At June 30, 2005, the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows:
Tax cost | $ | 163,137,090 | ||
Gross unrealized gain | 18,722,610 | |||
Gross unrealized loss | (13,085,547 | ) | ||
Net unrealized security gain | $ | 5,637,063 | ||
The difference between book-basis and tax basis unrealized gains (losses) is attributable primarily to wash sales.
8. LEGAL PROCEEDINGS |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Fund.
affiliates of the Investment Adviser receive compensation in connection with the execution of Fund’s portfolio securities transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000 | $ | 970.20 | $ | 4.39 | ||||||
Hypothetical 5% return | 1,000 | 1,020.33 | + | 4.51 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 0.90%. | ||
+ | Hypothetical expenses are based on the Fund’s actual annualized expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. In recent years, the U.S. stock market has experienced substantial price volatility. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Capital Growth Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITCGSAR |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust — Mid Cap Value Fund during the six-month reporting period that ended June 30, 2005.
Market Review
The U.S. equity markets finished the reporting period with relatively flat returns despite reaching both highs and lows of the year. Overall, during the reporting period, the equity market, as measured by the S&P 500 Index, returned - -0.81%. Throughout the period, investor sentiment related to interest rates and commodity prices drove the market’s direction. After bottoming in April and then surging in May, the markets weakened in June as oil prices exceeded $60 a barrel. Despite low interest rates and an improved outlook for economic growth, investor confidence was shaken by continued troubles in the U.S. auto industry.
Investment Objective
The Fund seeks long-term capital appreciation.
Portfolio Composition
Top 10 Portfolio Holdings as of June 30, 2005*
% of | ||||||
Company | Business | Net Assets | ||||
EOG Resources, Inc. | Energy Resources | 3.5 | % | |||
PPL Corp. | Electrical Utilities | 2.7 | ||||
Lennar Corp. | Construction | 2.5 | ||||
AGL Resources, Inc. | Gas Utilities | 2.3 | ||||
Federated Department Stores, Inc. | Retail Apparel | 2.1 | ||||
iStar Financial, Inc. | REITs | 2.1 | ||||
Entergy Corp. | Electrical Utilities | 2.0 | ||||
PG&E Corp. | Electrical Utilities | 1.9 | ||||
M&T Bank Corp. | Regional Banks | 1.9 | ||||
Zions Bancorp | Regional Banks | 1.9 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of 6.22%. Over the same time period, the Fund’s benchmark, the Russell Midcap Value Index (with dividends reinvested) generated a cumulative total return of 5.51%.
Stock selection was strongest in the Healthcare, Financial, and Industrial sectors, while investments in Utilities, Services, and REITs generated more modest gains.
Top contributors to performance included Abercrombie and Fitch Co. in Consumer Cyclicals, Activision Inc. in Technology, and Williams Companies in Energy. Abercrombie & Fitch benefited from changes in its merchandising strategies earlier in the year, which we believe enabled it to compete with department store labels more effectively while increasing same store sales. We subsequently eliminated Abercrombie and Fitch from the portfolio as it reached our price target. Activision, a video game maker/marketer, increased its earnings guidance for 2005 and reported better than expected holiday sales. We believe the company remains attractively valued and is a consistent free cash flow generator. Williams Companies, the one-time troubled natural gas firm, announced further progress in its debt reduction efforts and increased its dividend for the first time in two years. The dividend increase and its magnitude, from one cent to five cents, signaled to investors the near completion of its multi-year restructuring program.
One of the Fund’s largest detractors from performance was Ditech Communications Corp. The telecom equipment supplier reported earnings that fell short of high revenue expectations due to an order disruption in Asia and weak demand in North America. The company’s management, which we consider to be conservative, also guided revenue forecasts to more achievable levels. We added to the Fund’s position in the fourth quarter of 2004, as we believe it is operating at margins well below historical peak levels and trades at a discount versus its peers.
As in the past, we thank you for your continued confidence.
Goldman Sachs Value Portfolio Management Team
July 18, 2005
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) Mid Cap Value Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT Mid Cap Value Fund invests primarily in mid-capitalization U.S. equity investments and is subject to market risk so that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular industry sectors and/or general economic conditions. The securities of mid-capitalization companies involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements.
SECTOR ALLOCATION AS OF JUNE 30, 2005† |
Percentage of Portfolio Investments
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 97.6% | ||||||||||
Biotechnology – 1.4% | ||||||||||
586,922 | MedImmune, Inc.* | $ | 15,682,556 | |||||||
Brokers – 1.4% | ||||||||||
158,013 | The Bear Stearns Companies, Inc. | 16,423,871 | ||||||||
Chemicals – 3.1% | ||||||||||
612,386 | Agrium, Inc. | 12,008,889 | ||||||||
117,741 | Carlisle Cos., Inc. | 8,080,565 | ||||||||
342,440 | Rohm & Haas Co. | 15,868,670 | ||||||||
35,958,124 | ||||||||||
Computer Hardware – 4.5% | ||||||||||
235,840 | Amphenol Corp. | 9,473,693 | ||||||||
222,300 | Avocent Corp.* | 5,810,922 | ||||||||
209,416 | CDW Corp. | 11,955,559 | ||||||||
241,813 | Ditech Communications Corp.* | 1,569,366 | ||||||||
20,992 | Ingram Micro, Inc.* | 328,735 | ||||||||
383,690 | Tech Data Corp.* | 14,046,891 | ||||||||
332,496 | Xerox Corp.* | 4,585,120 | ||||||||
109,869 | Zebra Technologies Corp.* | 4,811,164 | ||||||||
52,581,450 | ||||||||||
Computer Software – 1.2% | ||||||||||
841,240 | Activision, Inc.* | 13,897,285 | ||||||||
Construction – 2.5% | ||||||||||
450,254 | Lennar Corp.(a) | 28,568,616 | ||||||||
Consumer Durables – 2.1% | ||||||||||
194,486 | Mohawk Industries, Inc.* | 16,045,095 | ||||||||
187,136 | The Stanley Works | 8,522,173 | ||||||||
24,567,268 | ||||||||||
Defense/Aerospace – 2.3% | ||||||||||
165,825 | Alliant Techsystems, Inc.* | 11,707,245 | ||||||||
314,985 | Rockwell Collins, Inc.(a) | 15,018,485 | ||||||||
26,725,730 | ||||||||||
Diversified Energy – 2.4% | ||||||||||
926,776 | The Williams Companies, Inc. | 17,608,744 | ||||||||
291,387 | Western Gas Resources, Inc. | 10,169,406 | ||||||||
