SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07462
WM Variable Trust
(Exact name of registrant as specified in charter)
1201 Third Avenue, 22nd Floor, Seattle, WA
98101 (Address of principal executive offices)
(Zip code)
Jeffrey L. Lunzer
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Name and address of agent for service)
Registrant's telephone number, including area code: (206) 461-3800
Date of fiscal year end: December 31, 2006
Date of reporting period: June 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS
(WM VARIABLE TRUST LOGO)
WM VARIABLE TRUST
Semiannual Report (GRAPHIC)
JUNE 30, 2006 Common sense. Uncommon solutions.(R)
WM VARIABLE TRUST
AT THE WM GROUP OF FUNDS, OUR PASSION IS PIECING INDIVIDUAL INVESTMENTS TOGETHER
INTO COMPREHENSIVE PORTFOLIOS TO MAKE YOUR FINANCIAL PLAN MORE EFFECTIVE.
(GRAPHIC)
Table of Contents
1 Letter from the President
WM Variable Trust Performance and Composition:
2 VT REIT Fund
3 VT Equity Income Fund
4 VT Growth & Income Fund
5 VT West Coast Equity Fund
6 VT Mid Cap Stock Fund
7 VT Growth Fund
8 VT Small Cap Value Fund
9 VT Small Cap Growth Fund
10 VT International Growth Fund
11 VT Short Term Income Fund
12 VT U.S. Government Securities Fund
13 VT Income Fund
14 VT Money Market Fund
15 Glossary
16 Expense Information
18 Financial Statements
85 Notes to Financial Statements
91 Supplemental Information
The WM Variable Trust (VT) Funds may not be purchased directly, but are
currently available through the WM Strategic Asset Manager and the WM Advantage
variable annuities issued by American General Life. They are also available
through the WM Diversified Strategies and WM Diversified Strategies(III)
variable annuities issued by AIG SunAmerica Life Assurance Company, the WM
Diversified Strategies(III) (New York) variable annuity issued by First
SunAmerica Life Insurance Company, and the WM LifeAccumulator variable universal
life insurance policy issued by Farmers New World Life Insurance Company. They
may also be available through other select variable insurance products and
retirement plans. The VT Funds may not have been available for sale for all
products for the time periods shown on pages 2-14.
Withdrawals made prior to age 59 1/2 may be subject to a 10% IRS tax penalty.
NOT FDIC OR NCUA/NCUSIF INSURED
MAY LOSE VALUE - NOT A DEPOSIT - NO BANK OR CREDIT UNION
GUARANTEE - NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Dear Investor,
(PHOTO)
U.S. stocks advanced strongly in early 2006, but since April stocks and bonds
have fluctuated with changes in the outlook for economic growth, inflation, and
interest rates. Real growth surged 5.6% in the first quarter of 2006 before
easing to an estimated 2.5% gain in the second quarter. The housing market also
appears to be in the early stages of a slowdown. Refinancing-fueled consumer
spending has driven economic growth in recent years, so the wavering pace of the
pullback in housing has clouded forecasts for future growth.
This period also saw signs of accelerating inflation, which led the Federal
Reserve (the Fed) to continue raising short-term interest rates. Although the
Fed hopes to contain inflationary pressures, some market participants fear that
the Fed may go too far, while others worry that it could pause too soon. This
uncertainty eroded first quarter gains in the equity markets and kept bond
markets generally negative year-to-date. For the six months ended June 30, 2006,
the S&P 500 rose 2.71%, while the Lehman Brothers Aggregate Bond Index fell
0.72%.(1)
REACHING A COMPANY MILESTONE
The early months of this year marked an important milestone for the WM Group of
Funds. In January, our assets under management exceeded $20 billion for the
first time in the company's history. This growth has been building steadily over
the last few years and has benefited from the solid performance of the WM VT
Funds shown on the following pages.
SHAPING OUR BOARD COMPOSITION
From my perspective, you can certainly be proud of your Board of Trustees and
the stewardship role they perform for your benefit. Just prior to this 2006
fiscal year, Michael (Mike) Murphy, a Director of Washington Mutual, Inc.,
retired from the WM Group of Funds Board of Trustees after 11 years of diligent
service. Concurrently, the Board elected independent Trustee Richard (Dick)
Yancey to the position of chairman. Dick has been a tireless advocate of
shareholder interests in the more than three decades that he has served on our
Board. Both he and Mike have my gratitude for their many years of wise
counsel.(2)
Our Board is now composed of nine members, more than 75% of whom are not
affiliated with Washington Mutual. I believe this structure, which emphasizes
independence, supports strong fund oversight and governance.
THE ROAD AHEAD
In the months to come, our company will undergo an exciting transformation. On
July 25, 2006, Washington Mutual, Inc. announced that it had signed a definitive
agreement to sell WM Advisors to the Principal Financial Group, one of the
nation's leading 401(k) providers. We are thrilled at the opportunity to join an
organization whose primary businesses are asset management and retirement
services--and one which is so closely aligned with our own culture and
commitment to advisors and investors. Over the next few months, we'll keep you
updated on our progress.
Underlying all of our efforts is the expectation that we can ultimately create
value for investors. On behalf of everyone at the WM Group of Funds, thank you
for your support and confidence.
Sincerely,
/s/ William G. Papesh
- ------------------------------------
William G. Papesh
President
(1) The S&P 500 is a broad-based index intended to represent the U.S. equity
market. The Lehman Brothers Aggregate Bond Index is a broad-based index
intended to represent the U.S. fixed-income market. Indices are unmanaged,
and individuals cannot invest directly in an index.
(2) Lengths of service include board membership with Composite Funds, a
predecessor to the WM Group of Funds.
(GRAPHIC) VT REIT Fund PORTFOLIO MANAGER
(PHOTO) David W. Simpson, CFA
WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year Inception Date
---------- ------ --------- ---------
CLASS 1 SHARES 11.31% 16.37% 26.65% 5/1/03
CLASS 2 SHARES 11.14% 16.01% 24.08% 8/5/03
NAREIT All REIT Index(3) 12.72% 16.36% 26.15%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Retail 25% 26% -1%
Industrial/Office 23% 24% -1%
Residential 11% 11% 0%
Health Care 8% 6% +2%
Common Stocks 7% 8% -1%
Lodging/Resorts 7% 6% +1%
Specialty 5% 5% 0%
Diversified 3% 3% 0%
Hybrid 2% 1% +1%
Mortgage/Financial 2% 1% +1%
Self Storage 2% 2% 0%
Cash Equivalents 5% 7% -2%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The VT Equity Income Fund's performance in 1998
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Periods of less than one year are not annualized.
2
PORTFOLIO MANAGER VT Equity Income Fund* (GRAPHIC)
Joseph T. Suty, CFA (PHOTO)
WM Advisors, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
REIT securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.
* As of 8/1/00, the WM VT Bond & Stock Fund became the WM VT Equity Income
Fund, and the Fund's objectives and strategies changed. This information
should be considered when reviewing past performance. Please see the
prospectus for detailed information.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 5.61% 11.42% 9.91% 9.56% 4/28/98
CLASS 2 SHARES 5.48% 11.19% 9.66% 9.71% 5/1/01
S&P 500/Barra Value Index(3) 5.48% 12.06% 4.14% 4.67%
S&P 500(3) 2.71% 8.63% 2.49% 3.24%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Financials 25% 25% 0%
Industrials 14% 9% +5%
Energy 11% 12% -1%
Health Care 11% 9% +2%
Consumer Staples 8% 6% +2%
Information Technology 7% 9% -2%
Telecommunication Services 7% 4% +3%
Consumer Discretionary 5% 6% -1%
REITs 5% 6% -1%
Materials 4% 4% 0%
Utilities 1% 3% -2%
Other 1% 2% -1%
Cash Equivalents 1% 5% -4%
(3) See page 15 for definitions of indices. Returns shown for the indices
assume reinvestment of all dividends and distributions. The since-inception
return shown for the NAREIT All REIT Index is calculated from 4/30/03.
Since-inception returns shown for the S&P 500/Barra Value Index and S&P 500
are calculated from 4/30/98. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) May not reflect the current portfolio composition.
3
(GRAPHIC) VT Growth & Income Fund PORTFOLIO MANAGER
(PHOTO) Stephen Q. Spencer, CFA
WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES 0.16% 3.16% 0.99% 8.42% 9.76% 1/12/94
CLASS 2 SHARES 0.08% 2.92% -- -- 3.15% 11/6/01
S&P 500(3) 2.71% 8.63% 2.49% 8.32% 10.32%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Financials 21% 22% -1%
Industrials 14% 12% +2%
Information Technology 14% 13% +1%
Health Care 13% 13% 0%
Energy 12% 10% +2%
Consumer Staples 9% 9% 0%
Consumer Discretionary 6% 10% -4%
Materials 3% 2% +1%
Telecommunication Services 3% 1% +2%
Utilities 3% 5% -2%
Cash Equivalents 2% 3% -1%
(1) Performance reflects ongoing fund expenses, which may have been waived,
and assumes reinvestment of all dividends and capital gains. Performance
does not reflect the impact of federal, state, or municipal taxes. If it
did, performance would be lower. The VT Growth & Income Fund's performance
in 1995 and the VT West Coast Equity Fund's performance in 1998 benefited
from the agreement of WM Advisors and its affiliates to limit the Funds'
expenses.
(2) Periods of less than one year are not annualized.
4
PORTFOLIO MANAGER VT West Coast Equity Fund (GRAPHIC)
Philip M. Foreman, CFA (PHOTO)
WM Advisors, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
VT West Coast Equity Fund: Small-cap and mid-cap stocks may have additional
risks, including greater price volatility. There may be additional investment
risks due to the Fund's concentration in West Coast companies.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 3.60% 14.00% 4.53% 11.66% 4/28/98
CLASS 2 SHARES 3.48% 13.70% -- 9.15% 11/6/01
Russell 3000(R) Index(3) 3.23% 9.56% 3.53% 3.82%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Financials 16% 17% -1%
Industrials 16% 15% +1%
Information Technology 16% 16% 0%
Health Care 15% 17% -2%
Consumer Discretionary 12% 13% -1%
Energy 7% 7% 0%
Consumer Staples 6% 5% +1%
Materials 4% 3% +1%
REITs 3% 3% 0%
Telecommunication Services 1% 1% 0%
Cash Equivalents 4% 3% +1%
(3) See page 15 for definitions of indices. Returns shown for the indices
assume reinvestment of all dividends and distributions. The since-inception
return shown for the S&P 500 is calculated from 12/31/93. The
since-inception return shown for the Russell 3000(R) Index is calculated
from 4/30/98. Indices are unmanaged, and individuals cannot invest directly
in an index.
(4) May not reflect the current portfolio composition.
5
(GRAPHIC) VT Mid Cap Stock Fund PORTFOLIO MANAGER
(PHOTO) Daniel R. Coleman
WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year 5-Year Inception Date
---------- ------ ------ --------- ---------
CLASS 1 SHARES 5.80% 14.16% 9.43% 12.53% 5/1/00
CLASS 2 SHARES 5.70% 13.96% 9.19% 10.27% 5/1/01
S&P MidCap 400(3) 4.24% 12.98% 9.30% 9.00%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Financials 19% 20% -1%
Industrials 17% 17% 0%
Consumer Discretionary 14% 13% +1%
Health Care 12% 12% 0%
Information Technology 12% 11% +1%
Energy 9% 8% +1%
Materials 5% 5% 0%
Utilities 4% 5% -1%
REITs 2% 2% 0%
Consumer Staples 1% 2% -1%
Telecommunication Services 0% 1% -1%
Cash Equivalents 5% 4% +1%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Periods of less than one year are not annualized.
6
PORTFOLIO MANAGERS VT Growth Fund (GRAPHIC)
Alan Blake, CFA E. Marc Pinto, CFA William L. Wilby, CFA &
Salomon Brothers Janus Capital Marc L. Baylin, CFA
Asset Management, Inc Management LLC OppenheimerFunds, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
VT Mid Cap Stock Fund: Small-cap and mid-cap stocks may have additional risks,
including greater price volatility.
VT Growth Fund: International investing involves increased risks due to currency
fluctuations, political or social instability, and differences in accounting
standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year 5-Year 10-Year Inception Date
---------- ------ ------ ------- --------- ---------
CLASS 1 SHARES -3.76% 4.58% -3.32% 7.32% 10.06% 5/7/93
CLASS 2 SHARES -3.90% 4.32% -- -- 0.85% 11/6/01
Russell 1000(R) Growth Index(3) -0.93% 6.12% -0.76% 5.42% 8.40%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Information Technology 29% 28% +1%
Health Care 19% 19% 0%
Consumer Discretionary 16% 18% -2%
Financials 12% 10% +2%
Consumer Staples 8% 8% 0%
Energy 6% 4% +2%
Industrials 5% 5% 0%
Materials 1% 2% -1%
Telecommunication Services 1% 1% 0%
Cash Equivalents 3% 5% -2%
(3) See page 15 for definitions of indices. Returns shown for the indices
assume reinvestment of all dividends and distributions. The since-inception
return shown for the S&P MidCap 400 is calculated from 4/30/00. The
since-inception return shown for the Russell 1000(R) Growth Index is
calculated from 4/30/93. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) May not reflect the current portfolio composition.
7
(GRAPHIC) VT Small Cap Value Fund PORTFOLIO MANAGER
(PHOTO) David W. Simpson, CFA
WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year Inception Date
---------- ------ --------- ---------
CLASS 1 SHARES 2.51% 3.76% 13.68% 5/3/04
CLASS 2 SHARES 2.42% 3.59% 3.59% 7/1/05
Russell 2000(R) Value Index(3) 10.44% 14.61% 16.58%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Industrials 16% 15% +1%
Financials 14% 13% +1%
Consumer Discretionary 10% 13% -3%
Energy 10% 9% +1%
Information Technology 10% 10% 0%
Consumer Staples 9% 8% +1%
Materials 9% 12% -3%
REITs 7% 5% +2%
Health Care 4% 5% -1%
Telecommunication Services 4% 3% +1%
Options 1% 3% -2%
Utilities 1% 1% 0%
Cash Equivalents 5% 3% +2%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The VT Small Cap Growth Fund's performance in
1995 benefited from the agreement of WM Advisors and its affiliates to
limit the Fund's expenses.
(2) Periods of less than one year are not annualized.
8
PORTFOLIO MANAGERS VT Small Cap Growth Fund (GRAPHIC)
Emerging Growth Team James W. Oberweis, CFA
Delaware Management Company Oberweis Asset Management, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
Small-cap and mid-cap stocks may have additional risks, including greater price
volatility. VT Small Cap Value Fund: International investing involves increased
risks due to currency fluctuations, political or social instability, and
differences in accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES 1.65% 10.44% -4.99% 3.97% 7.03% 1/12/94
CLASS 2 SHARES 1.57% 10.20% -5.21% -- -1.84% 5/1/01
Russell 2000(R) Growth Index(3) 6.07% 14.58% 3.49% 4.12% 6.29%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Health Care 24% 25% -1%
Consumer Discretionary 16% 14% +2%
Industrials 15% 13% +2%
Energy 10% 7% +3%
Semiconductors &
Semiconductor Equipment 7% 6% +1%
Financials 5% 5% 0%
Software 5% 5% 0%
Communications Equipment 4% 7% -3%
Internet Software & Services 4% 7% -3%
IT Services 3% 3% 0%
Computers & Peripherals 1% 2% -1%
Consumer Staples 1% 2% -1%
Electronic Equipment &
Instruments 1% 0% +1%
REITs 1% 1% 0%
Telecommunication Services 0% 1% -1%
Cash Equivalents 3% 2% +1%
(3) See page 15 for definitions of indices. Returns shown for the indices
assume reinvestment of all dividends and distributions. The since-inception
return shown for the Russell 2000(R) Value Index is calculated from
4/30/04. The since-inception return shown for the Russell 2000(R) Growth
Index is calculated from 12/31/93. Indices are unmanaged, and individuals
cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
9
(GRAPHIC) VT International Growth Fund PORTFOLIO MANAGERS
Non-U.S. Equity Team & Emerging
Market Equity Team
Capital Guardian Trust Company
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES 4.89% 26.52% 8.31% 5.39% 6.20% 5/7/93
CLASS 2 SHARES 4.74% 26.18% -- -- 11.45% 11/6/01
MSCI All Country World Index ex-USA(3) 9.99% 28.40% 11.85% 7.16% 7.96%
MSCI EAFE Index(3) 10.50% 27.07% 10.44% 6.75% 7.61%
GEOGRAPHIC BREAKDOWN (4)
As of 6/30/06
(PIE CHART)
As of As of
Country 6/30/06 12/31/05 Change
- ------- ------- -------- ------
Japan 24% 33% -9%
United Kingdom 14% 16% -2%
France 9% 8% +1%
Switzerland 6% 8% -2%
Canada 5% 4% +1%
Germany 5% 6% -1%
Netherlands 4% 5% -1%
South Korea 4% 2% +2%
South Africa 3% 1% +2%
Spain 3% 4% -1%
Australia 2% 2% 0%
Hong Kong 2% 1% +1%
Mexico 2% 1% +1%
Taiwan 2% 0% +2%
Other Countries 12% 7% +5%
Cash Equivalents 3% 2% +1%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The VT International Growth Fund's performance
in 1998 and the VT Short Term Income Fund's performance between 1995 and
1998 benefited from the agreement of WM Advisors and its affiliates to
limit the Funds' expenses.
(2) Periods of less than one year are not annualized.
10
PORTFOLIO MANAGER VT Short Term Income Fund (GRAPHIC)
Craig V. Sosey (PHOTO)
WM Advisors, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
VT International Growth Fund: International investing, especially in emerging
markets, involves increased risks due to currency fluctuations, political or
social instability, and differences in accounting standards.
VT Short Term Income Fund: Fixed-income investments are subject to interest
rate risk, and their value will decline as interest rates rise.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES 1.27% 2.08% 4.14% 5.03% 4.66% 1/12/94
CLASS 2 SHARES 1.33% 2.15% -- -- 3.43% 11/6/01
Citigroup Broad Investment-Grade
Credit 1-3 Years Index(3) 1.34% 2.28% 4.25% 5.65% 5.67%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Domestic Corporate Bonds 56% 58% -2%
Mortgage-Backed
Bonds/CMOs 16% 17% -1%
Foreign Corporate
Bonds (U.S. $) 8% 5% +3%
U.S. Government Agency 7% 7% 0%
Asset-Backed Bonds 5% 5% 0%
U.S. Treasuries 2% 4% -2%
Cash Equivalents 6% 4% +2%
(3) See page 15 for definitions of indices. Effective 3/1/06, the Morgan
Stanley Capital International (MSCI) All Country World Index ex-USA
replaced the MSCI EAFE Index because WM Advisors and the Fund's subadvisor
believe the new benchmark more accurately reflects the VT International
Growth Fund's performance characteristics. Returns shown for the indices
assume reinvestment of all dividends and distributions. Since-inception
returns shown for the MSCI All Country World Index ex-USA and the MSCI EAFE
Index are calculated from 4/30/93. The since-inception return shown for the
Citigroup Broad Investment-Grade Credit 1-3 Years Index is calculated from
12/31/93. Indices are unmanaged, and individuals cannot invest directly in
an index.
(4) May not reflect the current portfolio composition.
11
(GRAPHIC) VT U.S. Government Securities Fund PORTFOLIO MANAGER
(PHOTO) Craig V. Sosey
WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year 5-Year 10-Year Inception Date
---------- ------ ------ ------- --------- ---------
CLASS 1 SHARES -0.16% 0.22% 4.18% 5.59% 5.21% 5/6/93
CLASS 2 SHARES -0.39% -0.10% -- -- 3.01% 11/6/01
Citigroup Mortgage Index(3) -0.12% 0.44% 4.72% 6.15% 6.05%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
FHLMC/FGLMC 32% 34% -2%
FNMA 27% 24% +3%
CMOs 19% 22% -3%
U.S. Treasuries 8% 5% +3%
GNMA 5% 6% -1%
U.S. Government Agency 5% 6% -1%
Cash Equivalents 4% 3% +1%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The VT U.S. Government Securities Fund's
performance in 1995 and 1998 benefited from the agreement of WM Advisors
and its affiliates to limit the Fund's expenses. On 3/1/04, the investment
policies of the Fund were modified. As a result, the Fund's performance for
periods prior to that date may not be representative of the performance it
would have achieved had its current investment policies been in place.
(2) Periods of less than one year are not annualized.
12
PORTFOLIO MANAGERS VT Income Fund (GRAPHIC)
John R. Friedl, CFA and (PHOTO)
Gary J. Pokrzywinski, CFA (PHOTO)
WM Advisors, Inc.
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. VT U.S. Government Securities Fund: Neither the
principal of government bond funds nor their yields are guaranteed by the U.S.
government. VT Income Fund: Lower-rated securities are subject to additional
credit and default risks.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year 5-Year 10-Year Inception Date
---------- ------ ------ ------- --------- ---------
CLASS 1 SHARES -0.37% -0.08% 6.37% 6.68% 6.21% 5/7/93
CLASS 2 SHARES -0.40% -0.31% -- -- 5.18% 11/6/01
Citigroup Broad Investment-Grade
Bond Index(3) -0.78% -0.81% 5.02% 6.24% 6.10%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Domestic Corporate Bonds 58% 58% 0%
Mortgage-Backed Bonds 23% 22% +1%
Foreign Corporate Bonds (U.S. $) 8% 8% 0%
U.S. Treasuries 7% 7% 0%
Foreign Government Bonds (U.S. $) 1% 1% 0%
Equities 0% 1% -1%
Cash Equivalents 3% 3% 0%
(3) See page 15 for definitions of indices. Returns shown for the indices
assume reinvestment of all dividends and distributions, and since-inception
returns shown for the indices are calculated from 4/30/93. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
13
(GRAPHIC) VT Money Market Fund PORTFOLIO MANAGER
(PHOTO) Scott J. Peterson, CFA
WM Advisors, Inc.
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses, and charges of any variable insurance contract or retirement plan. If
these fees were reflected, performance would be lower.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
The 7-day simple yield more closely reflects current Fund earnings than the
total return data.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
Since Inception
6-Month(2) 1-Year 5-Year 10-Year Inception Date
---------- ------ ------ ------- --------- ---------
CLASS 1 SHARES 1.99% 3.57% 1.75% 3.38% 3.58% 5/10/93
CLASS 2 SHARES 1.87% 3.31% -- -- 1.40% 11/6/01
FUND YIELDS AND AVERAGE MATURITY(3)
AS OF JUNE 30, 2006
7-Day 7-Day Weighted
Simple Yield Effective Yield Average Maturity
(Class 1 Shares) (Class 1 Shares) (Days)
---------------- ---------------- -------------------
VT MONEY MARKET FUND 4.51% 4.61% 42
PORTFOLIO COMPOSITION(4)
AS OF JUNE 30, 2006
Taxable Municipal Bonds 31%
Corporate Bonds and Notes 21%
Commercial Paper (Yankee) 21%
Certificates of Deposit (Domestic and Yankee) 13%
Repurchase Agreement 8%
Other Assets 3%
Funding Agreement 3%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The Fund's performance between 1995 and 1999
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Periods of less than one year are not annualized.
(3) The 7-day simple yield is calculated based on the income generated by an
investment in the Fund over a 7-day period and is expressed as an annual
percentage rate. The 7-day effective yield is calculated similarly to the
7-day simple yield but assumes that income earned from the Fund's
investments is reinvested and compounded.
(4) May not reflect the current portfolio composition.
14
Glossary (GRAPHIC)
DEFINITIONS OF INDICES
CITIGROUP BROAD INVESTMENT-GRADE BOND INDEX:
Measures the performance of bonds, including U.S. and non-U.S. corporate
securities and non-U.S. sovereign and provincial securities. It includes
institutionally traded U.S. Treasury, government-sponsored, mortgage,
asset-backed, and investment-grade securities.
CITIGROUP BROAD INVESTMENT-GRADE CREDIT 1-3 YEARS INDEX:
Measures the performance of bonds, including U.S. and non-U.S. corporate
securities and non-U.S. sovereign and provincial securities, with maturities
between one and three years.
CITIGROUP MORTGAGE INDEX:
Represents the mortgage-backed securities component of Citigroup's Broad
Investment-Grade Bond Index. It consists of 30- and 15-year agency-issued (GNMA,
FNMA, and FHLMC) pass-through securities as well as FNMA and FHLMC balloon
mortgages.
LEHMAN BROTHERS AGGREGATE BOND INDEX:
A broad-based index intended to represent the U.S. fixed-income market.
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) ALL COUNTRY WORLD INDEX EX-USA:
A float-adjusted market-capitalization index that is designed to measure equity
market performance in the global developed and emerging markets, excluding the
United States. The index consists of 48 developed and emerging market country
indices.
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX:
A broad-based, capitalization-weighted index of equity markets representing 21
countries in Europe, Australasia, and the Far East.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUST (NAREIT) ALL REIT INDEX:
Reflects the aggregate performance of all publicly traded REITs that own,
develop, and manage properties.
RUSSELL 1000(R) GROWTH INDEX:
Measures the performance of those Russell 1000(R) Index securities with higher
price-to-book ratios and higher forecasted growth values.
RUSSELL 2000(R) GROWTH INDEX:
Measures the performance of those Russell 2000(R) Index securities with higher
price-to-book ratios and higher forecasted growth values.
RUSSELL 2000(R) VALUE INDEX:
Measures the performance of those Russell 2000(R) Index securities with lower
price-to-book ratios and lower forecasted growth values.
RUSSELL 3000(R) INDEX:
Measures the performance of the 3,000 largest U.S. companies based on total
market capitalization, which represents approximately 98% of the investable U.S.
equity market.
S&P 500:
A broad-based index intended to represent the U.S. equity market.
S&P 500/BARRA VALUE INDEX:
An index constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the lowest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
S&P MIDCAP 400:
A weighted index of the common stocks of 400 mid-size companies.
15
Expense Information
WM VARIABLE TRUST
As a shareholder of the VT REIT Fund, VT Equity Income Fund, VT Growth & Income
Fund, VT West Coast Equity Fund, VT Mid Cap Stock Fund, VT Growth Fund, VT Small
Cap Value Fund, VT Small Cap Growth Fund, VT International Growth Fund, VT Short
Term Income Fund, VT U.S. Government Securities Fund, VT Income Fund, or VT
Money Market Fund, (collectively, the "Funds"), you incur ongoing costs,
including management fees, distribution and/or service fees, and other Fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Funds and to compare these costs with the ongoing
costs of investing in other mutual funds. Expenses shown below and on the
following page do not account for fees, expenses and charges of any variable
insurance contract or retirement plan. If these fees had been reflected,
expenses would have been higher.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period January 1, 2006, to June 30, 2006.
ACTUAL EXPENSES:
The first section of the table below provides information about actual account
values and actual expenses. You may use the information in these columns,
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 = $8.60), then multiply the result by the
number in the third column under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second section of the table below provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses (rather than
each Fund's actual rate of return). The hypothetical account values and expenses
may not be used to estimate the actual ending balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other mutual funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other mutual funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as separate
account expenses. Therefore, the hypothetical section of the table is useful in
comparing ongoing costs only, and will not help you compare the relative total
costs of owning different mutual funds. In addition, if these transactional
costs were included, the cost shown would have been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
--------------------------------- -------------------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD*
VALUE VALUE 1/1/06 - VALUE VALUE 1/1/06 - EXPENSE
1/1/06 6/30/06 6/30/06 1/1/06 6/30/06 6/30/06 RATIO
--------- ------- ----------- --------- ------- ----------- -------
VT REIT Fund
Class 1 .......................... $1,000 $1,113 $4.72 $1,000 $1,020 $4.51 0.90%
Class 2 .......................... 1,000 1,111 6.02 1,000 1,019 5.76 1.15%
VT Equity Income Fund
Class 1 .......................... $1,000 $1,056 $3.36 $1,000 $1,022 $3.31 0.66%
Class 2 .......................... 1,000 1,055 4.64 1,000 1,020 4.56 0.91%
VT Growth & Income Fund
Class 1 .......................... $1,000 $1,002 $3.87 $1,000 $1,021 $3.91 0.78%
Class 2 .......................... 1,000 1,001 5.11 1,000 1,020 5.16 1.03%
VT West Coast Equity Fund
Class 1 .......................... $1,000 $1,036 $3.38 $1,000 $1,021 $3.36 0.67%
Class 2 .......................... 1,000 1,035 4.64 1,000 1,020 4.61 0.92%
VT Mid Cap Stock Fund
Class 1 .......................... $1,000 $1,058 $4.08 $1,000 $1,021 $4.01 0.80%
Class 2 .......................... 1,000 1,057 5.36 1,000 1,020 5.26 1.05%
VT Growth Fund
Class 1 .......................... $1,000 $ 962 $3.89 $1,000 $1,021 $4.01 0.80%
Class 2. ......................... 1,000 961 5.11 1,000 1,020 5.26 1.05%
VT Small Cap Value Fund
Class 1 .......................... $1,000 $1,025 $5.07 $1,000 $1,020 $5.06 1.01%
Class 2 .......................... 1,000 1,024 6.32 1,000 1,019 6.31 1.26%
VT Small Cap Growth Fund
Class 1 .......................... $1,000 $1,017 $5.10 $1,000 $1,020 $5.11 1.02%
Class 2 .......................... 1,000 1,016 6.35 1,000 1,018 6.36 1.27%
16
Expense Information (continued)
W M VARIABLE TRUST
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
--------------------------------- --------------------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD*
VALUE VALUE 1/1/06 - VALUE VALUE 1/1/06 - EXPENSE
1/1/06 6/30/06 6/30/06 1/1/06 6/30/06 6/30/06 RATIO
--------- ------- ----------- --------- ------- ----------- -------
VT International Growth Fund
Class 1 .......................... $1,000 $1,049 $5.33 $1,000 $1,020 $5.26 1.05%
Class 2. ......................... 1,000 1,047 6.60 1,000 1,018 6.51 1.30%
VT Short Term Income Fund
Class 1 .......................... $1,000 $1,013 $3.04 $1,000 $1,022 $3.06 0.61%
Class 2 .......................... 1,000 1,013 4.29 1,000 1,021 4.31 0.86%
VT U.S. Government Securities Fund
Class 1 .......................... $1,000 $ 998 $2.68 $1,000 $1,022 $2.71 0.54%
Class 2 .......................... 1,000 996 3.91 1,000 1,021 3.96 0.79%
VT Income Fund
Class 1 .......................... $1,000 $ 996 $2.72 $1,000 $1,022 $2.76 0.55%
Class 2 .......................... 1,000 996 3.96 1,000 1,021 4.01 0.80%
VT Money Market Fund
Class 1 .......................... $1,000 $1,020 $3.61 $1,000 $1,021 $3.61 0.72%
Class 2 .......................... 1,000 1,019 4.86 1,000 1,020 4.86 0.97%
* Expenses are equal to each Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by the 181 days in
the most recent fiscal half-year, divided by 365 days in the year (to
reflect the one-half year period).
17
Financial Statements:
Portfolio of Investments
VT REIT FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 87.6%
DIVERSIFIED - 2.6%
14,000 Vornado Realty Trust .................... $ 1,366
------------
HEALTH CARE - 7.8%
45,700 Health Care Property Investors, Inc. .... 1,222
8,000 Health Care REIT, Inc. .................. 280
30,800 Healthcare Realty Trust, Inc. ........... 981
54,200 Nationwide Health Properties, Inc. ...... 1,220
30,200 OMEGA Healthcare Investors, Inc. ........ 399
------------
Total Health Care ....................... 4,102
------------
HYBRIDS - 2.2%
31,100 iStar Financial, Inc. ................... 1,174
------------
INDUSTRIAL/OFFICE - 22.6%
INDUSTRIAL - 6.7%
21,300 AMB Property Corporation ................ 1,077
13,400 EastGroup Properties, Inc. .............. 625
35,200 ProLogis ................................ 1,835
------------
3,537
------------
MIXED - 1.6%
24,600 Duke Realty Corporation ................. 865
------------
OFFICE - 14.3%
22,400 Alexandria Real Estate Equities, Inc. ... 1,986
16,400 Boston Properties, Inc. ................. 1,483
46,700 Corporate Office Properties Trust ....... 1,965
19,500 SL Green Realty Corporation** ........... 2,135
------------
7,569
------------
Total Industrial/Office ................. 11,971
------------
LODGING/RESORTS - 7.2%
64,800 Equity Inns, Inc. ....................... 1,073
24,300 Hospitality Properties Trust ............ 1,067
48,100 Host Hotels & Resorts Inc. .............. 1,052
50,600 Winston Hotels, Inc. .................... 620
------------
Total Lodging/Resorts ................... 3,812
------------
MORTGAGE/FINANCIAL - 2.4%
25,900 Redwood Trust, Inc.** ................... 1,265
------------
RESIDENTIAL - 11.0%
APARTMENTS - 11.0%
13,500 AvalonBay Communities, Inc. ............. 1,493
43,800 Equity Residential ...................... 1,959
11,400 Mid-America Apartment Communities,
Inc. ................................. 636
62,700 United Dominion Realty Trust, Inc.** .... 1,756
------------
Total Residential ....................... 5,844
------------
RETAIL - 24.7%
FREESTANDING - 1.6%
42,600 National Retail Properties, Inc. ........ 850
------------
SHARES VALUE (000S)
- ------------- ------------
REGIONAL MALLS - 10.5%
38,500 General Growth Properties, Inc. ......... $ 1,735
26,600 Macerich Company ........................ 1,867
23,700 Simon Property Group, Inc. .............. 1,966
------------
5,568
------------
SHOPPING CENTERS - 12.6%
36,400 Developers Diversified Realty
Corporation .......................... 1,899
20,900 Equity One, Inc. ........................ 437
51,000 Kimco Realty Corporation** .............. 1,861
19,300 Pan Pacific Retail Properties, Inc. ..... 1,339
29,400 Weingarten Realty Investors ............. 1,125
------------
6,661
------------
Total Retail ............................ 13,079
------------
SELF STORAGE - 1.7%
11,900 Public Storage, Inc. .................... 903
------------
SPECIALTY - 5.4%
29,800 Entertainment Properties Trust .......... 1,283
15,100 Global Signal, Inc. ..................... 699
24,900 Plum Creek Timber Company, Inc. ......... 884
------------
Total Specialty ......................... 2,866
------------
Total REITs
(Cost $28,392) ....................... 46,382
------------
COMMON STOCKS - 4.7%
CONSUMER DISCRETIONARY - 0.7%
CONSUMER DURABLES & APPAREL - 0.7%
15,567 D.R. Horton, Inc. ....................... 371
------------
FINANCIALS - 4.0%
BANKS - 1.7%
23,300 Countrywide Financial Corporation ....... 887
------------
INSURANCE - 2.3%
10,000 Fidelity National Financial, Inc. ....... 390
42,115 Fidelity National Title Group, Inc.,
Class A** ............................ 828
------------
1,218
------------
Total Financials ........................ 2,105
------------
Total Common Stocks
(Cost $2,203) ........................ 2,476
------------
CANADIAN INCOME TRUSTS - 1.8%
ENERGY - 1.8%
11,600 Enerplus Resources Fund (F)** ........... 652
10,100 Harvest Energy Trust (F) ................ 301
------------
Total Canadian Income Trusts
(Cost $788) .......................... 953
------------
PREFERRED REAL ESTATE INVESTMENT TRUST (REIT) - 0.6%
(Cost $302)
13,300 Mills Corporation, Series E ............. 306
------------
18 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT REIT FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 5.1%
(Cost $2,704)
$ 2,704 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$2,705,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009,
market value $2,793,000) ............. $ 2,704
------------
SHORT-TERM INVESTMENT - 12.5%
(Cost $6,615)
6,615 Mellon GSL DBT II
Collateral Fund+ ..................... 6,615
------------
TOTAL INVESTMENTS (Cost $41,004*) ....................... 112.3% 59,436
OTHER ASSETS (LIABILITIES) (NET) ........................ (12.3) (6,499)
----- ------------
NET ASSETS .............................................. 100.0% $ 52,937
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $6,358,000, representing 12.0% of the total net
assets of the Fund (collateral value $6,615,000). (See Note 7 to Financial
Statements.)
+ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
(F) -- Foreign Shares
See Notes to Financial Statements. 19
Portfolio of Investments
VT EQUITY INCOME FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 93.0%
CONSUMER DISCRETIONARY - 5.0%
AUTOMOBILES & COMPONENTS - 1.0%
39,900 Johnson Controls, Inc. .................. $ 3,280
------------
CONSUMER DURABLES & APPAREL - 0.8%
30,000 NIKE Inc., Class B ...................... 2,430
------------
CONSUMER SERVICES - 1.6%
66,600 Hilton Hotels Corporation ............... 1,883
96,000 McDonald's Corporation .................. 3,226
------------
5,109
------------
MEDIA - 1.1%
73,400 McGraw Hill Companies, Inc. ............. 3,687
------------
RETAILING - 0.5%
45,500 Nordstrom, Inc. ......................... 1,661
------------
Total Consumer Discretionary ............ 16,167
------------
CONSUMER STAPLES - 8.2%
FOOD & STAPLES RETAILING - 1.3%
40,700 CVS Corporation ......................... 1,249
99,800 Sysco Corporation ....................... 3,050
------------
4,299
------------
FOOD, BEVERAGE & TOBACCO - 4.4%
86,800 Anheuser-Busch Companies, Inc. .......... 3,957
19,800 Archer Daniels Midland Company .......... 817
16,200 Cadbury Schweppes PLC, Sponsored ADR .... 629
54,300 Coca-Cola Company ....................... 2,336
41,700 Diageo PLC, Sponsored ADR** ............. 2,817
69,900 Hershey Company** ....................... 3,850
------------
14,406
------------
HOUSEHOLD & PERSONAL PRODUCTS - 2.5%
25,100 Clorox Company .......................... 1,531
58,300 Colgate-Palmolive Company ............... 3,492
13,100 Kimberly-Clark Corporation .............. 808
38,800 Procter & Gamble Company ................ 2,157
------------
7,988
------------
Total Consumer Staples 26,693
------------
ENERGY - 11.2%
67,700 Baker Hughes Inc. ....................... 5,541
22,900 BP PLC, Sponsored ADR ................... 1,594
35,484 Chevron Corporation ..................... 2,202
40,860 ConocoPhillips Company .................. 2,678
14,800 Enterprise Products Partners LP** ....... 368
53,200 ExxonMobil Corporation .................. 3,264
67,100 GlobalSantaFe Corporation ............... 3,875
14,400 Kinder Morgan Energy Partners LP** ...... 662
21,500 Kinder Morgan, Inc. ..................... 2,148
77,200 Marathon Oil Corporation ................ 6,431
44,700 Peabody Energy Corporation .............. 2,492
SHARES VALUE (000S)
- ------------- ------------
40,800 Schlumberger Ltd. ....................... $ 2,656
31,588 Valero Energy Corporation ............... 2,101
15,200 Williams Companies, Inc. ................ 355
------------
Total Energy 36,367
------------
FINANCIALS - 24.6%
BANKS - 6.6%
85,502 Bank of America Corporation ............. 4,113
54,400 Countrywide Financial Corporation ....... 2,072
59,300 Mellon Financial Corporation ............ 2,042
78,500 North Fork Bancorporation, Inc. ......... 2,368
38,500 PNC Financial Services Group, Inc. ...... 2,702
8,700 SunTrust Banks, Inc. .................... 663
72,000 U.S. Bancorp ............................ 2,223
78,000 Wells Fargo & Company ................... 5,232
------------
21,415
------------
DIVERSIFIED FINANCIALS - 10.2%
13,000 AllianceBernstein Holding LP ............ 795
61,800 Allied Capital Corporation** ............ 1,778
18,000 Ameriprise Financial, Inc. .............. 804
52,000 Bank of New York Company, Inc. .......... 1,674
17,100 Capital One Financial Corporation ....... 1,461
96,500 Citigroup Inc. .......................... 4,655
43,000 Franklin Resources, Inc. ................ 3,733
37,000 Freddie Mac ............................. 2,109
25,700 Goldman Sachs Group, Inc. ............... 3,866
53,800 ING Groep N.V., Sponsored ADR ........... 2,115
102,800 JPMorgan Chase & Company ................ 4,318
13,600 Lehman Brothers Holdings Inc. ........... 886
51,000 Morgan Stanley .......................... 3,224
51,200 T. Rowe Price Group, Inc. ............... 1,936
------------
33,354
------------
INSURANCE - 7.8%
93,400 ACE Ltd. ................................ 4,725
75,200 AFLAC Inc. .............................. 3,486
48,000 Allstate Corporation .................... 2,627
26,400 Chubb Corporation ....................... 1,317
81,000 Fidelity National Financial, Inc. ....... 3,155
32,500 Hartford Financial Services Group, Inc. . 2,750
43,050 HCC Insurance Holdings, Inc. ............ 1,267
22,900 Lincoln National Corporation ............ 1,293
43,500 Loews Corporation ....................... 1,542
47,700 MetLife, Inc.** ......................... 2,443
9,400 Prudential Financial, Inc. .............. 730
------------
25,335
------------
Total Financials ........................ 80,104
------------
HEALTH CARE - 11.2%
HEALTH CARE EQUIPMENT & SERVICES - 3.8%
40,000 Becton, Dickinson & Company ............. 2,445
28,600 Cardinal Health, Inc. ................... 1,840
36,900 Caremark Rx, Inc. ....................... 1,840
20 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT EQUITY INCOME FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
136,300 UnitedHealth Group Inc. ................. $ 6,104
------------
12,229
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 7.4%
54,000 Abbott Laboratories ..................... 2,355
30,800 AstraZeneca PLC, Sponsored ADR .......... 1,842
80,700 Bristol-Myers Squibb Company ............ 2,087
27,100 Eli Lilly & Company ..................... 1,498
35,900 GlaxoSmithKline PLC, Sponsored ADR ...... 2,003
23,800 Johnson & Johnson ....................... 1,426
147,400 Pfizer Inc. ............................. 3,459
24,500 Roche Holding Ltd., Sponsored ADR ....... 2,021
91,600 Schering-Plough Corporation ............. 1,743
68,900 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ........................... 2,177
81,300 Wyeth ................................... 3,611
------------
24,222
------------
Total Health Care ....................... 36,451
------------
INDUSTRIALS - 13.9%
CAPITAL GOODS - 11.0%
61,000 3M Company .............................. 4,927
36,400 Boeing Company .......................... 2,982
48,000 Caterpillar Inc. ........................ 3,575
33,100 Dover Corporation ....................... 1,636
25,700 Emerson Electric Company ................ 2,154
13,600 Fluor Corporation ....................... 1,264
11,800 General Dynamics Corporation ............ 772
91,800 General Electric Company ................ 3,026
53,800 Honeywell International Inc. ............ 2,168
71,400 ITT Industries, Inc. .................... 3,534
11,600 L-3 Communications Holdings, Inc. ....... 875
32,100 Northrop Grumman Corporation ............ 2,056
43,000 PACCAR Inc.** ........................... 3,542
19,000 Rockwell Automation, Inc.** ............. 1,368
22,500 Siemens AG, Sponsored ADR ............... 1,954
------------
35,833
------------
COMMERCIAL SERVICES & SUPPLIES - 0.7%
56,500 Waste Management Inc. ................... 2,028
------------
TRANSPORTATION - 2.2%
35,500 Union Pacific Corporation ............... 3,300
47,600 United Parcel Service, Inc., Class B .... 3,919
------------
7,219
------------
Total Industrials ....................... 45,080
------------
INFORMATION TECHNOLOGY - 6.8%
COMMUNICATIONS EQUIPMENT - 0.9%
153,000 Nokia Oyj, Sponsored ADR ................ 3,100
------------
SHARES VALUE (000S)
- ------------- ------------
COMPUTERS & PERIPHERALS - 1.5%
92,300 Hewlett-Packard Company ................. $ 2,924
24,400 International Business Machines
Corporation .......................... 1,874
------------
4,798
------------
IT SERVICES - 1.3%
64,700 Automatic Data Processing, Inc. ......... 2,934
28,600 First Data Corporation .................. 1,288
------------
4,222
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1%
178,000 Applied Materials, Inc. ................. 2,898
38,900 Linear Technology Corporation** ......... 1,303
90,000 Microchip Technology Inc. ............... 3,019
4,100 Samsung Electronics Company Ltd.,
GDR++ ................................ 1,303
50,100 Texas Instruments Inc. .................. 1,518
------------
10,041
------------
Total Information Technology ............ 22,161
------------
MATERIALS - 4.2%
32,600 Alcan Inc. (F) .......................... 1,530
113,200 Anglo American PLC, Unsponsored ADR** ... 2,314
28,600 Cemex SA de CV, Sponsored ADR ........... 1,629
39,900 International Paper Company ............. 1,289
40,100 PPG Industries, Inc. .................... 2,647
34,100 United States Steel Corporation ......... 2,391
27,100 Weyerhaeuser Company .................... 1,687
------------
Total Materials ......................... 13,487
------------
TELECOMMUNICATION SERVICES - 6.5%
91,600 Alltel Corporation ...................... 5,847
155,800 AT&T Inc. ............................... 4,345
38,800 BellSouth Corporation ................... 1,405
3,885 Embarq Corporation+ ..................... 159
129,300 Sprint Nextel Corporation ............... 2,585
136,500 Verizon Communications Inc. ............. 4,571
102,400 Vodafone Group PLC, Sponsored ADR ....... 2,181
------------
Total Telecommunication Services ........ 21,093
------------
UTILITIES - 1.4%
62,400 FPL Group, Inc.** ....................... 2,582
18,900 Progress Energy, Inc.** ................. 810
57,900 Xcel Energy, Inc.** ..................... 1,111
------------
Total Utilities ......................... 4,503
------------
Total Common Stocks
(Cost $256,308) ...................... 302,106
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 4.7%
20,300 AMB Property Corporation ................ 1,026
22,500 Archstone-Smith Trust ................... 1,145
10,500 Brookfield Properties Corporation ....... 338
12,100 Developers Diversified Realty
Corporation .......................... 631
12,200 Duke Realty Corporation ................. 429
See Notes to Financial Statements. 21
Portfolio of Investments (continued)
VT EQUITY INCOME FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (CONTINUED)
29,500 Equity Residential ...................... $ 1,320
11,700 General Growth Properties, Inc. ......... 527
26,900 Health Care Property Investors, Inc.** .. 719
90,300 Host Hotels & Resorts Inc. .............. 1,975
17,300 Kimco Realty Corporation** .............. 631
7,900 Macerich Company ........................ 555
24,000 Plum Creek Timber Company, Inc. ......... 852
42,000 ProLogis ................................ 2,189
12,100 Public Storage, Inc.** .................. 918
12,400 Simon Property Group, Inc. .............. 1,028
10,000 Vornado Realty Trust .................... 976
------------
Total REITs
(Cost $9,839) ........................ 15,259
------------
PRINCIPAL
AMOUNT (000S)
- -------------
CONVERTIBLE SECURITY - 0.2%
CONVERTIBLE BONDS AND NOTES - 0.2%
(Cost $592)
$ 600 Echostar Communications, Conv. Sub. Note,
5.750% due 05/15/2008 ................ 591
------------
FIXED-INCOME SECURITIES - 0.9%
CORPORATE BONDS AND NOTES - 0.9%
100 Aetna Inc., Company Guarantee,
7.125% due 08/15/2006 ................ 100
500 Aetna Inc., Sr. Note,
7.875% due 03/01/2011 ................ 539
45 Baxter International Inc., Note,
7.125% due 02/01/2007 ................ 45
1,000 ERAC USA Finance Company, Note,
7.350% due 06/15/2008++ .............. 1,027
59 Raytheon Company, Sr. Note,
6.150% due 11/01/2008 ................ 60
1,000 TELUS Corporation, Note,
8.000% due 06/01/2011 ................ 1,084
100 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 ................ 101
------------
Total Corporate Bonds and Notes
(Cost $2,833) ........................ 2,956
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -
0.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) -
0.0%
38 6.500% due 09/01/2030 ................... 38
18 7.000% due 09/01/2030 ................... 18
------------
Total U.S. Government Agency Mortgage-
Backed Securities
(Cost $54) ........................... 56
------------
Total Fixed-Income Securities
(Cost $2,887) ........................ 3,012
------------
SHARES VALUE (000S)
- ------------- ------------
WARRANTS - 0.0%
(Cost $0)
250 V2 Music Holdings PLC,
Expires 05/07/2008+,++ ............... $ 0
------------
PRINCIPAL
AMOUNT (000S)
- -------------
REPURCHASE AGREEMENT - 2.0%
(Cost $6,520)
$ 6,520 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$6,523,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009,
market value $6,735,000) ............. 6,520
------------
SHORT-TERM INVESTMENT - 5.4%
(Cost $17,672)
17,672 Mellon GSL DBT II
Collateral Fund+++ ................... 17,672
------------
TOTAL INVESTMENTS (Cost $293,819*) ...................... 106.2% 345,160
OTHER ASSETS (LIABILITIES) (NET) ........................ (6.2) (20,099)
----- ------------
NET ASSET ............................................... 100.0% $ 325,061
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $17,185,000, representing 5.3% of the total net
assets of the Fund (collateral value $17,672,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
(F) -- Foreign Shares
GDR -- Global Depositary Receipt
22 See Notes to Financial Statements.
Portfolio of Investments
VT GROWTH & INCOME FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 97.5%
CONSUMER DISCRETIONARY - 6.4%
CONSUMER SERVICES - 2.2%
129,000 Carnival Corporation .................... $ 5,384
------------
MEDIA - 3.0%
77,000 CBS Corporation, Class B ................ 2,083
94,000 Comcast Corporation, Class A+ ........... 3,078
60,000 Viacom Inc., Class B+ ................... 2,150
------------
7,311
------------
RETAILING - 1.2%
53,000 Kohl's Corporation+ ..................... 3,133
------------
Total Consumer Discretionary ............ 15,828
------------
CONSUMER STAPLES - 9.3%
FOOD & STAPLES RETAILING - 4.0%
58,000 Costco Wholesale Corporation** .......... 3,313
115,400 Kroger Company .......................... 2,523
82,000 Wal-Mart Stores, Inc. ................... 3,950
------------
9,786
------------
FOOD, BEVERAGE & TOBACCO - 3.3%
56,700 Hershey Company** ....................... 3,123
85,000 PepsiCo, Inc. ........................... 5,103
------------
8,226
------------
HOUSEHOLD & PERSONAL PRODUCTS - 2.0%
88,000 Procter & Gamble Company ................ 4,893
------------
Total Consumer Staples .................. 22,905
------------
ENERGY - 11.8%
68,000 BP PLC, Sponsored ADR ................... 4,734
65,400 ENSCO International Inc. ................ 3,010
81,000 ExxonMobil Corporation .................. 4,969
102,000 GlobalSantaFe Corporation ............... 5,891
24,000 Kinder Morgan, Inc. ..................... 2,397
35,000 National Oilwell Varco Inc.+ ............ 2,216
86,000 Schlumberger Ltd. ....................... 5,599
------------
Total Energy ............................ 28,816
------------
FINANCIALS - 21.2%
BANKS - 6.7%
127,000 Bank of America Corporation ............. 6,109
95,000 Wachovia Corporation .................... 5,137
76,000 Wells Fargo & Company ................... 5,098
------------
16,344
------------
DIVERSIFIED FINANCIALS - 6.7%
120,000 Citigroup Inc. .......................... 5,789
84,000 Freddie Mac ............................. 4,789
143,000 JPMorgan Chase & Company ................ 6,006
------------
16,584
------------
SHARES VALUE (000S)
- ------------- ------------
INSURANCE - 7.8%
97,000 ACE Ltd. ................................ $ 4,907
26,000 AFLAC Inc. .............................. 1,205
101,000 Allstate Corporation .................... 5,528
66,000 American International Group, Inc. ...... 3,897
34,900 Fidelity National Financial, Inc. ....... 1,359
26,000 Hartford Financial Services Group, Inc... 2,200
------------
19,096
------------
Total Financials ........................ 52,024
------------
HEALTH CARE - 12.7%
HEALTH CARE EQUIPMENT & SERVICES - 7.1%
66,000 Baxter International Inc. ............... 2,426
20,000 Becton, Dickinson & Company ............. 1,223
63,000 Cardinal Health, Inc. ................... 4,053
104,000 Medtronic, Inc.** ....................... 4,880
59,900 Omnicare, Inc. .......................... 2,840
29,000 WellPoint Inc.+ ......................... 2,110
------------
17,532
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 5.6%
58,900 Bristol-Myers Squibb Company ............ 1,523
24,000 Eli Lilly & Company ..................... 1,327
51,000 Johnson & Johnson ....................... 3,056
103,000 Pfizer Inc. ............................. 2,417
169,000 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ........................ 5,339
------------
13,662
------------
Total Health Care ....................... 31,194
------------
INDUSTRIALS - 13.8%
CAPITAL GOODS - 12.3%
55,000 Boeing Company .......................... 4,505
37,000 Caterpillar Inc. ........................ 2,756
210,000 General Electric Company ................ 6,921
149,000 Honeywell International Inc. ............ 6,005
59,000 Lockheed Martin Corporation ............. 4,233
25,000 Rockwell Automation, Inc. ............... 1,800
146,000 Tyco International Ltd. ................. 4,015
------------
30,235
------------
COMMERCIAL SERVICES & SUPPLIES - 0.7%
45,000 Waste Management Inc. ................... 1,614
------------
TRANSPORTATION - 0.8%
73,000 AMR Corporation+** ...................... 1,856
------------
Total Industrials ....................... 33,705
------------
INFORMATION TECHNOLOGY - 13.9%
COMMUNICATIONS EQUIPMENT - 2.6%
223,000 Motorola, Inc. .......................... 4,494
46,000 QUALCOMM Inc. ........................... 1,843
------------
6,337
------------
See Notes to Financial Statements. 23
Portfolio of Investments (continued)
VT GROWTH & INCOME FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
COMPUTERS & PERIPHERALS - 4.1%
20,000 Apple Computer, Inc.+ ................... $ 1,142
146,000 Hewlett-Packard Company ................. 4,625
57,000 International Business Machines
Corporation .......................... 4,379
------------
10,146
------------
IT SERVICES - 2.3%
126,000 First Data Corporation. ................. 5,675
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.2%
64,000 Intel Corporation ....................... 1,213
48,000 Microchip Technology Inc. ............... 1,610
------------
2,823
------------
SOFTWARE - 3.7%
61,000 Adobe Systems Inc.+ ..................... 1,852
72,000 Autodesk, Inc.+ ......................... 2,481
199,000 Microsoft Corporation ................... 4,637
------------
8,970
------------
Total Information Technology ............ 33,951
------------
MATERIALS - 3.0%
135,000 Alcoa Inc. .............................. 4,369
58,000 Anglo American PLC, Unsponsored ADR ..... 1,185
43,000 E.I. du Pont de Nemours & Company ....... 1,789
------------
Total Materials ......................... 7,343
------------
TELECOMMUNICATION SERVICES - 2.6%
136,000 AT&T Inc. ............................... 3,793
75,000 Verizon Communications Inc. ............ 2,512
------------
Total Telecommunication Services ........ 6,305
------------
UTILITIES - 2.8%
98,000 FPL Gro.p, Inc.** ....................... 4,055
70,000 Pinnacle West Capital Corporation ....... 2,794
------------
Total Utilities ......................... 6,849
------------
Total Common Stocks (Cost $186,328) ..... 238,920
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 2.1%
(Cost $5,089)
$ 5,089 Agreement with Morgan Stanley, 4.700%
dated 06/30/2005, to be repurchased at
$5,091,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$5,257,000) .......................... $ 5,089
------------
SHORT-TERM INVESTMENT - 6.2%
(Cost $15,170)
15,170 Mellon GSL DBT II
Collateral Fund++ .................... 15,170
------------
TOTAL INVESTMENTS (Cost $206,587*) ...................... 105.8% 259,179
OTHER ASSETS (LIABILITIES) (NET) ........................ (5.8) (14,313)
----- ------------
NET ASSET ............................................... 100.0% $ 244,866
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $14,787,000, representing 6.0% of the total net
assets of the Fund (collateral value $15,170,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
24 See Notes to Financial Statements.
Portfolio of Investments
V T WEST COAST EQUITY FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 93.7%
CONSUMER DISCRETIONARY - 11.8%
AUTOMOBILES & COMPONENTS - 1.6%
67,000 Monaco Coach Corporation** .............. $ 851
15,400 Toyota Motor Corporation, Sponsored
ADR .................................. 1,611
------------
2,462
------------
CONSUMER DURABLES & APPAREL - 1.7%
9,024 Columbia Sportswear Company+** .......... 409
9,300 KB Home** ............................... 426
22,200 Mattel, Inc. ............................ 367
17,325 NIKE Inc., Class B ...................... 1,403
------------
2,605
------------
CONSUMER SERVICES - 3.8%
11,488 Ambassadors Group, Inc. ................. 332
59,000 Hilton Hotels Corporation ............... 1,668
101,960 Red Lion Hotels Corporation+ ............ 1,116
75,440 Starbucks Corporation+ .................. 2,849
------------
5,965
------------
MEDIA - 4.0%
24,500 Getty Images, Inc.+** ................... 1,556
22,650 McClatchy Company, Class A** ............ 909
64,200 Univision Communications Inc., Class
A+** ................................. 2,151
57,670 Walt Disney Company ..................... 1,730
------------
6,346
------------
RETAILING - 0.7%
13,000 Blue Nile, Inc.+** ...................... 418
14,570 Building Materials Holding Corporation .. 406
6,200 Nordstrom, Inc. ......................... 226
------------
1,050
------------
Total Consumer Discretionary ............ 18,428
------------
CONSUMER STAPLES - 6.0%
FOOD & STAPLES RETAILING - 2.2%
50,720 Costco Wholesale Corporation** .......... 2,898
26,490 Kroger Company** ........................ 579
------------
3,477
------------
FOOD, BEVERAGE & TOBACCO - 0.9%
9,300 Archer Daniels Midland Company .......... 384
17,300 PepsiCo, Inc. ........................... 1,038
------------
1,422
------------
HOUSEHOLD & PERSONAL PRODUCTS - 2.9%
12,000 Central Garden & Pet Company+** ......... 517
25,870 Clorox Company .......................... 1,577
7,900 Colgate-Palmolive Company ............... 473
18,000 Estee Lauder Companies Inc., Class A .... 696
23,000 Procter & Gamble Company ................ 1,279
------------
4,542
------------
Total Consumer Staples .................. 9,441
------------
SHARES VALUE (000S)
- ------------- ------------
ENERGY - 7.4%
11,000 Apache Corporation ...................... $ 751
34,700 Berry Petroleum Company, Class A ........ 1,150
6,700 CARBO Ceramics Inc.** ................... 329
56,088 Chevron Corporation ..................... 3,481
13,100 ExxonMobil Corporation .................. 803
76,200 Nabors Industries Ltd. (F)+ ............. 2,575
24,200 Occidental Petroleum Corporation ........ 2,482
------------
Total Energy ............................ 11,571
------------
FINANCIALS - 16.2%
BANKS - 10.3%
13,300 Bank of America Corporation ............. 640
24,000 Banner Corporation** .................... 925
15,500 City National Corporation ............... 1,009
19,600 Countrywide Financial Corporation ....... 746
43,500 East West Bancorp, Inc. ................. 1,649
27,100 Greater Bay Bancorp ..................... 779
8,400 Pacific Capital Bancorp** ............... 261
65,100 U.S. Bancorp ............................ 2,010
17,400 UCBH Holdings, Inc.** ................... 288
12,300 UnionBanCal Corporation ................. 795
6,200 United PanAm Financial Corporation+ ..... 189
80,997 Washington Federal, Inc.** .............. 1,878
73,023 Wells Fargo & Company ................... 4,898
------------
16,067
------------
DIVERSIFIED FINANCIALS - 4.2%
123,600 Charles Schwab Corporation .............. 1,975
38,800 Citigroup Inc. .......................... 1,872
29,200 Franklin Resources, Inc. ................ 2,535
3,855 Piper Jaffray Companies, Inc.+ .......... 236
------------
6,618
------------
INSURANCE - 1.7%
6,000 Safeco Corporation ...................... 338
44,200 StanCorp Financial Group, Inc. .......... 2,250
------------
2,588
------------
Total Financials ........................ 25,273
------------
HEALTH CARE - 15.6%
HEALTH CARE EQUIPMENT & SERVICES - 7.6%
5,800 Affymetrix, Inc.+** ..................... 148
21,000 AMN Healthcare Services, Inc.+ .......... 426
21,200 Applera Corporation-Applied Biosystems
Group ................................ 686
2,100 C.R. Bard, Inc. ......................... 154
15,200 Caremark Rx, Inc. ....................... 758
1,500 Cooper Companies, Inc. .................. 66
20,200 DaVita, Inc.+ ........................... 1,004
7,180 Health Net, Inc.+ ....................... 324
17,000 McKesson Corporation .................... 804
6,000 Mentor Corporation ...................... 261
76,000 OraSure Technologies, Inc.+** ........... 724
See Notes to Financial Statements. 25
Portfolio of Investments (continued)
V T WEST COAST EQUITY FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
23,500 ResMed Inc.+ ............................ $ 1,103
57,325 SonoSite, Inc.+** ....................... 2,238
5,000 Stryker Corporation ..................... 211
34,200 Varian Medical Systems, Inc.+ ........... 1,619
26,400 VCA Antech, Inc.+ ....................... 843
8,300 Zimmer Holdings, Inc.+ .................. 471
------------
11,840
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 8.0%
21,900 Abbott Laboratories** ................... 955
25,012 Allergan, Inc. .......................... 2,683
30,607 Amgen, Inc.+ ............................ 1,997
9,300 Amylin Pharmaceuticals, Inc.+** ......... 459
23,400 CV Therapeutics, Inc.+** ................ 327
38,000 Dendreon Corporation+** ................. 184
14,441 Eden Bioscience Corporation+ ............ 27
20,500 Genentech, Inc.+ ........................ 1,677
2,600 Gilead Sciences, Inc.+ .................. 154
22,355 ICOS Corporation+** ..................... 492
23,600 Johnson & Johnson ....................... 1,414
11,000 Martek Biosciences Corporation+** ....... 318
9,000 Neurocrine Biosciences, Inc.+** ......... 95
47,200 Pfizer Inc. ............................. 1,108
29,500 Watson Pharmaceuticals, Inc.+ ........... 687
------------
12,577
------------
Total Health Care ....................... 24,417
------------
INDUSTRIALS - 15.7%
CAPITAL GOODS - 11.1%
43,911 Boeing Company .......................... 3,597
16,000 Cascade Corporation** ................... 633
1,100 Ceradyne, Inc.+ ......................... 54
25,900 Dionex Corporation+ ..................... 1,416
27,703 Electro Scientific Industries, Inc.+ .... 498
5,900 Granite Construction Inc.** ............. 267
33,300 Greenbrier Companies, Inc. .............. 1,090
28,800 Jacobs Engineering Group Inc.+ .......... 2,294
25,800 Northrop Grumman Corporation ............ 1,653
42,300 PACCAR Inc. ............................. 3,485
18,900 Precision Castparts Corporation ......... 1,129
35,700 Simpson Manufacturing Company, Inc.** ... 1,287
------------
17,403
------------
COMMERCIAL SERVICES & SUPPLIES - 1.5%
4,100 Avery Dennison Corporation .............. 238
22,000 Copart, Inc.+ ........................... 540
31,000 Robert Half International Inc. .......... 1,302
5,900 Waste Connections, Inc.+** .............. 215
------------
2,295
------------
SHARES VALUE (000S)
- ------------- ------------
TRANSPORTATION - 3.1%
36,160 Alaska Air Group, Inc.+ ................. $ 1,426
44,100 Cathay Pacific Airways Ltd., Sponsored
ADR .................................. 386
55,800 Expeditors International of Washington,
Inc. ................................. 3,125
------------
4,937
------------
Total Industrials ....................... 24,635
------------
INFORMATION TECHNOLOGY - 16.3%
COMMUNICATIONS EQUIPMENT - 1.7%
96,000 Cisco Systems, Inc.+ .................... 1,875
10,300 Polycom, Inc.+ .......................... 226
14,000 QUALCOMM Inc. ........................... 561
------------
2,662
------------
COMPUTERS & PERIPHERALS - 1.6%
5,000 Apple Computer, Inc.+ ................... 286
49,600 Hewlett-Packard Company ................. 1,571
5,700 InFocus Corporation+ .................... 16
9,400 Intermec Inc.+ .......................... 216
3,100 Network Appliance, Inc.+ ................ 110
18,000 QLogic Corporation+ ..................... 310
------------
2,509
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.1%
41,020 Tektronix, Inc. ......................... 1,207
10,100 Trimble Navigation Ltd.+ ................ 451
------------
1,658
------------
INTERNET SOFTWARE & SERVICES - 2.9%
284,340 Art Technology Group, Inc.+ ............. 847
2,900 Google Inc., Class A+ ................... 1,216
62,100 WatchGuard Technologies, Inc.+ .......... 253
18,574 WebEx Communications, Inc.+ ............. 660
49,100 Yahoo! Inc.+** .......................... 1,620
------------
4,596
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1%
27,025 Applied Materials, Inc. ................. 440
19,300 Credence Systems Corporation+ ........... 68
5,600 Exar Corporation+ ....................... 74
30,260 FEI Company+** .......................... 686
75,830 Intel Corporation ....................... 1,437
5,000 International Rectifier Corporation+** .. 195
9,600 KLA-Tencor Corporation .................. 399
74,780 Lattice Semiconductor Corporation+ ...... 462
36,700 LSI Logic Corporation+ .................. 329
4,200 Maxim Integrated Products, Inc. ......... 135
10,400 Novellus Systems, Inc.+ ................. 257
4,800 NVIDIA Corporation+ ..................... 102
79,300 Pixelworks, Inc.+ ....................... 217
------------
4,801
------------
26 See Notes to Financial Statements.
Portfolio of Investments (continued)
V T WEST COAST EQUITY FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SOFTWARE - 5.9%
70,000 Actuate Corporation+ .................... $ 283
56,940 Adobe Systems Inc.+ ..................... 1,729
3,200 Autodesk, Inc.+ ......................... 110
12,600 Electronic Arts Inc.+ ................... 542
29,000 Fair Isaac Corporation .................. 1,053
5,400 Mentor Graphics Corporation+ ............ 70
149,930 Microsoft Corporation ................... 3,493
46,000 Quest Software, Inc.+** ................. 646
31,090 RadiSys Corporation+** .................. 683
11,500 SupportSoft, Inc.+ ...................... 45
19,000 Sybase, Inc.+ ........................... 368
15,100 Symantec Corporation+** ................. 235
1,700 Websense, Inc.+ ......................... 35
------------
9,292
------------
Total Information Technology ............ 25,518
------------
MATERIALS - 3.6%
3,900 Cemex SA de CV, Sponsored ADR ........... 222
25,600 Oregon Steel Mills, Inc.+ ............... 1,297
43,830 Schnitzer Steel Industries, Inc.,
Class A .............................. 1,555
12,500 Symyx Technologies, Inc.+ ............... 302
36,735 Weyerhaeuser Company .................... 2,287
------------
Total Materials ......................... 5,663
------------
TELECOMMUNICATION SERVICES - 0.7%
53,500 Sprint Nextel Corporation ............... 1,070
------------
UTILITIES - 0.4%
12,100 Sempra Energy ........................... 550
------------
Total Common Stocks
(Cost $109,190) ...................... 146,566
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 3.0%
30,000 AMB Property Corporation ................ 1,516
9,100 Essex Property Trust, Inc. .............. 1,016
31,000 Health Care Property Investors, Inc. .... 829
6,200 Nationwide Health Properties, Inc. ...... 140
33,300 Plum Creek Timber Company, Inc. ......... 1,182
------------
Total REITs
(Cost $3,671) ........................ 4,683
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 4.1%
(Cost $ 6,356)
$ 6,356 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$6,358,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$6,565,000) .......................... $ 6,356
------------
SHORT-TERM INVESTMENT - 11.3%
(Cost $ 17,753)
17,753 Mellon GSL DBT II
Collateral Fund++ .................... 17,753
------------
TOTAL INVESTMENTS (Cost $136,970*) ...................... 112.1% 175,358
OTHER ASSETS (LIABILITIES) (NET) ........................ (12.1) (18,910)
----- ------------
NET ASSETS .............................................. 100.0% $ 156,448
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $17,034,000, representing 10.9% of the total net
assets of the Fund (collateral value $17,753,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
(F) -- Foreign Shares
See Notes to Financial Statements. 27
Portfolio of Investments
VT MID CAP STOCK FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 93.0%
CONSUMER DISCRETIONARY - 13.8%
AUTOMOBILES & COMPONENTS - 1.9%
28,800 Magna International Inc., Class A (F) ... $ 2,073
------------
CONSUMER DURABLES & APPAREL - 2.5%
33,200 Jones Apparel Group, Inc. ............... 1,055
104,400 Mattel, Inc. ............................ 1,724
------------
2,779
------------
CONSUMER SERVICES - 2.3%
20,600 Papa John's International, Inc.+ ........ 684
35,400 Yum! Brands, Inc. ....................... 1,780
------------
2,464
------------
RETAILING - 7.1%
56,900 Aaron Rents, Inc. ....................... 1,529
62,200 Nordstrom, Inc. ......................... 2,270
56,900 Tiffany & Company ....................... 1,879
50,200 Weight Watchers International, Inc. ..... 2,053
------------
7,731
------------
Total Consumer Discretionary ............ 15,047
------------
CONSUMER STAPLES - 1.3%
FOOD, BEVERAGE & TOBACCO - 0.8%
13,600 Dean Foods Company+ ..................... 506
8,700 J.M. Smucker Company .................... 389
------------
895
------------
HOUSEHOLD & PERSONAL PRODUCTS - 0.5%
13,200 Estee Lauder Companies Inc., Class A .... 510
------------
Total Consumer Staples .................. 1,405
------------
ENERGY - 9.0%
37,800 Cimarex Energy Company .................. 1,625
64,000 Nabors Industries Ltd. (F)+ ............. 2,163
54,400 Noble Energy, Inc. ...................... 2,549
15,200 Tesoro Corporation ...................... 1,130
46,300 Tidewater Inc. .......................... 2,278
------------
Total Energy ............................ 9,745
------------
FINANCIALS - 18.9%
BANKS - 5.1%
35,726 North Fork Bancorporation, Inc. ......... 1,078
82,800 TCF Financial Corporation ............... 2,190
95,450 Washington Federal, Inc. ................ 2,213
------------
5,481
------------
DIVERSIFIED FINANCIALS - 3.8%
42,300 A.G. Edwards, Inc. ...................... 2,340
22,500 Ambac Financial Group, Inc. ............. 1,825
------------
4,165
------------
SHARES VALUE (000S)
- ------------- ------------
INSURANCE - 10.0%
106,800 Fidelity National Financial, Inc. ....... $ 4,160
95,700 HCC Insurance Holdings, Inc. ............ 2,817
48,600 Max Re Capital Ltd. (F) ................. 1,061
27,200 MGIC Investment Corporation ............. 1,768
24,891 PMI Group, Inc.** ....................... 1,110
------------
10,916
------------
Total Financials ........................ 20,562
------------
HEALTH CARE - 11.5%
HEALTH CARE EQUIPMENT & SERVICES - 10.1%
18,600 AmerisourceBergen Corporation ........... 780
39,100 Covance Inc.+ ........................... 2,394
51,100 Edwards Lifesciences Corporation+ ....... 2,321
16,100 Express Scripts, Inc., Class A+ ......... 1,155
71,102 IMS Health Inc. ......................... 1,909
48,400 Universal Health Services, Inc.,
Class B .............................. 2,433
------------
10,992
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 1.4%
76,525 Mylan Laboratories Inc. ................. 1,530
------------
Total Health Care ....................... 12,522
------------
INDUSTRIALS - 16.6%
CAPITAL GOODS - 6.4%
62,800 Federal Signal Corporation .............. 951
38,900 Lincoln Electric Holdings, Inc. ......... 2,437
27,100 PACCAR Inc.** ........................... 2,232
25,500 Teleflex Inc. ........................... 1,378
------------
6,998
------------
COMMERCIAL SERVICES & SUPPLIES - 4.5%
78,300 Allied Waste Industries, Inc.+** ........ 890
42,700 HNI Corporation ......................... 1,936
50,500 Republic Services, Inc. ................. 2,037
------------
4,863
------------
TRANSPORTATION - 5.7%
36,800 Alaska Air Group, Inc.+ ................. 1,451
104,700 AMR Corporation+** ...................... 2,661
72,100 Continental Airlines, Inc., Class B+** .. 2,149
------------
6,261
------------
Total Industrials ....................... 18,122
------------
INFORMATION TECHNOLOGY - 11.9%
COMPUTERS & PERIPHERALS - 3.4%
72,000 Electronics for Imaging, Inc.+ .......... 1,503
61,500 Network Appliance, Inc.+ ................ 2,171
------------
3,674
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.4%
39,000 Arrow Electronics, Inc.+ 1,256
33,500 Diebold, Inc. ........................... 1,361
------------
2,617
------------
28 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT MID CAP STOCK FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
IT SERVICES - 1.6%
54,100 Acxiom Corporation ...................... $ 1,352
18,900 Convergys Corporation+ .................. 369
------------
1,721
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.6%
86,650 Microchip Technology Inc.** ............. 2,907
------------
SOFTWARE - 1.9%
72,100 BMC Software Inc.+ ...................... 1,723
19,600 Synopsys, Inc.+ ......................... 368
------------
2,091
------------
Total Information Technology ............ 13,010
------------
MATERIALS - 5.2%
31,800 Cabot Corporation ....................... 1,098
54,200 Lubrizol Corporation .................... 2,160
91,300 Valspar Corporation ..................... 2,411
------------
Total Materials ......................... 5,669
------------
TELECOMMUNICATION SERVICES - 0.5%
8,600 United States Cellular Corporation+ ..... 521
------------
UTILITIES - 4.3%
107,100 NiSource Inc.** ......................... 2,339
57,700 Pinnacle West Capital Corporation ....... 2,303
------------
Total Utilities ......................... 4,642
------------
Total Common Stocks
(Cost $70,674) ....................... 101,245
------------
REAL ESTATE INVESTMENT TRUST (REIT) - 2.1%
(Cost $1,566)
51,000 General Growth Properties, Inc. ......... 2,298
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 4.7%
(Cost $5,044)
$ 5,044 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$5,046,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$5,210,000) .......................... $ 5,044
------------
SHORT-TERM INVESTMENT - 9.1%
(Cost $ 9,934)
9,934 Mellon GSL DBT II Collateral Fund++ ..... 9,934
------------
TOTAL INVESTMENTS (Cost $87,217*) ....................... 108.9% 118,521
OTHER ASSETS (LIABILITIES) (NET) ........................ (8.9) (9,663)
----- ------------
NET ASSETS .............................................. 100.0% $ 108,858
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $9,722,000, representing 8.9% of the total net
assets of the Fund (collateral value $9,934,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
(F) -- Foreign Shares
See Notes to Financial Statements. 29
Portfolio of Investments
VT GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 97.2%
CONSUMER DISCRETIONARY - 15.6%
AUTOMOBILES & COMPONENTS - 0.1%
9,000 Toyota Motor Corporation (F) ............ $ 471
------------
CONSUMER DURABLES & APPAREL - 1.0%
4,000 Harman International Industries, Inc. ... 341
24,460 NIKE Inc., Class B ...................... 1,981
8,900 Polo Ralph Lauren Corporation ........... 489
------------
2,811
------------
CONSUMER SERVICES - 1.9%
16,410 Apollo Group, Inc., Class A+** .......... 848
9,770 Carnival Corporation** .................. 408
7,900 Las Vegas Sands Corporation+** .......... 615
10,100 Scientific Games Corporation+ ........... 360
85,515 Starbucks Corporation+ .................. 3,229
------------
5,460
------------
MEDIA - 2.7%
25,300 Comcast Corporation, Special Class
A+** ................................. 829
170,228 Time Warner Inc. ........................ 2,945
83,700 Walt Disney Company ..................... 2,511
98,910 XM Satellite Radio Holdings Inc.,
Class A+** ........................... 1,449
------------
7,734
------------
RETAILING - 9.9%
172,875 Amazon.com Inc.+** ...................... 6,687
16,020 Best Buy Company, Inc. .................. 878
148,680 eBay Inc.+ .............................. 4,355
34,000 Expedia, Inc.+ .......................... 509
136,575 Home Depot, Inc.** ...................... 4,888
143,832 IAC/InterActiveCorp+** .................. 3,810
13,030 J.C. Penney Company, Inc.
(Holding Company) .................... 880
13,200 Kohl's Corporation+ ..................... 780
19,510 Lowe's Companies, Inc. .................. 1,184
16,600 Michaels Stores, Inc. ................... 685
120,965 Staples, Inc. ........................... 2,942
12,770 Target Corporation ...................... 624
26,700 Urban Outfitters, Inc.+ ................. 467
------------
28,689
------------
Total Consumer Discretionary ............ 45,165
------------
CONSUMER STAPLES - 7.6%
FOOD & STAPLES RETAILING - 1.0%
32,100 CVS Corporation ......................... 986
60,775 Sysco Corporation ....................... 1,857
------------
2,843
------------
FOOD, BEVERAGE & TOBACCO - 3.8%
59,840 Cadbury Schweppes PLC (F) ............... 577
55,200 Coca-Cola Company ....................... 2,375
SHARES VALUE (000S)
- ------------- ------------
4,111 Nestle SA (F) ........................... $ 1,291
75,040 PepsiCo, Inc. ........................... 4,505
52,625 Wm. Wrigley Jr. Company ................. 2,387
------------
11,135
------------
HOUSEHOLD & PERSONAL PRODUCTS - 2.8%
124,712 Procter & Gamble Company ................ 6,934
27,750 Reckitt Benckiser PLC (F) ............... 1,037
------------
7,971
------------
Total Consumer Staples 21,949
------------
ENERGY - 6.3%
40,850 EOG Resources, Inc. ..................... 2,833
14,510 ExxonMobil Corporation .................. 890
35,470 Halliburton Company ..................... 2,632
12,348 Kinder Morgan Management LLC+ ........... 531
51,320 Occidental Petroleum Corporation ........ 5,263
23,460 Schlumberger Ltd. ....................... 1,527
26,200 Smith International, Inc. ............... 1,165
16,000 Transocean Inc.+ ........................ 1,285
30,675 Valero Energy Corporation ............... 2,041
------------
Total Energy ............................ 18,167
------------
FINANCIALS - 11.5%
BANKS - 0.1%
7,100 Bank of America Corporation ............. 342
------------
DIVERSIFIED FINANCIALS - 8.4%
65,175 American Express Company ................ 3,469
3,100 Chicago Mercantile Exchange Holdings Inc. 1,523
13,510 Citigroup Inc. .......................... 652
55,510 Fannie Mae .............................. 2,670
6,200 Franklin Resources, Inc. ................ 538
7,030 Goldman Sachs Group, Inc. ............... 1,057
9,700 Legg Mason, Inc. ........................ 965
92,530 Merrill Lynch & Company, Inc. ........... 6,436
46,300 Morgan Stanley .......................... 2,927
22,900 Nomura Holdings, Inc. (F) ............... 429
12,400 Northern Trust Corporation .............. 686
44,880 optionsXpress Holdings, Inc. ............ 1,046
8,100 T. Rowe Price Group, Inc. ............... 306
14,130 UBS AG (F) .............................. 1,550
------------
24,254
------------
INSURANCE - 3.0%
62,540 American International Group, Inc. ...... 3,693
34 Berkshire Hathaway, Inc., Class A+ ...... 3,116
8,000 Hartford Financial Services Group, Inc. . 677
13,420 Prudential Financial, Inc. .............. 1,043
------------
8,529
------------
Total Financials ........................ 33,125
------------
30 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
HEALTH CARE - 18.9%
HEALTH CARE EQUIPMENT & SERVICES - 6.3%
11,750 Alcon, Inc. (F) ......................... $ 1,158
49,245 Boston Scientific Corporation+ .......... 829
45,165 Caremark Rx, Inc. ....................... 2,252
13,400 Covance Inc.+ ........................... 820
52,515 Coventry Health Care, Inc.+ ............. 2,885
13,300 Fisher Scientific International Inc.+ ... 972
70,740 Medtronic, Inc.** ....................... 3,319
16,400 Quest Diagnostics Inc. .................. 983
8,254 Roche Holding AG-Genusschein (F) ........ 1,364
22,600 St. Jude Medical, Inc.+ ................. 733
52,245 UnitedHealth Group Inc. ................. 2,340
11,490 Varian Medical Systems, Inc.+ ........... 544
------------
18,199
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 12.6%
125,325 Amgen, Inc.+ ............................ 8,175
67,990 Biogen Idec Inc.+ ....................... 3,150
8,700 Celgene Corporation+ .................... 413
3,900 Cephalon, Inc.+** ....................... 234
16,755 Eli Lilly & Company ..................... 926
94,460 Genentech, Inc.+ ........................ 7,727
14,300 Genzyme Corporation+ .................... 873
31,740 Gilead Sciences, Inc.+ .................. 1,878
61,805 Johnson & Johnson ....................... 3,703
14,800 MedImmune, Inc.+** ...................... 401
29,760 Novartis AG (F) ......................... 1,611
22,500 PDL BioPharma Inc.+ ..................... 414
126,240 Pfizer Inc. ............................. 2,963
5,280 Sanofi-Aventis Group (F)** .............. 515
35,645 Sanofi-Aventis, ADR** ................... 1,736
8,200 Sepracor Inc.+** ........................ 469
24,000 Shionogi & Company, Ltd. (F) ............ 428
30,382 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ........................ 960
------------
36,576
------------
Total Health Care ....................... 54,775
------------
INDUSTRIALS - 5.5%
CAPITAL GOODS - 4.4%
13,300 Danaher Corporation** ................... 855
25,480 Empresa Brasileira de Aeronautica SA,
ADR** ................................ 929
9,400 Fastenal Company** ...................... 379
13,000 General Dynamics Corporation ............ 851
219,208 General Electric Company ................ 7,225
13,360 Lockheed Martin Corporation ............. 958
3,900 Textron Inc. ............................ 360
17,480 United Technologies Corporation ......... 1,109
------------
12,666
------------
SHARES VALUE (000S)
- ------------- ------------
COMMERCIAL SERVICES & SUPPLIES - 0.5%
9,500 ChoicePoint Inc.+ ....................... $ 397
8,800 Corporate Executive Board Company ....... 882
------------
1,279
------------
TRANSPORTATION - 0.6%
7,780 Expeditors International of Washington,
Inc. ................................. 436
12,070 FedEx Corporation ....................... 1,410
------------
1,846
------------
Total Industrials ....................... 15,791
------------
INFORMATION TECHNOLOGY - 29.5%
COMMUNICATIONS EQUIPMENT - 9.0%
352,035 Cisco Systems, Inc.+ .................... 6,875
36,100 Corning Inc.+ ........................... 873
9,200 F5 Networks, Inc.+ ...................... 492
124,000 Juniper Networks, Inc.+ ................. 1,983
247,680 Motorola, Inc. .......................... 4,991
19,500 Nokia Oyj, Sponsored ADR ................ 395
141,300 QUALCOMM Inc. ........................... 5,662
57,600 Research In Motion Ltd.+ ................ 4,019
21,800 Telefonaktiebolaget LM Ericsson,
Sponsored ADR ........................ 720
------------
26,010
------------
COMPUTERS & PERIPHERALS - 2.0%
16,200 Apple Computer, Inc.+ ................... 925
37,060 Dell Inc.+ .............................. 905
203,980 EMC Corporation+ ........................ 2,238
12,000 Network Appliance, Inc.+ ................ 424
27,075 SanDisk Corporation+** .................. 1,380
------------
5,872
------------
INTERNET SOFTWARE & SERVICES - 5.5%
74,700 Akamai Technologies, Inc.+ .............. 2,703
9,445 Google Inc., Class A+ ................... 3,961
274,935 Yahoo! Inc.+ ............................ 9,073
------------
15,737
------------
IT SERVICES - 1.4%
28,700 Affiliated Computer Services, Inc.,
Class A+ ................................ 1,481
37,300 Automatic Data Processing, Inc. ......... 1,692
13,600 Cognizant Technology Solutions
Corporation, Class A+ ................ 916
------------
4,089
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.1%
132,040 Advanced Micro Devices, Inc.+ ........... 3,224
36,750 Broadcom Corporation, Class A+ .......... 1,104
136,080 Intel Corporation ....................... 2,579
16,300 Linear Technology Corporation** ......... 546
11,600 Marvell Technology Group Ltd.+ .......... 514
19,900 Microchip Technology Inc. ............... 668
See Notes to Financial Statements. 31
Portfolio of Investments (continued)
VT GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT
(CONTINUED)
7,746 Samsung Electronics Company Ltd., GDR .. $ 2,462
217,778 Texas Instruments Inc. .................. 6,596
------------
17,693
------------
SOFTWARE - 5.5%
86,560 Adobe Systems Inc.+ ..................... 2,628
22,300 Amdocs Ltd. (F)+ ........................ 816
14,000 Autodesk, Inc.+ ......................... 483
66,900 Electronic Arts Inc.+ ................... 2,879
14,300 McAfee Inc.+ ............................ 347
171,308 Microsoft Corporation ................... 3,992
10,000 NAVTEQ Corporation+ ..................... 447
95,100 Red Hat, Inc.+ .......................... 2,225
39,915 SAP AG, Sponsored ADR ................... 2,096
------------
15,913
------------
Total Information Technology ............ 85,314
------------
MATERIALS - 1.1%
23,000 Monsanto Company ........................ 1,936
25,530 Praxair, Inc. ........................... 1,379
------------
Total Materials ......................... 3,315
------------
TELECOMMUNICATION SERVICES - 0.8%
28,300 American Tower Corporation, Class A+ .... 881
14,900 Crown Castle International
Corporation+ ......................... 514
39,170 Sprint Nextel Corporation ............... 783
------------
Total Telecommunication Services ........ 2,178
------------
UTILITIES - 0.4%
20,780 TXU Corporation ......................... 1,243
------------
Total Common Stocks
(Cost $258,739) ...................... 281,022
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTE - 2.0%
(Cost $5,898)
FEDERAL HOME LOAN BANK (FHLB) - 2.0%
$5,900 4.950% due 07/03/2006++ .................... $ 5,898
------------
REPURCHASE AGREEMENT - 0.9%
(Cost $2,452)
2,452 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$2,453,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$2,533,000) .......................... 2,452
------------
SHORT-TERM INVESTMENT - 5.1%
(Cost $14,867)
14,867 Mellon GSL DBT II
Collateral Fund+++ ................... 14,867
------------
TOTAL INVESTMENTS (Cost $281,956*) ...................... 105.2% 304,239
OTHER ASSETS (LIABILITIES) (NET) ........................ (5.2) (15,149)
----- ------------
NET ASSET ............................................... 100.0% $ 289,090
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $14,357,000, representing 5.0% of the total net
assets of the Fund (collateral value $14,867,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
+++ Represents investment purchased with cash collateral for securities loaned.