27,778,150 | ||||||||||
Drugs – 1.6% | ||||||||||
237,729 | Charles River Laboratories International, Inc.* | 11,470,424 | ||||||||
314,584 | IVAX Corp.* | 6,763,556 | ||||||||
18,233,980 | ||||||||||
Electrical Utilities – 11.0% | ||||||||||
142,049 | Cinergy Corp. | 6,366,636 | ||||||||
162,152 | CMS Energy Corp.* | 2,442,009 | ||||||||
286,361 | Edison International | 11,611,939 | ||||||||
304,949 | Entergy Corp. | 23,038,897 | ||||||||
275,997 | FirstEnergy Corp. | 13,278,216 | ||||||||
585,008 | PG&E Corp. | 21,961,200 | ||||||||
27,619 | Pinnacle West Capital Corp. | 1,227,665 | ||||||||
161,721 | PNM Resources, Inc. | 4,659,182 | ||||||||
532,855 | PPL Corp. | 31,640,930 | ||||||||
40,914 | Public Service Enterprise Group, Inc. | 2,488,389 | ||||||||
221,481 | Wisconsin Energy Corp. | 8,637,759 | ||||||||
127,352,822 | ||||||||||
Energy Resources – 6.0% | ||||||||||
715,621 | EOG Resources, Inc.(a) | 40,647,273 | ||||||||
194,832 | Noble Energy, Inc. | 14,739,041 | ||||||||
514,297 | Range Resources Corp. | 13,834,589 | ||||||||
69,220,903 | ||||||||||
Environmental & Other Services – 1.1% | ||||||||||
353,457 | Republic Services, Inc. | 12,727,987 | ||||||||
Food & Beverage – 2.3% | ||||||||||
473,014 | Archer-Daniels-Midland Co. | 10,113,039 | ||||||||
420,088 | Smithfield Foods, Inc.* | 11,455,800 | ||||||||
179,827 | The Pepsi Bottling Group, Inc. | 5,144,850 | ||||||||
26,713,689 | ||||||||||
Gas Utilities – 2.5% | ||||||||||
675,432 | AGL Resources, Inc. | 26,105,447 | ||||||||
74,792 | Energen Corp. | 2,621,459 | ||||||||
28,726,906 | ||||||||||
Health Insurance – 1.9% | ||||||||||
568,258 | Health Net, Inc.* | 21,684,725 | ||||||||
Home Products – 2.6% | ||||||||||
646,863 | Newell Rubbermaid, Inc. | 15,421,214 | ||||||||
254,890 | The Clorox Co. | 14,202,471 | ||||||||
29,623,685 | ||||||||||
Hotel & Leisure – 2.6% | ||||||||||
586,872 | Callaway Golf Co. | 9,055,435 | ||||||||
149,293 | Harrah’s Entertainment, Inc. | 10,759,547 | ||||||||
447,465 | Hilton Hotels Corp. | 10,672,040 | ||||||||
30,487,022 | ||||||||||
Information Services – 0.8% | ||||||||||
1,307,881 | BearingPoint, Inc.*(a) | 9,586,768 | ||||||||
Life Insurance – 1.2% | ||||||||||
257,036 | Torchmark Corp.(a) | 13,417,279 | ||||||||
Media – 1.3% | ||||||||||
349,628 | Lamar Advertising Co.* | 14,953,590 | ||||||||
Medical Providers – 0.6% | ||||||||||
698,321 | WebMD Corp.* | 7,171,757 | ||||||||
Motor Vehicle – 1.3% | ||||||||||
197,335 | Autoliv, Inc. | 8,643,273 | ||||||||
184,616 | Lear Corp. | 6,716,330 | ||||||||
15,359,603 | ||||||||||
Oil Refining – 0.6% | ||||||||||
254,173 | Frontier Oil Corp. | 7,459,977 | ||||||||
4
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Oil Services – 1.0% | ||||||||||
220,927 | BJ Services Co. | $ | 11,594,249 | |||||||
Paper & Packaging – 1.0% | ||||||||||
527,880 | Packaging Corp. of America | 11,111,874 | ||||||||
Parts & Equipment – 2.5% | ||||||||||
374,224 | American Standard Companies, Inc. | 15,687,470 | ||||||||
203,283 | Cooper Industries, Ltd. | 12,989,784 | ||||||||
28,677,254 | ||||||||||
Property Insurance – 7.2% | ||||||||||
246,059 | AMBAC Financial Group, Inc. | 17,165,076 | ||||||||
196,131 | Everest Re Group, Ltd. | 18,240,183 | ||||||||
233,564 | PartnerRe Ltd. | 15,046,193 | ||||||||
299,909 | RenaissanceRe Holdings Ltd. | 14,767,519 | ||||||||
207,493 | The PMI Group, Inc.(a) | 8,088,077 | ||||||||
307,164 | Willis Group Holdings Ltd. | 10,050,406 | ||||||||
83,357,454 | ||||||||||
Publishing – 1.4% | ||||||||||
442,038 | Dow Jones & Co., Inc. | 15,670,247 | ||||||||
Regional Banks – 6.6% | ||||||||||
148,111 | Commerce Bancshares, Inc. | 7,466,275 | ||||||||
558,133 | FirstMerit Corp. | 14,572,852 | ||||||||
326,231 | KeyCorp | 10,814,558 | ||||||||
208,311 | M&T Bank Corp. | 21,905,985 | ||||||||
297,264 | Zions Bancorp. | 21,857,822 | ||||||||
76,617,492 | ||||||||||
REITs – 7.6% | ||||||||||
410,898 | Apartment Investment & Management Co. | 16,813,946 | ||||||||
317,867 | Developers Diversified Realty Corp. | 14,609,167 | ||||||||
125,621 | Equity Residential | 4,625,365 | ||||||||
27,720 | Healthcare Realty Trust, Inc. | 1,070,269 | ||||||||
592,660 | iStar Financial, Inc.(a) | 24,648,730 | ||||||||
440,349 | Plum Creek Timber Co., Inc. | 15,984,669 | ||||||||
283,161 | Prentiss Properties Trust | 10,318,387 | ||||||||
88,070,533 | ||||||||||
Retail Apparel – 5.3% | ||||||||||
336,840 | Federated Department Stores, Inc. | 24,683,635 | ||||||||
374,544 | J. C. Penney Co., Inc. | 19,693,524 | ||||||||
288,649 | Ross Stores, Inc. | 8,344,843 | ||||||||
263,890 | The Talbots, Inc. | 8,568,508 | ||||||||
61,290,510 | ||||||||||
Semiconductors – 1.0% | ||||||||||
210,500 | Freescale Semiconductor, Inc.* | 4,422,605 | ||||||||
221,462 | Tessera Technologies, Inc.* | 7,399,045 | ||||||||
11,821,650 | ||||||||||
Specialty Financials – 2.4% | ||||||||||
301,715 | American Capital Strategies Ltd.(a) | 10,894,929 | ||||||||
391,126 | CIT Group, Inc. | 16,806,684 | ||||||||
27,701,613 | ||||||||||
Tobacco – 0.8% | ||||||||||
115,207 | Reynolds American, Inc.(a) | 9,078,312 | ||||||||
Transports – 1.5% | ||||||||||
106,833 | Landstar System, Inc.* | 3,217,810 | ||||||||
214,894 | Teekay Shipping Corp.(a) | 9,433,846 | ||||||||
101,652 | Yellow Roadway Corp.*(a) | 5,163,922 | ||||||||
17,815,578 | ||||||||||
Trust/ Processors – 1.0% | ||||||||||
259,888 | Northern Trust Corp. | 11,848,294 | ||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $971,772,507) | $ | 1,129,558,803 | ||||||||
Principal | Interest | Maturity | ||||||||||||
Amount | Rate | Date | Value | |||||||||||
Repurchase Agreement(b) – 4.0% | ||||||||||||||
Joint Repurchase Agreement Account II | ||||||||||||||
$ | 46,200,000 | 3.41 | % | 07/01/2005 | $ | 46,200,000 | ||||||||
Maturity Value $46,204,372 | ||||||||||||||
(Cost $46,200,000) | ||||||||||||||
TOTAL INVESTMENTS BEFORE SECURITIES LENDING COLLATERAL | ||||||||||||||
(Cost $1,017,972,507) | $ | 1,175,758,803 | ||||||||||||
Shares | Description | Value | ||||||||
Securities Lending Collateral – 6.8% | ||||||||||
78,315,675 | Boston Global Investment Trust – Enhanced Portfolio | $ | 78,315,675 | |||||||
(Cost $78,315,675) | ||||||||||
TOTAL INVESTMENTS – 108.4% | ||||||||||
(Cost $1,096,288,182) | $ | 1,254,074,478 | ||||||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. | |
(a) | All or a portion of security is on loan. | |
(b) | Joint repurchase agreement was entered into on June 30, 2005. |
Investment Abbreviations: | ||||||
REIT | — | Real Estate Investment Trust | ||||
5
ADDITIONAL INVESTMENT INFORMATION |
JOINT REPURCHASE AGREEMENT ACCOUNT II — At June 30, 2005, the Fund had an undivided interest in the following Joint Repurchase Agreement Account II which equaled $46,200,000 in principal amount.
Principal | Interest | Maturity | Maturity | |||||||||||
Repurchase Agreements | Amount | Rate | Date | Value | ||||||||||
Banc of America Securities LLC | $ | 1,500,000,000 | 3.40 | % | 07/01/2005 | $ | 1,500,141,667 | |||||||
Barclays Capital PLC | 700,000,000 | 3.40 | 07/01/2005 | 700,066,111 | ||||||||||
Deutsche Bank Securities, Inc. | 1,000,000,000 | 3.40 | 07/01/2005 | 1,000,094,444 | ||||||||||
Deutsche Bank Securities, Inc. | 300,000,000 | 3.45 | 07/01/2005 | 300,028,750 | ||||||||||
Greenwich Capital Markets | 400,000,000 | 3.43 | 07/01/2005 | 400,038,111 | ||||||||||
J.P. Morgan Securities, Inc. | 400,000,000 | 3.41 | 07/01/2005 | 400,037,889 | ||||||||||
Morgan Stanley & Co. | 1,000,500,000 | 3.40 | 07/01/2005 | 1,000,594,492 | ||||||||||
UBS Securities LLC | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||
Wachovia Capital Markets | 250,000,000 | 3.40 | 07/01/2005 | 250,023,611 | ||||||||||
Westdeutsche Landesbank AG | 500,000,000 | 3.43 | 07/01/2005 | 500,047,639 | ||||||||||
TOTAL | $ | 6,300,500,000 | $ | 6,301,096,325 | ||||||||||
At June 30, 2005, the Joint Repurchase Agreement Account II was fully collateralized by Federal Farm Credit Bank, 2.50% to 6.70%, due 09/13/2005 to 06/15/2007; Federal Home Loan Bank, 4.37% to 5.49% due 12/22/2008 to 08/15/2011; Federal Home Loan Mortgage Association, 0.00% to 8.00%, due 07/06/2005 to 07/01/2035; Federal National Mortgage Association, 0.00% to 9.50%, due 08/24/2005 to 07/01/2035 and Government National Mortgage Association, 5.50% to 6.50%, due 04/15/2032 to 06/15/2035. |
6
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $1,017,972,507) | $ | 1,175,758,803 | |||||
Securities lending collateral, at value | 78,315,675 | ||||||
Cash | 44,318 | ||||||
Receivables: | |||||||
Investment securities sold | 15,253,809 | ||||||
Fund shares sold | 2,691,866 | ||||||
Dividends and interest | 1,660,613 | ||||||
Securities lending income | 10,642 | ||||||
Other assets | 22,327 | ||||||
Total assets | 1,273,758,053 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Payable upon return of securities loaned | 78,315,675 | ||||||
Investment securities purchased | 37,081,934 | ||||||
Amounts owed to affiliates | 778,581 | ||||||
Fund shares repurchased | 132,363 | ||||||
Accrued expenses | 132,147 | ||||||
Total liabilities | 116,440,700 | ||||||
Net Assets: | |||||||
Paid-in capital | 903,651,266 | ||||||
Accumulated undistributed net investment income | 5,264,063 | ||||||
Accumulated net realized gain on investment transactions | 90,615,728 | ||||||
Net unrealized gain on investments | 157,786,296 | ||||||
NET ASSETS | $ | 1,157,317,353 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 71,326,628 | ||||||
Net asset value, offering and redemption price per share | $ | 16.23 | |||||
7
Statement of Operations
Investment income: | ||||||
Dividends(a) | $ | 9,021,238 | ||||
Interest (including securities lending income of $27,111) | 516,406 | |||||
Total income | 9,537,644 | |||||
Expenses: | ||||||
Management fees | 4,011,517 | |||||
Transfer Agent fees | 200,576 | |||||
Custody and accounting fees | 86,940 | |||||
Printing fees | 54,961 | |||||
Professional fees | 24,688 | |||||
Trustee fees | 7,140 | |||||
Other | 13,770 | |||||
Total expenses | 4,399,592 | |||||
Less — expense reductions | (2,023 | ) | ||||
Net Expenses | 4,397,569 | |||||
NET INVESTMENT INCOME | 5,140,075 | |||||
Realized and unrealized gain (loss) on investment transactions: | ||||||
Net realized gain from investment transactions (including commissions recaptured of $64,265) | 74,149,307 | |||||
Net increase from payment by affiliates to reimburse certain security claims | 8,377 | |||||
Net change in unrealized loss on investments | (13,933,301 | ) | ||||
Net realized and unrealized gain on investment transactions | 60,224,383 | |||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 65,364,458 | ||||
(a) | Foreign taxes withheld on dividends were $5,052. |
8
Statements of Changes in Net Assets
For the | For the | |||||||||
Six Months Ended | Year Ended | |||||||||
June 30, 2005 (Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 5,140,075 | $ | 4,663,695 | ||||||
Net realized gain from investment transactions | 74,149,307 | 96,038,101 | ||||||||
Net increase from payment by affiliates to reimburse certain security claims | 8,377 | — | ||||||||
Net increase from payment by affiliates to reimburse certain brokerage commissions | — | 4,488 | ||||||||
Net change in unrealized gain (loss) on investments | (13,933,301 | ) | 71,810,943 | |||||||
Net increase in net assets resulting from operations | 65,364,458 | 172,517,227 | ||||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (4,829,536 | ) | |||||||
From net realized gain | — | (77,536,102 | ) | |||||||
Total distributions to shareholders | — | (82,365,638 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 219,001,325 | 221,280,141 | ||||||||
Reinvestment of dividends and distributions | — | 82,365,638 | ||||||||
Cost of shares repurchased | (44,199,732 | ) | (54,569,105 | ) | ||||||
Net increase in net assets resulting from share transactions | 174,801,593 | 249,076,674 | ||||||||
TOTAL INCREASE | 240,166,051 | 339,228,263 | ||||||||
Net assets: | ||||||||||
Beginning of period | 917,151,302 | 577,923,039 | ||||||||
End of period | $ | 1,157,317,353 | $ | 917,151,302 | ||||||
Accumulated undistributed net investment income | $ | 5,264,063 | $ | 123,988 | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 14,155,825 | 15,134,517 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 5,458,182 | ||||||||
Shares repurchased | (2,834,458 | ) | (3,828,587 | ) | ||||||
NET INCREASE | 11,321,367 | 16,764,112 | ||||||||
9
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | Distributions to shareholders | expense reductions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | From | Net asset | Net assets | Ratio of | net investment | total | net investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | From net | net | value, | at end | net expenses | income | expenses | income | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | realized | Total | end of | Total | of period | to average | to average | to average | to average | turnover | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | gain | distributions | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 15.28 | $ | 0.08 | $ | 0.87 | $ | 0.95 | $ | — | $ | — | $ | — | $ | 16.23 | 6.22 | % | $ | 1,157,317 | 0.88 | % (c) | 1.03 | % (c) | 0.88 | %(c) | 1.03 | % (c) | 30 | % | ||||||||||||||||||||||||||||||||||
For the Years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 13.37 | 0.10 | 3.34 | 3.44 | (0.09 | ) | (1.44 | ) | (1.53 | ) | 15.28 | 25.88 | 917,151 | 0.88 | 0.67 | 0.88 | 0.67 | 72 | ||||||||||||||||||||||||||||||||||||||||||||||
2003 | 10.61 | 0.12 | 2.89 | 3.01 | (0.11 | ) | (0.14 | ) | (0.25 | ) | 13.37 | 28.39 | 577,923 | 0.91 | 1.02 | 0.91 | 1.02 | 64 | ||||||||||||||||||||||||||||||||||||||||||||||
2002 | 11.29 | 0.14 | (0.67 | ) | (0.53 | ) | (0.12 | ) | (0.03 | ) | (0.15 | ) | 10.61 | (4.69 | ) | 357,537 | 0.91 | 1.20 | 0.91 | 1.20 | 95 | |||||||||||||||||||||||||||||||||||||||||||
2001 | 10.67 | 0.14 | 1.14 | 1.28 | (0.11 | ) | (0.55 | ) | (0.66 | ) | 11.29 | 12.05 | 243,521 | 0.93 | 1.27 | 0.94 | 1.26 | 82 | ||||||||||||||||||||||||||||||||||||||||||||||
2000 | 8.42 | 0.15 | 2.45 | 2.60 | (0.08 | ) | (0.27 | ) | (0.35 | ) | 10.67 | 31.07 | 101,657 | 1.04 | 1.60 | 1.22 | 1.42 | 101 | ||||||||||||||||||||||||||||||||||||||||||||||
(a) | Calculated based on the average shares outstanding methodology. |
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for the periods less than one full year are not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities and investment companies traded on a U.S. securities exchange or the NASDAQ system are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/ dealer-supplied valuations or matrix pricing systems. Unlisted equity securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Investments in investment companies (other than those that are exchange traded) are valued at the net asset value per share on valuation date. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available or are deemed to be inaccurate by the investment adviser are valued at fair value using methods approved by the Trust’s Board of Trustees.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
F. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Fund, including accrued interest, is required to equal or exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Fund may be delayed or limited and there may be a decline in the value of the collateral during the period while the Fund seeks to assert its rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under triparty repurchase agreements.