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
(000S) NET
------------------------------------------ UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE DEPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- -------- -------- ----------- ------------
7/3/06 GBP71 131 128 $(3)
===
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
(F) -- Foreign Shares
GBP -- Great BritaIn Pound Sterling
GDR -- Global Depositary Receipt
32 See Notes to Financial Statements.
Portfolio of Investments
VT SMALL CAP VALUE FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 78.2%
CONSUMER DISCRETIONARY - 9.7%
AUTOMOBILES & COMPONENTS - 2.0%
48,500 Accuride Corporation+ ................... $ 605
3,600 Tenneco, Inc.+ .......................... 94
------------
699
------------
CONSUMER DURABLES & APPAREL - 2.4%
64,000 Lenox Group, Inc.+ ...................... 454
18,600 Rocky Brands, Inc.+** ................... 395
------------
849
------------
MEDIA - 0.5%
8,300 Carmike Cinemas, Inc. ................... 175
------------
RETAILING - 4.8%
49,200 Blockbuster Inc., Class A ............... 245
2,437 Children's Place Retail Stores, Inc.+ ... 146
130,300 Movie Gallery, Inc. ..................... 809
12,200 RC2 Corporation+ ........................ 472
------------
1,672
------------
Total Consumer Discretionary ............ 3,395
------------
CONSUMER STAPLES - 5.0%
FOOD & STAPLES RETAILING - 1.0%
20,500 Fresh Del Monte Produce, Inc. ........... 354
------------
FOOD, BEVERAGE & TOBACCO - 1.3%
27,300 B&G Foods Inc., EIS ..................... 443
------------
HOUSEHOLD & PERSONAL PRODUCTS - 2.7%
12,300 Central Garden & Pet Company+ ........... 530
13,249 Jarden Corporation+** ................... 403
------------
933
------------
Total Consumer Staples .................. 1,730
------------
ENERGY - 6.0%
16,100 Cimarex Energy Company .................. 692
14,000 Comstock Resources, Inc.+ ............... 418
11,800 Encore Acquisition Company+ ............. 317
3,800 Giant Industries, Inc.+ ................. 253
9,800 St. Mary Land & Exploration Company ..... 394
------------
Total Energy ............................ 2,074
------------
FINANCIALS - 14.1%
BANKS - 7.8%
13,780 Capital Corporation of the West ......... 441
4,100 Center Financial Corporation ............ 97
26,900 Dime Community Bancshares ............... 365
41,340 Oriental Financial Group, Inc. .......... 528
43,100 TrustCo Bank Corporation NY ............. 475
16,920 U.S.B. Holding Company, Inc. ............ 381
17,700 Washington Federal, Inc. ................ 410
------------
2,697
------------
SHARES VALUE (000S)
- ------------- ------------
INSURANCE - 6.3%
12,600 Navigators Group, Inc.+ ................. $ 552
10,200 Safety Insurance Group, Inc. ............ 485
12,300 State Auto Financial Corporation ........ 400
4,800 Stewart Information Services
Corporation ............................. 174
19,400 United Fire & Casualty Company .......... 585
------------
2,196
------------
Total Financials ........................ 4,893
------------
HEALTH CARE - 4.4%
HEALTH CARE EQUIPMENT & SERVICES - 2.5%
8,400 Gene Logic, Inc.+ ....................... 11
25,000 Kindred Healthcare, Inc.+ ............... 650
6,100 LifePoint Hospitals, Inc.+ .............. 196
------------
857
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 1.9%
53,200 Bradley Pharmaceuticals, Inc.+** ........ 543
22,400 Lannett Company, Inc.+** ................ 127
------------
670
------------
Total Health Care ....................... 1,527
------------
INDUSTRIALS - 15.2%
CAPITAL GOODS - 5.2%
10,700 DRS Technologies, Inc. .................. 521
2,100 Gardner Denver Inc.+ .................... 81
14,700 Griffon Corporation+** .................. 384
113,100 New Flyer Industries Inc. (F), IDS++ .... 839
------------
1,825
------------
COMMERCIAL SERVICES & SUPPLIES - 1.5%
18,800 McGrath RentCorp ........................ 523
------------
TRANSPORTATION - 8.5%
11,200 Alaska Air Group, Inc.+ ................. 442
23,300 AMR Corporation+** ...................... 592
20,200 Continental Airlines, Inc., Class B+ .... 602
11,000 Dampskibsselskabet TORM A/S, ADR** ...... 518
66,200 Frontier Airlines Holdings, Inc.+** ..... 477
15,100 OMI Corporation ......................... 327
------------
2,958
------------
Total Industrials ....................... 5,306
------------
INFORMATION TECHNOLOGY - 10.5%
COMMUNICATIONS EQUIPMENT - 1.2%
13,000 Bel Fuse Inc., Class B .................. 427
------------
COMPUTERS & PERIPHERALS - 2.3%
16,000 Electronics for Imaging, Inc.+ .......... 334
20,800 Hutchinson Technology, Inc.+** .......... 450
------------
784
------------
See Notes to Financial Statements. 33
Portfolio of Investments (continued)
VT SMALL CAP VALUE FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.4%
33,800 LeCroy Corporation+ ..................... $ 485
------------
IT SERVICES - 1.0%
62,600 Lionbridge Technologies, Inc.+ .......... 346
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.4%
76,500 Axcelis Technologies, Inc.+ ............. 451
63,000 Credence Systems Corporation+ ........... 221
51,400 PortalPlayer Inc.+** .................... 504
------------
1,176
------------
SOFTWARE - 1.2%
40,500 RealNetworks, Inc.+ ..................... 433
------------
Total Information Technology ............ 3,651
------------
MATERIALS - 8.8%
9,100 Century Aluminum Company+ ............... 325
9,500 Headwaters, Inc.+** ..................... 243
188,000 Kingsgate Consolidated Ltd. (F) ......... 718
20,000 Metal Management, Inc. .................. 612
394,200 Minara Resources Ltd. (F) ............... 712
21,800 Randgold Resources Ltd., ADR+** ......... 458
------------
Total Materials ......................... 3,068
------------
TELECOMMUNICATION SERVICES - 3.5%
30,100 Asia Satellite Telecommunications
Holdings Ltd., Sponsored ADR ......... 507
16,400 Iowa Telecommunications Services Inc. ... 310
24,800 USA Mobility, Inc.+** ................... 412
------------
Total Telecommunication Services ........ 1,229
------------
UTILITIES - 1.0%
10,700 Suburban Propane Partners LP** .......... 337
------------
Total Common Stocks
(Cost $25,568) ....................... 27,210
------------
CANADIAN INCOME TRUSTS - 8.8%
CONSUMER STAPLES - 3.7%
FOOD, BEVERAGE & TOBACCO - 3.7%
59,300 Arctic Glacier Income Fund (F) .......... 635
61,400 Connors Brothers Income Fund (F) ........ 638
------------
Total Consumer Staples .................. 1,273
------------
ENERGY - 4.1%
17,000 Harvest Energy Trust (F)** .............. 506
23,300 Vermilion Energy Trust (F) .............. 721
7,700 Zargon Energy Trust (F) ................. 211
------------
Total Energy ............................ 1,438
------------
SHARES VALUE (000S)
- ------------- ------------
INDUSTRIALS - 1.0%
COMMERCIAL SERVICES & SUPPLIES - 1.0%
42,900 Versacold Income Fund (F) ............... $ 341
------------
Total Canadian Income Trusts
(Cost $2,362) ........................ 3,052
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 6.5%
12,000 Entertainment Properties Trust .......... 516
23,800 Equity Inns, Inc. ....................... 394
10,400 Nationwide Health Properties, Inc. ...... 234
21,200 OMEGA Healthcare Investors, Inc. ........ 280
9,700 Redwood Trust, Inc.** ................... 474
30,500 Winston Hotels, Inc. .................... 374
------------
Total REITs
(Cost $1,757) ........................ 2,272
------------
CONTRACTS
- -------------
PURCHASED PUT OPTIONS - 1.1%
3,950 iShares Russell 2000 Index,
Expires January 2007 @ $49 ........... 99
iShares Russell 2000 Index,
Expires January 2007 @ $56 ........... 50
1,400 iShares Russell 2000 Index,
Expires January 2008 @ $55 ........... 231
------------
Total Purchased Put Options
(Cost $1,145) ........................ 380
------------
34 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT SMALL CAP VALUE FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 4.6%
Cost $1,608)
$ 1,608 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$1,609,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009,
market value $1,661,000) ............. $ 1,608
------------
SHORT-TERM INVESTMENT - 13.5%
(Cost $4,708)
4,708 Mellon GSL DBT II
Collateral Fund+++ ................... 4,708
------------
TOTAL INVESTMENTS (Cost $37,148*) ....................... 112.7% 39,230
OTHER ASSETS (LIABILITIES) (NET) ........................ (12.7) (4,412)
----- ------------
NET ASSETS .............................................. 100.0% $ 34,818
====== ============
- ----------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $4,538,000, representing 13.0% of the total net
assets of the Fund (collateral value $4,708,000). (See Note 7 to Financial
Statements.)
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
EIS -- Enhanced Income Security
(F) -- Foreign Shares
IDS -- Income Deposit Security
See Notes to Financial Statements. 35
Portfolio of Investments
VT SMALL CAP GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS - 95.5%
CONSUMER DISCRETIONARY - 16.0%
CONSUMER DURABLES & APPAREL - 5.9%
15,800 Carter's, Inc.+ ......................... $ 418
11,146 Charles & Colvard Ltd. .................. 117
16,000 Coach, Inc.+ ............................ 478
6,800 Crocs, Inc.+ ............................ 171
7,512 Desarrolladora Homex SA de CV, ADR+ ..... 247
7,800 Directed Electronics, Inc.+ ............. 102
8,800 GMARKET Inc., ADR+ ...................... 135
10,700 Iconix Brand Group, Inc.+ ............... 175
4,500 Steven Madden, Ltd.+ .................... 133
12,400 Under Armour, Inc., Class A+ ............ 529
8,700 Volcom, Inc.+ ........................... 278
------------
2,783
------------
CONSUMER SERVICES - 3.1%
12,600 BJ's Restaurants Inc.+ .................. 282
5,100 Ctrip.com International Ltd., ADR ....... 260
5,400 LIFE TIME FITNESS, Inc.+ ................ 250
6,400 Ruby Tuesday, Inc. ...................... 156
6,600 Shuffle Master, Inc.+ ................... 216
14,553 Sonic Corporation+ ...................... 303
------------
1,467
------------
MEDIA - 2.0%
14,400 Focus Media Holding Ltd., ADR+ .......... 938
------------
RETAILING - 5.0%
2,900 Citi Trends Inc.+ ....................... 124
5,783 Guitar Center, Inc.+ .................... 257
12,100 Gymboree Corporation+ ................... 421
14,122 Hibbett Sporting Goods, Inc.+ ........... 338
10,300 Hot Topic, Inc.+ ........................ 119
11,000 Priceline.com Inc.+ ..................... 328
7,767 Stamps.com, Inc.+ ....................... 216
4,403 Tractor Supply Company+ ................. 243
8,776 Urban Outfitters, Inc.+ ................. 154
3,100 Zumiez Inc.+ ............................ 116
------------
2,316
------------
Total Consumer Discretionary ............ 7,504
------------
CONSUMER STAPLES - 0.9%
FOOD & STAPLES RETAILING - 0.8%
14,400 Central European Distribution
Corporation+ ......................... 362
------------
HOUSEHOLD & PERSONAL PRODUCTS - 0.1%
4,228 Parlux Fragrances, Inc.+ ................ 41
------------
Total Consumer Staples .................. 403
------------
ENERGY - 10.4%
8,800 ATP Oil & Gas Corporation+ .............. 369
12,300 Basic Energy Services, Inc.+ ............ 376
14,700 Bronco Drilling Company, Inc.+ .......... 307
SHARES VALUE (000S)
- ------------- ------------
6,400 CARBO Ceramics Inc. ..................... $ 314
21,200 Carrizo Oil & Gas, Inc.+ ................ 664
6,200 Dril-Quip, Inc.+ ........................ 511
8,200 Hercules Offshore, Inc.+ ................ 287
31,100 Input/Output, Inc.+ ..................... 294
4,900 Lufkin Industries, Inc. ................. 291
24,900 Petrohawk Energy Corporation+ ........... 314
14,900 Pioneer Drilling Company+ ............... 230
3,700 SEACOR Holdings Inc.+ ................... 304
6,756 Veritas DGC, Inc.+ ...................... 348
5,500 W-H Energy Services, Inc.+ .............. 280
------------
Total Energy ............................ 4,889
------------
FINANCIALS - 5.2%
BANKS - 1.8%
11,242 Brookline Bancorp, Inc. ................. 155
11,400 Midwest Banc Holdings, Inc. ............. 253
10,100 Signature Bank+ ......................... 327
4,000 Sterling Financial Corporation .......... 122
------------
857
------------
DIVERSIFIED FINANCIALS - 1.4%
23,100 First Cash Financial Services, Inc.+ .... 456
16,300 TradeStation Group, Inc.+ ............... 207
------------
663
------------
INSURANCE - 2.0%
9,800 American Equity Investment Life Holding
Company .............................. 104
16,700 Amerisafe Inc.+ ......................... 208
13,836 Delphi Financial Group, Inc., Class A ... 503
3,900 United Fire & Casualty Company .......... 118
------------
933
------------
Total Financials ........................ 2,453
------------
HEALTH CARE - 23.5%
HEALTH CARE EQUIPMENT & SERVICES - 12.5%
7,200 Abaxis, Inc.+ ........................... 161
11,479 Adeza Biomedical Corporation+ ........... 161
6,400 Advisory Board Company+ ................. 308
26,094 Align Technology, Inc.+ ................. 193
6,100 Allscripts Healthcare Solutions, Inc.+ .. 107
9,588 ArthroCare Corporation+ ................. 403
7,527 Aspect Medical Systems, Inc.+ ........... 131
9,014 Centene Corporation+ .................... 212
16,754 Conceptus, Inc.+ ........................ 228
7,696 Conor Medsystems, Inc.+ ................. 212
11,500 HealthExtras, Inc.+ ..................... 348
15,900 Healthspring, Inc.+ ..................... 298
4,978 Healthways, Inc.+ ....................... 262
14,400 Immucor, Inc.+ .......................... 277
13,798 IntraLase Corporation+ .................. 231
10,666 inVentiv Health Inc.+ ................... 307
10,748 Kyphon, Inc.+ ........................... 412
36 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT SMALL CAP GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
9,339 LCA-Vision, Inc. ........................ $ 494
2,250 Merge Technologies, Inc.+ ............... 28
18,400 Micrus Endovascular Corporation+ ........ 222
6,700 Natus Medical Inc.+ ..................... 66
7,500 Nighthawk Radiology Holdings, Inc.+ ..... 135
5,600 Palomar Medical Technologies, Inc.+ ..... 256
2,100 Quidel Corporation+ ..................... 20
12,097 Syneron Medical Ltd. (F)+ ............... 253
4,300 Vital Images, Inc.+ ..................... 106
------------
5,831
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 11.0%
10,500 Adams Respiratory Therapeutics, Inc.+ ... 469
17,800 Anadys Pharmaceuticals Inc.+ ............ 52
20,900 Aspreva Pharmaceuticals Corporation
(F)+ ................................. 567
7,800 Combinatorx Inc.+ ....................... 69
16,166 CV Therapeutics, Inc.+ .................. 226
9,500 Digene Corporation+ ..................... 368
16,500 Keryx Biopharmaceuticals, Inc.+ ......... 234
5,650 Kos Pharmaceuticals, Inc.+ .............. 213
19,638 MGI Pharma, Inc.+ ....................... 422
25,800 Nastech Pharmaceutical Company Inc.+ .... 408
20,869 Nektar Therapeutics+ .................... 383
16,102 PDL BioPharma Inc.+ ..................... 296
18,000 Rigel Pharmaceuticals, Inc.+ ............ 175
16,337 Salix Pharmaceuticals Ltd.+ ............. 201
12,046 Sciele Pharma, Inc.+ .................... 279
19,900 Telik, Inc.+ ............................ 328
8,368 United Therapeutics Corporation+ ........ 483
------------
5,173
------------
Total Health Care ....................... 11,004
------------
INDUSTRIALS - 14.6%
CAPITAL GOODS - 10.0%
18,926 A.S.V., Inc.+ ........................... 436
1,748 American Science & Engineering, Inc.+ ... 101
4,850 Bucyrus International, Inc. ............. 245
21,214 Ceradyne, Inc.+ ......................... 1,050
11,600 Dynamic Materials Corporation ........... 391
6,200 ESCO Technologies Inc.+ ................. 332
14,000 Essex Corporation+ ...................... 258
15,800 Hexcel Corporation+ ..................... 248
7,000 Ladish Co., Inc.+ ....................... 262
8,433 Lincoln Electric Holdings, Inc. ......... 528
8,100 NCI Building Systems, Inc.+ ............. 431
19,601 TurboChef Technologies, Inc.+ ........... 218
9,100 Williams Scotsman International Inc.+ ... 199
------------
4,699
------------
SHARES VALUE (000S)
- ------------- ------------
COMMERCIAL SERVICES & SUPPLIES - 3.6%
8,000 American Ecology Corporation ............ $ 212
5,126 CRA International Inc.+ ................. 231
8,900 Kenexa Corporation+ ..................... 283
13,903 LECG Corporation+ ....................... 257
2,700 Mine Safety Appliances Company .......... 109
7,500 Portfolio Recovery Associates, Inc.+ .... 343
9,648 Resources Connection, Inc.+ ............. 241
------------
1,676
------------
TRANSPORTATION - 1.0%
12,300 Knight Transportation, Inc. ............. 249
6,805 Universal Truckload Services, Inc.+ ..... 232
------------
481
------------
Total Industrials ....................... 6,856
------------
INFORMATION TECHNOLOGY - 24.2%
COMMUNICATIONS EQUIPMENT - 4.0%
10,000 Carrier Access Corporation+ ............. 83
39,065 Glenayre Technologies, Inc.+ ............ 103
9,500 Ixia+ ................................... 86
18,321 Openwave Systems Inc.+ .................. 211
13,600 Oplink Communinications, Inc.+ .......... 249
16,500 Polycom, Inc.+ .......................... 362
11,100 Redback Networks Inc.+ .................. 204
13,100 Sierra Wireless+ ........................ 236
14,600 Stratex Networks, Inc.+ ................. 49
30,600 Symmetricom, Inc.+ ...................... 216
29,800 Zhone Technologies, Inc.+ ............... 61
------------
1,860
------------
COMPUTERS & PERIPHERALS - 0.8%
9,700 Neoware Inc.+ ........................... 119
6,000 Rackable Systems Inc.+ .................. 237
------------
356
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.6%
6,300 Daktronics, Inc. ........................ 182
8,300 Optimal Group Inc., Class A+ ............ 112
------------
294
------------
INTERNET SOFTWARE & SERVICES - 4.5%
11,326 Akamai Technologies, Inc.+ .............. 410
22,689 aQuantive, Inc.+ ........................ 575
11,500 DealerTrack Holdings Inc.+ .............. 254
15,000 Jupitermedia Corporation+ ............... 195
10,236 Marchex, Inc., Class B+ ................. 168
19,303 ValueClick, Inc.+ ....................... 296
16,800 WebSideStory, Inc.+ ..................... 205
------------
2,103
------------
See Notes to Financial Statements. 37
Portfolio of Investments (continued)
VT SMALL CAP GROWTH FUND
JUNE 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
IT SERVICES - 2.7%
17,985 Euronet Worldwide, Inc.+ ................ $ 690
9,950 RightNow Technologies, Inc.+ ............ 166
13,900 VeriFone Holdings, Inc.+ ................ 424
------------
1,280
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.7%
15,000 ANADIGICS, Inc.+ ........................ 101
5,600 Cymer, Inc.+ ............................ 260
8,700 Ikanos Communications, Inc.+ ............ 132
14,600 Microsemi Corporation+ .................. 356
27,363 O2Micro International Limited (F)+ ...... 210
7,200 SiRF Technology Holdings, Inc.+ ......... 232
6,100 Supertex, Inc.+ ......................... 244
14,925 Tessera Technologies, Inc.+ ............. 411
34,098 Trident Microsystems, Inc.+ ............. 647
6,100 Varian Semiconductor Equipment
Associates, Inc.+ .................... 199
13,100 Zoran Corporation+ ...................... 319
------------
3,111
------------
SOFTWARE - 4.9%
18,000 Concur Technologies, Inc.+ .............. 278
5,900 FactSet Research Systems Inc. ........... 279
16,100 FalconStor Software, Inc.+ .............. 112
23,800 Informatica Corporation+ ................ 313
3,300 MRO Software, Inc.+ ..................... 66
16,036 Online Resources Corporation+ ........... 166
2,600 Open Solutions Inc.+ .................... 69
8,203 PDF Solutions, Inc.+ .................... 102
4,100 Retalix Ltd. (F)+ ....................... 92
8,422 TALX Corporation ........................ 184
32,500 TIBCO Software Inc.+ .................... 229
26,200 VASCO Data Security International,
Inc.+ ................................ 219
9,800 Witness Systems, Inc.+ .................. 198
------------
2,307
------------
Total Information Technology ............ 11,311
------------
MATERIALS - 0.5%
8,000 Zoltek Companies, Inc.+ ................. 239
------------
UTILITIES - 0.2%
7,500 Basin Water, Inc.+ ...................... 75
------------
Total Common Stocks
(Cost $38,597) ....................... 44,734
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.4%
10,950 RAIT Investment Trust ................... 320
15,400 Strategic Hotels & Resorts, Inc. ........ 319
------------
Total REITs
(Cost $569) .......................... 639
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 3.4%
(Cost $1,603)
$ 1,603 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$1,604,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$1,656,000) .......................... $1,603
------------
TOTAL INVESTMENTS (Cost $40,769*) ....................... 100.3% 46,976
OTHER ASSETS (LIABILITIES) (NET) ........................ (0.3) (131)
----- ------------
NET ASSET ............................................... 100.0% $ 46,845
===== ============
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
(F) -- Foreign Shares
38 See Notes to Financial Statements.
Portfolio of Investments
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
JAPAN - 23.7% ***
4,800 Advantest Corporation ................... $ 489
27,000 AEON Company Ltd. ....................... 592
4,500 Astellas Pharma Inc. .................... 165
5,700 Canon Inc. .............................. 279
11,000 Daiichi Sankyo Company Ltd.+ ............ 303
13,000 Daimaru, Inc. ........................... 172
15,000 Daiwa House Industry Company Ltd. ....... 240
6,800 DENSO CORPORATION ....................... 222
9,100 FANUC Ltd. .............................. 817
2,100 Hirose Electric Company Ltd. ............ 255
8,400 Hoya Corporation** ...................... 299
63 Japan Tobacco Inc. ...................... 230
22,400 Kansai Electric Power Company Inc. ...... 501
14,000 Kao Corporation ......................... 366
37 Millea Holdings, Inc. ................... 689
27,700 Mitsubishi Corporation .................. 553
43,000 Mitsubishi Estate Company Ltd. .......... 913
48,000 Mitsubishi Heavy Industries Ltd. ........ 207
61 Mitsubishi UFJ Financial Group, Inc. .... 853
17,000 Mitsui & Company Ltd. ................... 240
11,000 Mitsui Fudosan Company Ltd. ............. 239
14,000 Mitsui Sumitomo Insurance Company Ltd. .. 176
193 Mizuho Financial Group, Inc. ............ 1,634
3,300 Murata Manufacturing Company Ltd. ....... 214
15,000 NGK Spark Plug Company, Ltd.** .......... 302
2,800 Nidec Corporation ....................... 201
6,000 Nintendo Company Ltd. ................... 1,007
28,000 Nippon Electric Glass Company, Ltd. ..... 562
53 Nippon Telegraph & Telephone
Corporation .......................... 260
80,200 Nissan Motor Company Ltd. ............... 876
15,600 Nitto Denko Corporation ................. 1,111
37,000 Odakyu Electric Railway Company, Ltd.** 239
5,490 ORIX Corporation ........................ 1,341
17,000 Ricoh Company, Ltd. ..................... 334
3,400 Rohm Company Ltd. ....................... 304
1,600 Shimamura Company Ltd. .................. 175
7,000 Shin-Etsu Chemical Company Ltd. ......... 381
6,300 SMC Corporation ......................... 891
74,700 SOFTBANK Corporation** .................. 1,674
32,000 Sompo Japan Insurance Inc. .............. 447
4,442 Sony Corporation ........................ 196
59,000 Sumitomo Corporation .................... 778
84,000 Sumitomo Metal Industries, Ltd. ......... 346
278 Sumitomo Mitsui Financial Group, Inc. ... 2,939
10,000 Sumitomo Realty & Development
Company, Ltd. ........................ 246
54,500 Suzuki Motor Corporation ................ 1,179
3,200 T&D Holdings, Inc. ...................... 259
9,100 Takeda Pharmaceutical Company Ltd. ...... 566
2,300 TDK Corporation ......................... 175
7,800 Tokyo Electric Power Company Inc. ....... 215
17,000 Tokyo Electron Ltd. ..................... 1,188
52,000 Tokyo Gas Company Ltd. .................. 245
SHARES VALUE (000S)
- ------------- ------------
66,000 Tokyu Corporation ....................... $ 385
70,000 Toshiba Corporation** ................... 457
3,100 Toyota Motor Corporation (F) ............ 162
13,000 Trend Micro Inc. ........................ 439
10,100 USHIO Inc. .............................. 213
914 Yahoo! Japan Corporation ................ 484
5,500 Yamada Denki Company Ltd. ............... 561
37,200 Yamato Holdings Company, Ltd. ........... 660
------------
32,446
------------
UNITED KINGDOM - 13.6%
1,200 Anglo American PLC ...................... 49
7,400 Anglo American PLC (F) .................. 303
31,000 ARM Holdings PLC ........................ 65
30,400 AstraZeneca PLC ......................... 1,835
43,500 Astro All Asia Networks PLC ............. 53
99,600 BAE Systems PLC ......................... 681
14,637 BHP Billiton PLC ........................ 284
22,800 Brambles Industries PLC ................. 181
12,000 British Land Company PLC ................ 280
21,143 Cadbury Schweppes PLC (F) ............... 204
8,200 Carnival PLC ............................ 334
72,800 HBOS PLC ................................ 1,265
25,400 HSBC Holdings PLC ....................... 447
15,600 Johnston Press PLC ...................... 120
1,300 Kazakhmys PLC ........................... 29
55,500 Kingfisher PLC .......................... 245
37,200 Lloyds TSB Group PLC .................... 366
1,600 Lonmin PLC .............................. 83
12,000 Northern Rock PLC ....................... 222
12,900 Oxus Gold PLC+ .......................... 13
18,300 Pearson PLC ............................. 249
77,800 Reed Elsevier PLC ....................... 786
7,400 Rio Tinto PLC ........................... 391
74,500 Royal Bank of Scotland Group PLC++ ...... 2,449
64,469 Royal Dutch Shell PLC, A Shares ......... 2,169
2,900 Royal Dutch Shell PLC, Class A, ADR ..... 194
19,600 Scottish & Southern Energy PLC .......... 417
26,700 Smith & Nephew PLC ...................... 206
31,000 Standard Chartered PLC .................. 757
31,000 Tesco PLC ............................... 191
63,000 TI Automotive Ltd., Class A+# ........... 0
2,605 Unilever PLC ............................ 59
1,351,998 Vodafone Group PLC (F) .................. 2,881
10,600 Wolseley PLC ............................ 234
9,400 Xstrata PLC ............................. 356
31,800 Yell Group PLC .......................... 301
------------
18,699
------------
FRANCE - 8.7%
4,600 Accor SA** .............................. 280
7,333 AXA Group ............................... 241
15,950 BNP Paribas SA** ........................ 1,527
24,706 Bouygues SA++** ......................... 1,270
See Notes to Financial Statements. 39
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
3,500 Dassault Systemes SA** .................. $ 188
2,000 Essilor International SA ................ 201
3,000 Groupe Danone ........................... 381
1,672 L'Air Liquide SA ........................ 326
8,100 L'Oreal SA .............................. 765
5,800 Lafarge SA .............................. 728
5,300 Renault SA .............................. 569
6,900 Safran SA ............................... 150
25,300 Sanofi-Aventis Group (F)** .............. 2,469
9,800 Schneider Electric SA** ................. 1,022
2,500 Societe Generale Group** ................ 368
4,800 Thales SA ............................... 188
8,560 Total SA ................................ 563
7,400 Veolia Environnement SA ................. 383
10,400 Vivendi SA .............................. 364
------------
11,983
------------
SWITZERLAND - 6.5%
3,800 Adecco SA ............................... 225
28,783 Compagnie Financiere Richemont AG,
A Units .............................. 1,318
9,605 Credit Suisse Group ..................... 537
14,907 Holcim Ltd. ............................. 1,143
3,775 Nestle SA (F) ........................... 1,186
33,065 Novartis AG (F) ......................... 1,791
4,479 Roche Holding AG-Genusschein (F) ........ 740
15,182 Swiss Reinsurance Company ............... 1,061
1,490 Swisscom AG ............................. 491
1,700 Synthes, Inc. ........................... 205
1,837 UBS AG .................................. 201
------------
8,898
------------
CANADA - 5.0%
21,600 Abitibi-Consolidated Inc.** ............. 58
28,700 Alcan Inc.** ............................ 1,344
1,200 Banro Corporation+ ...................... 12
400 Barrick Gold Corporation ................ 12
25,700 Barrick Gold Corporation (F) ............ 761
25,900 Cameco Corporation ...................... 1,032
3,200 Canadian Imperial Bank of Commerce ...... 214
18,100 Canadian Natural Resources Ltd.** ....... 1,001
4,000 CIC Energy Corporation+ ................. 27
8,100 Inco Ltd. (F) ........................... 534
8,600 Ivanhoe Mines Ltd.+ ..................... 58
1,900 Magna International Inc., Class A ....... 135
5,600 Manulife Financial Corporation** ........ 177
9,800 Methanex Corporation .................... 207
7,800 Potash Corporation of Saskatchewan
Inc. ................................. 668
5,400 Suncor Energy Inc. ...................... 437
5,900 TELUS Corporation** ..................... 238
------------
6,915
------------
SHARES VALUE (000S)
- ------------- ------------
GERMANY - 4.5%
4,200 Allianz AG .............................. $ 663
3,300 Altana AG ............................... 184
8,200 Bayer AG ................................ 377
4,100 Bayerische Motoren Werke (BMW) AG ....... 205
7,700 Commerzbank AG .......................... 280
7,700 DaimlerChrysler AG** .................... 380
19,400 Depfa Bank PLC .......................... 322
3,400 Deutsche Bank AG ........................ 383
1,989 Deutsche Boerse AG** .................... 271
11,400 Deutsche Post AG ........................ 306
2,900 E.ON AG ................................. 334
6,200 Infineon Technologies AG+ ............... 69
2,900 SAP AG .................................. 612
3,100 SAP AG, Sponsored ADR ................... 163
10,100 Siemens AG .............................. 879
11,200 Volkswagen AG** ......................... 785
------------
6,213
------------
NETHERLANDS - 4.2%
26,580 ABN AMRO Holding NV ..................... 727
30,523 AEGON NV ................................ 522
6,250 Heineken Holding NV ..................... 230
19,500 Heineken NV ............................. 827
37,731 ING Groep NV ............................ 1,483
75,800 Koninklijke (Royal) KPN NV .............. 852
5,322 Koninklijke (Royal) Numico NV ........... 239
18,000 Reed Elsevier NV ........................ 271
6,500 TNT NV .................................. 233
13,500 Unilever NV ............................. 306
------------
5,690
------------
SOUTH KOREA - 3.8% ***
14,490 Asiana Airlines+ ........................ 102
70 Cheil Communications Inc. ............... 14
90 CJ Home Shopping ........................ 7
310 Daewoo Shipbuilding & Marine
Engineering Company Ltd. ............. 9
300 Doosan Heavy Industries and Construction
Company Ltd. ......................... 11
7,850 Doosan Infracore Company Ltd. ........... 130
1,440 GS Engineering & Construction
Corporation .......................... 93
8,730 Hankook Tire Company Ltd. ............... 103
950 Hynix Semiconductor Inc.+ ............... 31
1,960 Hyundai Development Company ............. 85
270 Hyundai Heavy Industries Company Ltd. ... 30
270 Hyundai Mipo Dockyard Company Ltd. ...... 27
840 Hyundai Mobis ........................... 71
2,360 Hyundai Motor Company ................... 200
1,010 Hyundai Steel Company ................... 36
4,850 Kookmin Bank ............................ 399
1,440 Kookmin Bank, Sponsored ADR ............. 120
420 KT&G Corporation ........................ 25
7,600 LG.Philips LCD Company Ltd., ADR+ ....... 138
40 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
SOUTH KOREA (CONTINUED)
180 Lotte Shopping Company Ltd. ............. $ 70
1,680 LS Cable Ltd. ........................... 59
4,700 Macquarie Korea Infrastructure Fund+ .... 34
4,200 Macquarie Korea Infrastructure Fund,
GDR+ ................................. 30
100 Nong Shim Company Ltd. .................. 26
320 POSCO ................................... 86
300 POSCO, ADR** ............................ 20
1,600 Pusan Bank .............................. 20
3,998 Samsung Electronics Company Ltd. ........ 2,541
3,130 Samsung Engineering Company Ltd. ........ 140
1,760 Samsung Fire & Marine Insurance
Company Ltd. ......................... 237
140 Samsung Heavy Industries Company, Ltd. .. 3
430 Samsung Securities Company Ltd. ......... 23
3,140 Shinhan Financial Group Company Ltd. .... 147
130 Shinsegae Company Ltd. .................. 65
480 SK Corporation .......................... 31
700 SK Telecom Company Ltd., ADR ............ 16
1,110 Sungshin Cement Company Ltd. ............ 16
2,460 Woori Finance Holdings Company Ltd. ..... 46
------------
5,241
------------
SPAIN - 3.2%
7,100 Altadis, SA** ........................... 336
58,700 Banco Bilbao Vizcaya Argentaria SA ...... 1,207
70,700 Banco Santander Central Hispano SA ...... 1,033
11,500 Iberdrola SA** .......................... 396
7,500 Industria de Diseno Textil SA
(Inditex)** .......................... 316
28,000 Repsol YPF SA ........................... 802
19,769 Telefonica SA ........................... 329
------------
4,419
------------
SOUTH AFRICA - 2.6%
7,600 ABSA Group Ltd. ......................... 106
900 Anglo Platinum Ltd. ..................... 95
900 AngloGold Ashanti Ltd. .................. 45
1,700 AngloGold Ashanti Ltd., Sponsored ADR ... 82
5,000 Aspen Pharmacare Holdings Ltd. .......... 25
17,900 Aveng Ltd. .............................. 54
8,400 Edgars Consolidated Stores Ltd. ......... 34
8,400 FirstRand Ltd. .......................... 20
8,600 Gold Fields Ltd. ........................ 194
16,400 Harmony Gold Mining Company Ltd.+ ....... 261
1,000 Impala Platinum Holdings Ltd. ........... 184
8,900 Massmart Holdings Ltd. .................. 58
1,100 Mittal Steel South Africa Ltd. .......... 11
5,000 Mr. Price Group Ltd. .................... 12
27,484 Murray & Roberts Holdings Ltd. .......... 97
14,240 Mvelaphanda Resources Ltd.+ ............. 72
15,590 Network Healthcare Holdings Ltd. ........ 21
2,000 Sappi Ltd. .............................. 25
50,100 Sasol Ltd. .............................. 1,922
SHARES VALUE (000S)
- ------------- ------------
14,600 Standard Bank Group Ltd. ................ $ 157
2,500 Truworths International Ltd. ............ 7
3,014 Wilson Bayly Holmes-Ovcon Ltd. .......... 22
------------
3,504
------------
MEXICO - 2.1%
55,200 America Movil SA de CV, Series L, ADR ... 1,836
97,500 Carso Infraestructura y Construccion
SA de CV+ ............................ 59
5,347 Cemex SA de CV, CPO ..................... 31
600 Cemex SA de CV, Sponsored ADR ........... 34
15,000 Controladora Comercial Mexicana SA de
CV ................................... 25
43,300 Empresas ICA SA de CV+ .................. 122
1,500 Grupo Aeroportuario del Pacifico SA de
CV, ADR+ ............................. 48
4,600 Grupo FAMSA SA, Class A+ ................ 9
17,493 Grupo Financiero Banorte SA de CV ....... 41
7,700 Grupo Financiero Inbursa SA de CV ....... 12
11,100 Grupo Televisa SA, Sponsored ADR ........ 214
13,600 Impulsora del Desarrollo y el Empleo
en America Latina, SA de CV+ ......... 12
12,400 Kimberly-Clark de Mexico, SA de CV,
Class A .............................. 39
134,600 Wal-Mart de Mexico SA de CV, Series V ... 376
------------
2,858
------------
TAIWAN - 2.1% ***
111,000 Asia Cement Corporation ................. 83
9,000 Asustek Computer Inc. ................... 22
9,000 Asustek Computer Inc., GDR .............. 22
12,800 AU Optronics Corporation, ADR ........... 182
10,000 Cathay Financial Holding Company Ltd. ... 22
6,830 Cathy Financial Holding Company,
Ltd., GDR ............................ 149
3,100 Chi Mei Optoelectronics Corporation,
GDR .................................. 34
1,000 China Steel Corporation, GDR ............ 20
2,000 China Steel Corporation, Sponsored
GDR .................................. 40
38,850 Delta Electronics Inc. .................. 110
232,000 EVA Airways Corporation+ ................ 99
24,000 Fubon Financial Holding Company,
Ltd., GDR ............................ 208
2,000 High Tech Computer Corporation .......... 55
46,000 Hon Hai Precision Industry Company, Ltd.,
GDR .................................. 568
70,000 Inotera Memories Inc.+,++ ............... 70
11,000 MediaTek Inc. ........................... 102
37,000 President Chain Store Corporation ....... 81
7,000 Quanta Computer Inc. .................... 11
24,000 Synnex Technology International
Corporation .......................... 26
129,000 Taiwan Cement Corporation ............... 95
82,821 Taiwan Semiconductor Manufacturing
Company Ltd., Sponsored ADR .......... 760
35,000 Test-Rite International Company, Ltd. ... 23
43,000 Tong Yang Industry Company, Ltd. ........ 41
------------
2,823
------------
See Notes to Financial Statements. 41
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
AUSTRALIA - 2.0% ***
42,200 Amcor Ltd. .............................. $ 209
15,876 Brambles Industries Ltd.** .............. 130
50,012 Foster's Group Ltd. ..................... 203
74,105 Insurance Australia Group Ltd. .......... 295
7,099 Macquarie Bank Limited .................. 364
28,800 Promina Group Ltd. ...................... 120
14,000 QBE Insurance Group Ltd. ................ 213
50,128 Rinker Group Ltd. ....................... 611
16,429 Telstra Corporation Limited ............. 45
11,800 Westpac Banking Corporation ............. 204
24,986 Woolworths Ltd. ......................... 374
------------
2,768
------------
HONG KONG - 1.9% ***