G. Commission Recapture — The Fund may direct portfolio trades, subject to obtaining best price and execution, to various brokers who have agreed to rebate a portion of the commissions generated. Such rebates, if any, are made directly to the Fund as cash payments and are included in the net realized gain (loss) on investments in the Statement of Operations.
3. AGREEMENTS |
Average Daily Net Assets | Annual Rate | |||
First $2 Billion | 0.80% | |||
Over $2 Billion | 0.72% | |||
GSAM has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding Management Fees, Transfer Agency fees, taxes, interest, brokerage fees and litigation, indemnification, shareholder meeting and other extraordinary expenses exclusive of any expense offset arrangements) to the extent that such expenses exceed, on an annual basis, 0.25% of the average daily net assets of the Fund. GSAM may waive or modify the expense limitation for the Fund, at its discretion, at any time. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Fund is not obligated to reimburse GSAM for prior fiscal year expense reimbursements, if any. For the six months ended June 30, 2005, GSAM made no reimbursements to the Fund.
3. AGREEMENTS (continued) |
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
6. LINE OF CREDIT FACILITY |
7. ADDITIONAL TAX INFORMATION |
7. ADDITIONAL TAX INFORMATION (continued) |
Tax cost | $ | 1,096,878,376 | ||
Gross unrealized gain | 168,297,640 | |||
Gross unrealized loss | (11,101,538 | ) | ||
Net unrealized security gain | $ | 157,196,102 | ||
The difference between book-basis and tax basis unrealized gains (losses) is attributable primarily to wash sales.
8. LEGAL PROCEEDINGS |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Fund.
affiliates of the Investment Adviser receive compensation in connection with the execution of Fund’s portfolio securities transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000 | $ | 1,062.20 | $ | 4.48 | ||||||
Hypothetical 5% return | 1,000 | 1,020.45 | + | 4.39 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 0.88%. | ||
+ | Hypothetical expenses are based on the Fund’s actual annualized expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. In recent years, the U.S. stock market has experienced substantial price volatility. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Mid Cap Value Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITMIDCAPSAR |
Shareholder Letter
Dear Shareholders:
This report provides an overview on the performance of the Goldman Sachs Variable Insurance Trust – International Equity Fund during the six-month reporting period that ended June 30, 2005.
Market Overview
Although most international equity markets made modest gains in local currency terms, many declined in dollar terms over the reporting period. After a three-year decline, the U.S. dollar, which seemed to have bottomed out at the end of 2004, became resurgent again. The equity markets in the Pacific Rim have generated mixed returns thus far in 2005. After a fairly strong first quarter, the Japanese market declined as it was hurt by continued deflation, its dependence on oil imports, and political tensions with China, who is now Japan’s largest trading partner. Elsewhere, western European stock returns were hurt by the weakening Euro. The recent rejection of the European Union constitution by France and the Netherlands did little to boost short-term confidence in the currency.
During the reporting period, the Energy sector generated significant returns. However, rising oil prices, which reached $60 a barrel, is one of the greatest risks facing the international equity markets. In contrast, the Telecommunication Services sector has suffered on the back of concerns over competition in traditional fixed line networks and increasing competition in the mobile industry.
Investment Objective
The Fund seeks long-term capital appreciation.
Portfolio Composition
Top 10 Portfolio Holdings as of June 30, 2005*
% of Net | ||||||||
Company | Country | Business | Assets | |||||
Vodafone Group PLC | United Kingdom | Telecommunication Services | 4.4 | % | ||||
Total Fina Elf SA Class B | France | Energy | 3.9 | |||||
Nestle SA | Switzerland | Food, Beverage & Tobacco | 3.6 | |||||
GlaxoSmithKline PLC | United Kingdom | Pharmaceuticals & Biotechnology | 3.5 | |||||
E.ON AG | Germany | Utilities | 3.2 | |||||
LVMH Moet Hennessy Louis Vuitton SA | France | Consumer Durables & Apparel | 2.9 | |||||
Novartis AG | Switzerland | Pharmaceuticals & Biotechnology | 2.7 | |||||
Svenska Cellulosa AB (SCA) Series B | Sweden | Materials | 2.7 | |||||
Esprit Holdings Ltd. | Hong Kong | Retailing | 2.6 | |||||
Banco Bilbao Vizcaya Argentaria SA | Spain | Banks | 2.6 |
* Opinions expressed in this report represent our present opinions only. Reference to individual securities should not be construed as a commitment that such securities will be retained in the Fund. From time to time, the Fund may change the individual securities it holds, the number or types of securities held and the markets in which it invests. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. References to individual securities do not constitute a recommendation to the investor to buy, hold or sell such securities. In addition, references to past performance of the Fund do not indicate future returns, which are not guaranteed and will vary. Furthermore, the value of shares of the Fund may fall as well as rise.
Performance Review
Over the six-month period that ended June 30, 2005, the Fund generated a cumulative total return of –2.63%. Over the same time period, the Fund’s benchmark, the Morgan Stanley Capital International (“MSCI”) Europe, Australasia and Far East (“EAFE”) Index (unhedged with dividends reinvested), generated a cumulative total return of –0.85%.
During the reporting period, three sectors of the market produced strong returns: Energy, Healthcare, and Utilities. We entered the reporting period with a significant underweight in Energy and, although we closed that underweight quite meaningfully, it was not enough for the portfolio to keep up with the market. Similarly, the Fund was hurt by an underweight in Utilities, as they performed well due to falling bond yields and investors’ search for yield. The Fund also experienced poor performance in the Healthcare sector, as we did not participate in the rebound that occurred after a difficult period in 2004.
On the stock specific level, Royal Dutch Petroleum, based in the Netherlands and the majority shareholder in the Royal Dutch/ Shell Group (the world’s third largest integrated oil company), hurt performance as the Fund did not own this company. Its shares performed well as supply and demand factors drove commodity prices higher. Elsewhere, Credit Agricole, a French retail bank and life insurer, hurt performance. The company announced disappointing fourth quarter 2004 results at the start of this year. Following the company’s merger with Credit Lyonnais, its expenses in the corporate and investment banking division were higher than the market expected as a result of the acceleration of the merger process within this division. Bonuses paid to retain employees and fees spent on recruitment to replace employees that have left also increased costs. We remain confident in Credit Agricole’s management and maintain the Fund’s overweight position.