70,800 Bank of East Asia, Ltd. ................. 291
112,000 BOC Hong Kong (Holdings) Ltd. ........... 219
39,000 Clear Media Ltd.+ ....................... 45
66,000 Foxconn International Holdings Ltd.+ .... 141
28,000 Guangdong Investment Ltd. ............... 11
62,000 Hang Lung Group Ltd. .................... 134
113,500 Hang Lung Properties Ltd. ............... 203
144,000 Johnson Electric Holdings Ltd. .......... 105
3,500 Kingboard Chemical Holdings Ltd. ........ 10
161,000 Li & Fung Ltd. .......................... 325
1,000 Melco International Development Ltd. .... . 3
316,000 PCCW Ltd. ............................... 226
74,000 Shangri-La Asia Ltd. .................... 142
23,000 Sung Hung Kai Properties Ltd. ........... 235
49,000 Swire Pacific Ltd., Class A ............. 506
10,000 Tianjin Port Development Holdings
Ltd.+ ................................ 3
24,000 TPV Technology Ltd. ..................... 23
------------
2,622
------------
FINLAND - 1.3%
5,900 Neste Oil OYJ ........................... 208
40,800 Nokia Oyj ............................... 833
14,300 Nokia Oyj, Sponsored ADR ................ 290
20,800 UPM-Kymmene Oyj ......................... 448
------------
1,779
------------
CHINA - 1.1% ***
16,000 Advanced Semiconductor Manufacturing
Corporation, Class H+,++ ............. 3
18,000 Agile Property Holdings Ltd.+ ........... 11
25,700 Angang New Steel Company Ltd.,
Class H .............................. 24
88,000 Anhui Conch Cement Company Ltd.,
Class H .............................. 143
64,000 Beijing Capital International Airport
Company Ltd., Class H ................... 41
10,000 Beijing Enterprises Holdings Ltd. ....... 17
56,000 BOE Technology Group Company Ltd.,
Class B .............................. 10
112,000 China Construction Bank, Class H+ ....... 51
SHARES VALUE (000S)
- ------------- ------------
107,000 China Life Insurance Company Ltd.,
Class H+ ............................. $ 169
85,000 China Mengniu Dairy Company Ltd. ........ 101
6,000 China Merchants Holdings
International Company Ltd. ........... 18
14,500 China Netcom Group Corporation Ltd. ..... 25
34,000 China Oilfield Services Ltd., Class H ... 17
14,000 China Overseas Land & Investment Ltd. ... 9
20,000 China Paradise Electronics Retail
Ltd.+ ................................ 5
16,000 China Resources Enterprise Ltd. ......... 33
32,800 Chongqing Changan Automobile Company
Ltd., Class B ........................ 17
600 Ctrip.com International Ltd., ADR ....... 31
76,000 Dalian Port (PDA) Company Ltd., Class
H+ ................................... 35
6,000 Dalian Port (PDA) Company Ltd., Class
H+,++ ................................ 3
138,000 Dongfeng Motor Corporation Ltd.,
Class H+ ............................. 64
41,000 GOME Electrical Appliances Holdings
Ltd. ................................. 35
88,000 Lenovo Group Ltd. ....................... 29
12,000 Li Ning Company Ltd. .................... 12
22,000 Lianhua Supermarket Holdings Ltd.,
Class H .............................. 23
111,000 Nine Dragons Paper Holdings Ltd.+ ....... 90
144,000 PetroChina Company Ltd., Class H ........ 154
148,000 Shanghai Forte Land Company Ltd.,
Class H .............................. 60
86,000 Shanghai Prime Machinery Company
Ltd., Class H+ ....................... 31
8,000 Shanghai Prime Machinery Company
Ltd., Class H+,++ .................... 3
76,000 Tsingtao Brewery Company Ltd.,
Class H .............................. 85
12,000 Weichai Power Company Ltd., Class H ..... 25
8,000 Weiqiao Textile Company Ltd., Class H ... 10
17,000 Wumart Stores, Inc., Class H ............ 59
18,200 ZTE Corporation, Class H ................ 58
------------
1,501
------------
SWEDEN - 1.1%
12,900 Assa Abloy AB, B Shares ................. 217
11,700 Atlas Copco AB, Class A ................. 325
23,000 Sandvik AB .............................. 268
6,600 Scania AB, B Shares ..................... 300
103,000 Telefonaktiebolaget LM Ericsson, B
Shares ............................... 340
------------
1,450
------------
INDIA - 1.0%
47,300 Gujarat Ambuja Cements Limited,
Sponsored GDR ........................ 102
10,200 Infosys Technologies Ltd., Sponsored
ADR** ................................ 779
7,500 McDowell & Company Ltd., GDR+ ........... 35
11,978 Ranbaxy Laboratories Ltd., Sponsored
GDR .................................. 93
4,400 Reliance Energy Ltd., GDR ............... 130
3,674 Reliance Industries Ltd., Sponsored
GDR .................................. 169
7,200 Wipro Ltd., ADR** ....................... 92
------------
1,400
------------
BRAZIL - 0.9%
3,000 Banco Nossa Caixa SA .................... 63
6,000 Companhia de Concessoes Rodoviarias ..... 49
42 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
BRAZIL (CONTINUED)
7,000 Companhia de Saneamento de Minas Gerais -
Copasa MG+............................ $ 58
1,000 Companhia Siderurgica Nacional SA,
Sponsored ADR......................... 32
3,600 Companhia Vale do Rio Doce, Sponsored
ADR................................... 87
2,000 Gerdau SA, Sponsored ADR (F)............. 30
1,378,000 Light SA+................................ 9
2,300 Lojas Renner SA.......................... 122
5,000 Natura Cosmeticos SA..................... 51
210 Perdigao S.A............................. 2
1,100 Petroleo Brasileiro SA, ADR.............. 98
1,000 Petroleo Brasiliero SA, ADR.............. 80
2,000 Porto Seguro SA.......................... 34
1,500 Submarino SA............................. 30
2,000 Telemig Celular Participacoes SA, ADR.... 71
25,886,000 Tim Participacoes SA..................... 98
5,700 Tim Participacoes SA, ADR................ 157
2,300 Unibanco - Uniao de Bancos Brasileiros
SA, GDR............................... 153
800 Usinas Siderurgicas de Minas Gerais SA... 31
------------
1,255
------------
RUSSIA - 0.8%
1,000 Evraz Group SA, GDR, S Shares............ 25
3,100 Evraz Group SA, GDR, S Shares (F)........ 77
5,818 Gazprom, Sponsored ADR................... 245
900 Mining and Metallurgical Company Norilsk
Nickel, ADR........................... 117
2,000 Mobile TeleSystems, Sponsored ADR........ 59
5,700 Novolipetsk Steel, GDR+.................. 128
1,300 Pyaterochka Holding NV, GDR+............. 22
1,500 Pyaterochka Holding NV, GDR+............. 25
5,600 Unified Energy System of Russia, GDR..... 387
1,600 Vimpel-Communications, Sponsored ADR+.... 73
------------
1,158
------------
SINGAPORE - 0.7% ***
35,000 Banyan Tree Holdings Limited.+,++........ 20
66,000 Bio-Treat Technology Ltd................. 45
20,000 DBS Group Holdings Ltd................... 229
293,215 Singapore Telecommunications Ltd.++...... 472
21,000 United Overseas Bank Ltd................. 207
13,000 Yanlord Land Group Ltd.+,++.............. 9
------------
982
------------
INDONESIA - 0.7% ***
88,000 PT Bank Central Asia Tbk................. 39
663,500 PT Bank Mandiri.......................... 123
168,500 PT Bank Rakyat Indonesia................. 75
119,000 PT Ciputra Surya Tbk..................... 8
85,000 PT Medco Energi Internasional Tbk........ 34
167,000 PT Ramayana Lestari Sentosa Tbk.......... 14
787,000 PT Telekomunikasi Indonesia.............. 624
------------
917
------------
SHARES VALUE (000S)
- ------------- ------------
ISRAEL - 0.6%
6,500 Bank Hapoalim BM......................... $ 28
38,300 Bezeq Israeli Telecommunication
Corporation Ltd....................... 45
2,667 Mizrahi Tefahot Bank Ltd.+............... 15
5,900 Partner Communications Company Ltd....... 49
18,200 Supersol Ltd............................. 50
19,600 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR......................... 619
------------
806
------------
BELGIUM - 0.5%
4,100 Fortis................................... 140
12,400 SES GLOBAL, FDR.......................... 176
6,300 UCB Group SA............................. 341
------------
657
------------
IRELAND - 0.5%
20,085 CRH PLC.................................. 653
------------
MALAYSIA - 0.5% ***
92,700 AirAsia BHD+............................. 38
57,800 Bumiputra-Commerce Holdings BHD.......... 94
19,100 EON Capital BHD.......................... 31
2,000 Genting BHD.............................. 13
57,800 IJM Corporation BHD...................... 88
20,700 IOI Corporation BHD...................... 80
4,300 Malayan Banking BHD...................... 12
6,400 Maxis Communications BHD................. 15
11,400 MISC BHD (F)............................. 24
5,100 Naim Cendera Holdings BHD................ 4
12,800 Resorts World BHD........................ 41
58,600 SP Setia BHD............................. 60
300 Tanjong PLC (F).......................... 1
11,600 Tenaga Nasional BHD...................... 29
17,700 Transmile Group BHD...................... 62
24,200 UMW Holdings BHD......................... 50
------------
642
------------
TURKEY - 0.4%
32,627 Akbank T.A.S............................. 157
4,291 Anadolu Efes Biracilik ve Malt Sanayii
AS.................................... 117
7,900 Coca-Cola Icecek Uretim AS+.............. 36
5,707 Dogan Yayin Holding AS+.................. 19
10,104 Hurriyet Gazetecilik ve Matbaacilik AS... 21
6,000 Selcuk Ecza Deposu Ticaret ve Sanayi
AS+................................... 17
3,468 Tupras-Turkiye Petrol Rafinerileri AS.... 58
18,114 Turkiye Garanti Bankasi AS............... 45
17,393 Turkiye Is Bankasi, Class C.............. 86
------------
556
------------
See Notes to Financial Statements. 43
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
COMMON STOCKS (CONTINUED)
THAILAND - 0.4% ***
55,800 Bank of Ayudhya PCL, NVDR................ $ 25
6,700 Banpu Public Comany Ltd., NVDR........... 23
13,000 C.P. 7- Eleven PCL, (F).................. 2
30,800 Electricity Generating PCL, NVDR......... 59
43,300 Kasikornbank PCL, (F).................... 69
11,200 Kiatnakin Bank PCL, NVDR................. 9
280,000 Krung Thai Bank PCL, (F)................. 74
17,100 Major Cineplex Group PCL, (F)............ 8
7,200 Minor International PCL, (F)............. 2
14,700 Ratchaburi Electricity Generating Holding
PCL, (F).............................. 13
6,900 Siam City Cement PCL, (F)................ 40
17,400 Thai Airways International PCL, (F)++.... 18
762,000 Thai Beverages PCL+...................... 128
27,200 Thanachart Capital PCL, NVDR............. 10
17,500 TISCO Bank PCL, (F)...................... 10
75,300 TISCO Bank PCL, NVDR..................... 44
------------
534
------------
ITALY - 0.3%
37,900 Banca Intesa SpA......................... 222
7,150 Eni SpA.................................. 211
------------
433
------------
EGYPT - 0.3%
7,600 Commercial International Bank, GDR....... 78
3,400 Mobinil (Egyptian Mobile Phone Network).. 76
4,400 Orascom Construction Industries, GDR..... 268
------------
422
------------
DENMARK - 0.3%
6,300 Novo Nordisk A/S, Class B................ 401
------------
AUSTRIA - 0.3%
4,000 Erste Bank der Oesterreichischen
Sparkassen AG......................... 225
1,000 Raiffeisen International Bank Holding
AG.................................... 87
3,323 Telekom Austria AG....................... 74
------------
386
------------
NORWAY - 0.2%
16,200 DnB NOR ASA.............................. 201
7,284 Norske Skogindustrier ASA**.............. 107
------------
308
------------
UNITED STATES - 0.2%
1,800 CTC Media, Inc., (F)+.................... 33
200 Freeport-McMoRan Copper & Gold, Inc.,
Class B............................... 11
1,100 Net 1 UEPS Technologies, Inc.+........... 30
7,932 News Corporation (F), CDI................ 152
1,900 Transmeridian Exploration Inc.+**........ 11
500 Zoran Corporation+....................... 12
------------
249
------------
SHARES VALUE (000S)
- ------------- ------------
GREECE - 0.2%
6,300O pap SA................................... $ 228
------------
CHILE - 0.1%
4,300 Embotelladora Andina SA, Class A, ADR.... 58
2,300 Enersis SA, Sponsored ADR................ 26
------------
84
------------
LUXEMBOURG - 0.0%
2,400 Ternium SA, Sponsored ADR+............... 58
------------
PHILIPPINES - 0.0% ***
1,700 Ayala Corporation........................ 12
60,800 Ayala Land, Inc.......................... 13
5,000 SM Investments Corporation............... 20
------------
45
------------
COLOMBIA - 0.0%
7,900 Suramericana de Inversiones S.A.......... 37
------------
OMAN - 0.0%
3,300 Bank Muscat SAOG, GDR.................... 33
------------
UNITED ARAB EMIRATES - 0.0%
3,700 Kingdom Hotels Investments, GDR+......... 26
------------
HUNGARY - 0.0%
100 MOL Magyar Olaj-es Gazipari Rt........... 10
------------
Total Common Stocks
(Cost $100,589)....................... 132,089
------------
WARRANTS - 0.0%
8,100 Baosteel Company Ltd.,
Expires 06/02/2008+,++................ 4
1,750 China Overseas Land & Investment Ltd.,
Expires 07/18/2007+................... 0
2,700 Lehman- CW08 Anhui Conch Cement
Company Ltd., Expires 06/02/2008+,
++.................................... 5
61,000 UBS Beijing Yanjing Brewery,
Expires 06/07/2007+, ++............... 65
------------
Total Warrants
(Cost $71)............................ 74
------------
PREFERRED STOCKS - 0.6%
BRAZIL - 0.6%
1,000 Bradespar SA++........................... 34
9,700 Companhia de Bebidas das Americas, ADR... 400
547,000 Companhia Energetica de Minas Gerais..... 23
2,000 Companhia Vale do Rio Doce, Class A...... 41
4,000 Duratex S.A.++........................... 36
34,219 Itausa - Investimentos Itau SA........... 137
1,800 Usinas Siderurgicas de Minas Gerais SA,
Class A............................... 65
13,000 Weg SA................................... 50
------------
786
------------
44 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SHARES VALUE (000S)
- ------------- ------------
PREFERRED STOCKS (CONTINUED)
SOUTH KOREA - 0.0% ***
130 Samsung Electronics Company Ltd. ........ $ 64
------------
Total Preferred Stocks
(Cost $821) .......................... 850
------------
PRINCIPAL
AMOUNT (000S)
- -------------
FOREIGN BONDS AND NOTES - 0.1%
$ 20 Federal Republic of Brazil, Note, 8.000%
due 01/15/2018 ....................... 21
146 Republic of Argentina, Note, 5.830% due
12/31/2033 .......................... 55
------------
Total Foreign Government Bonds
(Cost $81) ........................... 76
------------
REPURCHASE AGREEMENT - 2.4%
(Cost $3,241)
3,241 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$3,242,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$3,348,000) .......................... 3,241
------------
SHORT-TERM INVESTMENT - 7.4%
(Cost $10,155)
10,155 Mellon GSL DBT II Collateral Fund+++ .... 10,155
------------
TOTAL INVESTMENTS (Cost $114,958*) ...................... 106.8% 146,485
OTHER ASSETS (LIABILITIES) (NET) ........................ (6.8) (9,361)
----- ------------
NET ASSETS .............................................. 100.0% $ 137,124
===== ============
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2006, and have an
aggregate market value of $9,977,000, representing 7.3% of the total net
assets of the Fund (collateral value $10,155,000). (See Note 7 to Financial
Statements.)
*** Investments in the areas of the Pacific Rim at June 30, 2006 are 36.9% of
the total net assets of the Fund.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
# Security is restricted and illiquid. It was acquired on October 30, 2001,
and has a value of $0.00 per share at June 30, 2006.
See Notes to Financial Statements. 45
Portfolio of Investments (continued)
VT INTERNATIONAL GROWTH FUND
June 30, 2006 (unaudited)
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
(000S) NET
----------------------------------------- UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- --------- -------- ----------- ------------
7/21/06 AUD 576 427 425 $ 2
9/26/06 GBP 259 479 469 10
---
$12
===
AT JUNE 30, 2006, SECTOR DIVERSIFICATION WAS AS FOLLOWS:
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (000S)
---------------------- ---------- --------
COMMON STOCKS:
Banks ..................................... 16.7% $ 22,955
Materials ................................. 11.3 15,473
Telecommunication Services ................ 7.5 10,282
Pharmaceuticals & Biotechnology ........... 7.2 9,909
Capital Goods ............................. 6.1 8,408
Energy .................................... 6.0 8,283
Semiconductors & Semiconductor Equipment .. 4.0 5,450
Automobiles & Components .................. 3.9 5,386
Insurance ................................. 3.9 5,303
Food, Beverage & Tobacco .................. 3.6 4,894
Diversified Financials .................... 2.7 3,695
Utilities ................................. 2.3 3,202
Retailing ................................. 2.3 3,154
Consumer Durables & Apparel ............... 2.1 2,921
Media ..................................... 2.1 2,826
Electronic Equipment & Instruments ........ 2.1 2,822
Internet Software & Services .............. 1.9 2,658
Real Estate Investment Trusts (REITs) ..... 1.8 2,420
Transportation ............................ 1.6 2,155
Commercial Services & Supplies ............ 1.5 2,051
Software .................................. 1.3 1,834
Other ..................................... 4.4 6,008
----- --------
TOTAL COMMON STOCKS ....................... 96.3 132,089
WARRANTS .................................. 0.0 74
PREFERRED STOCKS .......................... 0.6 850
FOREIGN BONDS AND NOTES ................... 0.1 76
REPURCHASE AGREEMENT ...................... 2.4 3,241
SHORT-TERM INVESTMENT ..................... 7.4 10,155
----- --------
TOTAL INVESTMENTS ......................... 106.8 146,485
OTHER ASSETS (LIABILITIES) (NET) .......... (6.8) (9,361)
----- --------
NET ASSETS ................................ 100.0% $137,124
===== ========
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER NET
(000S) UNREALIZED
------------------------------------------ APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ----------- -------- ----------- --------------
7/3/06 EUR 37 48 47 $ (1)
7/3/06 ZAR 80 11 11 --
7/5/06 JPY 5,059 44 44 --
7/5/06 ZAR 457 64 63 (1)
7/6/06 ZAR 277 39 38 (1)
7/7/06 ZAR 299 41 49 8
7/19/06 ZAR 328 46 53 7
7/21/06 EUR 345 442 425 (17)
9/26/06 CHF 583 481 469 (12)
----
$(17)
====
Net Unrealized Depreciation of Forward Foreign
Currency Contracts ................................. $ (5)
====
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
AUD -- Australian Dollar
BHD -- Bahraini Dollar
CDI -- CHESS Depositary Interest
CHF -- Swiss Franc
CPO -- Ordinary Participation Certificate
EUR -- Euro
(F) -- Foreign Shares
FDR -- Fiduciary Depositary Receipt
GBP -- Great Britain Pound Sterling
GDR -- Global Depositary Receipt
JPY -- Japanese Yen
NVDR -- Non-Voting Depositary Receipt
ZAR -- South African Rand
46 See Notes to Financial Statements.
Portfolio of Investments
VT SHORT TERM INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
CORPORATE BONDS AND NOTES - 63.6%
FINANCIAL SERVICES - 12.4%
$ 1,000 Berkshire Hathaway Inc., Note,
3.375% due 10/15/2008 ................ $ 952
1,000 CIT Group Inc., Sr. Note,
7.375% due 04/02/2007 ................ 1,013
500 Goldman Sachs Group, Inc., Note,
4.125% due 01/15/2008 ................ 489
Household Finance Corporation, Note:
1,500 5.750% due 01/30/2007 ................ 1,502
250 7.875% due 03/01/2007 ................ 254
500 Nuveen Investments, Inc., Sr. Note,
5.000% due 09/15/2010 ................ 481
1,500 Rollins Truck Leasing Corporation, Deb.,
8.375% due 02/15/2007 ................ 1,524
------------
6,215
------------
BANKS - 8.1%
1,000 Fifth Third Bank, Note,
2.700% due 01/30/2007 ................ 985
1,000 JPMorgan Chase & Company, Note,
5.350% due 03/01/2007 ................ 998
1,000 SB Treasury Company LLC, Bond,
9.400% to 06/30/2008;
10.925% due 12/29/2049** ............. 1,063
1,000 U.S. Bank N.A., Note,
2.850% due 11/15/2006 ................ 990
------------
4,036
------------
REAL ESTATE INVESTMENT TRUSTS/PROPERTY - 6.3%
1,000 CPG Partners LP, Note,
3.500% due 03/15/2009 ................ 946
750 Developers Diversified Realty
Corporation, Sr. Note,
6.625% due 01/15/2008 ................ 758
800 Duke-Weeks Realty Corporation, Note,
7.375% due 08/01/2007 ................ 810
600 EOP Operating LP, Note,
7.750% due 11/15/2007 ................ 615
------------
3,129
------------
CABLE TV - 5.4%
1,250 AOL Time Warner Inc., Note,
6.150% due 05/01/2007 ................ 1,255
1,000 Cox Enterprises, Inc., Note,
4.375% due 05/01/2008** .............. 968
500 Univision Communications Inc., Company
Guarantee,
7.850% due 07/15/2011 ................ 504
------------
2,727
------------
TELECOMMUNICATIONS - 5.1%
1,000 Koninklijke (Royal) KPN NV, Sr. Note,
8.000% due 10/01/2010 ................ 1,062
500 TELUS Corporation, Note,
7.500% due 06/01/2007 ................ 507
1,000 Verizon Global Funding Corporation, Note,
4.000% due 01/15/2008 ................ 975
------------
2,544
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
HEALTH CARE - 4.9%
$ 1,500 Amgen Inc., Sr. Note,
4.000% due 11/18/2009 ................ $ 1,427
1,000 Cardinal Health, Inc., Note,
6.250% due 07/15/2008 ................ 1,007
------------
2,434
------------
UTILITIES - 4.9%
1,000 Constellation Energy Group, Inc., Note,
6.350% due 04/01/2007 ................ 1,004
350 Pacific Gas & Electric Company, First
Mortgage,
3.600% due 03/01/2009 ................ 332
350 Sempra Energy, Note,
4.750% due 05/15/2009 ................ 341
750 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 ................ 754
------------
2,431
------------
AUTO MANUFACTURING & PARTS - 4.0%
1,000 Ford Motor Credit Company, Note,
6.500% due 01/25/2007 ................ 999
1,000 Toyota Motor Credit Corporation, Note,
5.650% due 01/15/2007 ................ 1,000
------------
1,999
------------
GAMING/LEISURE - 3.9%
1,000 Carnival Corporation, Company Guarantee,
3.750% due 11/15/2007 ................ 972
1,000 Harrah's Operating Company, Inc., Company
Guarantee,
5.500% due 07/01/2010 ................ 976
------------
1,948
------------
SERVICES - 3.0%
1,000 PHH Corporation, Note,
6.000% due 03/01/2008 ................ 999
500 Sealed Air Corporation, Conv. Sr. Note,
3.000% due 06/30/2033** .............. 483
------------
1,482
------------
AIRLINES - 2.0%
1,000 Southwest Airlines Company, Pass-through
Certificates,
5.496% due 11/01/2006 ................ 1,001
------------
INFORMATION TECHNOLOGY - 1.5%
750 Cisco Systems, Inc., Note,
5.250% due 02/22/2011 ................ 737
------------
BUILDING PRODUCTS - 1.2%
600 Mohawk Industries, Inc., Note, Series D,
7.200% due 04/15/2012 ................ 619
------------
See Notes to Financial Statements. 47
Portfolio of Investments (continued)
VT SHORT TERM INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
CORPORATE BONDS AND NOTES (CONTINUED)
FOOD - 0.9%
$ 500 CVS Corporation, Note,
4.000% due 09/15/2009 ................ $ 473
------------
Total Corporate Bonds and Notes
(Cost $32,363) ....................... 31,775
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) - 13.4%
1,000 Banc of America Mortgage Securities,
Inc., Pass-through Certificates,
Series 2003-6, Class 1A30,
4.750% due 08/25/2033 ................ 968
901 Cendant Mortgage Corporation, Series
2003-3P, Class A1,
5.500% due 04/25/2020** .............. 885
902 Chase Mortgage Finance Corporation,
Series 2005-S1, Class 1A8,
5.500% due 05/25/2035 ................ 891
527 Credit Suisse First Boston Mortgage
Securities Corporation, Pass-through
Certificates, Series 2003-29, Class
4A1,
6.000% due 12/25/2033 ................ 526
Federal Home Loan Mortgage Corporation:
434 Series 2552, Class KB,
4.250% due 06/15/2027 ................ 427
1,000 Series 2811, Class NU,
4.500% due 05/15/2030 ................ 944
854 Federal National Mortgage Association,
Series 2005-100, Class QA,
5.000% due 11/25/2035 ................ 833
590 Government National Mortgage Association,
Series 2002-70, Class PA,
4.500% due 08/20/2032 ................ 560
663 GSR Mortgage Loan Trust, Pass-through
Certificates, Series 2005-1F, Class
2A1,
6.000% due 02/25/2035 ................ 657
------------
Total CMOs
(Cost $6,893) ........................ 6,691
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.6%
926 Federal Home Loan Bank, Series 00-0606,
Class Y,
5.270% due 12/28/2012 ................ 906
Federal Home Loan Mortgage Corporation:
1,000 Bond,
3.250% due 02/25/2008 ................ 965
1,000 Note,
4.125% due 07/12/2010 ................ 952
500 Federal National Mortgage Association,
Note,
3.000% to 07/16/2006;
5.800% due 07/16/2013 ................ 494
------------
Total U.S. Government Agency Obligations
(Cost $3,417) ........................ 3,317
------------
ASSET-BACKED SECURITIES (ABSS) - 5.2%
445 Atlantic City Electric Transition
Funding LLC, Series 2003-1, Class A1,
2.890% due 07/20/2011 ................ 428
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
$ 1,000 Capital One Multi-Asset Execution Trust,
Series 2003-A6, Class A6,
2.950% due 08/17/2009 ................ $ 994
80 Green Tree Financial Corporation,
Series 1995-6, Class B1,
7.700% due 09/15/2026 ................ 70
41 Green Tree Home Improvement, Series
1995-D, Class B2,
7.450% due 09/15/2025 ................ 40
96 Mid-State Trust, Series 4, Class A,
8.330% due 04/01/2030 ................ 100
1,000 WFS Financial Owner Trust, Series 2004-3,
Class A4,
3.930% due 02/17/2012 ................ 978
------------
Total ABSs
(Cost $2,661) ........................ 2,610
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 2.2%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 0.7%
162 6.500% due 01/01/2014 ................... 164
155 8.000% due 05/01/2027 ................... 163
20 8.500% due 11/01/2017 ................... 21
------------
Total FNMA
(Cost $336) .......................... 348
------------
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES (ARMS) -
0.6%
18 Federal Home Loan Mortgage Corporation
(FHLMC),
5.492% due 11/01/2021+ ............... 18
Federal National Mortgage Association
(FNMA):
228 4.647% due 11/01/2032+ .................. 227
7 5.042% due 01/01/2019+ .................. 7
15 5.329% due 11/01/2035+ .................. 15
5 5.610% due 04/01/2019+ .................. 5
9 5.875% due 11/01/2021+ .................. 9
2 6.053% due 11/01/2022+ .................. 2
------------
Total ARMs
(Cost $293) .......................... 283
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 0.5%
224 6.000% due 05/01/2017 ................... 225
13 9.500% due 08/01/2016 ................... 13
------------
Total FHLMC
(Cost $239) .......................... 238
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 0.4%
18 8.000% due 06/15/2009-08/15/2012 ........ 19
18 9.000% due 12/15/2020-04/20/2025 ........ 19
144 10.000% due 02/15/2018-04/15/2025 ....... 158
10 11.000% due 12/15/2015 .................. 12
------------
Total GNMA
(Cost $202) .......................... 208
------------
48 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT SHORT TERM INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $1,070) ........................ $ 1,077
------------
U.S. TREASURY NOTE - 1.9%
(Cost $983)
$ 1,000 3.250% due 08/15/2008 ................... 962
------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 0.4%
(Cost $214)
215 GMAC Commercial Mortgage Securities Inc.,
Series 1999-CTL1, Class A,
7.151% due 12/15/2016** .............. 217
------------
REPURCHASE AGREEMENT - 5.5%
(Cost $2,746)
2,746 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$2,747,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$2,836,000) .......................... 2,746
------------
TOTAL INVESTMENTS++ (Cost $50,347*) ..................... 98.8% 49,395
OTHER ASSETS (LIABILITIES) (NET) ........................ 1.2 609
----- ------------
NET ASSETS .............................................. 100.0% $ 50,004
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
+ Variable rate security. The interest rate shown reflects the rate in effect
at June 30, 2006.
++ All securities segregated as collateral for futures contracts.
UNREALIZED
NUMBER OF VALUE DEPRECIATION
CONTRACTS (000S) (000S)
- --------- ------ ------------
FUTURES CONTRACTS-SHORT POSITION
35 U.S. 5 Year Treasury Note, September 2006 .. $3,619 $(8)
====== ===
See Notes to Financial Statements. 49
Portfolio of Investments
VT U.S. GOVERNMENT SECURITIES FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 63.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 32.2%
$ 2,870 4.000% due 08/01/2018 ................... $ 2,650
13,258 4.500% due 04/01/2018-06/01/2035 ........ 12,317
32,504 5.000% due 04/01/2018-06/01/2036 ........ 30,487
27,546 5.500% due 12/01/2008-09/01/2035 ........ 26,634
11,562 6.000% due 01/01/2013-05/01/2034 ........ 11,450
3,403 6.500% due 11/01/2016-01/01/2032 ........ 3,448
1,447 7.000% due 04/01/2008-04/01/2032 ........ 1,486
92 7.500% due 02/01/2031 ................... 95
80 8.000% due 07/01/2007-12/01/2030 ........ 82
87 8.500% due 07/01/2029 ................... 94
16 8.750% due 01/01/2013 ................... 16
------------
Total FHLMC
(Cost $93,179) ....................... 88,759
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 26.6%
4,617 4.500% due 12/01/2018-11/01/2019 ........ 4,374
16,764 5.000% due 04/01/2018-06/01/2035 ........ 16,007
29,698 5.500% due 01/01/2017-11/01/2035 ........ 28,624
9,190 6.000% due 12/01/2016-10/01/2035 ........ 9,101
13,505 6.500% due 09/01/2024-05/01/2036 ........ 13,622
845 7.000% due 08/01/2028-11/01/2031 ........ 869
77 7.500% due 11/01/2029 ................... 80
367 8.000% due 05/01/2022-09/01/2027 ........ 385
142 8.500% due 02/01/2023-10/01/2027 ........ 152
85 9.000% due 09/01/2030 ................... 93
------------
Total FNMA
(Cost $76,384) ....................... 73,307
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 5.0%
6,748 5.500% due 07/20/2033-03/20/2034 ........ 6,522
5,262 6.000% due 02/20/2029-08/15/2034 ........ 5,225
1,221 6.500% due 03/20/2031-04/20/2034 ........ 1,234
317 7.000% due 01/15/2028-06/20/2031 ........ 326
432 7.500% due 01/15/2023-11/15/2023 ........ 453
33 7.750% due 12/15/2029 ................... 35
26 8.000% due 07/15/2026-06/15/2027 ........ 28
------------
Total GNMA
(Cost $14,361) ....................... 13,823
------------
Total U.S Government Agency
Mortgage-Backed Securities
(Cost $183,924) ...................... 175,889
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) - 19.1%
Banc of America Mortgage Securities, Inc.,
Pass-through Certificates:
3,500 Series 2003-6, Class 1A30,
4.750% due 08/25/2033 ................ 3,389
1,324 Series 2004-4, Class 2A1,
5.500% due 05/25/2034 ................ 1,282
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
$ 2,365 Chase Mortgage Finance Corporation,
Series 2005-S1, Class 1A15,
6.000% due 05/25/2035 ................ $ 2,329
1,001 Countrywide Alternative Loan Trust,
Series 2003-13T1, Class A1,
4.000% due 08/25/2033 ................ 976
Countrywide Home Loans:
2,727 Series 2003-50, Class A1,
5.000% due 11/25/2018 ................ 2,601
4,000 Series 2004-4, Class A5,
5.250% due 05/25/2034 ................ 3,743
Credit Suisse First Boston
Mortgage Securities Corporation,
Pass-through Certificates:
2,230 Series 2003-11, Class 1A3,
4.500% due 06/25/2033 ................ 2,194
2,089 Series 2003-8, Class 1A1,
5.750% due 04/25/2033 ................ 2,017
Federal Home Loan Mortgage Corporation:
3,265 Series 2449, Class ND,
6.500% due 05/15/2030 ................ 3,286
1,382 Series 2551, Class QK,
5.500% due 01/15/2033 ................ 1,333
1,334 Series 2575, Class LM,
4.500% due 05/15/2032 ................ 1,281
2,000 Series 2981, Class PC,
5.500% due 10/15/2031 ................ 1,951
Federal National Mortgage Association:
3,000 Grantor Trust, Series 2000-T5,
Class B,
7.300% due 05/25/2010 ................ 3,188
1,819 Series 2002-16, Class TM,
7.000% due 04/25/2032 ................ 1,863
2,635 Series 2002-86, Class JC,
5.500% due 02/25/2032 ................ 2,566
4,443 Series 2003-58, Class PI,
5.000% due 02/25/2027 ................ 272
Federal National Mortgage Association,
REMIC, Pass-through Certificates:
32 Series 1989-90, Class E,
8.700% due 12/25/2019 ................ 34
574 Series 1992-55, Class DZ,
8.000% due 04/25/2022 ................ 588
GSR Mortgage Loan Trust,
Pass-through Certificates:
1,759 Series 2003-4F, Class 2A3,
5.000% due 05/25/2033 ................ 1,744
2,653 Series 2005-1F, Class 2A1,
6.000% due 02/25/2035 ................ 2,629
Prime Mortgage Trust:
2,671 Series 2004-2, Class A2,
4.750% due 11/25/2019 ................ 2,515
2,726 Series 2005-4, Class 1A1,
4.750% due 10/25/2020 ................ 2,626
3,000 Residential Funding Mortgage Security,
Series 2003-S20, Class 1A4,
5.500% due 12/25/2033 ................ 2,886
2,533 Structured Asset Securities Corporation,
Series 2005-6, Class 4A1,
5.000% due 05/25/2035 ................ 2,359
3,133 Vendee Mortgage Trust,
Series 2000-3, Class 2H,
7.500% due 11/15/2014 ................ 3,143
------------
50 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT U.S. GOVERNMENT SECURITIES FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
Total CMOs
(Cost $54,682) ....................... $ 52,795
------------
U.S TREASURY NOTES - 8.2%
$ 1,000 3.500% due 12/15/2009 ................ 950
3,000 4.000% due 02/15/2014 ................ 2,788
2,000 4.250% due 11/15/2013 ................ 1,893
10,000 4.500% due 02/28/2011 ................ 9,754
5,000 4.750% due 05/15/2014 ................ 4,879
2,000 5.750% due 08/15/2010 ................ 2,050
350 6.250% due 02/15/2007 ................ 352
------------
Total U.S Treasury Notes
(Cost $23,325) ....................... 22,666
------------
U.S GOVERNMENT AGENCY OBLIGATIONS - 5.1%
Federal Home Loan Bank, Bond:
2,000 4.500% due 09/16/2013 ................ 1,884
2,500 6.500% due 08/14/2009 ................ 2,577
3,000 7.375% due 02/12/2010 ................ 3,188
Federal National Mortgage Association:
Note:
2,000 6.000% due 02/03/2020 ................ 1,938
2,500 3.000% to 07/16/2006;
5.800% due 07/16/2013 ................ 2,468
2,000 Housing Urban Development,
Government Guarantee, Series 99-A,
6.160% due 08/01/2011 ................ 2,014
------------
Total U.S Government Agency Obligations
(Cost $14,132) ....................... 14,069
------------
REPURCHASE AGREEMENT - 3.3%
(Cost $9,002)
9,002 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$9,006,000 on 07/03/2006
(collateralized by U.S Treasury Note,
3.875% due 01/15/2009, market value
$9,299,000) .......................... 9,002
------------
TOTAL INVESTMENTS (Cost $285,066*) ...................... 99.5% 274,421
OTHER ASSETS (LIABILITIES) (NET) ........................ 0.5 1,289
----- ------------
NET ASSETS .............................................. 100.0% $ 275,710
===== ============
- ----------
* Aggregate cost for federal tax purposes.
GLOSSARY OF TERMS
REMIC -- Real Estate Mortgage Investment Conduit
See Notes to Financial Statements. 51
Portfolio of Investments
VT INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
CORPORATE BONDS AND NOTES - 65.6%
FINANCIAL SERVICES/BANKS - 11.2%
$ 500 American General Corporation, Note,
7.500% due 07/15/2025 ................ $ 566
1,000 American General Finance, Inc.,
MTN, Series I,
4.625% due 05/15/2009 ................ 972
400 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 ............... 457
1,000 Bank of America Corporation, Sub. Note,
7.800% due 02/15/2010 ................ 1,069
500 CIT Group Inc.,
Sr. Note,
7.750% due 04/02/2012 ................ 543
3,000 Citigroup Inc., Note,
6.500% due 01/18/2011 ................ 3,096
1,000 Farmers Insurance Exchange, Note,
6.000% due 08/01/2014** .............. 963
2,500 Goldman Sachs Group, Inc., Bond,
6.875% due 01/15/2011 ................ 2,600
1,000 Hartford Life Insurance Company, Deb.,
7.650% due 06/15/2027 ................ 1,143
1,500 Jefferies Group, Inc., Sr. Note,
7.750% due 03/15/2012 ................ 1,613
1,000 JPMorgan Chase & Company, Sub. Note,
5.125% due 09/15/2014 ................ 946
1,000 Legg Mason, Inc., Sr. Note,
6.750% due 07/02/2008 ................ 1,020
2,000 Merrill Lynch & Company Inc., Note,
6.000% due 02/17/2009 ................ 2,015
1,500 Morgan Stanley Dean Witter & Company,
Note,
6.750% due 04/15/2011 ................ 1,559
1,000 Morgan Stanley, Sub. Note,
4.750% due 04/01/2014 ................ 918
1,100 NCNB Corporation, Sub. Note,
9.375% due 09/15/2009 ................ 1,218
2,250 Wells Fargo & Company, Sub. Note,
4.625% due 04/15/2014 ................ 2,075
------------
22,773
------------
OIL & GAS - 7.7%
1,200 ANR Pipeline Company, Deb.,
9.625% due 11/01/2021 ................ 1,406
1,750 Consolidated Natural Gas Company,
Sr. Note,
6.850% due 04/15/2011 ................ 1,810
2,500 El Paso Natural Gas Company, Deb.,
7.500% due 11/15/2026 ................ 2,462
1,000 Enterprise Products Partners LP,
Company Guarantee,
6.375% due 02/01/2013 ................ 1,000
1,345 Express Pipeline LP, Sub. Note,
7.390% due 12/31/2017** .............. 1,399
775 Hanover Compressor Company,
Sr. Note,
8.625% due 12/15/2010 ................ 806
Petro-Canada:
500 Deb.,
9.250% due 10/15/2021 ................ 628
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
$ 1,000 Note,
4.000% due 07/15/2013 ................... $ 886
2,500 Petrobras International Finance
Company, Sr. Note,
9.750% due 07/06/2011 ................... 2,838
1,000 Southern Natural Gas Company, Sr. Note,
8.000% due 03/01/2032 ................... 1,038
1,500 XTO Energy Inc., Sr. Note,
6.250% due 04/15/2013 ................... 1,503
------------
15,776
------------
UTILITIES - 6.7%
1,000 Arizona Public Service Company, Note,
6.500% due 03/01/2012 ................ 1,014
1,850 Illinois Power Company, First Mortgage,
7.500% due 06/15/2009 ................ 1,928
1,000 Metropolitan Edison Company, Sr. Note,
4.950% due 03/15/2013 ................ 935
2,000 Mirant Americas Generation, LLC, Sr.