On the positive side, Hong Kong clothing manufacturer Esprit contributed to performance. The company released outstanding results in February for the first half of its financial year, driven by rising sales of apparel and accessories in Europe and Asia. However, the company gave back some of its gain in May as it felt the impact of the weak Euro. Esprit derives a substantial part of its revenues from Euroland. Another Fund holding that enhanced results was Deutsche Boerse, the provider of stock exchange services in Germany. During the reporting period, it withdrew its offer for the London Stock Exchange (LSE) and announced the return of cash to shareholders. Boerse investors had previously been worried that the company might overpay for its proposed acquisition.
We thank you for your investment and look forward to serving your investment needs in the future.
Goldman Sachs International Equity Portfolio Management Team
July 18, 2005
Shares of the Goldman Sachs Variable Insurance Trust (“VIT”) International Equity Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity
contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund’s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.
The VIT International Equity Fund invests in equity investments in companies that are organized outside the United States or whose securities are principally traded outside the United States and is subject to market risk so that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular industry sectors and/or general economic conditions. Foreign and emerging market securities may be more volatile than investments in U.S. securities and will be subject to the risks of currency fluctuations and sudden economic or political developments. At times, the Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all.
Statement of Investments
Shares | Description | Value | ||||||||
Common Stocks – 100.3% | ||||||||||
Australia – 1.4% | ||||||||||
324,543 | Alumina Ltd. (Materials) | $ | 1,370,232 | |||||||
France – 18.6% | ||||||||||
37,865 | Cap Gemini SA* (Software & Services) | 1,198,080 | ||||||||
91,003 | Credit Agricole SA(a) (Banks) | 2,299,201 | ||||||||
37,063 | LVMH Moet Hennessy Louis Vuitton SA (Consumer Durables & Apparel) | 2,853,332 | ||||||||
63,424 | PagesJaunes SA(a) (Media) | 1,481,457 | ||||||||
41,605 | PSA Peugeot Citroen* (Automobiles & Components) | 2,453,514 | ||||||||
28,929 | Schneider Electric SA(a) (Capital Goods) | 2,175,404 | ||||||||
16,343 | Total Fina Elf SA Class B(a) (Energy) | 3,824,192 | ||||||||
21,930 | Vinci SA(a) (Capital Goods) | 1,822,462 | ||||||||
18,107,642 | ||||||||||
Germany – 6.3% | ||||||||||
34,565 | E.ON AG* (Utilities) | 3,068,440 | ||||||||
61,998 | Premiere AG* (Media) | 2,145,768 | ||||||||
15,439 | Schering AG (Pharmaceuticals & Biotechnology) | 948,590 | ||||||||
6,162,798 | ||||||||||
Hong Kong – 7.4% | ||||||||||
270,320 | Dah Sing Banking Group Ltd. (Banks) | 501,409 | ||||||||
137,313 | Dah Sing Financial Group (Banks) | 916,994 | ||||||||
352,000 | Esprit Holdings Ltd. (Retailing) | 2,538,278 | ||||||||
562,000 | Techtronic Industries Co. Ltd. (Consumer Durables & Apparel) | 1,412,836 | ||||||||
274,000 | Wing Hang Bank Ltd. (Banks) | 1,776,417 | ||||||||
7,145,934 | ||||||||||
Hungary – 1.1% | ||||||||||
15,400 | OTP Bank Rt. GDR (Banks) | 1,036,420 | ||||||||
Italy – 2.0% | ||||||||||
429,158 | Banca Intesa SpA* (Banks) | 1,959,175 | ||||||||
Japan – 11.3% | ||||||||||
55,300 | Credit Saison Co. Ltd. (Diversified Financials) | 1,830,362 | ||||||||
125 | Millea Holdings, Inc. (Insurance) | 1,676,395 | ||||||||
199,000 | Mitsui Fudosan Co. Ltd. (Real Estate) | 2,219,327 | ||||||||
347 | NTT Urban Development Corp. (Real Estate) | 1,417,144 | ||||||||
4,600 | OBIC Co. Ltd. (Software & Services) | 778,782 | ||||||||
77,000 | RICOH Co. Ltd. (Technology Hardware & Equipment) | 1,198,788 | ||||||||
49,700 | Shin-Etsu Chemical Co. Ltd. (Materials) | 1,880,458 | ||||||||
11,001,256 | ||||||||||
Netherlands – 3.0% | ||||||||||
49,762 | ING Groep NV* (Diversified Financials) | 1,398,671 | ||||||||
54,662 | VNU NV* (Media) | 1,521,493 | ||||||||
2,920,164 | ||||||||||
Norway – 1.8% | ||||||||||
219,446 | Telenor ASA (Telecommunication Services) | 1,745,027 | ||||||||
Russia – 3.0% | ||||||||||
43,600 | LUKOIL ADR (Energy) | 1,604,916 | ||||||||
38,300 | Mobile Telesystems ADR (Telecommunication Services) | 1,288,795 | ||||||||
2,893,711 | ||||||||||
South Korea – 4.3% | ||||||||||
24,734 | Hyundai Motor Co. GDR(a)(b) (Automobiles & Components) | 695,026 | ||||||||
46,054 | Hyundai Motor Co. Ltd. GDR(b) (Automobiles & Components) | 1,303,328 | ||||||||
5,000 | Samsung Electronics Co. Ltd. GDR(b) (Semiconductors & Semiconductor Equipment) | 1,196,250 | ||||||||
5,900 | Samsung Electronics Co. Ltd. GDR(b) (Semiconductors & Semiconductor Equipment) | 961,700 | ||||||||
4,156,304 | ||||||||||
Spain – 2.6% | ||||||||||
164,415 | Banco Bilbao Vizcaya Argentaria SA (Banks) | 2,526,198 | ||||||||
Sweden – 7.1% | ||||||||||
403,898 | Skandia Forsakrings AB (Insurance) | 2,216,987 | ||||||||
81,268 | Svenska Cellulosa AB (SCA) Series B (Materials) | 2,600,792 | ||||||||
655,445 | Telefonaktiebolaget LM Ericsson (Technology Hardware & Equipment) | 2,091,194 | ||||||||
6,908,973 | ||||||||||
Switzerland – 8.1% | ||||||||||
44,054 | Credit Suisse Group* (Diversified Financials) | 1,726,812 | ||||||||
13,835 | Nestle SA (Food Beverage & Tobacco) | 3,534,327 | ||||||||
55,169 | Novartis AG (Pharmaceuticals & Biotechnology) | 2,619,239 | ||||||||
7,880,378 | ||||||||||
Taiwan – 1.7% | ||||||||||
164,063 | Hon Hai Precision Industry Co. Ltd. GDR (Technology Hardware & Equipment) | 1,698,052 | ||||||||
4
Shares | Description | Value | ||||||||
Common Stocks – (continued) | ||||||||||
Taiwan – (continued) | ||||||||||
United Kingdom – 20.6% | ||||||||||
113,600 | BP PLC (Energy) | $ | 1,181,406 | |||||||
33,548 | Carnival PLC (Consumer Services) | 1,902,148 | ||||||||
139,837 | GlaxoSmithKline PLC (Pharmaceuticals & Biotechnology) | 3,378,957 | ||||||||
225,906 | Prudential PLC (Insurance) | 2,001,818 | ||||||||
226,821 | Rolls-Royce Group PLC* (Capital Goods) | 1,163,687 | ||||||||
41,960 | Royal Bank of Scotland Group PLC (Banks) | 1,263,369 | ||||||||
140,580 | Shire Pharmaceuticals Group PLC (Pharmaceuticals & Biotechnology) | 1,535,050 | ||||||||
1,776,789 | Vodafone Group PLC (Telecommunication Services) | 4,319,840 | ||||||||
361,099 | W.M. Supermarkets PLC (Food & Staples Retailing) | 1,199,225 | ||||||||
205,736 | WPP Group PLC (Media) | 2,107,330 | ||||||||
20,052,830 | ||||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $86,784,662) | $ | 97,565,094 | ||||||||
Principal | Interest | Maturity | ||||||||||||
Amount | Rate | Date | Value | |||||||||||
Short-Term Obligation – 2.4% | ||||||||||||||
State Street Bank & Trust Euro – Time Deposit | ||||||||||||||
$ | 2,286,000 | 3.19 | % | 07/01/2005 | $ | 2,286,000 | ||||||||
(Cost $2,286,000) | ||||||||||||||
TOTAL INVESTMENTS BEFORE SECURITIES LENDING COLLATERAL | ||||||||||||||
(Cost $89,070,662) | $ | 99,851,094 | ||||||||||||
Shares | Description | Value | ||||||||
Securities Lending Collateral – 5.9% | ||||||||||
5,760,283 | Boston Global Investment Trust – Enhanced Portfolio | $ | 5,760,283 | |||||||
(Cost $5,760,283) | ||||||||||
TOTAL INVESTMENTS – 108.6% | ||||||||||
(Cost $94,830,945) | $ | 105,611,377 | ||||||||
As a % of | ||||||
Net Assets | ||||||
Investments Industry Classifications(c) | ||||||
Automobiles & Components | 4.6 | % | ||||
Banks | 12.6 | |||||
Capital Goods | 5.3 | |||||
Consumer Durables & Apparel | 4.4 | |||||
Consumer Services | 2.0 | |||||
Diversified Financials | 5.1 | |||||
Energy | 6.8 | |||||
Food & Staples Retailing | 1.2 | |||||
Food Beverage & Tobacco | 3.6 | |||||
Insurance | 6.1 | |||||
Materials | 6.0 | |||||
Media | 7.5 | |||||
Pharmaceuticals & Biotechnology | 8.7 | |||||
Real Estate | 3.7 | |||||
Retailing | 2.6 | |||||
Semiconductors & Semiconductor Equipment | 2.2 | |||||
Short Term Investments(d) | 8.3 | |||||
Software & Services | 2.0 | |||||
Technology Hardware & Equipment | 5.1 | |||||
Telecommunication Services | 7.6 | |||||
Utilities | 3.2 | |||||
TOTAL INVESTMENTS | 108.6 | % | ||||
The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. |
* | Non-income producing security. | |
(a) | All or portion of security is on loan. | |
(b) | Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the Investment Adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $4,156,304, which represents approximately 4.3% of net assets as of June 30, 2005. | |
(c) | Industry concentrations greater than one-tenth of one percent are disclosed. | |
(d) | Short-term investments include securities lending collateral. |
Investment Abbreviations: | ||||||
ADR | — | American Depositary Receipt | ||||
GDR | — | Global Depositary Receipt | ||||
5
ADDITIONAL INVESTMENT INFORMATION |
FORWARD FOREIGN CURRENCY CONTRACTS — At June 30, 2005, the Fund had outstanding forward foreign currency exchange contracts, both to purchase and sell foreign currencies as follows:
Unrealized | ||||||||||||||||||||
Open Forward Foreign Currency | Expiration | Value on | Current | |||||||||||||||||
Purchase Contracts | Date | Settlement Date | Value | Gain | Loss | |||||||||||||||
Australian Dollar | �� | 08/18/2005 | $ | 3,831,763 | $ | 3,752,331 | $ | — | $ | 79,432 | ||||||||||
09/21/2005 | 1,283,015 | 1,284,613 | 1,598 | — | ||||||||||||||||
09/21/2005 | 1,232,000 | 1,220,981 | — | 11,019 | ||||||||||||||||
British Pounds | 07/20/2005 | 4,996,909 | 4,881,752 | — | 115,157 | |||||||||||||||
09/21/2005 | 1,224,000 | 1,202,054 | — | 21,946 | ||||||||||||||||
Canadian Dollar | 09/21/2005 | 1,226,000 | 1,255,414 | 29,414 | — | |||||||||||||||
Danish Krone | 09/22/2005 | 741,531 | 741,800 | 269 | — | |||||||||||||||
Euro | 07/29/2005 | 1,832,842 | 1,834,632 | 1,790 | — | |||||||||||||||
09/21/2005 | 607,000 | 608,890 | 1,890 | — | ||||||||||||||||
09/21/2005 | 1,225,000 | 1,214,431 | — | 10,569 | ||||||||||||||||
Japanese Yen | 07/27/2005 | 10,232,187 | 10,072,326 | — | 159,861 | |||||||||||||||
09/21/2005 | 615,000 | 599,280 | — | 15,720 | ||||||||||||||||
New Zealand Dollar | 08/10/2005 | 248,139 | 241,864 | — | 6,275 | |||||||||||||||
Norwegian Krone | 09/21/2005 | 3,064,118 | 3,010,374 | — | 53,744 | |||||||||||||||
Singapore Dollar | 08/22/2005 | 882,503 | 877,036 | — | 5,467 | |||||||||||||||
Swedish Krona | 09/21/2005 | 1,133,832 | 1,057,693 | — | 76,139 | |||||||||||||||
Swiss Franc | 09/21/2005 | 615,000 | 598,639 | — | 16,361 | |||||||||||||||
TOTAL OPEN FORWARD FOREIGN CURRENCY PURCHASE CONTRACTS | $ | 34,990,839 | $ | 34,454,110 | $ | 34,961 | $ | 571,690 | ||||||||||||
Unrealized | ||||||||||||||||||||
Open Forward Foreign Currency | Expiration | Value on | Current | |||||||||||||||||
Sale Contracts | Date | Settlement Date | Value | Gain | Loss | |||||||||||||||
Australian Dollar | 09/21/2005 | $ | 618,000 | $ | 608,168 | $ | 9,832 | $ | — | |||||||||||
09/21/2005 | 615,000 | 626,624 | — | 11,624 | ||||||||||||||||
British Pounds | 07/20/2005 | 793,605 | 782,489 | 11,116 | — | |||||||||||||||
09/21/2005 | 1,235,825 | 1,219,324 | 16,501 | — | ||||||||||||||||
Canadian Dollar | 09/21/2005 | 2,533,365 | 2,607,672 | — | 74,307 | |||||||||||||||
Euro | 07/29/2005 | 235,578 | 236,144 | — | 566 | |||||||||||||||
09/21/2005 | 3,111,343 | 3,020,752 | 90,591 | — | ||||||||||||||||
09/21/2005 | 618,000 | 619,035 | — | 1,035 | ||||||||||||||||
Hong Kong Dollar | 09/15/2005 | 5,437,129 | 5,442,535 | — | 5,406 | |||||||||||||||
Hungarian Forint | 09/14/2005 | 873,672 | 879,674 | — | 6,002 | |||||||||||||||
Japanese Yen | 09/21/2005 | 1,398,534 | 1,362,358 | 36,176 | — | |||||||||||||||
Norwegian Krone | 08/26/2005 | 989,375 | 971,143 | 18,232 | — | |||||||||||||||
09/21/2005 | 618,000 | 624,579 | — | 6,579 | ||||||||||||||||
Swedish Krona | 09/21/2005 | 1,839,000 | 1,759,938 | 79,062 | — | |||||||||||||||
09/26/2005 | 1,958,774 | 1,906,376 | 52,398 | |||||||||||||||||
Swiss Franc | 07/15/2005 | 1,321,553 | 1,241,981 | 79,572 | — | |||||||||||||||
09/21/2005 | 2,399,405 | 2,315,500 | 83,905 | — | ||||||||||||||||
TOTAL OPEN FORWARD FOREIGN CURRENCY SALE CONTRACTS | $ | 26,596,158 | $ | 26,224,292 | $ | 477,385 | $ | 105,519 | ||||||||||||
6
Statement of Assets and Liabilities
Assets: | |||||||
Investment in securities, at value (identified cost $89,070,662) | $ | 99,851,094 | |||||
Securities lending collateral, at value | 5,760,283 | ||||||
Cash | 364 | ||||||
Foreign currencies, at value (identified cost $61,291) | 60,768 | ||||||
Receivables: | |||||||
Forward foreign currency exchange contracts, at value | 512,346 | ||||||
Dividends and interest, at value | 248,370 | ||||||
Securities lending income | 9,604 | ||||||
Reimbursement from adviser | 7,644 | ||||||
Fund shares sold | 7,504 | ||||||
Other assets | 2,086 | ||||||
Total assets | 106,460,063 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Payable upon return of securities loaned | 5,760,283 | ||||||
Investment securities purchased, at value | 2,604,307 | ||||||
Forward foreign currency exchange contracts, at value | 677,209 | ||||||
Amounts owed to affiliates | 83,760 | ||||||