Note,
8.500% due 10/01/2021 ................ 1,885
2,250 Pacific Gas & Electric Company,
First Mortgage,
4.200% due 03/01/2011 ................ 2,106
PacifiCorp, First Mortgage:
1,500 4.950% due 08/15/2014 ................ 1,405
1,000 5.250% due 06/15/2035 ................ 864
500 Public Service Company of
New Mexico, Sr. Note,
4.400% due 09/15/2008 ................ 485
1,500 Southwestern Electric Power Company,
Note,
5.375% due 04/15/2015 ................ 1,419
1,500 Texas-New Mexico Power
Company, Sr. Note,
6.250% due 01/15/2009 ................ 1,508
------------
13,549
------------
CONSUMER PRODUCTS/SERVICES - 5.6%
2,000 Allied Waste North America, Inc.,
Sr. Note,
7.250% due 03/15/2015 ................ 1,920
1,750 Carnival Corporation, Deb.,
7.200% due 10/01/2023 ................ 1,863
1,000 Cendant Corporation, Note,
6.875% due 08/15/2006 ................ 1,001
1,000 Mattel, Inc., Note,
7.300% due 06/13/2011 ................ 1,036
1,500 Reed Elsevier Capital Inc.,
Company Guarantee,
6.750% due 08/01/2011 ................ 1,554
1,000 Royal Caribbean Cruises Ltd.,
Sr. Note,
8.750% due 02/02/2011 ................ 1,080
1,500 Sealed Air Corporation,
Conv. Sr. Note,
3.000% due 06/30/2033** .............. 1,447
1,500 Waste Management Inc.,
Sr. Note,
7.375% due 08/01/2010 ................ 1,584
------------
11,485
------------
52 See Notes to Financial Statements.
Portfolio of Investments (continued)
VT INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
CORPORATE BONDS AND NOTES (CONTINUED)
TRANSPORTATION/AUTO - 5.2%
$ 2,000 Burlington Northern Santa Fe Corporation,
Deb.,
8.125% due 04/15/2020 ................ $ 2,364
124 Continental Airlines Inc., Pass-through
Certificates, Series 1997-4C,
6.800% due 07/02/2007 ................ 121
420 CSX Transportation, Inc., Deb.,
9.750% due 06/15/2020 ................ 546
Norfolk Southern Corporation:
Bond:
963 5.640% due 05/17/2029 ................ 897
37 7.800% due 05/15/2027 ................ 43
580 Deb.,
9.750% due 06/15/2020 ................ 760
2,500 Sr. Note,
6.200% due 04/15/2009 ................ 2,528
2,000 Southwest Airlines Company,
Pass-through Certificates, Series A-4,
9.150% due 07/01/2016 ................ 2,293
1,000 Trailer Bridge, Inc.,
Sr. Sec. Note,
9.250% due 11/15/2011 ................ 1,030
129 United Air Lines Inc.,
Pass-through Certificates,
(in default),
9.560% due 10/19/2018 ................ 75
------------
10,657
------------
HEALTH CARE - 4.8%
2,000 Cardinal Health, Inc., Note,
6.750% due 02/15/2011 ................ 2,053
DVI, Inc., Sr. Note, (in default):
400 9.875% due 02/01/2004+ ............... 58
900 9.875% due 02/01/2004+ ............... 130
2,000 HCA Inc., Sr. Note,
8.750% due 09/01/2010 ................ 2,119
2,000 Health Management Associates, Inc.,
Sr. Note,
6.125% due 04/15/2016 ................ 1,916
750 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 ................ 757
3,000 Tenet Healthcare Corporation, Sr. Note,
6.375% due 12/01/2011 ................ 2,693
------------
9,726
------------
TELECOMMUNICATIONS - 4.7%
4,000 Deutsche Telephone Finance, Bond,
8.000% due 06/15/2010 ................ 4,298
2,000 Qwest Corporation, Note,
8.875% due 03/15/2012 ................ 2,120
1,000 TELUS Corporation, Note,
8.000% due 06/01/2011 ................ 1,084
2,000 Vodafone Group PLC, Note,
7.750% due 02/15/2010 ................ 2,115
------------
9,617
------------
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 4.7%
Arden Realty LP, Note:
$ 1,000 5.200% due 09/01/2011 ................ $ 981
1,000 5.250% due 03/01/2015 ................ 958
1,000 Developers Diversified Realty
Corporation, Note,
4.625% due 08/01/2010 ................ 953
2,000 Health Care Property Investors, Inc.,
Note,
6.000% due 03/01/2015 ................ 1,948
2,000 Health Care REIT, Inc.,
Sr. Note,
6.200% due 06/01/2016 ................ 1,947
2,500 Healthcare Realty Trust, Inc., Sr. Note,
8.125% due 05/01/2011 ................ 2,688
------------
9,475
------------
GAMING - 4.6%
1,000 155E Tropicana Hooters LLC, Sr. Note,
8.750% due 04/01/2012 ................ 958
2,000 CCM Merger Inc., Note,
8.000% due 08/01/2013** .............. 1,900
1,000 Harrahs Operating Company Inc., Note,
6.500% due 06/01/2016 ................ 976
1,350 Old Evangeline Downs LLC / Diamond
Jo LLC, Company Guarantee,
8.750% due 04/15/2012 ................ 1,365
2,000 Park Place Entertainment Corporation,
Sr. Note,
7.500% due 09/01/2009 ................ 2,078
2,000 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 ............... 2,125
------------
9,402
------------
MEDIA - 3.2%
1,500 Comcast Cable Communications Inc.,
Sr. Note,
7.125% due 06/15/2013 ................ 1,574
2,500 Cox Communications, Inc., Note,
7.875% due 08/15/2009 ................ 2,628
1,200 News America Holdings Inc., Sr. Deb.,
8.000% due 10/17/2016 ................ 1,347
500 Tele-Communications, Inc., Sr. Deb.,
7.875% due 08/01/2013 ................ 539
300 Time Warner Inc., Deb.,
9.150% due 02/01/2023 ................ 357
------------
6,445
------------
RETAIL - 1.8%
1,000 Fred Meyer Inc., Company Guarantee,
7.450% due 03/01/2008 ................ 1,025
2,500 Safeway Inc., Note,
7.500% due 09/15/2009 ................ 2,613
------------
3,638
------------
See Notes to Financial Statements. 53
Portfolio of Investments (continued)
VT INCOME FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
CORPORATE BONDS AND NOTES (CONTINUED)
INFORMATION TECHNOLOGY - 1.7%
$ 2,500 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ................ $ 2,472
1,000 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 ................ 999
------------
3,471
------------
INDUSTRIAL PRODUCTS - 1.4%
2,000 Noranda Inc., Note,
6.000% due 10/15/2015 ................ 1,908
Weyerhaeuser Company:
500 Deb.,
7.375% due 03/15/2032 ................ 508
500 Note,
6.750% due 03/15/2012 ................ 511
------------
2,927
------------
FOREIGN GOVERNMENT - 1.2%
Federal Republic of Brazil:
750 Bond,
9.250% due 10/22/2010 ................ 829
500 Note,
8.750% due 02/04/2025 ................ 550
1,000 United Mexican States, Bond,
9.875% due 02/01/2010 ................ 1,127
------------
2,506
------------
AEROSPACE/DEFENSE - 1.1%
1,000 Boeing Company, Deb.,
8.750% due 08/15/2021 ................ 1,265
1,000 Orbital Sciences Corporation, Sr. Note,
9.000% due 07/15/2011 ................ 1,050
------------
2,315
------------
Total Corporate Bonds and Notes
(Cost $131,803) ...................... 133,762
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 22.7%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 12.8%
2,941 4.500% due 08/01/2033 ................... 2,683
12,446 5.000% due 04/01/2018-11/01/2035 ........ 11,801
10,547 5.500% due 11/01/2017-04/01/2036 ........ 10,171
937 6.000% due 03/01/2031-05/01/2032 ........ 927
356 6.500% due 06/01/2029-08/01/2029 ........ 360
213 7.000% due 01/01/2032 ................... 219
18 9.000% due 01/01/2025 ................... 19
------------
Total FHLMC
(Cost $27,340) ....................... 26,180
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 9.5%
6,524 4.000% due 09/01/2018-10/01/2018 ........ 6,032
1,454 5.000% due 01/01/2018 ................... 1,404
8,058 5.500% due 03/01/2033-02/01/2035 ........ 7,766
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
$ 772 6.000% due 04/01/2032 ................... $ 763
1,148 6.500% due 05/01/2031-05/01/2032 ........ 1,158
38 7.000% due 01/01/2030 ................... 40
2,000 7.630% due 02/01/2010 ................... 2,097
------------
Total FNMA
(Cost $20,087) ....................... 19,260
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 0.4%
474 6.000% due 05/20/2032 ................... 470
309 7.000% due 06/20/2031 ................... 316
27 9.000% due 02/15/2025 ................... 29
------------
Total GNMA
(Cost $810) .......................... 815
------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $48,237) ....................... 46,255
------------
U.S. TREASURY OBLIGATIONS - 7.3%
U.S. TREASURY NOTES - 4.8%
2,000 3.375% due 11/15/2008 ................... 1,922
7,250 3.375% due 12/15/2008 ................... 6,960
1,000 4.500% due 11/15/2015 ................... 953
------------
Total U.S. Treasury Notes ............... 9,835
------------
U.S. TREASURY BOND - 2.5%
5,000 5.375% due 02/15/2031 ................... 5,088
------------
Total U.S. Treasury Obligations
(Cost $15,817) ....................... 14,923
------------
REPURCHASE AGREEMENT- 3.0%
(Cost $6,025)
6,025 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$6,027,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$6,223,000) .......................... 6,025
------------
TOTAL INVESTMENTS (Cost $201,882*) ...................... 98.6% 200,965
OTHER ASSETS (LIABILITIES) (NET) ........................ 1.4 2,808
----- ------------
NET ASSETS .............................................. 100.0% $ 203,773
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
+ Defaulted security is past maturity but continues to be valued in
recognition of future potential worth.
GLOSSARY OF TERMS
MTN -- Medium-Term Note
54 See Notes to Financial Statements.
Portfolio of Investments
VT MONEY MARKET FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
COMMERCIAL PAPER (YANKEE) - 21.0%
$ 510 BNP Paribas Finance,
5.050% due 08/28/2006+++ ............. $ 506
500 Credit Suisse First Boston,
4.720% due 07/03/2006+++** ........... 499
700 Dexia Delaware LLC,
5.220% due 08/16/2006+++ ............. 696
600 Landesbank Baden-Wurttemberg,
5.350% due 09/19/2006+++ ............. 593
600 Societe Generale N.A.,
5.030% due 10/06/2006+++ ............. 592
700 UBS Finance (D.E.) LLC,
5.110% due 08/22/2006+++ ............. 695
------------
Total Commercial Paper (Yankee)
(Cost $3,581) ........................ 3,581
------------
CERTIFICATE OF DEPOSIT (DOMESTIC) - 6.9%
580 State Street Bank & Trust, Note,
5.206% due 12/11/2006++ .............. 579
600 Wells Fargo Bank N.A., Note,
4.010% due 07/24/2006 ................ 600
------------
Total Certificate of Deposit (Domestic)
(Cost $1,179) ........................ 1,179
------------
CERTIFICATES OF DEPOSIT (YANKEE) - 5.9%
500 Canadian Imperial Bank of Commerce, NY,
5.170% due 04/27/2007++ .............. 500
500 Toronto Dominion Bank,
5.300% due 04/13/2007 ................ 500
------------
Total Certificates of Deposit (Yankee)
(Cost $1,000) ........................ 1,000
------------
CORPORATE BONDS AND NOTES - 21.1%
800 ACF Parking Ltd., Note,
(LOC: Fifth Third Bank),
5.350% due 05/01/2022+ ............... 800
754 Everett Clinic, P.S., Bond,
(LOC: Bank of America),
5.300% due 05/01/2022+ ............... 754
700 Household Finance Corporation, Note,
5.750% due 01/30/2007 ................ 703
855 Lauren Company LLC, Bond,
(LOC: Wells Fargo Bank),
5.370% due 07/01/2033+** ............. 855
500 U.S. Bank N.A., Note,
2.850% due 11/15/2006 ................ 496
------------
Total Corporate Bonds and Notes
(Cost $3,608) ........................ 3,608
------------
TAXABLE MUNICIPAL BONDS - 31.5%
750 California Statewide Communities
Development Authority, MFHR,
(Hallmark House Apartments), Series
ZZ-T, (FNMA Collateral),
5.430% due 12/15/2036+ ............... 750
855 Illinois Health Facilities Authority,
Health Care Revenue, (Loyola
University Health System), Series C,
(MBIA Insured),
5.390% due 07/01/2024+ ............... 855
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
$ 590 Michigan State Housing Development
Authority, SFMR, Series D,
(FSA Insured),
5.330% due 06/01/2034+ ............... $ 590
720 New York State Housing Finance Agency,
Housing Revenue, (West 20th Street
Project), Series B, (FNMA Collateral),
5.350% due 05/15/2033+ ............... 720
600 Oakland-Alameda County, California,
Coliseum Authority, Lease Revenue,
(Coliseum Project), Series D,
(LOC: Wachovia Bank),
5.350% due 02/01/2011+ ............... 600
705 Sacramento County, Pension Funding,
Revenue Bonds, Seies C,
(LOC: Bayerische Landesbank),
5.430% due 07/01/2022+ ............... 705
445 Washington State Housing Finance
Commission, MFHR, (Bremerton Project),
Series B, (FNMA Collateral),
5.380% due 05/15/2033+ ............... 445
715 Washington State Housing Finance
Commission, Nonprofit Community
College Foundation Revenue, Series B,
(Community College Spokane
Foundation),
(LOC: Bank of America),
5.360% due 07/01/2030+ ............... 715
------------
Total Taxable Municipal Bonds
(Cost $5,380) ........................ 5,380
------------
FUNDING AGREEMENT - 2.9%
(Cost $500)
500 New York Life Insurance,
5.160% due 08/02/2006++*** ........... 500@@
------------
See Notes to Financial Statements. 55
Portfolio of Investments (continued)
VT MONEY MARKET FUND
June 30, 2006 (unaudited)
PRINCIPAL
AMOUNT (000S) VALUE (000S)
- ------------- ------------
REPURCHASE AGREEMENT - 8.0%
(Cost $1,361)
$ 1,361 Agreement with Morgan Stanley, 4.700%
dated 06/30/2006, to be repurchased at
$1,362,000 on 07/03/2006
(collateralized by U.S. Treasury Note,
3.875% due 01/15/2009, market value
$1,406,000) .......................... $ 1,361
------------
TOTAL INVESTMENTS (Cost $16,609*) ....................... 97.3% 16,609
OTHER ASSETS (LIABILITIES) (NET) ........................ 2.7 469
----- ------------
NET ASSETS .............................................. 100.0% $ 17,078
===== ============
- ----------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933, as amended.
*** Security is restricted and illiquid. It was acquired on August 3, 2005, and
has a value of $0.03 per Fund share at June 30, 2006.
+ Securities with a maturity date of more than thirteen months have variable
rates and/or demand features which qualify them as short-term securities.
Securities are secured by bank letters of credit or guarantees by certain
corporations. The interest rate shown are those in effect at June 30, 2006.
These rates change periodically based on specified market rates or
indicies.
++ Floating rate security whose interest rate is reset periodically based on
an index.
+++ Rate represents discount rate on purchase date.
@@ Represents fair value as determined in good faith under the direction of
the Board of Trustees.
GLOSSARY OF TERMS
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
SFMR -- Single Family Mortgage Revenue
56 See Notes to Financial Statements.
This Page Intentionally Left Blank.
57
Statements of Assets and Liabilities
WM VARIABLE TRUST
June 30, 2006 (unaudited)
(In thousands)
VT EQUITY VT GROWTH & VT WEST COAST VT MID CAP
VT REIT INCOME INCOME EQUITY STOCK VT GROWTH
FUND FUND FUND FUND FUND FUND
------- --------- ----------- ------------- ---------- ---------
ASSETS:
Investments, at cost ......................... $41,004 $293,819 $206,587 $136,970 $ 87,217 $281,956
======= ======== ======== ======== ======== ========
Investments, at value:
Securities ................................ $52,821 $327,488 $244,009 $157,605 $108,587 $289,372
Investments held as collateral for
securities loaned ......................... 6,615 17,672 15,170 17,753 9,934 14,867
------- -------- -------- -------- -------- --------
Total Investments ......................... 59,436 345,160 259,179 175,358 118,521 304,239
Cash ......................................... -- -- -- -- -- 54
Unrealized appreciation of forward foreign
currency contracts ........................ -- -- -- -- -- --
Dividends and/or interest receivable ......... 181 434 228 98 92 222
Receivable for Fund shares sold .............. 6 239 -- 181 3 4
Variation margin ............................. -- -- -- -- -- --
Receivable for investment securities sold .... 78 -- 1,585 356 274 1,376
Prepaid expenses ............................. 1 4 4 2 2 4
------- -------- -------- -------- -------- --------
Total Assets .............................. 59,702 345,837 260,996 175,995 118,892 305,899
------- -------- -------- -------- -------- --------
LIABILITIES:
Payable upon return of securities loaned ..... 6,615 17,672 15,170 17,753 9,934 14,867
Unrealized depreciation of forward foreign
currency contracts ........................ -- -- -- -- -- 3
Payable for Fund shares redeemed ............. 4 59 170 76 1 127
Payable for investment securities purchased .. 86 2,832 588 1,603 -- 1,581
Investment advisory fee payable .............. 34 163 148 78 65 176
Distribution fees payable .................... -- 10 1 3 2 --
Variation margin ............................. -- -- -- -- -- --
Due to custodian ............................. -- 3 2 1 1 --
Accrued legal and audit fees ................. 17 19 19 18 16 19
Accrued printing and postage expenses ........ 7 15 29 12 13 27
Accrued expenses and other payables .......... 2 3 3 3 2 9
------- -------- -------- -------- -------- --------
Total Liabilities ......................... 6,765 20,776 16,130 19,547 10,034 16,809
------- -------- -------- -------- -------- --------
NET ASSETS ................................... $52,937 $325,061 $244,866 $156,448 $108,858 $289,090
======= ======== ======== ======== ======== ========
58 See Notes to Financial Statements.
VT U.S.
VT SMALL CAP VT SMALL CAP VT INTERNATIONAL VT SHORT TERM GOVERNMENT VT MONEY
VALUE GROWTH GROWTH INCOME SECURITIES VT INCOME MARKET
FUND FUND FUND FUND FUND FUND FUND
- ------------ ------------ ---------------- ------------- ---------- --------- --------
$37,148 $40,769 $114,958 $50,347 $285,066 $201,882 $16,609
======= ======= ======== ======= ======== ======== =======
$34,522 $46,976 $136,330 $49,395 $274,421 $200,965 $16,609
4,708 -- 10,155 -- -- -- --
------- ------- -------- ------- -------- -------- -------
39,230 46,976 146,485 49,395 274,421 200,965 16,609
-- -- 524 54 -- 21 1
-- -- 28 -- -- -- --
177 16 717 611 1,697 2,950 87
-- 9 11 6 -- 92 411
-- -- -- -- -- -- --
179 176 574 -- -- -- --
1 1 1 1 4 2 --
------- ------- -------- ------- -------- -------- -------
39,587 47,178 148,340 50,067 276,122 204,030 17,108
------- ------- -------- ------- -------- -------- -------
4,708 -- 10,155 -- -- -- --
-- -- 33 -- -- -- --
-- 1 35 8 243 126 --
9 265 621 -- -- -- --
24 32 318 21 115 84 6
-- 1 1 1 1 4 1
-- -- -- 8 -- -- --
-- -- -- -- 2 -- --
18 19 19 18 19 18 17
8 10 9 5 29 24 5
2 5 25 2 3 1 1
------- ------- -------- ------- -------- -------- -------
4,769 333 11,216 63 412 257 30
------- ------- -------- ------- -------- -------- -------
$34,818 $46,845 $137,124 $50,004 $275,710 $203,773 $17,078
======= ======= ======== ======= ======== ======== =======
See Notes to Financial Statements. 59
Statements of Assets and Liabilities (continued)
WM VARIABLE TRUST
June 30, 2006 (unaudited)
(In thousands)
VT EQUITY VT GROWTH VT WEST VT MID CAP
VT REIT INCOME & INCOME COAST EQUITY STOCK VT GROWTH
FUND FUND FUND FUND FUND FUND
------- --------- --------- ------------ ---------- ---------
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss) ........ $ 526 $ 2,797 $ 1,591 $ 407 $ 365 $ 404
Accumulated net realized gain/(loss)
on investment transactions ............... 3,165 11,737 (20,161) 2,383 3,547 (92,738)
Net unrealized appreciation/(depreciation)
of investments ........................... 18,432 51,341 52,592 38,388 31,304 22,283
Paid-in capital ............................. 30,814 259,186 210,844 115,270 73,642 359,141
------- -------- -------- -------- -------- --------
Total Net Assets ......................... $52,937 $325,061 $244,866 $156,448 $108,858 $289,090
======= ======== ======== ======== ======== ========
NET ASSETS:
Class 1 Shares .............................. $51,365 $271,718 $241,497 $143,270 $ 99,560 $287,881
======= ======== ======== ======== ======== ========
Class 2 Shares .............................. $ 1,572 $ 53,343 $ 3,369 $ 13,178 $ 9,298 $ 1,209
======= ======== ======== ======== ======== ========
SHARES OUTSTANDING:
Class 1 Shares .............................. 2,982 15,680 13,191 6,441 6,203 21,520
======= ======== ======== ======== ======== ========
Class 2 Shares .............................. 92 3,098 185 595 583 91
======= ======== ======== ======== ======== ========
CLASS 1 SHARES:*
Net asset value, offering and redemption
price per share of beneficial interest
outstanding .............................. $ 17.23 $ 17.33 $ 18.31 $ 22.24 $ 16.05 $ 13.38
======= ======== ======== ======== ======== ========
CLASS 2 SHARES:*
Net asset value, offering and redemption
price per share of beneficial interest
outstanding .............................. $ 17.11 $ 17.22 $ 18.23 $ 22.14 $ 15.96 $ 13.29
======= ======== ======== ======== ======== ========
- ----------
* Net asset values are not shown in thousands.
60 See Notes to Financial Statements.
VT U.S.
VT SMALL VT SMALL VT SHORT GOVERNMENT VT MONEY
CAP VALUE CAP GROWTH VT INTERNATIONAL TERM INCOME SECURITIES VT INCOME MARKET
FUND FUND GROWTH FUND FUND FUND FUND FUND
- --------- ---------- ---------------- ----------- ---------- --------- --------
$ 361 $ (142) $ (333) $ 1,066 $ 6,210 $ 5,905 $ --
3,118 (21,695) (4,321) (422) (4,170) (1,567) --
2,082 6,207 31,537 (937) (10,645) (917) --
29,257 62,475 110,241 50,297 284,315 200,352 17,078
------- -------- -------- ------- -------- -------- -------
$34,818 $ 46,845 $137,124 $50,004 $275,710 $203,773 $17,078
======= ======== ======== ======= ======== ======== =======
$34,682 $ 42,913 $133,392 $45,827 $269,579 $186,173 $12,369
======= ======== ======== ======= ======== ======== =======
$ 136 $ 3,932 $ 3,732 $ 4,177 $ 6,131 $ 17,600 $ 4,709
======= ======== ======== ======= ======== ======== =======
3,071 4,360 8,731 18,759 27,109 18,566 12,384
======= ======== ======== ======= ======== ======== =======
12 405 246 1,715 617 1,763 4,711
======= ======== ======== ======= ======== ======== =======
$ 11.29 $ 9.84 $ 15.28 $ 2.44 $ 9.94 $ 10.03 $ 1.00
======= ======== ======== ======= ======== ======== =======
$ 11.27 $ 9.72 $ 15.17 $ 2.44 $ 9.94 $ 9.98 $ 1.00
======= ======== ======== ======= ======== ======== =======
See Notes to Financial Statements. 61
Statements of Operations
WM VARIABLE TRUST
For the Six Months Ended June 30, 2006 (unaudited)
(In thousands)
VT EQUITY VT GROWTH VT MID CAP
VT REIT INCOME & INCOME VT WEST COAST STOCK VT GROWTH
FUND FUND FUND EQUITY FUND FUND FUND
------- --------- --------- ------------- ---------- ---------
INVESTMENT INCOME:
Dividends ............................................. $ 419 $ 3,328 $ 2,462 $ 769 $ 664 $ 1,418
Interest .............................................. 60 447 138 115 127 183
Foreign withholding taxes ............................. (5) (27) (4) -- (2) (38)
Securities lending income ............................. 14 55 5 24 7 12
------ ------- ------- ------ ------ --------
Total investment income ......................... 488 3,803 2,601 908 796 1,575
------ ------- ------- ------ ------ --------
EXPENSES:
Investment advisory fee ............................... 209 963 940 473 409 1,087
Class 2 Shares distribution fees ...................... 2 60 4 15 11 2
Custodian fees ........................................ 3 6 7 9 5 24
Legal and audit fees .................................. 15 20 19 17 14 19
Trustees' fees ........................................ 1 3 3 1 1 3
Other ................................................. 7 21 23 9 7 25
------ ------- ------- ------ ------ --------
Total expenses .................................. 237 1,073 996 524 447 1,160
Fees reduced by custodian credits ..................... -- -- -- -- -- --
------ ------- ------- ------ ------ --------
Net expenses .................................... 237 1,073 996 524 447 1,160
------ ------- ------- ------ ------ --------
NET INVESTMENT INCOME/(LOSS) .......................... 251 2,730 1,605 384 349 415
------ ------- ------- ------ ------ --------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) on:
Security transactions .............................. 3,000 11,948 4,823 2,687 4,069 710
Forward foreign currency contracts and foreign
currency transactions ........................... -- -- -- -- -- (5)
Futures contracts .................................. -- -- -- -- -- --
------ ------- ------- ------ ------ --------
Net realized gain/(loss) on investment
transactions .................................... 3,000 11,948 4,823 2,687 4,069 705
------ ------- ------- ------ ------ --------
Capital gain distributions received ................... 455 -- -- 40 -- --
------ ------- ------- ------ ------ --------
Net change in unrealized appreciation/(depreciation)
of securities ...................................... 2,019 1,237 (5,782) 1,814 1,858 (13,114)
Forward foreign currency contracts ................. -- -- -- -- -- (3)
Foreign currency, futures contracts and other
assets and liabilities .......................... -- -- -- -- -- 3
------ ------- ------- ------ ------ --------
Net change in unrealized appreciation/depreciation
of investment transactions ......................... 2,019 1,237 (5,782) 1,814 1,858 (13,114)
------ ------- ------- ------ ------ --------
Net realized and unrealized gain/(loss) on
investments ........................................ 5,474 13,185 (959) 4,541 5,927 (12,409)
------ ------- ------- ------ ------ --------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ......................................... $5,725 $15,915 $ 646 $4,925 $6,276 $(11,994)
====== ======= ======= ====== ====== ========
62 See Notes to Financial Statements.
VT U.S.
VT SMALL VT SMALL CAP VT INTERNATIONAL VT SHORT GOVERNMENT VT MONEY
CAP VALUE GROWTH GROWTH TERM INCOME SECURITIES VT INCOME MARKET
FUND FUND FUND FUND FUND FUND FUND
- --------- ------------ ---------------- ----------- ---------- --------- --------
$ 528 $ 26 $1,888 $ -- $ -- $ -- $ --
28 35 82 1,242 6,986 6,486 354
(40) -- (179) -- -- -- --
29 51 35 -- -- -- --
------- ------ ------ ------ ------- ------- ----
545 112 1,826 1,242 6,986 6,486 354
------- ------ ------ ------ ------- ------- ----
150 209 568 128 689 509 34
-- 5 3 6 10 23 5
5 13 75 3 9 -- 1
17 17 18 16 19 18 15
-- 1 1 1 3 2 --
6 9 12 7 22 26 4
------- ------ ------ ------ ------- ------- ----
178 254 677 161 752 578 59
-- -- -- -- -- -- --
------- ------ ------ ------ ------- ------- ----
178 254 677 161 752 578 59
------- ------ ------ ------ ------- ------- ----
367 (142) 1,149 1,081 6,234 5,908 295
------- ------ ------ ------ ------- ------- ----
2,656 1,037 5,029 -- -- (310) --
(2) -- (35) -- -- -- --
-- -- -- 69 -- -- --
------- ------ ------ ------ ------- ------- ----
2,654 1,037 4,994 69 -- (310) --
------- ------ ------ ------ ------- ------- ----
4 -- -- -- -- -- --
------- ------ ------ ------ ------- ------- ----
(2,075) (138) (813) (506) (6,769) (6,326) --
-- -- 32 -- -- -- --
-- -- 16 26 -- -- --
------- ------ ------ ------ ------- ------- ----
(2,075) (138) (765) (480) (6,769) (6,326) --
------- ------ ------ ------ ------- ------- ----
583 899 4,229 (411) (6,769) (6,636) --
------- ------ ------ ------ ------- ------- ----
$ 950 $ 757 $5,378 $ 670 $ (535) $ (728) $295
======= ====== ====== ====== ======= ======= ====
See Notes to Financial Statements. 63
Statements of Changes in Net Assets
WM VARIABLE TRUST
(In thousands)
VT GROWTH &
VT REIT FUND VT EQUITY INCOME FUND INCOME FUND
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
----------- ---------- ----------- ---------- ----------- ----------
OPERATIONS:
Net investment income .................... $ 251 $ 1,506 $ 2,730 $ 5,563 $ 1,605 $ 3,645
Net realized gain on investment
transactions .......................... 3,000 4,000 11,948 17,515 4,823 7,943
Capital gain distributions received ...... 455 414 -- 165 -- --
Net change in unrealized appreciation/
depreciation of investments ........... 2,019 (917) 1,237 (306) (5,782) (2,342)
------- ------- -------- -------- -------- --------
Net increase/(decrease) in net assets
resulting from operations ............. 5,725 5,003 15,915 22,937 646 9,246
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class 1 Shares ..................... (1,340) (1,095) (4,714) (3,268) (3,616) (3,393)
Class 2 Shares ..................... (38) (22) (838) (459) (43) (33)
Net realized gains on investments:
Class 1 Shares ..................... (4,410) (2,005) (13,881) -- -- --
Class 2 Shares ..................... (135) (41) (2,700) -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares ..................... (40) (1,847) 39,255 31,403 (20,651) (11,414)
Class 2 Shares ..................... 351 861 12,566 15,234 (12) (64)
------- ------- -------- -------- -------- --------
Net increase/(decrease) in net assets .... 113 854 45,603 65,847 (23,676) (5,658)
NET ASSETS:
Beginning of period/year ................. 52,824 51,970 279,458 213,611 268,542 274,200
------- ------- -------- -------- -------- --------
End of period/year ....................... $52,937 $52,824 $325,061 $279,458 $244,866 $268,542
======= ======= ======== ======== ======== ========
Undistributed net investment income
at end of period ...................... $ 526 $ 1,653 $ 2,797 $ 5,619 $ 1,591 $ 3,645
======= ======= ======== ======== ======== ========
64 See Notes to Financial Statements.
VT WEST COAST EQUITY FUND VT MID CAP STOCK FUND VT GROWTH FUND VT SMALL CAP VALUE FUND
- ------------------------- ------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
$ 384 $ 774 $ 349 $ 1,883 $ 415 $ 365 $ 367 $ 401
2,687 5,774 4,069 11,521 705 12,221 2,654 3,772
40 92 -- -- -- -- 4 1
1,814 4,125 1,858 1,652 (13,114) 4,143 (2,075) (2,091)
-------- -------- -------- -------- -------- -------- ------- -------
4,925 10,765 6,276 15,056 (11,994) 16,729 950 2,083
(726) (864) (1,713) (519) (344) (1,293) (402) (202)
(42) (46) (142) (18) -- (3) (1) --
(2,853) -- (10,407) (7,313) -- -- (3,463) (1,350)
(254) -- (965) (431) -- -- (13) --
12,221 1,547 2,292 (11,193) 28,659 10,517 (750) (4,853)
2,283 1,851 2,282 1,226 (10) (163) 136 15
-------- -------- -------- -------- -------- -------- ------- -------
15,554 13,253 (2,377) (3,192) 16,311 25,787 (3,543) (4,307)
140,894 127,641 111,235 114,427 272,779 246,992 38,361 42,668
-------- -------- -------- -------- -------- -------- ------- -------
$156,448 $140,894 $108,858 $111,235 $289,090 $272,779 $34,818 $38,361
======== ======== ======== ======== ======== ======== ======= =======
$ 407 $ 791 $ 365 $ 1,871 $ 404 $ 333 $ 361 $ 397
======== ======== ======== ======== ======== ======== ======= =======
See Notes to Financial Statements. 65
Statements of Changes in Net Assets (continued)
WM VARIABLE TRUST
(In thousands)
VT SMALL CAP VT INTERNATIONAL VT SHORT TERM
GROWTH FUND GROWTH FUND INCOME FUND
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
----------- ---------- ----------- ---------- ----------- ----------
OPERATIONS:
Net investment income/(loss) ................ $ (142) $ (294) $ 1,149 $ 1,211 $ 1,081 $ 2,149
Net realized gain/(loss) on investment
transactions ............................. 1,037 756 4,994 4,044 69 114
Net increase from payment by the Advisor .... -- 189 -- -- -- --
Net change in unrealized appreciation/
depreciation of investments .............. (138) (2,232) (765) 11,434 (480) (1,310)
------- -------- -------- -------- ------- -------
Net increase/(decrease) in net assets
resulting from operations ................ 757 (1,581) 5,378 16,689 670 953
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class 1 Shares ........................... -- -- (2,003) (1,503) (2,030) (1,866)
Class 2 Shares ........................... -- -- (54) (9) (181) (227)
Net realized gains on investments:
Class 1 Shares ........................... -- -- -- -- -- --
Class 2 Shares ........................... -- -- -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares ........................... (476) (8,823) 20,967 2,110 23 (351)
Class 2 Shares ........................... 123 170 2,719 645 (855) (1,802)
------- -------- -------- -------- ------- -------
Net increase/(decrease) in net assets ....... 404 (10,234) 27,007 17,932 (2,373) (3,293)
NET ASSETS:
Beginning of period/year .................... 46,441 56,675 110,117 92,185 52,377 55,670
------- -------- -------- -------- ------- -------
End of period/year .......................... $46,845 $ 46,441 $137,124 $110,117 $50,004 $52,377
======= ======== ======== ======== ======= =======
Undistributed net investment income/(loss)
at end of year ........................... $ (142) $ -- $ (333) $ 575 $ 1,066 $ 2,196
======= ======== ======== ======== ======= =======
66 See Notes to Financial Statements.
VT U.S. GOVERNMENT
SECURITIES FUND VT INCOME FUND VT MONEY MARKET FUND
- ------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
- ----------- ---------- ----------- ---------- ----------- ----------
$ 6,234 $ 12,151 $ 5,908 $ 11,358 $ 295 $ 441
-- 496 (310) 893 -- --
-- -- -- -- -- --
(6,769) (6,425) (6,326) (7,462) -- --
-------- -------- -------- -------- ------- -------
(535) 6,222 (728) 4,789 295 441
(13,080) (11,782) (10,798) (10,718) (226) (339)
(294) (436) (957) (1,267) (69) (102)
-- -- (105) -- -- --
-- -- (10) -- -- --
16,266 8,857 12,584 5,960 (763) (1,528)
(2,291) (3,790) (1,727) (2,178) 1,394 (2,089)
-------- -------- -------- -------- ------- -------
66 (929) (1,741) (3,414) 631 (3,617)
275,644 276,573 205,514 208,928 16,447 20,064
-------- -------- -------- -------- ------- -------
$275,710 $275,644 $203,773 $205,514 $17,078 $16,447
======== ======== ======== ======== ======= =======
$ 6,210 $ 13,350 $ 5,905 $ 11,752 $ -- $ --
======== ======== ======== ======== ======= =======
See Notes to Financial Statements. 67
Statements of Changes in Net Assets -- Capital Stock Activity
WM VARIABLE TRUST
(In thousands)
VT REIT FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
--------------- ------------------------- ---------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $ 698 37 $5,750 343 $(6,488) (347) $ (40) 33
Class 2 Shares .... 286 15 173 10 (108) (5) 351 20
YEAR ENDED 12/31/05:
Class 1 Shares .... $ 819 49 $3,100 186 $(5,766) (330) $(1,847) (95)
Class 2 Shares .... 1,393 84 63 4 (595) (36) 861 52
VT EQUITY INCOME FUND
ISSUED AS
SOLD REINVESTMENT OF DIVIDENDS REDEEMED NET INCREASE
---------------- ------------------------- ---------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------- ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $28,647 1,558 $18,595 1,091 $(7,987) (433) $39,255 2,216
Class 2 Shares .... 11,660 639 3,538 209 (2,632) (145) 12,566 703
YEAR ENDED 12/31/05:
Class 1 Shares .... $34,607 2,002 $ 3,268 194 $(6,472) (386) $31,403 1,810
Class 2 Shares .... 19,058 1,134 459 28 (4,283) (256) 15,234 906
VT GROWTH & INCOME FUND
ISSUED AS
SOLD REINVESTMENT OF DIVIDENDS REDEEMED NET DECREASE
---------------- ------------------------- ----------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------ -------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $ 9,826 516 $3,616 200 $(34,093) (1,811) $(20,651) (1,095)
Class 2 Shares .... 513 27 43 2 (568) (30) (12) (1)
YEAR ENDED 12/31/05:
Class 1 Shares .... $13,104 724 $3,393 187 $(27,911) (1,510) $(11,414) (599)
Class 2 Shares .... 861 48 33 2 (958) (53) (64) (3)
VT WEST COAST EQUITY FUND
ISSUED AS
SOLD REINVESTMENT OF DIVIDENDS REDEEMED NET INCREASE
---------------- ------------------------- ---------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $11,753 510 $3,579 164 $(3,111) (135) $12,221 539
Class 2 Shares .... 3,190 140 296 13 (1,203) (52) 2,283 101
YEAR ENDED 12/31/05:
Class 1 Shares .... $ 8,492 400 $ 864 43 $(7,809) (378) $ 1,547 65
Class 2 Shares .... 3,299 159 46 2 (1,494) (73) 1,851 88
68 See Notes to Financial Statements.
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM VARIABLE TRUST
(In thousands)
VT MID CAP STOCK FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
--------------- ------------------------- ----------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------ ------ ------- ------ -------- ------ -------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $2,954 161 $12,120 776 $(12,782) (706) $ 2,292 231
Class 2 Shares .... 1,770 99 1,108 71 (596) (33) 2,282 137
YEAR ENDED 12/31/05:
Class 1 Shares .... $1,809 110 $ 7,832 487 $(20,834) (1,214) $(11,193) (617)
Class 2 Shares .... 1,747 105 449 28 (970) (59) 1,226 74
VT GROWTH FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $35,568 2,519 $ 344 26 $ (7,253) (524) $28,659 2,021
Class 2 Shares .... 173 13 -- -- (183) (14) (10) (1)
YEAR ENDED 12/31/05:
Class 1 Shares .... $30,450 2,171 $1,293 99 $(21,226) (1,628) $10,517 642
Class 2 Shares .... 172 13 3 -- (338) (26) (163) (13)
VT SMALL CAP VALUE FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
--------------- ------------------------- ---------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $901 70 $3,865 349 $(5,516) (433) $ (750) (14)
Class 2 Shares .... 128 10 14 2 (6) (1) 136 11
YEAR ENDED 12/31/05:
Class 1 Shares .... $310 26 $1,552 126 $(6,715) (544) $(4,853) (392)
Class 2 Shares .... 15 1 -- -- -- -- 15 1
VT SMALL CAP GROWTH FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
--------------- ------------------------- ----------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $1,932 183 $-- -- $ (2,408) (230) $ (476) (47)
Class 2 Shares .... 440 43 -- -- (317) (31) 123 12
YEAR ENDED 12/31/05:
Class 1 Shares .... $1,315 145 $-- -- $(10,138) (1,122) $(8,823) (977)
Class 2 Shares .... 835 96 -- -- (665) (74) 170 22
See Notes to Financial Statements. 69
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM VARIABLE TRUST
(In thousands)
VT INTERNATIONAL GROWTH FUND
ISSUED AS
SOLD REINVESTMENT OF DIVIDENDS REDEEMED NET INCREASE
---------------- ------------------------- ---------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $22,605 1,460 $2,003 137 $(3,641) (232) $20,967 1,365
Class 2 Shares .... 2,696 170 54 4 (31) (2) 2,719 172
YEAR ENDED 12/31/05:
Class 1 Shares .... $ 2,995 228 $1,503 123 $(2,388) (182) $ 2,110 169
Class 2 Shares .... 694 53 9 1 (58) (4) 645 50
VT SHORT TERM INCOME FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
--------------- ------------------------- ---------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------ ------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $1,886 742 $2,030 832 $(3,893) (1,541) $ 23 33
Class 2 Shares .... 322 128 181 74 (1,358) (543) (855) (341)
YEAR ENDED 12/31/05:
Class 1 Shares .... $1,650 651 $1,866 750 $(3,867) (1,525) $ (351) (124)
Class 2 Shares .... 782 308 227 91 (2,811) (1,112) (1,802) (713)
VT U.S. GOVERNMENT SECURITIES FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------- ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $17,942 1,718 $13,080 1,315 $(14,756) (1,422) $16,266 1,611
Class 2 Shares .... 153 15 294 29 (2,738) (265) (2,291) (221)
YEAR ENDED 12/31/05:
Class 1 Shares .... $12,473 1,188 $11,782 1,135 $(15,398) (1,468) $ 8,857 855
Class 2 Shares .... 645 62 436 42 (4,871) (462) (3,790) (358)
VT INCOME FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------- ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $11,772 1,106 $10,903 1,087 $(10,091) (952) $12,584 1,241
Class 2 Shares .... 1,227 118 967 97 (3,921) (370) (1,727) (155)
YEAR ENDED 12/31/05:
Class 1 Shares .... $ 7,235 674 $10,718 1,015 $(11,993) (1,113) $ 5,960 576
Class 2 Shares .... 3,002 279 1,267 120 (6,447) (602) (2,178) (203)
70 See Notes to Financial Statements.
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM VARIABLE TRUST
(In thousands)
VT MONEY MARKET FUND
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ------------------ ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------- ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares .... $ 4,836 4,836 $226 226 $ (5,825) (5,825) $ (763) (763)
Class 2 Shares .... 5,341 5,341 69 69 (4,016) (4,016) 1,394 1,394
YEAR ENDED 12/31/05:
Class 1 Shares .... $10,489 10,489 $339 339 $(12,356) (12,356) $(1,528) (1,528)
Class 2 Shares .... 6,537 6,537 102 102 (8,728) (8,728) (2,089) (2,089)
See Notes to Financial Statements. 71
Financial Highlights
VT REIT FUND
For a Fund share outstanding throughout each period.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET NET REALIZED NET
ASSET AND DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT GAIN ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $17.49 $0.09(5) $1.83 $1.92 $(0.51) $(1.67) $(2.18) $17.23 11.31%
Year Ended:
12/31/05 $16.96 $0.47(5) $1.08 $1.55 $(0.36) $(0.66) $(1.02) $17.49 9.40%
12/31/04 13.04 0.49(5) 3.74 4.23 (0.20) (0.11) (0.31) 16.96 33.08
12/31/03(3) 10.00 0.36(5) 2.68 3.04 -- -- -- 13.04 30.40
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $17.38 $0.07(5) $1.81 $1.88 $(0.48) $(1.67) $(2.15) $17.11 11.14%
Year Ended:
12/31/05 $16.90 $0.44(5) $1.05 $1.49 $(0.35) $(0.66) $(1.01) $17.38 9.10%
12/31/04 13.03 0.45(5) 3.73 4.18 (0.20) (0.11) (0.31) 16.90 32.72
12/31/03(4) 11.20 0.28(5) 1.55 1.83 -- -- -- 13.03 16.34
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $51,365 0.90%(7) 0.90%(7) 0.97%(7) 9%
Year Ended:
12/31/05 $51,570 0.89% 0.89% 2.82% 25%
12/31/04 51,632 0.88 0.88 3.43 13
12/31/03(3) 38,593 1.00(7) 1.00(7) 4.21(7) 3
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 1,572 1.15%(7) 1.15%(7) 0.72%(7) 9%
Year Ended:
12/31/05 $ 1,254 1.14% 1.14% 2.57% 25%
12/31/04 338 1.13 1.13 3.18 13
12/31/03(4) 1 1.25(7) 1.25(7) 3.96(7) 3
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The VT REIT Fund commenced operations on May 1, 2003.
(4) The VT REIT Fund commenced selling Class 2 shares on August 5, 2003.
72 See Notes to Financial Statements.
Financial Highlights
VT EQUITY INCOME FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS
------------------------------------ LESS DISTRIBUTIONS
NET REALIZED ----------------------------------------
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $17.64 $0.17 $0.80 $0.97 $(0.33) $(0.95) $(1.28) $17.33 5.61%
Year Ended:
12/31/05 $16.26 $0.40(5) $1.26 $1.66 $(0.28) $ -- $(0.28) $17.64 10.27%
12/31/04 13.90 0.32(5) 2.30 2.62 (0.26) -- (0.26) 16.26 19.12
12/31/03 11.01 0.31(5) 2.95 3.26 (0.31) (0.06) (0.37) 13.90 30.10
12/31/02 12.87 0.36(5) (1.95) (1.59) (0.25) (0.02) (0.27) 11.01 (12.51)
12/31/01 12.11 0.42(5) 0.54 0.96 (0.12) (0.08) (0.20) 12.87 7.92
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $17.53 $0.14 $0.80 $0.94 $(0.30) $(0.95) $(1.25) $17.22 5.48%
Year Ended:
12/31/05 $16.18 $0.36(5) $1.24 $1.60 $(0.25) $ -- $(0.25) $17.53 9.97%
12/31/04 13.85 0.28(5) 2.30 2.58 (0.25) -- (0.25) 16.18 18.82
12/31/03 10.99 0.29(5) 2.93 3.22 (0.30) (0.06) (0.36) 13.85 29.73
12/31/02 12.87 0.32(5) (1.93) (1.61) (0.25) (0.02) (0.27) 10.99 (12.67)
12/31/01(6) 12.64 0.22(5) 0.21 0.43 (0.12) (0.08) (0.20) 12.87 3.40
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $271,718 0.66%(7) 0.66%(7) 1.83%(7) 36%
Year Ended:
12/31/05 $237,482 0.66% 0.66% 2.40% 46%
12/31/04 189,517 0.67 0.67 2.15 26
12/31/03 149,603 0.70 0.70 2.63 23
12/31/02 112,304 0.70 0.70 3.04 16
12/31/01 97,982 0.70 0.70 3.29 15
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 53,343 0.91%(7) 0.91%(7) 1.58%(7) 36%
Year Ended:
12/31/05 $ 41,976 0.91% 0.91% 2.15% 46%
12/31/04 24,094 0.92 0.92 1.90 26
12/31/03 12,619 0.95 0.95 2.38 23
12/31/02 6,460 0.95 0.95 2.79 16
12/31/01(6) 658 0.94(7) 0.94(7) 3.05(7) 15
(5) Per share numbers have been calculated using the average shares method.
(6) The VT Equity Income Fund commenced selling Class 2 shares on May 1, 2001.
(7) Annualized.
See Notes to Financial Statements. 73
Financial Highlights
VT GROWTH & INCOME FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS
------------------------------------ LESS DISTRIBUTIONS
NET REALIZED ----------------------------------------
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $18.56 $0.12(4) $(0.09) $ 0.03 $(0.28) $ -- $(0.28) $18.31 0.16%
Year Ended:
12/31/05 $18.19 $0.25 $ 0.35 $ 0.60 $(0.23) $ -- $(0.23) $18.56 3.30%
12/31/04 16.85 0.23(4) 1.29 1.52 (0.18) -- (0.18) 18.19 9.08
12/31/03 13.45 0.19(4) 3.39 3.58 (0.18) -- (0.18) 16.85 26.80
12/31/02 17.18 0.15(4) (3.77) (3.62) (0.11) -- (0.11) 13.45 (21.16)
12/31/01 18.23 0.09 (0.70) (0.61) (0.06) (0.38) (0.44) 17.18 (3.51)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $18.46 $0.09(4) $(0.09) $ -- $(0.23) $ -- $(0.23) $18.23 0.08%
Year Ended:
12/31/05 $18.10 $0.20 $ 0.34 $ 0.54 $(0.18) $ -- $(0.18) $18.46 2.97%
12/31/04 16.79 0.19(4) 1.28 1.47 (0.16) -- (0.16) 18.10 8.78
12/31/03 13.42 0.15(4) 3.39 3.54 (0.17) -- (0.17) 16.79 26.49
12/31/02 17.18 0.11(4) (3.76) (3.65) (0.11) -- (0.11) 13.42 (21.33)
12/31/01(3) 16.59 0.00(5) 0.59(6) 0.59 -- -- -- 17.18 3.56
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $241,497 0.78%(7) 0.78%(7) 1.27%(7) 17%
Year Ended:
12/31/05 $265,115 0.77% 0.77% 1.32% 24%
12/31/04 270,775 0.79 0.79 1.33 11
12/31/03 245,820 0.83 0.83 1.28 16
12/31/02 209,337 0.81 0.81 1.01 20
12/31/01 319,171 0.78 0.78 0.54 25
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 3,369 1.03%(7) 1.03%(7) 1.02%(7) 17%
Year Ended:
12/31/05 $ 3,427 1.02% 1.02% 1.07% 24%
12/31/04 3,425 1.04 1.04 1.08 11
12/31/03 2,712 1.08 1.08 1.03 16
12/31/02 1,301 1.06 1.06 0.76 20
12/31/01(3) 112 1.03(7) 1.03(7) 0.29(7) 25
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The Funds commenced selling Class 2 shares on November 6, 2001.
(4) Per share numbers have been calculated using the average shares method.
74 See Notes to Financial Statements.
Financial Highlights
VT WEST COAST EQUITY FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS
------------------------------------ LESS DISTRIBUTIONS
NET REALIZED ----------------------------------------
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $22.04 $0.06(4) $0.72 $0.78 $(0.12) $(0.46) $(0.58) $22.24 3.60%
Year Ended:
12/31/05 $20.45 $0.13(4) $1.61 $1.74 $(0.15) $ -- $(0.15) $22.04 8.57%
12/31/04 18.14 0.16(4) 2.20 2.36 (0.05) -- (0.05) 20.45 13.03
12/31/03 12.69 0.06(4) 5.43 5.49 (0.04) -- (0.04) 18.14 43.35
12/31/02 16.70 0.06(4) (3.79) (3.73) (0.08) (0.20) (0.28) 12.69 (22.55)
12/31/01 16.01 0.10(4) 1.03 1.13 (0.09) (0.35) (0.44) 16.70 6.88
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $21.92 $0.03(4) $0.73 $0.76 $(0.08) $(0.46) $(0.54) $22.14 3.48%
Year Ended:
12/31/05 $20.35 $0.08(4) $1.60 $1.68 $(0.11) $ -- $(0.11) $21.92 8.30%
12/31/04 18.08 0.11(4) 2.19 2.30 (0.03) -- (0.03) 20.35 12.72
12/31/03 12.67 0.02(4) 5.41 5.43 (0.02) -- (0.02) 18.08 42.93
12/31/02 16.70 0.02(4) (3.77) (3.75) (0.08) (0.20) (0.28) 12.67 (22.67)
12/31/01(3) 15.52 0.01(4) 1.17 1.18 -- -- -- 16.70 7.60
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $143,270 0.67%(7) 0.67%(7) 0.53%(7) 9%
Year Ended:
12/31/05 $130,071 0.68% 0.68% 0.62% 18%
12/31/04 119,371 0.69 0.69 0.87 17
12/31/03 105,160 0.71 0.71 0.42 16
12/31/02 68,227 0.71 0.71 0.42 20
12/31/01 83,835 0.70 0.70 0.59 19
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 13,178 0.92%(7) 0.92%(7) 0.28%(7) 9%
Year Ended:
12/31/05 $ 10,823 0.93% 0.93% 0.37% 18%
12/31/04 8,270 0.94 0.94 0.62 17
12/31/03 5,202 0.96 0.96 0.17 16
12/31/02 2,313 0.96 0.96 0.17 20
12/31/01(3) 58 0.95(7) 0.95(7) 0.34(7) 19
(5) Amount represents less than $0.01 per share.
(6) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(7) Annualized.
See Notes to Financial Statements. 75
Financial Highlights
VT MID CAP STOCK FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS
-------------------------------------- LESS DISTRIBUTIONS
NET REALIZED ----------------------------------------
NET AND NET
ASSET NET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INCOME/ ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ------------ ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $17.34 $ 0.06 $ 0.89 $ 0.95 $(0.32) $(1.92) $(2.24) $16.05 5.80%
Year Ended:
12/31/05 $16.44 $ 0.27(4) $ 1.84 $ 2.11 $(0.08) $(1.13) $(1.21) $17.34 13.39%
12/31/04 14.63 0.08(4) 2.03 2.11 (0.05) (0.25) (0.30) 16.44 14.59
12/31/03 11.49 0.06(4) 3.12 3.18 (0.04) -- (0.04) 14.63 27.73
12/31/02 13.14 0.04(4) (1.36) (1.32) (0.03) (0.30) (0.33) 11.49 (10.35)
12/31/01 11.74 0.03(4) 1.38 1.41 (0.01) -- (0.01) 13.14 11.99
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $17.24 $ 0.04 $ 0.88 $ 0.92 $(0.28) $(1.92) $(2.20) $15.96 5.70%
Year Ended:
12/31/05 $16.36 $ 0.22(4) $ 1.84 $ 2.06 $(0.05) $(1.13) $(1.18) $17.24 13.12%
12/31/04 14.58 0.04(4) 2.02 2.06 (0.03) (0.25) (0.28) 16.36 14.28
12/31/03 11.46 0.03(4) 3.11 3.14 (0.02) -- (0.02) 14.58 27.45
12/31/02 13.13 0.01(4) (1.36) (1.35) (0.02) (0.30) (0.32) 11.46 (10.54)
12/31/01(3) 12.35 (0.00)(4)(5) 0.79 0.79 (0.01) -- (0.01) 13.13 6.38
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES RATIO OF
TO AVERAGE TO AVERAGE NET
NET NET ASSETS NET ASSETS INVESTMENT
ASSETS BEFORE AFTER INCOME/
END OF REIMBURSE- REIMBURSE- (LOSS) TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $ 99,560 0.80%(6) 0.80%(6) 0.66%(6) 9%
Year Ended:
12/31/05 $103,543 0.81% 0.81% 1.62% 27%
12/31/04 108,347 0.81 0.81 0.54 32
12/31/03 84,408 0.83 0.83 0.47 37
12/31/02 63,119 0.84 0.84 0.32 28
12/31/01 71,988 0.82 0.82 0.21 30
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 9,298 1.05%(6) 1.05%(6) 0.41%(6) 9%
Year Ended:
12/31/05 $ 7,692 1.06% 1.06% 1.37% 27%
12/31/04 6,080 1.06 1.06 0.29 32
12/31/03 3,725 1.08 1.08 0.22 37
12/31/02 1,962 1.09 1.09 0.07 28
12/31/01(3) 668 1.07(6) 1.07(6) (0.04)(6) 30
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The VT Mid Cap Stock Fund commenced selling Class 2 shares on May 1, 2001.
(4) Per share numbers have been calculated using the average shares method.
76 See Notes to Financial Statements.
Financial Highlights
VT GROWTH FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS
-------------------------------------- LESS DISTRIBUTIONS
NET REALIZED ----------------------------------------
NET AND NET
ASSET NET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INCOME/ ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ------------ ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $13.92 $ 0.02 $(0.54) $(0.52) $(0.02) $ -- $(0.02) $13.38 (3.76)%
Year Ended:
12/31/05 $13.03 $ 0.02 $ 0.94 $ 0.96 $(0.07) $ -- $(0.07) $13.92 7.41%
12/31/04 12.04 0.07 0.92 0.99 -- -- -- 13.03 8.22
12/31/03 9.32 (0.00)(5) 2.72 2.72 -- -- -- 12.04 29.18
12/31/02 13.51 (0.01)(4) (4.18) (4.19) -- -- -- 9.32 (31.01)
12/31/01 22.99 0.02(4) (6.24) (6.22) (0.37) (2.89) (3.26) 13.51 (29.05)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $13.83 $ 0.00(5) $(0.54) $(0.54) $ -- $ -- $ -- $13.29 (3.90)%
Year Ended:
12/31/05 $12.94 $(0.01) $ 0.94 $ 0.93 $(0.04) $ -- $(0.04) $13.83 7.17%
12/31/04 11.98 0.04 0.92 0.96 -- -- -- 12.94 8.01
12/31/03 9.30 (0.03) 2.71 2.68 -- -- -- 11.98 28.82
12/31/02 13.51 (0.03)(4) (4.18) (4.21) -- -- -- 9.30 (31.16)
12/31/01(7) 12.81 (0.00)(4)(5) 0.70(8) 0.70 -- -- -- 13.51 5.46
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES RATIO OF
TO AVERAGE TO AVERAGE NET
NET NET ASSETS NET ASSETS INVESTMENT
ASSETS BEFORE AFTER INCOME/
END OF REIMBURSE- REIMBURSE- (LOSS) TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $287,881 0.80%(6) 0.80%(6) 0.29%(6) 23%
Year Ended:
12/31/05 $271,508 0.87% 0.87% 0.15% 81%
12/31/04 245,637 0.94 0.95 0.58 66
12/31/03 189,837 0.98 0.98 (0.04) 75
12/31/02 135,422 1.00 1.00 (0.05) 171
12/31/01 167,483 0.94 0.94 0.11 92
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 1,209 1.05%(6) 1.05%(6) 0.04%(6) 23%
Year Ended:
12/31/05 $ 1,271 1.12% 1.12% (0.10)% 81%
12/31/04 1,355 1.19 1.20 0.33 66
12/31/03 1,274 1.23 1.23 (0.29) 75
12/31/02 622 1.25 1.25 (0.30) 171
12/31/01(7) 31 1.19(6) 1.19(6) (0.14)(6) 92
(5) Amount represents less than $0.01 per share.
(6) Annualized.
(7) The VT Growth Fund commenced selling Class 2 shares on November 6, 2001.
(8) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
See Notes to Financial Statements. 77
Financial Highlights
VT SMALL CAP VALUE FUNd
For a Fund share outstanding throughout each period.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET NET REALIZED NET
ASSET AND DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT GAIN ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $12.43 $0.13(5) $0.15 $0.28 $(0.15) $(1.27) $(1.42) $11.29 2.51%
Year Ended:
12/31/05 $12.27 $0.11(5) $0.50 $0.61 $(0.06) $(0.39) $(0.45) $12.43 4.97%
12/31/04(3) 10.00 0.06 2.21 2.27 -- -- -- 12.27 22.70
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $12.41 $0.11(5) $0.17 $0.28 $(0.15) $(1.27) $(1.42) $11.27 2.42%
Year Ended:
12/31/05(4) $12.28 $0.08(5) $0.05 $0.13 $ -- $ -- $ -- $12.41 1.14%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $34,682 1.01%(6) 1.01%(6) 2.08%(6) 17%
Year Ended:
12/31/05 $38,346 0.97% 0.97% 0.93% 59%
12/31/04(3) 42,668 1.08(6) 1.08(6) 0.83(6) 50
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 136 1.26%(6) 1.26%(6) 1.83%(6) 17%
Year Ended:
12/31/05(4) $ 15 1.22%(6) 1.22%(6) 0.68%(6) 59%
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The VT Small Cap Value Fund commenced operations on May 3, 2004.
(4) The VT Small Cap Value Fund commenced selling Class 2 shares on July 1,
2005.
78 See Notes to Financial Statements.
Financial Highlights
VT SMALL CAP GROWTH FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS)
FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD LOSS INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $ 9.68 $(0.03) $ 0.19 $ 0.16 $-- $ -- $ -- $ 9.84 1.65%
Year Ended:
12/31/05 $ 9.85 $(0.06) $(0.11) $(0.17) $-- $ -- $ -- $ 9.68 (1.73)%
12/31/04 9.41 (0.05) 0.49 0.44 -- -- -- 9.85 4.68
12/31/03 5.49 (0.02)(5) 3.94 3.92 -- -- -- 9.41 71.40
12/31/02 11.37 (0.02)(5) (5.27) (5.29) -- (0.59) (0.59) 5.49 (47.15)
12/31/01 16.03 (0.06)(5) (1.69) (1.75) -- (2.91) (2.91) 11.37 (12.73)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 9.57 $(0.04) $ 0.19 $ 0.15 $-- $ -- $ -- $ 9.72 1.57%
Year Ended:
12/31/05 $ 9.77 $(0.08) $(0.12) $(0.20) $-- $ -- $ -- $ 9.57 (2.05)%
12/31/04 9.35 (0.07) 0.49 0.42 -- -- -- 9.77 4.49
12/31/03 5.47 (0.04)(5) 3.92 3.88 -- -- -- 9.35 70.93
12/31/02 11.36 (0.03)(5) (5.27) (5.30) -- (0.59) (0.59) 5.47 (47.28)
12/31/01(7) 14.41 (0.05)(5) (0.09) (0.14) -- (2.91) (2.91) 11.36 (3.00)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- LOSS TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $42,913 1.02%(6) 1.02%(6) (0.56)%(6) 35%
Year Ended:
12/31/05 $42,679 1.11% 1.11% (0.61)% 172%(8)
12/31/04 53,049 0.98 0.98 (0.56) 41
12/31/03 70,806 1.00 1.00 (0.31) 67
12/31/02 39,476 1.00 1.00 (0.31) 29
12/31/01 73,367 0.95 0.95 (0.44) 46
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 3,932 1.27%(6) 1.27%(6) (0.81)%(6) 35%
Year Ended:
12/31/05 $ 3,762 1.36% 1.36% (0.86)% 172%(8)
12/31/04 3,626 1.23 1.23 (0.81) 41
12/31/03 2,710 1.25 1.25 (0.56) 67
12/31/02 1,068 1.25 1.25 (0.56) 29
12/31/01(7) 440 1.20(6) 1.20(6) (0.69)(6) 46
(5) Per share numbers have been calculated using the average shares method.
(6) Annualized.
(7) The VT Small Cap Growth Fund commenced selling Class 2 shares on May 1,
2001.
(8) The VT Small Cap Growth Fund had unusually high portfolio turnover due to a
change in sub-advisors.
See Notes to Financial Statements. 79
Financial Highlights
VT INTERNATIONAL GROWTH FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS)
FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $14.80 $0.14 $ 0.57 $ 0.71 $(0.23) $ -- $(0.23) $15.28 4.89%
Year Ended:
12/31/05 $12.77 $0.17(4) $ 2.07 $ 2.24 $(0.21) $ -- $(0.21) $14.80 17.87%
12/31/04 11.38 0.12(4) 1.41 1.53 (0.14) -- (0.14) 12.77 13.60
12/31/03 8.51 0.09(4) 2.91 3.00 (0.13) -- (0.13) 11.38 35.51
12/31/02 10.21 0.04(4) (1.63) (1.59) (0.11) -- (0.11) 8.51 (15.71)
12/31/01 13.65 0.04 (2.39) (2.35) (0.09) (1.00) (1.09) 10.21 (17.78)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $14.71 $0.12 $ 0.57 $ 0.69 $(0.23) $ -- $(0.23) $15.17 4.74%
Year Ended:
12/31/05 $12.71 $0.13(4) $ 2.07 $ 2.20 $(0.20) $ -- $(0.20) $14.71 17.59%
12/31/04 11.34 0.09(4) 1.41 1.50 (0.13) -- (0.13) 12.71 13.33
12/31/03 8.49 0.06(4) 2.90 2.96 (0.11) -- (0.11) 11.34 35.10
12/31/02 10.21 0.02(4) (1.63) (1.61) (0.11) -- (0.11) 8.49 (15.91)
12/31/01(3) 9.78 0.00(5) 0.43(6) 0.43 -- -- -- 10.21 4.40
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $133,392 1.05%(7) 1.05%(7) 1.79%(7) 19%
Year Ended:
12/31/05 $109,029 1.11% 1.11% 1.27% 32%
12/31/04 91,875 1.16 1.16 0.99 23
12/31/03 74,138 1.21 1.21 0.94 22
12/31/02 50,625 1.26 1.26 0.49 30
12/31/01 49,178 1.19 1.19 0.33 34
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 3,732 1.30%(7) 1.30%(7) 1.54%(7) 19%
Year Ended:
12/31/05 $ 1,088 1.36% 1.36% 1.02% 32%
12/31/04 310 1.41 1.41 0.74 23
12/31/03 182 1.46 1.46 0.69 22
12/31/02 93 1.51 1.51 0.24 30
12/31/01(3) 0 1.40(7) 1.40(7) 0.12(7) 34
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The Funds commenced selling Class 2 shares on November 6, 2001.
(4) Per share numbers have been calculated using the average shares method.
80 See Notes to Financial Statements.
Financial Highlights
VT SHORT TERM INCOME FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS)
FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $2.52 $0.05(4) $(0.02) $0.03 $(0.11) $-- $(0.11) $2.44 1.27%
Year Ended:
12/31/05 $2.58 $0.10(4) $(0.06) $0.04 $(0.10) $-- $(0.10) $2.52 1.64%
12/31/04 2.63 0.10(4) (0.05) 0.05 (0.10) -- (0.10) 2.58 2.07
12/31/03 2.65 0.11(4) 0.04 0.15 (0.17) -- (0.17) 2.63 5.52
12/31/02 2.60 0.14(4) 0.02 0.16 (0.11) -- (0.11) 2.65 6.26
12/31/01 2.44 0.15(4) 0.05 0.20 (0.04) -- (0.04) 2.60 8.15
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $2.51 $0.05(4) $(0.02) $0.03 $(0.10) $-- $(0.10) $2.44 1.33%
Year Ended:
12/31/05 $2.56 $0.09(4) $(0.05) $0.04 $(0.09) $-- $(0.09) $2.51 1.76%
12/31/04 2.62 0.09(4) (0.05) 0.04 (0.10) -- (0.10) 2.56 1.60
12/31/03 2.64 0.10(4) 0.04 0.14 (0.16) -- (0.16) 2.62 5.46
12/31/02 2.60 0.13(4) 0.02 0.15 (0.11) -- (0.11) 2.64 5.86
12/31/01(3) 2.60 0.02(4) (0.02)(6) 0.00(5) -- -- -- 2.60 0.00
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $45,827 0.61%(7) 0.61%(7) 4.24%(7) 5%
Year Ended:
12/31/05 $47,221 0.60% 0.60% 4.01% 22%
12/31/04 48,574 0.61 0.61 3.74 17
12/31/03 46,628 0.63 0.63 4.31 38
12/31/02 41,592 0.62 0.62 5.42 41
12/31/01 50,343 0.60 0.60 5.77 44
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 4,177 0.86%(7) 0.86%(7) 3.99%(7) 5%
Year Ended:
12/31/05 $ 5,156 0.85% 0.85% 3.76% 22%
12/31/04 7,096 0.86 0.86 3.49 17
12/31/03 6,157 0.88 0.88 4.06 38
12/31/02 1,188 0.87 0.87 5.17 41
12/31/01(3) 20 0.85(7) 0.85(7) 5.52(7) 44
(5) Amount represents less than $0.01 per share.
(6) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(7) Annualized.
See Notes to Financial Statements. 81
Financial Highlights
VT U.S. GOVERNMENT SECURITIES FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS)
FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $10.47 $0.23 $(0.26) $(0.03) $(0.50) $-- $(0.50) $ 9.94 (0.16)%
Year Ended:
12/31/05 $10.71 $0.46(4) $(0.22) $ 0.24 $(0.48) $-- $(0.48) $10.47 2.27%
12/31/04 10.75 0.45(4) (0.06) 0.39 (0.43) -- (0.43) 10.71 3.78
12/31/03 11.05 0.46(4) (0.23) 0.23 (0.53) -- (0.53) 10.75 2.14
12/31/02 10.55 0.59(4) 0.33 0.92 (0.42) -- (0.42) 11.05 8.87
12/31/01 9.93 0.61(4) 0.16 0.77 (0.15) -- (0.15) 10.55 7.79
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $10.43 $0.22 $(0.25) $(0.03) $(0.46) $-- $(0.46) $ 9.94 (0.39)%
Year Ended:
12/31/05 $10.66 $0.43(4) $(0.22) $ 0.21 $(0.44) $-- $(0.44) $10.43 2.02%
12/31/04 10.70 0.42(4) (0.06) 0.36 (0.40) -- (0.40) 10.66 3.59
12/31/03 11.02 0.44(4) (0.23) 0.21 (0.53) -- (0.53) 10.70 1.87
12/31/02 10.55 0.56(4) 0.33 0.89 (0.42) -- (0.42) 11.02 8.57
12/31/01(3) 10.70 0.09(4) (0.24)(5) (0.15) -- -- -- 10.55 (1.40)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $269,579 0.54%(6) 0.54%(6) 4.53%(6) 8%
Year Ended:
12/31/05 $266,902 0.54% 0.54% 4.39% 33%
12/31/04 263,816 0.54 0.54 4.21 28
12/31/03 204,193 0.56 0.56 4.26 46
12/31/02 173,770 0.56 0.56 5.45 41
12/31/01 136,904 0.56 0.56 5.89 31
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 6,131 0.79%(6) 0.79%(6) 4.28%(6) 8%
Year Ended:
12/31/05 $ 8,742 0.79% 0.79% 4.14% 33%
12/31/04 12,757 0.79 0.79 3.96 28
12/31/03 16,323 0.81 0.81 4.01 46
12/31/02 12,264 0.81 0.81 5.20 41
12/31/01(3) 753 0.81(6) 0.81(6) 5.64(6) 31
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The Funds commenced selling Class 2 shares on November 6, 2001.
82 See Notes to Financial Statements.
Financial Highlights
VT INCOME FUND
For a Fund share outstanding throughout each period.
INCOME/(LOSS)
FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $10.69 $0.31(4) $(0.35) $(0.04) $(0.61) $(0.01) $(0.62) $10.03 (0.37)%
Year Ended:
12/31/05 $11.08 $0.60(4) $(0.34) $ 0.26 $(0.65) $ -- $(0.65) $10.69 2.40%
12/31/04 11.18 0.61(4) (0.03) 0.58 (0.68) -- (0.68) 11.08 5.56
12/31/03 10.79 0.63(4) 0.42 1.05 (0.66) -- (0.66) 11.18 9.78
12/31/02 10.31 0.69(4) 0.27 0.96 (0.48) -- (0.48) 10.79 9.61
12/31/01 9.70 0.67(4) 0.11 0.78 (0.17) -- (0.17) 10.31 8.08
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $10.62 $0.29(4) $(0.34) $(0.05) $(0.58) $(0.01) $(0.59) $ 9.98 (0.40)%
Year Ended:
12/31/05 $11.01 $0.57(4) $(0.34) $ 0.23 $(0.62) $ -- $(0.62) $10.62 2.06%
12/31/04 11.12 0.58(4) (0.03) 0.55 (0.66) -- (0.66) 11.01 5.31
12/31/03 10.77 0.60(4) 0.41 1.01 (0.66) -- (0.66) 11.12 9.47
12/31/02 10.31 0.65(4) 0.29 0.94 (0.48) -- (0.48) 10.77 9.40
12/31/01(3) 10.45 0.10(4) (0.24)(5) (0.14) -- -- -- 10.31 (1.34)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $186,173 0.55%(6) 0.55%(6) 5.83%(6) 8%
Year Ended:
12/31/05 $185,140 0.54% 0.54% 5.50% 13%
12/31/04 185,570 0.55 0.55 5.53 20
12/31/03 193,953 0.56 0.56 5.74 24
12/31/02 179,844 0.56 0.56 6.64 21
12/31/01 154,826 0.55 0.55 6.69 33
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 17,600 0.80%(6) 0.80%(6) 5.58%(6) 8%
Year Ended:
12/31/05 $ 20,374 0.79% 0.79% 5.25% 13%
12/31/04 23,358 0.80 0.80 5.28 20
12/31/03 21,188 0.81 0.81 5.49 24
12/31/02 8,186 0.81 0.81 6.39 21
12/31/01(3) 362 0.80(6) 0.80(6) 6.44(6) 33
(4) Per share numbers have been calculated using the average shares method.
(5) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(6) Annualized.
See Notes to Financial Statements. 83
Financial Highlights
VT MONEY MARKET FUND
For a Fund share outstanding throughout each period.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------
NET NET REALIZED NET
ASSET AND DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT LOSS ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(1)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $1.00 $0.020 $ -- $0.020 $(0.020) $-- $(0.020) $1.00 1.99%
Year Ended:
12/31/05 $1.00 $0.026 $ -- $0.026 $(0.026) $-- $(0.026) $1.00 2.59%
12/31/04 1.00 0.008 -- 0.008 (0.008) -- (0.008) 1.00 0.85
12/31/03 1.00 0.006 -- 0.006 (0.006) -- (0.006) 1.00 0.65
12/31/02 1.00 0.014(4) -- 0.014 (0.014) -- (0.014) 1.00 1.39
12/31/01 1.00 0.036 (0.000)(5) 0.036 (0.036) -- (0.036) 1.00 3.68
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $1.00 $0.019 $ -- $0.019 $(0.019) $-- $(0.019) $1.00 1.87%
Year Ended:
12/31/05 $1.00 $0.023 $ -- $0.023 $(0.023) $-- $(0.023) $1.00 2.33%
12/31/04 1.00 0.006 -- 0.006 (0.006) -- (0.006) 1.00 0.59
12/31/03 1.00 0.004 -- 0.004 (0.004) -- (0.004) 1.00 0.40
12/31/02 1.00 0.011(4) -- 0.011 (0.011) -- (0.011) 1.00 1.13
12/31/01(3) 1.00 0.002 (0.000)(5) 0.002 (0.002) -- (0.002) 1.00 0.22
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET NET ASSETS NET ASSETS NET
ASSETS BEFORE AFTER INVESTMENT
END OF REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS WAIVERS(2) NET ASSETS RATE
--------- ---------- ---------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $12,369 0.72%(6) 0.72%(6) 3.99%(6) 0%
Year Ended:
12/31/05 $13,132 0.70% 0.70% 2.53% 0%
12/31/04 14,660 0.63 0.63 0.84 0
12/31/03 20,198 0.60 0.60 0.67 0
12/31/02 33,766 0.57 0.57 1.32 0
12/31/01 28,563 0.62 0.62 3.41 0
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 4,709 0.97%(6) 0.97%(6) 3.74%(6) 0%
Year Ended:
12/31/05 $ 3,315 0.95% 0.95% 2.28% 0%
12/31/04 5,404 0.88 0.88 0.59 0
12/31/03 3,068 0.85 0.85 0.42 0
12/31/02 4,679 0.82 0.82 1.07 0
12/31/01(3) 189 0.87(6) 0.87(6) 3.16(6) 0
(1) Total return is not annualized for periods of less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The Fund commenced selling Class 2 shares on November 6, 2001.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.001 per share.
(6) Annualized.
84 See Notes to Financial Statements.
Notes to Financial Statements (unaudited)
WM VARIABLE TRUST
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 13 funds (each a "Fund" and collectively, the "Funds") and
5 portfolios ("Portfolios"). The VT REIT, VT Equity Income, VT Growth & Income,
VT West Coast Equity, VT Mid Cap Stock, VT Growth, VT Small Cap Value, VT Small
Cap Growth, VT International Growth, VT Short Term Income, VT U.S. Government
Securities, VT Income and VT Money Market Funds are included in this report.
WM Advisors, Inc. (the "Advisor") serves as investment advisor to the Trust. The
Advisor is a wholly owned subsidiary of Washington Mutual, Inc. ("Washington
Mutual"), a publicly owned financial services company.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Fund offers two classes of shares: Class
1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity and
variable life insurance contracts (collectively "Variable Insurance Contracts"),
as well as certain qualified retirement plans.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, in conformity
with accounting principles generally accepted in the United States of America
("generally accepted accounting principles"), which are consistently followed by
the Funds in the preparation of their financial statements.
PORTFOLIO VALUATION:
Securities that are primarily traded on a U.S. exchange (excluding securities
traded through the NASDAQ National Market System, which are valued at the NASDAQ
official closing price) are valued at the last reported sales price on that
exchange or, if there were no sales during the day (and no official closing
price on such day), at the mean of the current day's bid and asked prices.
Securities traded only on over-the-counter markets (other than the NASDAQ
National Market System and the U.S. Government Securities System) are valued at
the mean of the current day's bid and asked prices.
The value of a foreign security is determined in its functional currency as of
the close of trading on the foreign exchange on which it is traded or at the
close of the New York Stock Exchange, if that is earlier, or if there has been
movement in the U.S. market and/or other economic indicators that exceed a
specified threshold, the foreign security is fair valued. The value is then
converted into its U.S. dollar equivalent using prevailing exchange rates on the
day the value of the foreign security is determined.
Options are generally valued at the last sale price or, in the absence of a last
sale price, at the mean of the current day's bid and asked prices. The value of
a futures contract equals the unrealized gain or loss on the contract, which is
determined by marking the contract to the current settlement price for a like
contract acquired on the day on which the futures contract is being valued.
Debt securities of U.S. issuers (other than short-term investments), including
municipal securities, are valued by one or more independent pricing services
retained by the Trust. When, in the judgment of a pricing service, market
quotations for these securities are readily available, they are valued at the
mean between the quoted bid and asked prices. Short-term debt securities that
mature in 60 days or less are valued at amortized cost, which approximates
market value.
Securities for which market quotations are not readily available are valued at
fair value as determined by, or under the direction of, the Funds' Board of
Trustees, which may rely on the assistance of one or more pricing services.
The investments of the VT Money Market Fund are valued on the basis of amortized
cost in accordance with Rule 2a-7 of the 1940 Act, which approximates market
value and does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, as long as the amortized cost fairly reflects the market-based net
asset value per share. Certain other assets may be valued by the Advisor under
the supervision of the VT Money Market Fund's Board of Trustees.
REPURCHASE AGREEMENTS:
Each Fund may enter into repurchase agreement transactions. A repurchase
agreement is a purchase of an underlying debt obligation subject to an agreement
by the seller to repurchase the obligation at an agreed upon price and time. It
is each Fund's policy that its custodian take possession of the underlying
collateral securities. The fair value of the collateral is at all times at least
equal to the total amount of the repurchase obligation. In the event of
counterparty default, the Fund would seek to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is delayed
or prevented from exercising its right to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert its rights. The
Advisor, acting under the supervision of the Board of Trustees of the Trust,
reviews the value of the collateral and the creditworthiness of those banks and
broker/dealers with whom each Fund enters into repurchase agreements.
85
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST
FUTURES CONTRACTS:
Certain Funds may enter into futures transactions. The underlying value of a
futures contract is incorporated within the unrealized
appreciation/(depreciation) shown in the Portfolio of Investments under the
caption "Futures Contracts."
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount (known as an initial margin deposit). Subsequent payments
(known as variation margins) are made or received by the Fund each day,
depending on the daily fluctuation of the value of the contract. The daily
changes in contract value are recorded as unrealized gains or losses, and the
Fund recognizes a realized gain or loss when the contract is closed. Should
market conditions change unexpectedly, the Funds may not achieve the anticipated
benefits of the futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts, interest rates and the underlying hedged assets.
PURCHASED OPTION CONTRACTS:
Certain Funds may enter into put and call option contracts. These Funds may use
option contracts to manage their exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Upon entering into a put or
call option, the premium paid is recorded as an investment. The daily changes in
contract value are recorded as unrealized gains or losses. When a purchased
option expires, the Fund will realize a loss in the amount of the cost of the
option. When the Fund enters into a closing sale transaction, the Fund will
realize a gain or loss depending on whether the sales proceeds from the closing
sale transaction are greater or less than the cost of the option plus related
transaction costs. When the Fund exercises a put option, the Fund will realize a
gain or loss from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. When the Fund exercises a
call option, the cost of the security, which the Fund purchases upon exercise,
will be increased by the premium originally paid. The risk associated with
purchasing options is limited to the premium originally paid.
FOREIGN CURRENCY:
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars on a daily basis using prevailing exchange rates. Purchases and
sales of investment securities, income and expenses are translated on the
respective dates of such transactions.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates, have been included in unrealized
appreciation/(depreciation) of investments. Unrealized gains and losses of
securities, which result from changes in foreign currency exchange rates as well
as changes in market prices of securities, have been included in unrealized
appreciation/(depreciation) of investments. Net realized foreign currency gains
and losses, which result from changes in exchange rates between trade date and
settlement date on investment transactions as well as the difference between the
amounts of interest and dividends recorded on the books of the Funds and the
amount actually received, have been included in realized gains/(losses) on
investment transactions. Foreign currency gains and losses, which result from
fluctuations in exchange rates between the initial purchase trade date and
subsequent sale trade date, have been included in realized gains/(losses) on
investment transactions.
FORWARD FOREIGN CURRENCY CONTRACTS:
Certain Funds may enter into forward foreign currency contracts. Forward foreign
currency contracts are agreements to exchange one currency for another at a
future date and at a specified price. These Funds may use forward foreign
currency contracts to facilitate transactions in foreign securities and to
manage the Funds' foreign currency exposure. These contracts are valued daily,
and a Fund's net equity therein, representing unrealized gain or loss on the
contracts as measured by the difference between the forward foreign exchange
rates at the dates of entry into the contracts and the forward rates at the
reporting date, is included in the "Statements of Assets and Liabilities".
Realized and unrealized gains and losses are included in the "Statements of
Operations". Due to the risks, the Funds could incur losses up to the entire
contract amount, which may exceed the net unrealized value shown in the
"Statements of Assets and Liabilities".
ILLIQUID INVESTMENTS:
Each Fund may invest a portion of its net assets in securities that are not
readily marketable, including: (1) repurchase agreements with maturities greater
than seven calendar days; (2) time deposits maturing in more than seven calendar
days; (3) certain futures contracts and options; (4) certain variable rate
demand notes having a demand period of more than seven calendar days; (5)
securities, the disposition of which are restricted under federal securities
laws, excluding certain Rule 144A securities, as defined in the following
paragraph; and (6) certain over-the-counter options.
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business (within seven calendar days) at approximately the value at
which each Fund has valued the investments. This may have an adverse effect on
each Fund's ability to dispose of particular illiquid securities at fair market
value and may limit the Fund's ability to obtain accurate market quotations for
purposes of valuing the securities and calculating the net asset value per share
of the Fund. The Funds may also purchase securities that are not registered
under the Securities Act of 1933, as amended (the "Act"), but that can be sold
to qualified
86
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST
institutional buyers in accordance with Rule 144A under the Act ("Rule 144A
Securities"). Rule 144A Securities generally must be sold only to other
qualified institutional buyers. If a particular investment in Rule 144A
Securities is not determined to be liquid under the guidelines established by
the Board of Trustees, the investment will be subject to a Fund's limitation on
investment in illiquid securities as indicated above.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains and
losses from securities sold are recorded on the identified cost basis.
Securities purchased or sold on a "when-issued" or "delayed-delivery" basis may
be settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate assets of
the Fund with a current value at least equal to the amount of its when-issued
purchase commitments.
Interest income on debt securities is accrued daily. Premiums and discounts are
amortized using the interest method. Paydown gains and losses on mortgage-backed
and asset-backed securities are presented as an adjustment to interest income.
Dividend income is recorded on the ex-dividend date, except certain dividends
from foreign securities are recorded as soon as the information is available to
the Funds if informed after the ex-dividend date. The Funds estimate components
of distributions from real estate investment trusts (REITs). Distributions
received in excess of income are recorded as a reduction of the cost of the
related investments. Distributions received from capital gains are presented as
an adjustment to dividend income and recorded as capital gain distributions
received. Each Fund's investment income and realized and unrealized gains and
losses are allocated among the classes of that Fund based upon the relative
average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
earned by a Fund are declared and paid annually, with the exception of the VT
Money Market Fund, from which dividends from net investment income are declared
daily and paid monthly.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Funds,
redesignated distributions and differing characterization of distributions made
by each Fund.
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to regulated investment companies and by distributing
substantially all of its earnings to its shareholders. Therefore, no federal
income or excise tax provision is required.
It is each Fund's policy to meet the diversification requirements of the Code so
that variable annuity and variable life contracts funded by the Trust will not
fail to qualify as annuities and life insurance contracts for tax purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Funds of the Trust based
upon the relative average net assets of each Fund. Operating expenses directly
attributable to a class of shares are charged to the operations of that class of
shares. Expenses of each Fund not directly attributable to the operations of any
class of shares are prorated among the classes to which the expenses relate
based on the relative average net assets of each class of shares.
Custodian fees for certain Funds have been reduced by credits allowed by the
Funds' custodian for uninvested cash balances. The Funds could have invested
this cash in income producing securities. Fees reduced by credits allowed by the
custodian for the six months ended June 30, 2006, are shown separately in the
"Statements of Operations".
USE OF ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
87
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
The Advisor is entitled to a monthly fee at an annual rate based upon a
percentage of the average daily net assets of each Fund at the following rates:
FROM
FROM $50 FROM $100 FROM $125 FROM $200 FROM $250 FROM $400 $500 FROM $1 FROM $2
FROM $0 MILLION MILLION MILLION MILLION MILLION MILLION MILLION BILLION BILLION OVER
TO $50 TO $100 TO $125 TO $200 TO $250 TO $400 TO $500 TO $1 TO $2 TO $3 $3
NAME OF FUND MILLION MILLION MILLION MILLION MILLION MILLION MILLION BILLION BILLION BILLION BILLION
- ------------ ------- -------- --------- --------- --------- --------- --------- ------- ------- ------- -------
VT REIT Fund ........ 0.800% 0.800% 0.800% 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700% 0.650%
VT Equity Income
Fund ............. 0.625% 0.625% 0.625% 0.625% 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500%
VT Growth &
Income Fund ...... 0.750% 0.750% 0.750% 0.750% 0.700% 0.700% 0.650% 0.575% 0.575% 0.575% 0.575%
VT West Coast
Equity Fund ...... 0.625% 0.625% 0.625% 0.625% 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500%
VT Mid Cap Stock
Fund ............. 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.700% 0.650% 0.600%
VT Growth Fund ...... 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.700% 0.700% 0.650% 0.600%
VT Small Cap
Value Fund ....... 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.750% 0.750% 0.750% 0.700%
VT Small Cap
Growth Fund ...... 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.750% 0.750% 0.750% 0.700%
VT International
Growth Fund ...... 0.950% 0.850% 0.850% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.700%
VT Short Term
Income Fund ...... 0.500% 0.500% 0.500% 0.500% 0.450% 0.450% 0.450% 0.400% 0.400% 0.400% 0.400%
VT U.S. Government
Securities Fund .. 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450%
VT Income Fund ...... 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450%
VT Money Market
Fund ............. 0.450% 0.450% 0.450% 0.450% 0.450% 0.450% 0.450% 0.450% 0.400% 0.400% 0.400%
4. TRUSTEES' FEES
No officer or employee of Washington Mutual or its subsidiaries receives any
compensation from the Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by the Advisor, pays each
Trustee who is not an officer or employee of Washington Mutual or its
subsidiaries a per annum retainer plus attendance fees for each meeting at which
they are present. The Chairman, Committee Chairs and Committee Members receive
additional remuneration for these services to the Trust. Trustees are also
reimbursed for travel and out-of-pocket expenses. Each Trustee serves in the
same capacity for all 40 funds within the WM Group of Funds.
5. DISTRIBUTION PLANS
Each of the Funds has adopted a distribution plan, pursuant to Rule 12b-1 under
the 1940 Act, applicable to Class 2 shares of the Funds (a "Rule 12b-1 Plan").
Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the "Distributor"), a
registered broker/dealer and a wholly owned subsidiary of Washington Mutual, may
receive a fee at an annual rate of 0.25% of the average daily net assets
attributable to Class 2 shares. This fee may be used to cover the expenses of
the Distributor primarily intended to result in the sale of such shares,
including payments to the Distributor's representatives or others for selling
shares. The Rule 12b-1 Plan shall remain in effect from year to year, provided
such continuance is approved annually by vote of the Board of Trustees,
including a majority of those Trustees who are not "interested persons" of the
Trust, as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of the distribution plan, or any agreements related to
the plan.
6. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. government and short-term investments, for the six months ended June 30,
2006, are as follows:
PURCHASES SALES
NAME OF FUND (000S) (000S)
- ------------ --------- --------
VT REIT Fund ........................... $ 4,274 $ 8,636
VT Equity Income Fund .................. 150,287 108,940
VT Growth & Income Fund ................ 41,822 63,800
VTWest Coast Equity Fund ............... 23,210 12,915
VT Mid Cap Stock Fund .................. 9,431 17,951
VT Growth Fund ......................... 99,638 64,367
VT Small Cap Value Fund ................ 5,818 10,823
VT Small Cap Growth Fund ............... 16,758 17,674
88
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST
PURCHASES SALES
NAME OF FUND (000S) (000S)
- ------------ --------- --------
VT International Growth Fund ........... $ 45,069 $ 24,261
VT Short Term Income Fund .............. 2,447 3,193
VT U.S. Government Securities Fund ..... -- 4,125
VT Income Fund ......................... 12,023 14,067
The aggregate cost of purchases and proceeds from sales of U.S. government
securities, excluding short-term investments, for the six months ended June 30,
2006, are as follows:
PURCHASES SALES
NAME OF FUND (000S) (000S)
- ------------ --------- --------
VT Short Term Income Fund .............. $ -- $ 1,501
VT U.S. Government Securities Fund ..... 28,875 18,138
VT Income Fund ......................... 6,981 2,645
7. LENDING OF SECURITIES
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. The Funds also continue to receive
interest or dividends on the securities loaned. Each security loan is
collateralized with assets in an amount equal to or greater than the current
market value of the loaned securities. There is a risk of delay in receiving
collateral, that the collateral could lose value or become valueless, or in
recovering the securities loaned or even a loss of rights in collateral should
the borrower fail financially.
At June 30, 2006, each of the Funds with outstanding loans of securities to
certain brokers, dealers or other financial institutions has segregated cash
and/or securities at least equal to the market value of securities loaned with
the Funds' custodian. The Funds currently invest the segregated cash in Mellon
GSL DBT II, which is a common collective trust that invests in high-grade
short-term investments.
8. PORTFOLIO OWNERSHIP AND OTHER FACTORS
At June 30, 2006, the WM Variable Trust Portfolios hold investments in a number
of the Funds. The figures presented below represent the percentage of shares
outstanding of each Fund owned by the Portfolios:
PORTFOLIOS
-------------------------------------------------------------------
VT VT VT VT
FLEXIBLE CONSERVATIVE VT CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
NAME OF FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
- ------------ --------- ------------ --------- ------------ --------- -----
VT REIT Fund ........................... 3.9% 3.0% 41.0% 31.1% 15.6% 94.6%
VT Equity Income Fund .................. 2.8% 2.1% 26.8% 19.6% 10.5% 61.8%
VT Growth & Income Fund ................ 4.8% 2.4% 34.7% 25.3% 13.6% 80.8%
VT West Coast Equity Fund .............. 1.7% 1.9% 27.1% 19.7% 11.3% 61.7%
VT Mid Cap Stock Fund .................. 5.3% 2.4% 32.8% 23.9% 14.6% 79.0%
VT Growth Fund ......................... 4.9% 2.5% 38.1% 26.0% 15.6% 87.1%
VT Small Cap Value Fund ................ 6.4% 2.7% 40.7% 32.2% 17.2% 99.2%
VT Small Cap Growth Fund ............... 4.4% 1.8% 28.2% 22.1% 12.0% 68.5%
VT International Growth Fund ........... -- 2.9% 41.4% 28.7% 16.4% 89.4%
VT Short Term Income Fund .............. 49.1% 8.6% 14.6% -- -- 72.3%
VT U.S. Government Securities Fund ..... 23.3% 7.2% 46.2% 10.8% -- 87.5%
VT Income Fund ......................... 25.0% 6.6% 37.4% 7.7% -- 76.7%
From time to time, one or more of the Funds used for investment by a Portfolio
may experience relatively large investments or redemptions due to reallocations
or rebalancings by the Portfolios as recommended by the Advisor. These
transactions will affect the Funds, since the Funds that experience redemptions
as a result of the reallocations or rebalancings may have to sell portfolio
securities. At the same time, the Funds that receive additional cash will have
to invest such cash. This may be particularly important when one or more
Portfolios owns a substantial portion of any Underlying Fund. While it is
impossible to predict the overall impact of these transactions over time, there
could be adverse effects on Fund performance to the extent that the Funds may be
required to sell securities or invest cash at times when they would not
otherwise do so. These transactions could also accelerate the realization of
taxable income if sales of securities resulted in gains and could also increase
transaction costs. Because the Portfolios own substantial portions of some of
the Funds, redemptions and reallocations by the Portfolios away from a Fund
could cause the Fund's expenses to increase and may result in a Fund becoming
too small to be economically viable. The Advisor is committed to minimizing such
impact on the Funds to the extent it is consistent with pursuing the investment
objectives of the Portfolios. The Advisor may nevertheless face conflicts in
fulfilling its dual responsibilities to the Portfolios and Funds. The Advisor
will, at all times, monitor the impact on the Funds of transactions by the
Portfolios.
89
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST
9. UNREALIZED APPRECIATION/(DEPRECIATION)
At June 30, 2006, the aggregate gross unrealized appreciation and depreciation
on a tax basis are as follows:
(IN THOUSANDS)
--------------------------------------------------------------------------
VT VT VT VT VT
VT EQUITY GROWTH & WEST COAST MID CAP VT SMALL CAP
REIT INCOME INCOME EQUITY STOCK GROWTH VALUE
FUND FUND FUND FUND FUND FUND FUND
------- ------- -------- ---------- ------- -------- ---------
Gross tax unrealized appreciation ...... $18,656 $54,798 $57,751 $45,981 $31,530 $ 33,227 $ 6,121
Gross tax unrealized depreciation ...... (224) (3,457) (5,159) (7,593) (226) (10,944) (4,039)
------- ------- ------- ------- ------- -------- -------
Net unrealized appreciation ............ $18,432 $51,341 $52,592 $38,388 $31,304 $ 22,283 $ 2,082
======= ======= ======= ======= ======= ======== =======
VT VT VT VT U.S. VT
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT VT MONEY
GROWTH GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
--------- ------------- ---------- ---------- ------- ------
Gross tax unrealized appreciation ...... $ 8,752 $34,565 $ 90 $ 458 $ 5,282 $--
Gross tax unrealized depreciation ...... (2,545) (3,038) (1,042) (11,103) (6,199) --
------- ------- ------- -------- ------- ---
Net unrealized appreciation/
(depreciation) ...................... $ 6,207 $31,527 $ (952) $(10,645) $ (917) $--
======= ======= ======= ======== ======= ===
10. INDUSTRY AND GEOGRAPHIC CONCENTRATION AND OTHER RISK FACTORS
While no individual fund is intended as a complete investment program, this is
especially true for funds that concentrate their investments such as those
investing in particular industries or regions.
The VT REIT Fund concentrates its investments in real estate investment trust
("REIT") securities or debt securities of issuers that are principally engaged
in the U.S. real estate or related industries. The VT REIT Fund could be
adversely impacted by economic trends within this industry.
The VT West Coast Equity Fund concentrates its investments in companies located
or doing business in Alaska, California, Oregon and Washington. The VT West
Coast Equity Fund could be adversely impacted by economic trends within this
region.
The VT International Growth Fund concentrates its investments in foreign
securities in both developed and emerging market countries. Additional risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments, and the possible prevention of currency exchange or other
foreign governmental laws or restrictions. Investments in emerging markets are
subject to additional risk as less developed countries are more likely to
experience high levels of inflation, deflation, or currency devaluation, which
could harm their economies and securities markets.
The WM High Yield Fund concentrates its investments in lower-rated debt
securities, which may be more susceptible to adverse economic conditions than
investment grade holdings. These securities are often subordinated to the prior
claims of other senior lenders, and uncertainties exist as to an issuer's
ability to meet principal and interest payments.
Certain Funds may invest a portion of their assets in foreign securities of
developing or emerging market countries; enter into forward foreign currency
transactions; lend their portfolio securities; enter into stock index, interest
rate and currency futures contracts, and options on such contracts; enter into
interest rate swaps or purchase or sell interest rate caps or floors; enter into
other types of options transactions; make short sales; purchase zero coupon and
payment-in-kind bonds; enter into repurchase or reverse repurchase agreements;
purchase and sell "when-issued" securities and engage in "delayed-delivery"
transactions; and enter into various other investment practices, each with
inherent risks. The risks involved in investing in a high concentration of a
single sector include those resulting from future adverse political and economic
developments or regulatory occurrences and the potential for adverse effects to
the financial conditions of the industries within the sector due to market
fluctuations.
11. SUBSEQUENT ENENTS
On July 25, 2006, Washington Mutual, the parent of the Advisor, the Distributor,
and WM Shareholder Services, Inc. (the"Transfer Agent"), announced that it had
entered into an agreement with Principal Financial Group to sell the Advisor,
Distributor, and Transfer Agent to Principal Management Corporation, subject to,
among other things, approval by the Trustees and shareholders of the Funds of
the mergers of various Funds into funds advised by Principal Management
Corporation. The Trustees of the Funds are currently considering proposals
relating to such mergers. If approved by the Trustees, each such merger would be
subject to approval by the shareholders of the relevant Funds, which would be
sought through a proxy statement.
90
Supplemental Information (unaudited)
WM VARIABLE TRUST
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Each year, the Board of Trustees of the Trust (the "Board"), including a
majority of the Trustees who are not interested persons of the Trust (the
"Independent Trustees"), is required to determine whether to continue the
Trust's advisory agreements (each an "Agreement" and together the "Agreements").
The Investment Company Act of 1940, as amended, requires that the Board request
and evaluate, and that the investment manager furnish, such information as may
reasonably be necessary to evaluate the terms of the Trust's advisory
Agreements. In May 2006, the Board and the Independent Trustees approved the
continuation of the Trust's Agreements with the Advisor and with Salomon
Brothers Asset Management, Inc, Janus Capital Management LLC, OppenheimerFunds,
Inc., Delaware Management Company, Oberweis Asset Management, Inc., and Capital
Guardian Trust Company (each a "Sub-Advisor" and collectively the
"Sub-Advisors"), in each case following the recommendation of the Investment
Committee (the "Committee"), a majority of the members of which are Independent
Trustees, and the recommendations of the Independent Trustees as a whole. The
material factors and conclusions that formed the basis for the Committee's
recommendation and the subsequent approval by the Board and the Independent
Trustees are discussed below.
REVIEW PROCESS:
The Independent Trustees received assistance and advice, including a written
memorandum, regarding the legal standards applicable to the consideration of
advisory arrangements from independent counsel to the Trust and the Independent
Trustees. The Independent Trustees discussed the continuation of the Agreements
with representatives of the Advisor and in private session with independent
legal counsel at which no representatives of the Advisor were present. The
Committee, in deciding to recommend continuation of the Agreements, and the
Board and the Independent Trustees, in approving such continuation, did not
identify any particular information that was all-important or controlling, and
each Trustee attributed different weights to the various factors. The Trustees
evaluated all information available to them on a Fund-by-Fund basis, and their
deliberations were made separately in respect of each Fund. This summary
describes the most important, but not all, of the factors considered by the
Board, the Independent Trustees and the Committee. The Board, the Independent
Trustees and the Committee considered the fact that each of the Funds is managed
in a style substantially identical to that of a corresponding series of WM Trust
I or WM Trust II (each, a "Retail Fund"), and reviewed the Funds simultaneously
with their review of the corresponding Retail Funds.
MATERIALS REVIEWED:
During the course of each year, the Board receives a wide variety of materials
relating to the services provided by the Advisor and its affiliates, including
reports on: each Fund's investment results; portfolio construction; portfolio
composition; performance attribution; shareholder services; the Advisor's views
on the economy and capital markets; and other information relating to the
nature, extent and quality of services provided by the Advisor and its
affiliates to the Funds. In addition, in connection with its annual
consideration of the Agreements, the Board requests and reviews supplementary
information regarding the terms of the Agreements, performance and expense
information for other investment companies derived from data compiled by Lipper
Inc., a third-party data provider ("Lipper"), data on pre- and post-marketing
profit margins for investment advisory subsidiaries of publicly-traded companies
prepared by Lipper, as well as additional information prepared by the Advisor,
including financial and profitability information regarding the Advisor and its
affiliates, descriptions of various functions undertaken by the Advisor, such as
compliance monitoring practices, and information about the personnel providing
investment management to the Funds. The Board, the Independent Trustees and the
Committee also considered information regarding "revenue sharing" arrangements
that the Advisor and its affiliates have entered into with various
intermediaries that sell shares of the Funds. The Board also requested and
reviewed information relating to other services provided to the Funds by the
Advisor and its affiliates under other agreements, information regarding
so-called "fall-out" benefits to the Advisor and its affiliates due to their
other relationships with the Funds, such as the administrative services contract
with the Advisor described below. The Board and the Committee also received and
reviewed comparative performance information regarding the Retail Funds at each
of the quarterly Board and Committee meetings.
NATURE, EXTENT AND QUALITY OF SERVICES:
Nature and Extent of Services -- In considering the continuation of the
Agreements, the Board, the Independent Trustees and the Committee evaluated the
nature and extent of the services provided by the Advisor, its affiliates and
the Sub-Advisors. For each Fund, the Advisor or the relevant Sub-Advisor, as
applicable, formulates the Fund's investment policies (subject to the terms of
the prospectus), analyzes economic trends and capital market developments,
evaluates the risk/return characteristics of the Fund, constructs the Fund's
portfolio, monitors the Fund's investment performance, and reports to the Board
and the Committee. The Board, the Independent Trustees and the Committee
considered information concerning the investment philosophy and investment
process used by the Advisor and the Sub-Advisors in managing the Funds. In this
context, the Board, the Independent Trustees and the Committee considered the
in-house research capabilities of the Advisor and the Sub-Advisors as well as
other resources available to the Advisor and the Sub-Advisors, including
research services available to the Advisor and the Sub-Advisors as a result of
securities transactions effected for the Funds. The Board, the Independent
Trustees and the Committee considered the managerial and financial resources
available to the Advisor and the Sub-Advisors and concluded that
91
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST
they would be sufficient to meet any reasonably foreseeable obligations under
the Agreements. The Board, the Independent Trustees and the Committee noted that
the standard of care under the Agreements was comparable to that typically found
in mutual fund investment advisory agreements, and considered the record of the
Advisor in resolving potential disputes arising under its investment advisory
agreements with the WM Group of Funds to be in the best interests of
shareholders.
Quality of Services -- The Board, the Independent Trustees and the Committee
considered the quality of the services provided by the Advisor and the
Sub-Advisors and the quality of their resources that are available to the Funds.
The Board, the Independent Trustees and the Committee considered the investment
experience and professional qualifications of the personnel of the Advisor, its
affiliates and the Sub-Advisors, and the size and functions of their staffs as
well as the reputation of the Advisor and the Sub-Advisors. The Board, the
Independent Trustees and the Committee considered the complexity of managing the
Funds relative to other types of funds. The Board, the Independent Trustees and
the Committee also received and reviewed information regarding the quality of
non-investment advisory services provided to the Funds by the Advisor and its
affiliates under other agreements.
The Board, the Independent Trustees and the Committee concluded that the
services provided by the Advisor and the Sub-Advisors have benefited and should
continue to benefit the Funds and their shareholders. The Board, the Independent
Trustees and the Committee concluded that the investment philosophies,
processes, and research capabilities of the Advisor and the Sub-Advisors were
well suited to the Funds, given their investment objectives and policies. The
Board, the Independent Trustees and the Committee concluded that the scope of
the services provided to the Funds by the Advisor, its affiliates and the
Sub-Advisors was consistent with the Funds' operational requirements, including,
in addition to their investment objectives, compliance with the Funds'
investment restrictions, tax and reporting requirements and related shareholder
services. In evaluating the scope and quality of the services provided by the
Advisor to the Funds, the Board, the Independent Trustees and the Committee
members also drew on their experiences as directors or trustees of the Retail
Funds and, for certain Trustees, other funds. The Board, the Independent
Trustees and the Committee concluded that the nature, scope and quality of the
services provided by the Advisor, its affiliates and the Sub-Advisors were
sufficient, in light of the resources dedicated by the Advisor and the
Sub-Advisors and their integrity, personnel, systems and financial resources, to
merit approval of the continuation of the Agreements.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE:
In their evaluation of the quality of the portfolio management services provided
by the Advisor and the Sub-Advisors, the Board, the Independent Trustees and the
Committee considered the professional credentials and investment experience of
the Funds' portfolio managers. The Board, the Independent Trustees and the
Committee considered the Funds' record of compliance with investment
restrictions. The Board, the Independent Trustees and the Committee reviewed
information comparing the Funds' historical performance to relevant market
indices for the 1-, 3- and 5-year (or since inception) periods ended March 31,
2006, and to average performance information for peer groups prepared by Lipper
based on the performance of other investment companies with similar investment
objectives over the 1-, 3-, 5- and 10-year periods (to the extent applicable)
ended December 31, 2005. In the case of each Fund that had performance that
lagged that of a relevant peer group for certain (although not necessarily all)
periods, the Board, the Independent Trustees and the Committee concluded that
other factors relevant to performance were sufficient, in light of other
considerations, to warrant continuation of the Agreements. Those factors varied
from Fund to Fund, but included one or more of the following: (i) that the
Fund's performance, although lagging in certain recent periods, was stronger
over the longer term; (ii) that the underperformance was attributable, to a
significant extent, to investment decisions that were reasonable and consistent
with the Fund's investment strategy and policies and that the fund was
performing as expected, given market conditions and the Fund's investment
strategy; (iii) that the Fund's performance was competitive when compared to
other relevant performance benchmarks or peer groups; and (iv) that the Advisor
had taken or was taking steps designed to improve the Fund's investment
performance. After reviewing those and related factors, the Board, the
Independent Trustees and the Committee concluded that the Advisor's and the
Sub-Advisors' performance record and investment processes used in managing the
Funds were sufficient, in light of other considerations, to warrant the
continuation of the Agreements.
MANAGEMENT FEES AND EXPENSES:
The Board, the Independent Trustees and the Committee reviewed information,
including comparative information provided by Lipper, regarding the advisory,
service and distribution fees paid to the Advisor, its affiliates and the
Sub-Advisors, and the total expenses borne by the Funds. They discussed trends
in total expense ratios for the Funds. The Board, the Independent Trustees and
the Committee reviewed the distribution (12b-1) fees paid to the Distributor.
They considered the Funds' management fees relative to those of their respective
peer groups as determined by Lipper. The Board, the Independent Trustees and the
Committee concluded that the fees to be charged under the Agreements bore a
reasonable relationship to the scope and quality of the services provided.
92
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST
PROFITABILITY AND ECONOMIES OF SCALE:
Profitability -- The Board, the Independent Trustees and the Committee reviewed
information regarding the cost of services provided by the Advisor and its
affiliates and the profitability (before and after distribution expenses and
prior to taxes) of their relationships with the Funds. The Board, the
Independent Trustees and the Committee considered trends in the profitability of
the Advisor and its affiliates, and information provided by Lipper regarding the
pre- and post-marketing profitability of other investment advisers with
publicly-traded parent companies. The Board, the Independent Trustees and the
Committee considered that the Advisor must be able to pay and retain experienced
professional personnel at competitive rates to provide services to the Funds
(and in connection therewith reviewed information regarding the structure of
compensation of the Advisor's investment professionals), and that maintaining
the financial viability of the Advisor is important in order for it to continue
to provide significant services to the Funds and their shareholders. In
addition, the Board, the Independent Trustees and the Committee considered
information regarding the direct and indirect benefits the Advisor receives as a
result of its relationship with the Funds, including compensation paid to the
Advisor and its affiliates, including transfer agency fees to the Transfer Agent
and 12b-1 fees to the Distributor as well as research provided to the Advisor in
connection with portfolio transactions effected on behalf of the Funds (soft
dollar arrangements), and reputational benefits. The Trustees considered the
fact that the structure of breakpoints for the Advisor's fees and the fees of
the Sub-Advisors for Funds with multiple Sub-Advisors was such that, assuming
relatively equal allocation of Fund assets among all Sub-Advisors, the Advisor's
fee would be reduced by breakpoints at lower asset levels than those at which
the Advisor might benefit from breakpoints in the fees of the Sub-Advisors. The
Trustees did not evaluate the profitability to the Sub-Advisors of their
relationships with the Fund because the structure of the Agreements is such that
the fees payable to the Advisor are reduced by any fees payable to the
Sub-Advisors and they concluded that negotiations between the Advisor and the
Sub-Advisors had been entirely at arm's-length.
Economies of Scale -- The Board, the Independent Trustees and the Committee
reviewed the extent to which the Advisor may realize economies of scale in
managing and supporting the Funds and the current level of Fund assets in
relation to the breakpoints in the Funds' advisory fees. The Board, the
Independent Trustees and the Committee considered the extent to which economies
of scale might be realized by the Advisor across a variety of products and
services.
The Board, the Independent Trustees and the Committee concluded that the Funds'
cost structure was reasonable given the scope and quality of the services
provided to the Funds and that the Advisor was sharing any economies of scale
with the Funds and their shareholders.
ADDITIONAL CONSIDERATIONS:
The Board, the Independent Trustees and the Committee also considered possible
conflicts of interest associated with the provision of investment advisory
services by the Advisor to other clients. The Trustees considered the procedures
of the Advisor designed to fulfill its fiduciary duties to its advisory clients
with respect to possible conflicts of interest, including the codes of ethics,
the integrity of the systems in place to ensure compliance with the foregoing,
and the record of the Advisor in these matters.
CONCLUSIONS:
Based on their review, including their consideration of each of the factors
referred to above, the Board, the Independent Trustees and the Committee
concluded that the Agreements, including the fees payable to the Advisor and the
Sub-Advisors, are fair and reasonable to the Funds and their shareholders given
the scope and quality of the services provided to the Funds and such other
considerations as the Trustees considered relevant in the exercise of their
reasonable business judgment and that the continuation of the Agreements was in
the best interests of the Funds and their shareholders. The Board and the
Independent Trustees unanimously approved the continuation of the Agreements.
OTHER FUND INFORMATION
SCHEDULES OF INVESTMENTS:
The Trust files its complete schedules of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Trust's Form N-Q is available at http://www.sec.gov and
also may be reviewed and copied at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 800-SEC-0330.
PROXY VOTING INFORMATION:
The policies and procedures that the Trust uses to determine how to vote proxies
relating to portfolio securities held by the Funds are included in the Trust's
Statement of Additional Information which is available, without charge and upon
request, by calling 800-222-5852. Information regarding how the Funds voted
proxies relating to portfolio securities during the most recent twelve-month
period ended June 30 is available at http://www.wmgroupoffunds.com. This
information is also available at http://www.sec.gov.
93
(WM VARIABLE TRUST LOGO)
A variable insurance product's unit value and investment returns will vary with
market conditions, and an investor's units when redeemed may be worth more or
less than their original cost.
This semiannual report is published as general information for the shareholders
of the WM Variable Trust. This material is not authorized for distribution
unless preceded or accompanied by a current prospectus that includes more
information regarding the risk factors, expenses, policies, and objectives of
the contract. Investors should read the prospectus carefully before investing.
To obtain an additional prospectus, please call 800-222-5852.
The WM Variable Trust Funds are advised by WM Advisors, Inc. (WMAI). They are
available through variable insurance products distributed by WM Funds
Distributor, Inc. (WMFD) and sold through WM Financial Services, Inc. (WMFS) and
independent broker/ dealers. WMAI, WMFD, and WMFS are affiliates of Washington
Mutual, Inc.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
(WM VARIABLE TRUST LOGO)
WM Funds Distributor, Inc.
1100 Investment Blvd., Suite 200
El Dorado Hills, CA 95762
VTSAR (8/29/06)
(WM VARIABLE TRUST LOGO)
WM VT STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Semiannual Report
(GRAPHIC)
The sophistication of a managed account
June 30, 2006 with the simplicity of a mutual fund.
WM VT Strategic Asset Management Portfolios
AT THE WM GROUP OF FUNDS, OUR PASSION IS PIECING INDIVIDUAL INVESTMENTS TOGETHER
INTO COMPREHENSIVE PORTFOLIOS TO MAKE YOUR FINANCIAL PLAN MORE EFFECTIVE.
(GRAPHIC)
Table of Contents
1 Letter from the President
WM VT SAM Portfolio Performance and Composition:
2 VT Flexible Income Portfolio
3 VT Conservative Balanced Portfolio
4 VT Balanced Portfolio
5 VT Conservative Growth Portfolio
6 VT Strategic Growth Portfolio
7 Glossary
8 Expense Information
10 Financial Statements
25 Notes to Financial Statements
30 Supplemental Information
The WM Variable Trust (VT) Funds may not be purchased directly, but are
currently available through the WM Strategic Asset Manager and the WM Advantage
variable annuities issued by American General Life. They are also available
through the WM Diversified Strategies and WM Diversified Strategies(III)
variable annuities issued by AIG SunAmerica Life Assurance Company, the WM
Diversified Strategies(III) (New York) variable annuity issued by First
SunAmerica Life Insurance Company, and the WM LifeAccumulator variable universal
life insurance policy issued by Farmers New World Life Insurance Company. They
may also be available through other select variable insurance products and
retirement plans. The VT SAM Portfolios may not have been available for sale for
all products for the time periods shown on pages 2-6.
Withdrawals made prior to age 59 1/2 may be subject to a 10% IRS tax penalty.
NOT FDIC OR NCUA/NCUSIF INSURED
MAY LOSE VALUE - NOT A DEPOSIT - NO BANK OR CREDIT UNION
GUARANTEE - NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
(PHOTO)
Dear Investor,
U.S. stocks advanced strongly in early 2006, but since April stocks and bonds
have fluctuated with changes in the outlook for economic growth, inflation, and
interest rates. Real growth surged 5.6% in the first quarter of 2006 before
easing to an estimated 2.5% gain in the second quarter. The housing market also
appears to be in the early stages of a slowdown. Refinancing-fueled consumer
spending has driven economic growth in recent years, so the wavering pace of the
pullback in housing has clouded forecasts for future growth.
This period also saw signs of accelerating inflation, which led the Federal
Reserve (the Fed) to continue raising short-term interest rates. Although the
Fed hopes to contain inflationary pressures, some market participants fear that
the Fed may go too far, while others worry that it could pause too soon. This
uncertainty eroded first quarter gains in the equity markets and kept bond
markets generally negative year-to-date. For the six months ended June 30, 2006,
the S&P 500 rose 2.71%, while the Lehman Brothers Aggregate Bond Index fell
0.72%.(1)
REACHING COMPANY MILESTONES
The winter and summer months of this year marked two important milestones for
the WM Group of Funds. In January, our assets under management exceeded $20
billion for the first time in the company's history. This growth was primarily
due to the success of our retail WM SAM Portfolios, as well as the WM VT SAM
Portfolios. In July, the retail Portfolios celebrated their own
accomplishment--their 10-year anniversary.(2) Few asset allocation funds today
can claim a decade-long track record. We are enormously proud that hundreds of
thousands of investors have chosen to pursue their financial goals through our
disciplined active asset allocation process.
SHAPING OUR BOARD COMPOSITION
From my perspective, you can certainly be proud of your Board of Trustees and
the stewardship role they perform for your benefit. Just prior to this 2006
fiscal year, Michael (Mike) Murphy, a Director of Washington Mutual, Inc.,
retired from the WM Group of Funds Board of Trustees after 11 years of diligent
service. Concurrently, the Board elected independent Trustee Richard (Dick)
Yancey to the position of chairman. Dick has been a tireless advocate of
shareholder interests in the more than three decades that he has served on our
Board. Both he and Mike have my gratitude for their many years of wise
counsel.(3)
Our Board is now composed of nine members, more than 75% of whom are not
affiliated with Washington Mutual. I believe this structure, which emphasizes
independence, supports strong fund oversight and governance.
THE ROAD AHEAD
In the months to come, our company will undergo an exciting transformation. On
July 25, 2006, Washington Mutual, Inc. announced that it had signed a definitive
agreement to sell WM Advisors to the Principal Financial Group, one of the
nation's leading 401(k) providers. We are thrilled at the opportunity to join an
organization whose primary businesses are asset management and retirement
services--and one which is so closely aligned with our own culture and
commitment to advisors and investors. Over the next few months, we'll keep you
updated on our progress.
Underlying all of our efforts is the expectation that we can ultimately create
value for investors. On behalf of everyone at the WM Group of Funds, thank you
for your support and confidence.
Sincerely,
/s/ William G. Papesh
- ------------------------------------
William G. Papesh
President
(1) The S&P 500 is a broad-based index intended to represent the U.S. equity
market. The Lehman Brothers Aggregate Bond Index is a broad-based index
intended to represent the U.S. fixed-income market. Indices are unmanaged,
and individuals cannot invest directly in an index.
(2) The retail WM SAM Portfolios were launched in 1996. The WM VT SAM
Portfolios were launched in 1997 and 1998, and they are available only
through variable insurance products and certain retirement plans.
(3) Lengths of service include board membership with Composite Funds, a
predecessor to the WM Group of Funds.
PORTFOLIO MANAGER
Asset Allocation Team
(GRAPHIC) VT Flexible Income Portfolio WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 0.54% 2.51% 5.48% 6.65% 9/9/97
CLASS 2 SHARES 0.43% 2.19% -- 5.31% 11/6/01
Lehman Brothers Aggregate Bond Index(3) -0.72% -0.81% 4.97% 5.90%
S&P 500(3) 2.71% 8.63% 2.49% 5.61%
Capital Market Benchmark(3) -0.03% 1.06% 4.67% 6.08%
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Mortgage- & Asset-Backed Bonds 35% 36% -1%
Investment-Grade Corporate Bonds 20% 20% 0%
High-Yield Corporate Bonds 9% 8% +1%
U.S. Government Securities 7% 6% +1%
U.S. Large-Cap Growth Stocks 7% 7% 0%
U.S. Large-Cap Value Stocks 6% 7% -1%
U.S. Mid-Cap Growth Stocks 4% 3% +1%
U.S. Mid-Cap Value Stocks 2% 2% 0%
Convertible Securities 2% 2% 0%
REITs 2% 2% 0%
U.S. Small-Cap Growth Stocks 1% 2% -1%
U.S. Small-Cap Value Stocks 1% 1% 0%
Non-U.S. Developed Market Stocks 1% 1% 0%
Cash Equivalents 3% 3% 0%
Note: Pages 34 and 35 provide information about those WM Funds in which the VT
Flexible Income and VT Conservative Balanced Portfolios invest a significant
portion of their assets. For additional information about these and other WM
Funds, please see the WM Variable Trust semiannual report, which is available
online at wmgroupoffunds.com or by calling 800-222-5852.
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolios' applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state,
or municipal taxes. If it did, performance would be lower. The VT Flexible
Income Portfolio's performance between 1997 and 1999 and the VT
Conservative Balanced Portfolio's performance between 1998 and 2003
benefited from the agreement of WM Advisors and its affiliates to limit the
Portfolios' expenses.
(2) Periods of less than one year are not annualized.
2
PORTFOLIO MANAGER
Asset Allocation Team
WM Advisors, Inc. VT Conservative Balanced Portfolio* (GRAPHIC)
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
Equity investments involve greater risk, including heightened volatility, than
fixed-income investments.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise.
* As of 8/1/00, the VT Income Portfolio became the VT Conservative Balanced
Portfolio, and the Portfolio's objectives and strategies changed. This
information should be considered when reviewing past performance. Please
see the prospectus for detailed information.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 1.06% 4.43% 5.53% 5.03% 4/23/98
CLASS 2 SHARES 0.94% 4.25% -- 5.99% 11/6/01
Lehman Brothers Aggregate Bond Index(3) -0.72% -0.81% 4.97% 5.57%
S&P 500(3) 2.71% 8.63% 2.49% 3.24%
Capital Market Benchmark(3) 0.66% 2.94% 4.27% 4.99%
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Mortgage- & Asset-Backed Bonds 28% 28% 0%
Investment-Grade Corporate Bonds 13% 13% 0%
High-Yield Corporate Bonds 7% 6% +1%
U.S. Government Securities 5% 5% 0%
U.S. Large-Cap Growth Stocks 11% 11% 0%
U.S. Large-Cap Value Stocks 10% 11% -1%
U.S. Mid-Cap Growth Stocks 6% 5% +1%
Non-U.S. Developed Market Stocks 5% 5% 0%
REITs 3% 3% 0%
U.S. Mid-Cap Value Stocks 3% 3% 0%
U.S. Small-Cap Growth Stocks 2% 2% 0%
Emerging Market Stocks 2% 1% +1%
Convertible Securities 1% 2% -1%
U.S. Small-Cap Value Stocks 1% 2% -1%
Cash Equivalents 3% 3% 0%
(3) See page 7 for definitions of indices. Returns shown for the indices assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the indices are calculated from 8/31/97 (for benchmarks
of the VT Flexible Income Portfolio) or 4/30/98 (for benchmarks of the VT
Conservative Balanced Portfolio). Indices are unmanaged, and individuals
cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
3
PORTFOLIO MANAGER
Asset Allocation Team
(GRAPHIC) VT Balanced Portfolio WM Advisors, Inc.
(GRAPHIC)
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses,
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 1.44% 6.47% 5.44% 8.46% 6/3/97
CLASS 2 SHARES 1.35% 6.20% -- 6.65% 11/6/01
S&P 500(3) 2.71% 8.63% 2.49% 6.19%
Lehman Brothers Aggregate Bond Index(3) -0.72% -0.81% 4.97% 6.09%
Capital Market Benchmark(3) 1.35% 4.83% 3.78% 6.50%
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
U.S. Large-Cap Growth Stocks 17% 16% +1%
U.S. Large-Cap Value Stocks 15% 16% -1%
U.S. Mid-Cap Growth Stocks 9% 8% +1%
Non-U.S. Developed Market Stocks 8% 7% +1%
U.S. Mid-Cap Value Stocks 4% 5% -1%
REITs 4% 4% 0%
U.S. Small-Cap Growth Stocks 3% 3% 0%
U.S. Small-Cap Value Stocks 2% 2% 0%
Convertible Securities 1% 1% 0%
Emerging Market Stocks 2% 1% +1%
Mortgage- & Asset-Backed Bonds 18% 18% 0%
Investment-Grade Corporate Bonds 6% 7% -1%
High-Yield Corporate Bonds 5% 5% 0%
U.S. Government Securities 3% 3% 0%
Cash Equivalents 3% 4% -1%
Note: For information about the underlying WM Funds of the VT SAM Portfolios,
please see the WM Variable Trust semiannual report, which is available online at
wmgroupoffunds.com or by calling 800-222-5852.
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolios' applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state,
or municipal taxes. If it did, performance would be lower. The Portfolios'
performance between 1997 and 1998 benefited from the agreement of WM
Advisors and its affiliates to limit the Portfolios' expenses.
(2) Periods of less than one year are not annualized.
4
PORTFOLIO MANAGER
Asset Allocation Team
WM Advisors, Inc. VT Conservative Growth Portfolio (GRAPHIC)
and charges of any variable insurance contract or retirement plan. If these fees
were reflected, performance would be lower.
Equity investments involve greater risk, including heightened volatility, than
fixed-income investments.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 1.78% 8.14% 4.78% 8.98% 6/3/97
CLASS 2 SHARES 1.70% 7.91% -- 6.97% 11/6/01
S&P 500(3) 2.71% 8.63% 2.49% 6.19%
Lehman Brothers Aggregate Bond Index(3) -0.72% -0.81% 4.97% 6.09%
Capital Market Benchmark(3) 2.03% 6.73% 3.18% 6.40%
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
U.S. Large-Cap Growth Stocks 22% 20% +2%
U.S. Large-Cap Value Stocks 19% 21% -2%
U.S. Mid-Cap Growth Stocks 12% 10% +2%
Non-U.S. Developed Market Stocks 10% 10% 0%
U.S. Mid-Cap Value Stocks 6% 7% -1%
REITs 5% 5% 0%
U.S. Small-Cap Growth Stocks 4% 4% 0%
U.S. Small-Cap Value Stocks 3% 3% 0%
Emerging Market Stocks 3% 2% +1%
Convertible Securities 0% 1% -1%
Mortgage- & Asset-Backed Bonds 7% 7% 0%
High-Yield Corporate Bonds 3% 3% 0%
Investment-Grade Corporate Bonds 2% 2% 0%
U.S. Government Securities 1% 1% 0%
Cash Equivalents 3% 4% -1%
(3) See page 7 for definitions of indices. Returns shown for the indices assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the indices are calculated from 5/31/97. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
5
PORTFOLIO MANAGER
Asset Allocation Team
(GRAPHIC) VT Strategic Growth Portfolio WM Advisors, Inc.
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852.
Your investment's return and principal value will fluctuate, so it may be worth
more or less upon redemption. Performance shown below does not account for fees,
expenses, and charges of any variable insurance contract or retirement plan.
If these fees were reflected, performance would be lower.
Equity investments involve greater risk, including heightened volatility, than
fixed-income investments.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS 1 SHARES 2.04% 9.36% 3.98% 9.95% 6/3/97
CLASS 2 SHARES 1.92% 9.09% -- 7.10% 11/6/01
S&P 500(3) 2.71% 8.63% 2.49% 6.19%
Russell 3000(R) Index(3) 3.23% 9.56% 3.53% 6.73%
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
U.S. Large-Cap Growth Stocks 25% 23% +2%
U.S. Large-Cap Value Stocks 21% 23% -2%
U.S. Mid-Cap Growth Stocks 14% 11% +3%
Non-U.S. Developed Market Stocks 12% 12% 0%
U.S. Mid-Cap Value Stocks 6% 8% -2%
REITs 5% 5% 0%
U.S. Small-Cap Growth Stocks 4% 5% -1%
U.S. Small-Cap Value Stocks 3% 3% 0%
Emerging Market Stocks 3% 2% +1%
Convertible Securities 1% 1% 0%
High-Yield Corporate Bonds 3% 3% 0%
Cash Equivalents 3% 4% -1%
Note: For information about the underlying WM Funds of the VT SAM Portfolios,
please see the WM Variable Trust semiannual report, which is available online at
wmgroupoffunds.com or by calling 800-222-5852.
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolio's applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state,
or municipal taxes. If it did, performance would be lower. The Portfolio's
performance between 1997 and 1999 benefited from the agreement of WM
Advisors and its affiliates to limit the Portfolio's expenses.
(2) Periods of less than one year are not annualized.
(3) See page 7 for definitions of indices. Returns shown for the indices assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the indices are calculated from 5/31/97. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
6
Glossary (GRAPHIC)
Definitions of Indices
CAPITAL MARKET BENCHMARK:
A benchmark intended to represent a relevant proxy for market and Portfolio
performance. It is allocated as follows: VT Flexible Income Portfolio: 20% S&P
500 and 80% Lehman Brothers Aggregate Bond Index; VT Conservative Balanced
Portfolio: 40% S&P 500 and 60% Lehman Brothers Aggregate Bond Index; VT Balanced
Portfolio: 60% S&P 500 and 40% Lehman Brothers Aggregate Bond Index; and VT
Conservative Growth Portfolio: 80% S&P 500 and 20% Lehman Brothers Aggregate
Bond Index.
CITIGROUP BROAD INVESTMENT-GRADE BOND INDEX:
Measures the performance of bonds, including U.S. and non-U.S. corporate
securities and non-U.S. sovereign and provincial securities. It includes
institutionally traded U.S. Treasury, government-sponsored, mortgage,
asset-backed, and investment-grade securities.
CITIGROUP MORTGAGE INDEX:
Represents the mortgage-backed securities component of Citigroup's Broad
Investment-Grade Bond Index. It consists of 30- and 15-year agency-issued (GNMA,
FNMA, and FHLMC) pass-through securities as well as FNMA and FHLMC balloon
mortgages.
LEHMAN BROTHERS AGGREGATE BOND INDEX:
A broad-based index intended to represent the U.S. fixed-income market.
RUSSELL 3000(R) INDEX:
Measures the performance of the 3,000 largest U.S. companies based on total
market capitalization, which represents approximately 98% of the investable U.S.
equity market.
S&P 500:
A broad-based index intended to represent the U.S. equity market.
7
Expense Information
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
As a shareholder of the VT Flexible Income Portfolio, VT Conservative Balanced
Portfolio, VT Balanced Portfolio, VT Conservative Growth Portfolio or VT
Strategic Growth Portfolio (collectively, the "Portfolios"), you incur ongoing
costs, including management fees, distribution and/or service fees, and other
Portfolio expenses. This example is intended to help you understand your ongoing
costs (in dollars) of investing in the Portfolios and to compare these costs
with the ongoing costs of investing in other mutual funds. This example does not
include expenses of Class 1 shares of various funds in the WM Group of Funds and
Class I shares of the WM High Yield Fund (collectively, the "Underlying Funds")
(see Notes to Financial Statements - note 1). An example including expenses of
the Underlying Funds appears on the following page. Also note expenses shown
below and on the following page do not account for fees, expenses, and charges
of any variable insurance contract or retirement plan. If these fees had been
reflected, expenses would have been higher.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period January 1, 2006, to June 30, 2006.
ACTUAL EXPENSES:
The first section of the table below provides information about actual account
values and actual expenses. You may use the information in these columns,
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 = $8.60), then multiply the result by the
number in the third column under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second section of the table below provides information about hypothetical
account values and hypothetical expenses based on each Portfolio's actual
expense ratio and an assumed rate of return of 5% per year before expenses
(rather than each Portfolio's actual rate of return). The hypothetical account
values and expenses may not be used to estimate the actual ending balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Portfolios and other mutual funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other mutual funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as separate
account expenses. Therefore, the hypothetical section of the table is useful in
comparing ongoing costs only, and will not help you compare the relative total
costs of owning different mutual funds. In addition, if these transactional
costs were included, the cost shown would have been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
--------------------------------- ---------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD*
VALUE VALUE 1/1/06 - VALUE VALUE 1/1/06 - EXPENSE
1/1/06 6/30/06 6/30/06 1/1/06 6/30/06 6/30/06 RATIO
--------- ------- ----------- --------- ------- ----------- -------
VT Flexible Income Portfolio
Class 1 .......................... $1,000 $1,005 $1.49 $1,000 $1,023 $1.51 0.30%
Class 2 .......................... 1,000 1,004 2.73 1,000 1,022 2.76 0.55%
VT Conservative Balanced Portfolio
Class 1 .......................... $1,000 $1,011 $1.74 $1,000 $1,023 $1.76 0.35%
Class 2 .......................... 1,000 1,009 2.99 1,000 1,022 3.01 0.60%
VT Balanced Portfolio
Class 1 .......................... $1,000 $1,014 $1.40 $1,000 $1,023 $1.40 0.28%
Class 2 .......................... 1,000 1,013 2.65 1,000 1,022 2.66 0.53%
VT Conservative Growth Portfolio
Class 1 .......................... $1,000 $1,018 $1.45 $1,000 $1,023 $1.45 0.29%
Class 2 .......................... 1,000 1,017 2.70 1,000 1,022 2.71 0.54%
VT Strategic Growth Portfolio
Class 1 .......................... $1,000 $1,020 $1.50 $1,000 $1,023 $1.51 0.30%
Class 2 .......................... 1,000 1,019 2.75 1,000 1,022 2.76 0.55%
* Expenses are equal to each Portfolio's annualized expense ratio, multiplied
by the average account value over the period, multiplied by the 181 days in
the most recent fiscal half-year, divided by 365 days in the year (to
reflect the one-half year period).