Fund shares repurchased | 60,878 | ||||||
Accrued expenses | 40,986 | ||||||
Total liabilities | 9,227,423 | ||||||
Net Assets: | |||||||
Paid-in capital | 135,525,580 | ||||||
Accumulated undistributed net investment income | 1,299,755 | ||||||
Accumulated net realized loss on investment, futures and foreign currency related transactions | (50,210,635 | ) | |||||
Net unrealized gain on investments and translation of assets and liabilities denominated in foreign currencies | 10,617,940 | ||||||
NET ASSETS | $ | 97,232,640 | |||||
Total shares of beneficial interest outstanding, par value $0.001 (unlimited shares authorized) | 9,397,288 | ||||||
Net asset value, offering and redemption price per share | $ | 10.35 | |||||
7
Statement of Operations
Investment income: | |||||||
Dividends(a) | $ | 1,396,278 | |||||
Interest (including securities lending income of $82,236) | 96,887 | ||||||
Total income | 1,493,165 | ||||||
Expenses: | |||||||
Management fees | 509,974 | ||||||
Custody and accounting fees | 52,024 | ||||||
Printing fees | 26,935 | ||||||
Professional fees | 24,094 | ||||||
Transfer Agent fees | 20,399 | ||||||
Trustee fees | 7,140 | ||||||
Other | 7,345 | ||||||
Total expenses | 647,911 | ||||||
Less — expense reductions | (34,475 | ) | |||||
Net Expenses | 613,436 | ||||||
NET INVESTMENT INCOME | 879,729 | ||||||
Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions: | |||||||
Net realized gain (loss) from: | |||||||
Investment transactions | 6,251,528 | ||||||
Futures transactions | (1,726 | ) | |||||
Foreign currency related transactions | (675,087 | ) | |||||
Net change in unrealized loss on: | |||||||
Investments | (8,955,431 | ) | |||||
Translation of assets and liabilities denominated in foreign currencies | (97,648 | ) | |||||
Net realized and unrealized loss on investment, futures and foreign currency related transactions | (3,478,364 | ) | |||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,598,635 | ) | ||||
(a) | Foreign taxes withheld on dividends were $196,926. |
8
Statements of Changes in Net Assets
For the | For the | |||||||||
Six Months Ended | Year Ended | |||||||||
June 30, 2005 (Unaudited) | December 31, 2004 | |||||||||
From operations: | ||||||||||
Net investment income | $ | 879,729 | $ | 763,630 | ||||||
Net realized gain on investment, futures and foreign currency related transactions | 5,574,715 | 6,084,785 | ||||||||
Net change in unrealized gain (loss) on investments and translation of assets and liabilities denominated in foreign currencies | (9,053,079 | ) | 5,896,272 | |||||||
Net increase (decrease) in net assets resulting from operations | (2,598,635 | ) | 12,744,687 | |||||||
Distributions to shareholders: | ||||||||||
From net investment income | — | (1,154,644 | ) | |||||||
From share transactions: | ||||||||||
Proceeds from sales of shares | 3,261,035 | 5,062,404 | ||||||||
Reinvestment of dividends and distributions | — | 1,154,644 | ||||||||
Cost of shares repurchased | (12,053,792 | ) | (15,975,317 | ) | ||||||
Net decrease in net assets resulting from share transactions | (8,792,757 | ) | (9,758,269 | ) | ||||||
TOTAL INCREASE (DECREASE) | (11,391,392 | ) | 1,831,774 | |||||||
Net assets: | ||||||||||
Beginning of period | $ | 108,624,032 | $ | 106,792,258 | ||||||
End of period | $ | 97,232,640 | $ | 108,624,032 | ||||||
Accumulated undistributed net investment income | $ | 1,299,755 | $ | 420,026 | ||||||
Summary of share transactions: | ||||||||||
Shares sold | 307,373 | 520,639 | ||||||||
Shares issued on reinvestment of dividends and distributions | — | 111,462 | ||||||||
Shares repurchased | (1,134,239 | ) | (1,676,423 | ) | ||||||
NET DECREASE | (826,866 | ) | (1,044,322 | ) | ||||||
9
Financial Highlights
Income (loss) from | Ratios assuming no | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment operations | Distributions to shareholders | expense reductions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | realized | From | From | Net asset | Net assets | Ratio of | net investment | total | net investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | and | Total from | From net | tax | net | value, | at end | net expenses | income | expenses | income (loss) | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | unrealized | investment | investment | return of | realized | Total | end of | Total | of period | to average | to average | to average | to average | turnover | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | of period | income(a) | gain (loss) | operations | income | capital | gain | distributions | period | return(b) | (in 000s) | net assets | net assets | net assets | net assets | rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2005 | $ | 10.62 | $ | 0.09 | $ | (0.36 | ) | $ | (0.27 | ) | $ | — | $ | — | $ | — | $ | — | $ | 10.35 | (2.63 | )% | $ | 97,233 | 1.20 | % (c) | 1.73 | % (c) | 1.27 | % (c) | 1.66 | % (c) | 26 | % | ||||||||||||||||||||||||||||||||||
For the Years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 9.48 | 0.07 | 1.18 | 1.25 | (0.11 | ) | — | — | (0.11 | ) | 10.62 | 13.48 | 108,624 | 1.20 | 0.75 | 1.35 | 0.60 | 63 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2003 | 7.25 | 0.04 | 2.53 | 2.57 | (0.34 | ) | — | — | (0.34 | ) | 9.48 | 35.49 | 106,792 | 1.37 | 0.49 | 2.60 | (0.74 | ) | 49 | |||||||||||||||||||||||||||||||||||||||||||||||||
2002 | 8.99 | 0.03 | (1.68 | ) | (1.65 | ) | (0.09 | ) | — | — | (0.09 | ) | 7.25 | (18.34 | ) | 13,214 | 1.46 | 0.32 | 2.96 | (1.18 | ) | 86 | ||||||||||||||||||||||||||||||||||||||||||||||
2001 | 11.78 | 0.05 | (2.68 | ) | (2.63 | ) | (0.09 | ) | (0.04 | ) | (0.03 | ) | (0.16 | ) | 8.99 | (22.26 | ) | 17,773 | 1.35 | 0.47 | 2.05 | (0.23 | ) | 76 | ||||||||||||||||||||||||||||||||||||||||||||
2000 | 14.47 | 0.05 | (1.99 | ) | (1.94 | ) | — | — | (0.75 | ) | (0.75 | ) | 11.78 | (13.19 | ) | 29,261 | 1.34 | 0.37 | 1.99 | (0.28 | ) | 70 | ||||||||||||||||||||||||||||||||||||||||||||||
(a) | Calculated based on the average shares outstanding methodology. |
(b) | Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
1. ORGANIZATION |
2. SIGNIFICANT ACCOUNTING POLICIES |
A. Investment Valuation — Investments in securities traded on a foreign securities exchange are valued daily at fair value determined by an independent service (if available) under valuation procedures approved by the Board of Trustees consistent with applicable regulatory guidance. The independent service takes into account multiple factors including, but not limited to, movements in the U.S. securities markets, certain depositary receipts, futures contracts and foreign currency exchange rates.
B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Fund, where applicable. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. In addition, it is the Fund’s policy to accrue for estimated capital gains taxes on foreign securities held by the Fund which are subject to such taxes.
C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually.
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Fund on a straight-line or pro rata basis depending upon the nature of the expense.
E. Foreign Currency Translations — The books and records of the Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions.
F. Segregation Transactions — As set forth in the prospectus, the Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Forward Foreign Currency Exchange Contracts — The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are “marked-to-market” daily at the applicable translation rates and any resulting unrealized gains or losses are recorded in the Fund’s financial statements. The Fund records realized gains or losses at the time a forward contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
H. Futures Contracts — The Fund may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Futures contracts are valued at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Fund is required to deposit with a broker, or the Fund’s custodian bank on behalf of the broker an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, dependent on the daily fluctuations in the value of
2. SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. AGREEMENTS |
Average Daily Net Assets | Annual Rate | |||
First $1 Billion | 1.00 | % | ||
Next $1 Billion | 0.90 | % | ||
Over $2 Billion | 0.86 | % | ||
4. PORTFOLIO SECURITIES TRANSACTIONS |
5. SECURITIES LENDING |
6. LINE OF CREDIT FACILITY |
7. ADDITIONAL TAX INFORMATION |
Capital loss carryforward:* | |||||
Expiring 2008 | $ | (17,055,611 | ) | ||
Expiring 2009 | (27,159,909 | ) | |||
Expiring 2010 | (8,409,296 | ) | |||
Expiring 2011 | (609,034 | ) | |||
Total capital loss carryforward | $ | (53,233,850 | ) | ||
Timing differences (post October losses) | $ | (914,343 | ) | ||
* | Utilization of these losses may be limited under the Code. |
7. ADDITIONAL TAX INFORMATION (continued) |
At June 30, 2005 the Fund’s aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows:
Tax cost | $ | 96,468,102 | ||
Gross unrealized gain | 12,569,364 | |||
Gross unrealized loss | (3,426,089 | ) | ||
Net unrealized security gain | $ | 9,143,275 | ||
The difference between book-basis and tax-basis unrealized gains (losses) is attributable primarily to wash sales and certain forward currency contracts.
8. LEGAL PROCEEDINGS |
Statement Regarding Basis for Approval of Management Agreement (Unaudited)
The Trustees oversee the management of Goldman Sachs Variable Insurance Trust (the “Trust”), and review the investment performance and expenses of the investment fund covered by this Report (the “Fund”) at regularly scheduled meetings held during the Fund’s fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreement (the “Management Agreement”) with Goldman Sachs Asset Management International (the “Investment Adviser”) for the Fund.
transactions. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Fund and had, in fact, committed those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address new regulatory compliance requirements applicable to the Fund and the Investment Adviser, including education and training initiatives.
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. | ||
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. | ||
Actual Expenses — The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period. | ||
Hypothetical Example for Comparison Purposes — The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual annualized expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. | ||
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. As a shareholder of the Fund, you do not incur any transaction costs, such as sales charges (loads), redemption fees, or exchange fees, but shareholders of other funds may incur such costs. The second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs. |
Expenses Paid | ||||||||||||
for the | ||||||||||||
Beginning | Ending | 6 months | ||||||||||
Account Value | Account Value | ended | ||||||||||
1/1/05 | 6/30/05 | 6/30/05* | ||||||||||
Actual | $ | 1,000.00 | $ | 973.70 | $ | 5.89 | ||||||
Hypothetical 5% return | 1,000.00 | 1,018.83 | + | 6.02 | ||||||||
* | Expenses are calculated using the Fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the six months ended June 30, 2005. Expenses are calculated by multiplying the annualized expense ratio by the average account value for such period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratio for the period was 1.20%. | ||
+ | Hypothetical expenses are based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses. |
TRUSTEES | OFFICERS | |
Ashok N. Bakhru, Chairman | Kaysie P. Uniacke, President | |
John P. Coblentz, Jr. | James A. Fitzpatrick, Vice President | |
Patrick T. Harker | James A. McNamara, Vice President | |
Mary Patterson McPherson | John M. Perlowski, Treasurer | |
Alan A. Shuch | Howard B. Surloff, Secretary | |
Wilma J. Smelcer | ||
Richard P. Strubel | ||
Kaysie P. Uniacke | ||
GOLDMAN, SACHS & CO. Distributor and Transfer Agent | ||
GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser | ||
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL 133 Peterborough Court London, England EC4A 2BB | ||
Visit our internet address: www.gs.com/funds to obtain the most recent month-end returns. | ||
The reports concerning the Fund included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Fund. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. | ||
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available, without charge, upon request by calling 1-800-621-2550 and on the Securities and Exchange Commission Web site at http://www.sec.gov. | ||
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“the Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Form N-Q may be obtained upon request and without charge by calling 1-800-621-2550. | ||
This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus for the Fund. Please consider the Fund’s objectives, risks and charges and expenses, and read the Prospectus carefully before investing. | ||
Holdings are as of June 30, 2005 and are subject to change in the future. Fund holdings of stocks or bonds should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities. | ||
The Fund is subject to the risk of rising and falling stock prices. | ||
Emerging markets securities are volatile. They are subject to substantial currency fluctuations and sudden economic and political developments. At times, the Goldman Sachs Variable Insurance Trust International Equity Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all. | ||
Concentration of the Fund’s assets in one or a few countries (or a particular geographic area) and currencies will subject the fund to greater risks than if the fund’s assets were not geographically concentrated. | ||
Toll Free (in U.S.): 800-292-4726 | ||
This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: International Equity Fund. | ||
© Copyright 2005 Goldman, Sachs & Co. All rights reserved. Date of first use: August 19, 2005 | ||
VITINTLSAR |
ITEM 2. | CODE OF ETHICS. — Not applicable to the Semi-Annual Report for the period ended June 30, 2005 |
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. — Not applicable to the Semi-Annual Report for the period ended June 30, 2005 |
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. — Not applicable to the Semi-Annual Report for the period ended June 30, 2005 |
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. | |
Not applicable. |
ITEM 6. | SCHEDULE OF INVESTMENTS. | |
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1. |
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. | |
Not applicable. |
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED END MANAGEMENT INVESTMENT COMPANIES. | |
Not applicable. |
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. | |
Not applicable. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees. | |
ITEM 11. | CONTROLS AND PROCEDURES. | |
(a) | The registrant’s principal executive and principal financial officers or persons performing similar functions have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934, as amended. | ||
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting. | ||
ITEM 12. | EXHIBITS. |
(a)(1) | Goldman Sachs Variable Insurance Trust’s Code of Ethics for Principal Executive and Senior Financial Officers is incorporated by reference to Exhibit 11(a)(1) of the registrant’s Form N-CSR filed on March 8, 2004 (Accession Number 0000950123-04-0002976). | ||
(a)(2) | Exhibit 99.CERT | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith. | ||
(b) | Exhibit 99.906CERT | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Goldman Sachs Variable Insurance Trust | ||
/s/ Kaysie Uniacke | ||
By: Kaysie Uniacke | ||
Chief Executive Officer of | ||
Goldman Sachs Variable Insurance Trust | ||
Date: August 19, 2005 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | ||
/s/ Kaysie Uniacke | ||
By: Kaysie Uniacke | ||
Chief Executive Officer of | ||
Goldman Sachs Variable Insurance Trust | ||
Date: August 19, 2005 | ||
/s/ John M. Perlowski | ||
By: John M. Perlowski | ||
Chief Financial Officer of | ||
Goldman Sachs Variable Insurance Trust | ||
Date: August 19, 2005 |