8
Expense Information (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
The following table sets forth the estimated ongoing aggregate expenses of the
Portfolios, including expenses of the Underlying Funds, based upon expenses
shown in the table above for each Portfolio and corresponding expenses for each
Underlying Fund's Class 1 shares or Class I shares. These estimates assume a
constant allocation by each Portfolio of its assets among the Underlying Funds
identical to the actual allocation of the Portfolio at June 30, 2006. A
Portfolio's actual expenses may be higher as a result of changes in the
allocation of the Portfolio's assets among the Underlying Funds, the expenses of
the Underlying Funds and/or the Portfolio's own expenses.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
--------------------------------- ---------------------------------
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING ESTIMATED
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD* AGGREGATE
VALUE VALUE 1/1/06 - VALUE VALUE 1/1/06 - EXPENSE
1/1/06 6/30/06 6/30/06 1/1/06 6/30/06 6/30/06 RATIO
--------- ------- ----------- --------- ------- ----------- ---------
VT Flexible Income Portfolio
Class 1 .......................... $1,000 $1,005 $4.48 $1,000 $1,020 $4.51 0.90%
Class 2 .......................... 1,000 1,004 5.72 1,000 1,019 5.76 1.15%
VT Conservative Balanced Portfolio
Class 1 .......................... $1,000 $1,011 $4.89 $1,000 $1,020 $4.91 0.98%
Class 2 .......................... 1,000 1,009 6.13 1,000 1,019 6.16 1.23%
VT Balanced Portfolio
Class 1 .......................... $1,000 $1,014 $4.84 $1,000 $1,020 $4.86 0.97%
Class 2 .......................... 1,000 1,013 6.09 1,000 1,019 6.11 1.22%
VT Conservative Growth Portfolio
Class 1 .......................... $1,000 $1,018 $5.25 $1,000 $1,020 $5.26 1.05%
Class 2 .......................... 1,000 1,017 6.50 1,000 1,018 6.51 1.30%
VT Strategic Growth Portfolio
Class 1 .......................... $1,000 $1,020 $5.51 $1,000 $1,019 $5.51 1.10%
Class 2 .......................... 1,000 1,019 6.76 1,000 1,018 6.76 1.35%
* Expenses are equal to each Portfolio's annualized expense ratio, multiplied
by the average account value over the period, multiplied by the 181 days in
the most recent fiscal half-year, divided by 365 days in the year (to
reflect the one-half year period).
9
Financial Statements:
Portfolios of Investments
VT FLEXIBLE INCOME PORTFOLIO
June 30, 2006 (unaudited)
VALUE
SHARES (000S)
- ---------- --------
INVESTMENT COMPANY SECURITIES -- 99.6%
EQUITY FUNDS -- 24.4%
525,811 WM VT Equity Income Fund .............................. $ 9,112
642,256 WM VT Growth & Income Fund ............................ 11,760
1,048,878 WM VT Growth Fund ..................................... 14,034
356,802 WM VT Mid Cap Stock Fund .............................. 5,727
120,044 WM VT REIT Fund ....................................... 2,068
212,023 WM VT Small Cap Growth Fund+ .......................... 2,086
198,745 WM VT Small Cap Value Fund ............................ 2,244
117,845 WM VT West Coast Equity Fund .......................... 2,621
--------
Total Equity Funds
(Cost $36,990) ..................................... 49,652
--------
FIXED-INCOME FUNDS -- 75.2%
1,560,202 WM High Yield Fund .................................... 13,246
5,081,055 WM VT Income Fund ..................................... 50,963
10,055,248 WM VT Short Term Income Fund .......................... 24,535
6,449,603 WM VT U.S. Government Securities Fund ................. 64,109
--------
Total Fixed-Income Funds
(Cost $155,238) .................................... 152,853
--------
Total Investment Company Securities
(Cost $192,228) .................................... 202,505
--------
PRINCIPAL
AMOUNT
(000S)
- ----------
REPURCHASE AGREEMENT -- 0.5%
(Cost $942)
$ 942 Agreement with Morgan Stanley,
4.700% dated 06/30/2006, to be repurchased at
$942,000 on 07/03/2006 (collateralized by U.S.
Treasury Note, 3.875% due 01/15/2009, market
value $973,000) .................................... 942
--------
TOTAL INVESTMENTS (Cost $193,170*) ......................... 100.1% 203,447
OTHER ASSETS (LIABILITIES) (NET) ........................... (0.1) (225)
----- --------
NET ASSETS ................................................. 100.0% $203,222
===== ========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
VT CONSERVATIVE BALANCED PORTFOLIO
June 30, 2006 (unaudited)
VALUE
SHARES (000S)
- ---------- --------
INVESTMENT COMPANY SECURITIES -- 99.2%
EQUITY FUNDS -- 43.5%
392,645 WM VT Equity Income Fund .............................. $ 6,805
321,337 WM VT Growth & Income Fund ............................ 5,884
537,622 WM VT Growth Fund ..................................... 7,193
256,015 WM VT International Growth Fund ....................... 3,912
162,463 WM VT Mid Cap Stock Fund .............................. 2,607
92,595 WM VT REIT Fund ....................................... 1,595
84,030 WM VT Small Cap Growth Fund+ .......................... 827
82,061 WM VT Small Cap Value Fund ............................ 926
132,807 WM VT West Coast Equity Fund .......................... 2,954
--------
Total Equity Funds
(Cost $26,638) ..................................... 32,703
--------
FIXED-INCOME FUNDS -- 55.7%
511,193 WM High Yield Fund .................................... 4,340
1,342,729 WM VT Income Fund ..................................... 13,468
1,753,213 WM VT Short Term Income Fund .......................... 4,278
1,982,649 WM VT U.S. Government Securities Fund ................. 19,707
--------
Total Fixed-Income Funds
(Cost $43,107) ..................................... 41,793
--------
Total Investment Company Securities
(Cost $69,745) ..................................... 74,496
--------
PRINCIPAL
AMOUNT
(000S)
- ----------
REPURCHASE AGREEMENT -- 0.6%
(Cost $465)
$ 465 Agreement with Morgan Stanley,
4.700% dated 06/30/2006, to be repurchased at
$465,000 on 07/03/2006 (collateralized by U.S.
Treasury Note, 3.875% due 01/15/2009, market
value $480,000) .................................... 465
--------
TOTAL INVESTMENTS (Cost $70,210*) .......................... 99.8% 74,961
OTHER ASSETS (LIABILITIES) (NET) ........................... 0.2 127
----- --------
NET ASSETS ................................................. 100.0% $ 75,088
===== ========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
10 See Notes to Financial Statements.
Portfolios of Investments
VT BALANCED PORTFOLIO
June 30, 2006 (unaudited)
VALUE
SHARES (000S)
- ---------- --------
INVESTMENT COMPANY SECURITIES -- 99.5%
EQUITY FUNDS -- 65.3%
5,023,772 WM VT Equity Income Fund .............................. $ 87,062
4,646,676 WM VT Growth & Income Fund ............................ 85,081
8,244,571 WM VT Growth Fund ..................................... 110,312
3,717,006 WM VT International Growth Fund ....................... 56,796
2,225,349 WM VT Mid Cap Stock Fund .............................. 35,717
1,259,407 WM VT REIT Fund ....................................... 21,699
1,343,417 WM VT Small Cap Growth Fund+ .......................... 13,219
1,256,077 WM VT Small Cap Value Fund ............................ 14,181
1,905,962 WM VT West Coast Equity Fund .......................... 42,389
--------
Total Equity Funds
(Cost $380,640) .................................... 466,456
--------
FIXED-INCOME FUNDS -- 34.2%
3,908,671 WM High Yield Fund .................................... 33,184
7,604,753 WM VT Income Fund ..................................... 76,276
2,990,988 WM VT Short Term Income Fund .......................... 7,298
12,797,596 WM VT U.S. Government Securities Fund ................. 127,208
--------
Total Fixed-Income Funds
(Cost $242,700) .................................... 243,966
--------
Total Investment Company Securities
(Cost $623,340) .................................... 710,422
--------
PRINCIPAL
AMOUNT
(000S)
- ----------
REPURCHASE AGREEMENT -- 0.4%
(Cost $2,915)
$ 2,915 Agreement with Morgan Stanley,
4.700% dated 06/30/2006, to be repurchased at
$2,916,000 on 07/03/2006 (collateralized by U.S.
Treasury Note, 3.875% due 01/15/2009, market
value $3,011,000) .................................. 2,915
--------
TOTAL INVESTMENTS (Cost $626,255*) ......................... 99.9% 713,337
OTHER ASSETS (LIABILITIES) (NET) ........................... 0.1 808
----- --------
NET ASSETS 100.0% $714,145
===== ========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
VT CONSERVATIVE GROWTH PORTFOLIO
June 30, 2006 (unaudited)
VALUE
SHARES (000S)
- ---------- --------
INVESTMENT COMPANY SECURITIES -- 99.8%
EQUITY FUNDS -- 85.6%
3,686,432 WM VT Equity Income Fund .............................. $ 63,886
3,389,897 WM VT Growth & Income Fund ............................ 62,069
5,610,840 WM VT Growth Fund ..................................... 75,073
2,575,729 WM VT International Growth Fund ....................... 39,357
1,619,641 WM VT Mid Cap Stock Fund .............................. 25,995
955,399 WM VT REIT Fund ....................................... 16,462
1,054,894 WM VT Small Cap Growth Fund+ . . . . .................. 10,380
991,975 WM VT Small Cap Value Fund ............................ 11,199
1,389,499 WM VT West Coast Equity Fund .......................... 30,903
--------
Total Equity Funds
(Cost $282,531) .................................... 335,324
--------
FIXED-INCOME FUNDS -- 14.2%
1,204,557 WM High Yield Fund .................................... 10,227
1,570,119 WM VT Income Fund ..................................... 15,748
2,981,032 WM VT U.S. Government Securities Fund ................. 29,631
--------
Total Fixed-Income Funds
(Cost $54,176) ..................................... 55,606
--------
Total Investment Company Securities
(Cost $336,707) .................................... 390,930
--------
PRINCIPAL
AMOUNT
(000S)
- ----------
REPURCHASE AGREEMENT -- 0.2%
(Cost $657)
$ 657 Agreement with Morgan Stanley,
4.700% dated 06/30/2006, to be repurchased at
$657,000 on 07/03/2006 (collateralized by U.S.
Treasury Note, 3.875% due 01/15/2009, market
value $679,000) .................................... 657
--------
TOTAL INVESTMENTS (Cost $337,364*) ......................... 100.0% 391,587
OTHER ASSETS (LIABILITIES) (NET) ........................... 0.0 62
----- --------
NET ASSETS ................................................. 100.0% $391,649
===== ========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
See Notes to Financial Statements. 11
Portfolio of Investments
VT STRATEGIC GROWTH PORTFOLIO
June 30, 2006 (unaudited)
VALUE
SHARES (000S)
- ---------- --------
INVESTMENT COMPANY SECURITIES -- 99.5%
EQUITY FUNDS -- 95.3%
1,980,739 WM VT Equity Income Fund .............................. $ 34,326
1,825,763 WM VT Growth & Income Fund ............................ 33,430
3,374,046 WM VT Growth Fund ..................................... 45,145
1,475,762 WM VT International Growth Fund ....................... 22,550
993,836 WM VT Mid Cap Stock Fund .............................. 15,951
478,912 WM VT REIT Fund ....................................... 8,252
572,386 WM VT Small Cap Growth Fund+ .......................... 5,632
531,022 WM VT Small Cap Value Fund ............................ 5,995
797,457 WM VT West Coast Equity Fund .......................... 17,735
--------
Total Equity Funds
(Cost $163,442) .................................... 189,016
--------
FIXED-INCOME FUND -- 4.2%
(Cost $7,644)
968,714 WM High Yield Fund .................................... 8,224
--------
Total Investment Company Securities
(Cost $171,086) .................................... 197,240
--------
PRINCIPAL
AMOUNT
(000S)
- ----------
REPURCHASE AGREEMENT -- 0.2%
(Cost $423)
$ 423 Agreement with Morgan Stanley,
4.700% dated 06/30/2006, to be repurchased at
$423,000 on 07/03/2006 (collateralized by U.S.
Treasury Note, 3.875% due 01/15/2009, market
value $437,000) .................................... 423
--------
TOTAL INVESTMENTS (Cost $171,509*) ......................... 99.7% 197,663
OTHER ASSETS (LIABILITIES) (NET) ........................... 0.3 576
----- --------
NET ASSETS ................................................. 100.0% $198,239
===== ========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
12 See Notes to Financial Statements.
Statements of Assets and Liabilities
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
June 30, 2006 (unaudited)
(In thousands)
VT FLEXIBLE VT CONSERVATIVE VT CONSERVATIVE VT STRATEGIC
INCOME BALANCED VT BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------------- ----------- --------------- ------------
ASSETS:
Investments, at cost ............................. $193,170 $70,210 $626,255 $337,364 $171,509
======== ======= ======== ======== ========
Investments, at value ............................ $203,447 $74,961 $713,337 $391,587 $197,663
Dividends and/or interest receivable ............. -- -- -- -- --
Receivable for Portfolio shares sold ............. 130 180 536 362 669
Prepaid expenses and other assets ................ 5 3 718 74 3
-------- ------- -------- -------- --------
Total Assets .................................. 203,582 75,144 714,591 392,023 198,335
-------- ------- -------- -------- --------
LIABILITIES:
Payable for Portfolio shares redeemed ............ 253 -- 160 139 2
Payable for investment securities purchased ...... -- -- -- 63 --
Investment advisory fee payable .................. 17 6 58 32 16
Administration fee payable ....................... 25 9 87 48 24
Distribution fees payable ........................ 15 7 43 21 11
Accrued legal and audit fees ..................... 14 14 16 15 15
Accrued printing and postage expenses ............ 32 16 77 50 24
Accrued expenses and other payables .............. 4 4 5 6 4
-------- ------- -------- -------- --------
Total Liabilities ............................. 360 56 446 374 96
-------- ------- -------- -------- --------
NET ASSETS ....................................... $203,222 $75,088 $714,145 $391,649 $198,239
======== ======= ======== ======== ========
NET ASSETS CONSIST OF:
Undistributed net investment income .............. $ 7,821 $ 2,311 $ 16,236 $ 5,894 $ 2,071
Accumulated net realized gain/(loss) on investment
transactions .................................. 1,138 (7) (11,812) (25,947) (8,719)
Net unrealized appreciation of investments ....... 10,277 4,751 87,082 54,223 26,154
Paid-in capital .................................. 183,986 68,033 622,639 357,479 178,733
-------- ------- -------- -------- --------
Total Net Assets .............................. $203,222 $75,088 $714,145 $391,649 $198,239
======== ======= ======== ======== ========
NET ASSETS:
Class 1 Shares ................................... $132,503 $42,902 $500,099 $282,573 $140,827
======== ======= ======== ======== ========
Class 2 Shares ................................... $ 70,719 $32,186 $214,046 $109,076 $ 57,412
======== ======= ======== ======== ========
SHARES OUTSTANDING:
Class 1 Shares ................................... 9,769 3,627 30,147 15,814 7,070
======== ======= ======== ======== ========
Class 2 Shares ................................... 5,243 2,738 12,975 6,140 2,895
======== ======= ======== ======== ========
CLASS 1 SHARES:*
Net asset value, offering and redemption price per
share of beneficial interest outstanding ...... $ 13.56 $ 11.83 $ 16.59 $ 17.87 $ 19.92
======== ======= ======== ======== ========
CLASS 2 SHARES:*
Net asset value, offering and redemption price per
share of beneficial interest outstanding ...... $ 13.49 $ 11.75 $ 16.50 $ 17.77 $ 19.83
======== ======= ======== ======== ========
- ----------
* Net asset values are not shown in thousands.
See Notes to Financial Statements. 13
Statements of Operations
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
For the Six Months Ended June 30, 2006 (unaudited)
(In thousands)
VT FLEXIBLE VT CONSERVATIVE VT CONSERVATIVE VT STRATEGIC
INCOME BALANCED VT BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------------- ----------- --------------- ------------
INVESTMENT INCOME:
Dividends from investment company securities ..... $ 8,227 $ 2,473 $ 17,394 $ 6,587 $ 2,422
Interest ......................................... 10 9 93 14 13
------- ------- -------- -------- -------
Total investment income ....................... 8,237 2,482 17,487 6,601 2,435
------- ------- -------- -------- -------
EXPENSES:
Investment advisory fee .......................... 107 38 347 197 98
Administration fee ............................... 160 56 521 295 146
Class 2 Shares distribution fees ................. 94 40 262 128 67
Custodian fees ................................... 2 1 1 2 1
Legal and audit fees ............................. 14 12 19 16 14
Registration and filing fees ..................... 7 7 8 8 8
Trustees' fees ................................... 2 1 7 4 2
Printing and postage expenses .................... 24 14 56 39 22
Other ............................................ 2 1 7 5 2
------- ------- -------- -------- -------
Total expenses ................................ 412 170 1,228 694 360
Fees reduced by custodian credits ................ --* --* --* --* --*
------- ------- -------- -------- -------
Net expenses .................................. 412 170 1,228 694 360
------- ------- -------- -------- -------
NET INVESTMENT INCOME ............................ 7,825 2,312 16,259 5,907 2,075
------- ------- -------- -------- -------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) on investment
transactions .................................. 543 (68) 1,791 2,161 596
Capital gain distributions received .............. 1,552 915 12,378 9,144 5,076
Net change in unrealized appreciation/
depreciation of investments ................... (8,740) (2,434) (22,338) (10,331) (4,201)
------- ------- -------- -------- -------
Net realized and unrealized gain/(loss) on
investments ................................... (6,645) (1,587) (8,169) 974 1,471
------- ------- -------- -------- -------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS .................................... $ 1,180 $ 725 $ 8,090 $ 6,881 $ 3,546
======= ======= ======== ======== =======
- ----------
* Amount represents less than $500.
14 See Notes to Financial Statements.
This Page Left Blank Intentionally.
15
Statements of Changes in Net Assets
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
(In thousands)
VT FLEXIBLE VT CONSERVATIVE
INCOME PORTFOLIO BALANCED PORTFOLIO VT BALANCED PORTFOLIO
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
----------- ---------- ----------- ---------- ----------- ----------
Net investment income ....................... $ 7,825 $ 8,050 $ 2,312 $ 1,929 $ 16,259 $ 13,960
Net realized gain/(loss) on investment
transactions ............................. 543 (438) (68) (107) 1,791 1,400
Capital gain distributions received ......... 1,552 639 915 259 12,378 4,091
Net change in unrealized appreciation/
depreciation of investments .............. (8,740) (1,105) (2,434) 926 (22,338) 17,751
-------- -------- -------- ------- -------- --------
Net increase in net assets resulting
from operations .......................... 1,180 7,146 725 3,007 8,090 37,202
Distributions to shareholders from:
Net investment income:
Class 1 Shares ........................ (5,442) (4,878) (1,175) (980) (10,811) (8,714)
Class 2 Shares ........................ (2,747) (2,294) (815) (534) (4,176) (3,132)
Net realized gains on investments:
Class 1 Shares ........................ (75) (186) (117) -- -- --
Class 2 Shares ........................ (41) (93) (87) -- -- --
Net increase/(decrease) in net assets from
Portfolio share transactions:
Class 1 Shares ........................ (6,156) (5,428) (85) 2,467 42,794 (22,572)
Class 2 Shares ........................ (6,351) 11,780 2,840 8,539 17,530 26,056
-------- -------- -------- ------- -------- --------
Net increase in net assets .................. (19,632) 6,047 1,286 12,499 53,427 28,840
NET ASSETS:
Beginning of period/year .................... 222,854 216,807 73,802 61,303 660,718 631,878
-------- -------- -------- ------- -------- --------
End of period/year .......................... $203,222 $222,854 $ 75,088 $73,802 $714,145 $660,718
======== ======== ======== ======= ======== ========
Undistributed net investment income at end of
period/year .............................. $ 7,821 $ 8,185 $ 2,311 $ 1,989 $ 16,236 $ 14,964
======== ======== ======== ======= ======== ========
16 See Notes to Financial Statements.
VT CONSERVATIVE VT STRATEGIC
GROWTH PORTFOLIO GROWTH PORTFOLIO
- ------------------------ ------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
6/30/06 YEAR ENDED 6/30/06 YEAR ENDED
(UNAUDITED) 12/31/05 (UNAUDITED) 12/31/05
- ----------- ---------- ----------- ----------
$ 5,907 $ 5,298 $ 2,075 $ 1,633
2,161 (9,831) 596 (1,690)
9,144 3,091 5,076 1,761
(10,331) 26,819 (4,201) 11,390
-------- -------- -------- --------
6,881 25,377 3,546 13,094
(4,557) (3,689) (1,525) (868)
(1,537) (914) (523) (207)
-- -- -- --
-- -- -- --
(11,668) (26,037) 2,649 (2,087)
14,490 15,889 8,713 11,249
-------- -------- -------- --------
3,609 10,626 12,860 21,181
388,040 377,414 185,379 164,198
-------- -------- -------- --------
$391,649 $388,040 $198,239 $185,379
======== ======== ======== ========
$ 5,894 $ 6,081 $ 2,071 $ 2,044
======== ======== ======== ========
See Notes to Financial Statements. 17
Statements of Changes in Net Assets -- Capital Stock Activity
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
(In thousands)
VT FLEXIBLE INCOME PORTFOLIO
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares ................... $ 5,267 371 $5,517 409 $(16,940) (1,196) $(6,156) (416)
Class 2 Shares ................... 2,879 204 2,788 208 (12,018) (854) (6,351) (442)
YEAR ENDED 12/31/05:
Class 1 Shares ................... $12,734 911 $5,064 367 $(23,226) (1,664) $(5,428) (386)
Class 2 Shares ................... 17,886 1,289 2,387 174 (8,493) (611) 11,780 852
VT CONSERVATIVE BALANCED PORTFOLIO
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ---------------- ---------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ ------- ------ ------ ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares ................... $ 4,140 338 $1,292 110 $(5,517) (452) $ (85) (4)
Class 2 Shares ................... 4,743 391 902 77 (2,805) (232) 2,840 236
YEAR ENDED 12/31/05:
Class 1 Shares ................... $ 9,437 799 $ 980 84 $(7,950) (674) $2,467 209
Class 2 Shares ................... 11,296 963 534 46 (3,291) (280) 8,539 729
VT BALANCED PORTFOLIO
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------- ------ -------- ------ -------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares ................... $68,822 3,989 $10,811 660 $(36,839) (2,160) $ 42,794 2,489
Class 2 Shares ................... 21,569 1,270 4,176 256 (8,215) (486) 17,530 1,040
YEAR ENDED 12/31/05:
Class 1 Shares ................... $29,514 1,831 $ 8,714 546 $(60,800) (3,774) $(22,572) (1,397)
Class 2 Shares ................... 39,460 2,461 3,132 197 (16,536) (1,032) 26,056 1,626
18 See Notes to Financial Statements.
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
(In thousands)
VT CONSERVATIVE GROWTH PORTFOLIO
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- -----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------ -------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares ................... $10,536 573 $4,557 260 $(26,761) (1,459) $(11,668) (626)
Class 2 Shares ................... 16,929 930 1,537 88 (3,976) (217) 14,490 801
YEAR ENDED 12/31/05:
Class 1 Shares ................... $16,106 947 $3,689 219 $(45,832) (2,698) $(26,037) (1,532)
Class 2 Shares ................... 23,764 1,410 914 54 (8,789) (521) 15,889 943
VT STRATEGIC GROWTH PORTFOLIO
ISSUED AS NET INCREASE/
SOLD REINVESTMENT OF DIVIDENDS REDEEMED (DECREASE)
---------------- ------------------------- ----------------- ----------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------- ------ ------ ------ -------- ------ ------- ------
SIX MONTHS ENDED 6/30/06 (UNAUDITED):
Class 1 Shares ................... $11,573 567 $1,525 78 $(10,449) (514) $ 2,649 131
Class 2 Shares ................... 10,944 539 523 27 (2,754) (136) 8,713 430
YEAR ENDED 12/31/05:
Class 1 Shares ................... $18,421 989 $ 868 47 $(21,376) (1,147) $(2,087) (111)
Class 2 Shares ................... 16,216 876 207 11 (5,174) (279) 11,249 608
See Notes to Financial Statements. 19
Financial Highlights
VT FLEXIBLE INCOME PORTFOLIO
For a Portfolio share outstanding throughout each period.
INCOME FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- --------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(2)
--------- ---------- ----------- ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $14.08 $0.52(6) $(0.46) $0.06 $(0.57) $(0.01) $(0.58) $13.56 0.54%
Year Ended:
12/31/05 $14.10 $0.52(6) $(0.05) $0.47 $(0.47) $(0.02) $(0.49) $14.08 3.41%
12/31/04 13.71 0.51(6) 0.35 0.86 (0.47) -- (0.47) 14.10 6.47
12/31/03 12.41 0.56(6) 1.08 1.64 (0.34) -- (0.34) 13.71 13.30
12/31/02 12.23 0.41(6) (0.15) 0.26 (0.08) -- (0.08) 12.41 2.14
12/31/01 11.90 0.17(6) 0.40 0.57 (0.15) (0.09) (0.24) 12.23 4.84
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $13.98 $0.50(6) $(0.44) $0.06 $(0.54) $(0.01) $(0.55) $13.49 0.43%
Year Ended:
12/31/05 $14.02 $0.49(6) $(0.07) $0.42 $(0.44) $(0.02) $(0.46) $13.98 3.09%
12/31/04 13.65 0.47(6) 0.36 0.83 (0.46) -- (0.46) 14.02 6.24
12/31/03 12.38 0.53(6) 1.07 1.60 (0.33) -- (0.33) 13.65 13.02
12/31/02 12.23 0.38(6) (0.15) 0.23 (0.08) -- (0.08) 12.38 1.89
12/31/01(5) 12.18 0.02(6) 0.03 0.05 -- -- -- 12.23 0.41
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET ASSETS NET ASSETS NET
BEFORE AFTER INVESTMENT
NET ASSETS REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
END OF PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS(3) WAIVERS(3)(4) NET ASSETS RATE
------------- ---------- ------------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $132,503 0.30%(7) 0.30%(7) 7.44%(7) 5%
Year Ended:
12/31/05 $143,367 0.30% 0.30% 3.74% 5%
12/31/04 149,055 0.28 0.28 3.67 5
12/31/03 143,283 0.30 0.30 4.33 4
12/31/02 125,992 0.30 0.30 3.37 9
12/31/01 90,860 0.33 0.33 1.43 1
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 70,719 0.55%(7) 0.55%(7) 7.19%(7) 5%
Year Ended:
12/31/05 $ 79,487 0.55% 0.55% 3.49% 5%
12/31/04 67,752 0.53 0.53 3.42 5
12/31/03 34,501 0.55 0.55 4.08 4
12/31/02 9,416 0.55 0.55 3.12 9
12/31/01(5) 182 0.58(7) 0.58(7) 1.18(7) 1
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio commenced selling Class 2 shares on November 6, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) Annualized.
20 See Notes to Financial Statements.
Financial Highlights
VT CONSERVATIVE BALANCED PORTFOLIO
For a Portfolio share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- --------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(2)
--------- ---------- ----------- ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $12.07 $0.37(6) $(0.25) $ 0.12 $(0.33) $(0.03) $(0.36) $11.83 1.06%
Year Ended:
12/31/05 $11.82 $0.35(6) $ 0.18 $ 0.53 $(0.28) $ -- $(0.28) $12.07 4.59%
12/31/04 11.15 0.34(6) 0.56 0.90 (0.23) -- (0.23) 11.82 8.21
12/31/03 9.73 0.36(6) 1.29 1.65 (0.23) -- (0.23) 11.15 17.09
12/31/02 10.04 0.31(6) (0.54) (0.23) (0.07) (0.01) (0.08) 9.73 (2.26)
12/31/01 9.90 0.13 0.10 0.23 (0.09) -- (0.09) 10.04 2.40
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $11.98 $0.36(6) $(0.25) $ 0.11 $(0.31) $(0.03) $(0.34) $11.75 0.94%
Year Ended:
12/31/05 $11.75 $0.32(6) $ 0.17 $ 0.49 $(0.26) $ -- $(0.26) $11.98 4.37%
12/31/04 11.11 0.31(6) 0.55 0.86 (0.22) -- (0.22) 11.75 7.88
12/31/03 9.71 0.33(6) 1.29 1.62 (0.22) -- (0.22) 11.11 16.83
12/31/02 10.04 0.29(6) (0.54) (0.25) (0.07) (0.01) (0.08) 9.71 (2.47)
12/31/01(5) 9.92 0.01 0.11 0.12 -- -- -- 10.04 1.21
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET ASSETS NET ASSETS NET
BEFORE AFTER INVESTMENT
NET ASSETS REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
END OF PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS(3) WAIVERS(3)(4) NET ASSETS RATE
------------- ---------- ------------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $42,902 0.35%(7) 0.35%(7) 6.26%(7) 6%
Year Ended:
12/31/05 $43,818 0.38% 0.38% 3.00% 4%
12/31/04 40,458 0.33 0.33 3.02 1
12/31/03 31,600 0.36 0.31 3.48 6
12/31/02 20,759 0.41 0.30 3.20 9
12/31/01 14,221 0.53 0.41 1.36 2
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $32,186 0.60%(7) 0.60%(7) 6.01%(7) 6%
Year Ended:
12/31/05 $29,984 0.63% 0.63% 2.75% 4%
12/31/04 20,845 0.58 0.58 2.77 1
12/31/03 9,128 0.61 0.56 3.23 6
12/31/02 2,244 0.66 0.55 2.95 9
12/31/01(5) 205 0.78(7) 0.66(7) 1.11(7) 2
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio commenced selling Class 2 shares on November 6, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) Annualized.
See Notes to Financial Statements. 21
Financial Highlights
VT BALANCED PORTFOLIO
For a Portfolio share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- --------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(2)
--------- ---------- ----------- ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $16.72 $0.40(6) $(0.16) $ 0.24 $(0.37) $ -- $(0.37) $16.59 1.44%
Year Ended:
12/31/05 $16.08 $0.36(6) $ 0.59 $ 0.95 $(0.31) $ -- $(0.31) $16.72 6.01%
12/31/04 14.88 0.32(6) 1.16 1.48 (0.28) -- (0.28) 16.08 10.12
12/31/03 12.42 0.33(6) 2.46 2.79 (0.33) -- (0.33) 14.88 22.74
12/31/02 13.91 0.32(6) (1.53) (1.21) (0.28) -- (0.28) 12.42 (8.78)
12/31/01 14.50 0.17(6) (0.15) 0.02 (0.25) (0.36) (0.61) 13.91 0.13
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $16.61 $0.38(6) $(0.16) $ 0.22 $(0.33) $ -- $(0.33) $16.50 1.35%
Year Ended:
12/31/05 $15.99 $0.32(6) $ 0.58 $ 0.90 $(0.28) $ -- $(0.28) $16.61 5.72%
12/31/04 14.82 0.28(6) 1.16 1.44 (0.27) -- (0.27) 15.99 9.83
12/31/03 12.39 0.30(6) 2.45 2.75 (0.32) -- (0.32) 14.82 22.46
12/31/02 13.91 0.29(6) (1.53) (1.24) (0.28) -- (0.28) 12.39 (9.00)
12/31/01(5) 13.52 0.02(6) 0.37(7) 0.39 -- -- -- 13.91 2.88
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET ASSETS NET ASSETS NET
BEFORE AFTER INVESTMENT
NET ASSETS REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
END OF PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS(3) WAIVERS(3)(4) NET ASSETS RATE
------------- ---------- ------------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $500,099 0.28%(8) 0.28%(8) 4.76%(8) 5%
Year Ended:
12/31/05 $462,438 0.28% 0.28% 2.26% 4%
12/31/04 467,076 0.28 0.28 2.13 4
12/31/03 419,273 0.29 0.29 2.50 7
12/31/02 334,605 0.29 0.29 2.52 22
12/31/01 354,082 0.28 0.28 1.22 8
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $214,046 0.53%(8) 0.53%(8) 4.51%(8) 5%
Year Ended:
12/31/05 $198,280 0.53% 0.53% 2.01% 4%
12/31/04 164,802 0.53 0.53 1.88 4
12/31/03 91,631 0.54 0.54 2.25 7
12/31/02 31,335 0.54 0.54 2.27 22
12/31/01(5) 1,452 0.53(8) 0.53(8) 0.97(8) 8
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio commenced selling Class 2 shares on November 6, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
(8) Annualized.
22 See Notes to Financial Statements.
Financial Highlights
VT CONSERVATIVE GROWTH PORTFOLIO
For a Portfolio share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- --------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(2)
--------- ---------- ----------- ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $17.85 $0.28(6) $ 0.03 $ 0.31 $(0.29) $ -- $(0.29) $17.87 1.78%
Year Ended:
12/31/05 $16.89 $0.25(6) $ 0.93 $ 1.18 $(0.22) $ -- $(0.22) $17.85 7.04%
12/31/04 15.32 0.21(6) 1.58 1.79 (0.22) -- (0.22) 16.89 11.78
12/31/03 12.16 0.23(6) 3.23 3.46 (0.30) -- (0.30) 15.32 28.74
12/31/02 14.87 0.23(6) (2.51) (2.28) (0.41) (0.02) (0.43) 12.16 (15.52)
12/31/01 16.46 0.17(6) (0.72) (0.55) (0.61) (0.43) (1.04) 14.87 (3.56)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $17.73 $0.25(6) $ 0.05 $ 0.30 $(0.26) $ -- $(0.26) $17.77 1.70%
Year Ended:
12/31/05 $16.80 $0.21(6) $ 0.91 $ 1.12 $(0.19) $ -- $(0.19) $17.73 6.71%
12/31/04 15.25 0.17(6) 1.58 1.75 (0.20) -- (0.20) 16.80 11.58
12/31/03 12.13 0.20(6) 3.20 3.40 (0.28) -- (0.28) 15.25 28.36
12/31/02 14.87 0.19(6) (2.50) (2.31) (0.41) (0.02) (0.43) 12.13 (15.72)
12/31/01(5) 14.24 0.01(6) 0.62(7) 0.63 -- -- -- 14.87 4.42
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET ASSETS NET ASSETS NET
BEFORE AFTER INVESTMENT
NET ASSETS REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
END OF PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS(3) WAIVERS(3)(4) NET ASSETS RATE
------------- ---------- ------------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $282,573 0.29%(8) 0.29%(8) 3.07%(8) 5%
Year Ended:
12/31/05 $293,378 0.29% 0.29% 1.47% 9%
12/31/04 303,584 0.28 0.28 1.36 10
12/31/03 284,165 0.30 0.30 1.75 11
12/31/02 229,564 0.29 0.29 1.77 19
12/31/01 309,608 0.28 0.28 1.11 7
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $109,076 0.54%(8) 0.54%(8) 2.82%(8) 5%
Year Ended:
12/31/05 $ 94,662 0.54% 0.54% 1.22% 9%
12/31/04 73,830 0.53 0.53 1.11 10
12/31/03 40,576 0.55 0.55 1.50 11
12/31/02 14,610 0.54 0.54 1.52 19
12/31/01(5) 1,127 0.53(8) 0.53(8) 0.86(8) 7
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio commenced selling Class 2 shares on November 6, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
(8) Annualized.
See Notes to Financial Statements. 23
Financial Highlights
VT STRATEGIC GROWTH PORTFOLIO
For a Portfolio share outstanding throughout each period.
INCOME/(LOSS) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- --------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET
VALUE NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET VALUE
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN(2)
--------- ---------- ----------- ---------- ---------- ------------- ------------- ------ ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $19.74 $0.22(6) $ 0.18 $ 0.40 $(0.22) $ -- $(0.22) $19.92 2.04%
Year Ended:
12/31/05 $18.45 $0.19(6) $ 1.22 $ 1.41 $(0.12) $ -- $(0.12) $19.74 7.71%
12/31/04 16.46 0.14(6) 1.96 2.10 (0.11) -- (0.11) 18.45 12.83
12/31/03 12.55 0.14(6) 3.98 4.12 (0.21) -- (0.21) 16.46 33.07
12/31/02 16.45 0.15(6) (3.47) (3.32) (0.54) (0.04) (0.58) 12.55 (20.53)
12/31/01 18.61 0.16(6) (1.27) (1.11) (0.57) (0.48) (1.05) 16.45 (6.25)
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $19.64 $0.20(6) $ 0.17 $ 0.37 $(0.18) $ -- $(0.18) $19.83 1.92%
Year Ended:
12/31/05 $18.38 $0.14(6) $ 1.22 $ 1.36 $(0.10) $ -- $(0.10) $19.64 7.47%
12/31/04 16.42 0.09(6) 1.97 2.06 (0.10) -- (0.10) 18.38 12.54
12/31/03 12.54 0.10(6) 3.98 4.08 (0.20) -- (0.20) 16.42 32.76
12/31/02 16.45 0.11(6) (3.44) (3.33) (0.54) (0.04) (0.58) 12.54 (20.59)
12/31/01(5) 15.54 0.01(6) 0.90(7) 0.91 -- -- -- 16.45 5.86
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE RATIO OF
NET ASSETS NET ASSETS NET
BEFORE AFTER INVESTMENT
NET ASSETS REIMBURSE- REIMBURSE- INCOME TO PORTFOLIO
END OF PERIOD MENTS/ MENTS/ AVERAGE TURNOVER
(IN 000S) WAIVERS(3) WAIVERS(3)(4) NET ASSETS RATE
------------- ---------- ------------- ---------- ---------
CLASS 1 SHARES
Six Months Ended (unaudited):
6/30/06 $140,827 0.30%(8) 0.30%(8) 2.20%(8) 5%
Year Ended:
12/31/05 $136,966 0.31% 0.31% 1.01% 9%
12/31/04 130,069 0.29 0.29 0.80 4
12/31/03 105,077 0.31 0.31 0.99 9
12/31/02 73,936 0.32 0.32 1.06 16
12/31/01 97,401 0.31 0.31 0.95 5
CLASS 2 SHARES
Six Months Ended (unaudited):
6/30/06 $ 57,412 0.55%(8) 0.55%(8) 1.95%(8) 5%
Year Ended:
12/31/05 $ 48,413 0.56% 0.56% 0.76% 9%
12/31/04 34,129 0.54 0.54 0.55 4
12/31/03 14,766 0.56 0.56 0.74 9
12/31/02 2,676 0.57 0.57 0.81 16
12/31/01(5) 319 0.56(8) 0.56(8) 0.70(8) 5
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio commenced selling Class 2 shares on November 6, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
(8) Annualized.
24 See Notes to Financial Statements.
Notes to Financial Statements (unaudited)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 13 funds (each a "Fund" and collectively, the "Funds") and
5 portfolios (each a "Portfolio" and collectively, the "Portfolios"). The VT
Flexible Income, VT Conservative Balanced, VT Balanced, VT Conservative Growth
and VT Strategic Growth Portfolios are included in this report.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Portfolio offers two classes of shares:
Class 1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity and
variable life insurance contracts (collectively "Variable Insurance Contracts"),
as well as certain qualified retirement plans including affiliated plans of
Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial
services company. At June 30, 2006, "The Washington Mutual Savings Plan" held
approximately 29%, 19%, 15%, 12% and 33% of the outstanding shares in the VT
Flexible Income, VT Conservative Balanced, VT Balanced, VT Conservative Growth
and VT Strategic Growth Portfolios, respectively.
Each of the Portfolios invests, within certain percentage ranges, in Class 1
shares of various funds in the Trust and Class I shares of the WM High Yield
Fund (collectively, the "Underlying Funds"). WM Advisors, Inc. (the "Advisor"),
a wholly owned subsidiary of Washington Mutual, serves as investment advisor to
the Portfolios and the Underlying Funds. The Advisor may alter these percentage
ranges when it deems appropriate. The assets of each Portfolio will be allocated
among the Underlying Funds in accordance with its investment objective based on
the Advisor's outlook for the economy, the financial markets and the relative
market valuations of the Underlying Funds. In addition, in order to meet
liquidity needs or for temporary defensive purposes, each Portfolio may invest
its assets directly in cash, stock or bond index futures, options, money market
securities and certain short-term debt instruments, including repurchase
agreements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, in conformity
with accounting principles generally accepted in the United States of America
("generally accepted accounting principles"), which are consistently followed by
the Portfolios and the Underlying Funds in the preparation of their financial
statements.
PORTFOLIO VALUATION:
Investments in the Underlying Funds are valued at net asset value per Class 1
share or Class I share of the respective Underlying Funds determined as of the
close of the New York Stock Exchange on each valuation date. Short-term debt
securities that mature in 60 days or less are valued at amortized cost, which
approximates market value.
REPURCHASE AGREEMENTS:
Each Portfolio may enter into repurchase agreement transactions. A repurchase
agreement is a purchase of an underlying debt obligation subject to an agreement
by the seller to repurchase the obligation at an agreed upon price and time. It
is each Portfolio's policy that its custodian take possession of the underlying
collateral securities. The fair value of the collateral is at all times at least
equal to the total amount of the repurchase obligation. In the event of
counterparty default, the Portfolio would seek to use the collateral to offset
losses incurred. There is potential loss to the Portfolio in the event the
Portfolio is delayed or prevented from exercising its right to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the Portfolio seeks to assert
its rights. The Advisor, acting under the supervision of the Board of Trustees
of the Trust, reviews the value of the collateral and the creditworthiness of
those banks and broker/dealers with whom each Portfolio enters into repurchase
agreements.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains and
losses from securities sold are recorded on the identified cost basis.
Interest income on debt securities is accrued daily. Dividend income and capital
gain distributions received from the Underlying Funds are recorded on the
ex-dividend date. Each Portfolio's investment income and realized and unrealized
gains and losses are allocated among the classes of that Portfolio based upon
the relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
earned by a Portfolio are declared and paid annually.
25
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investments held by the Portfolios, redesignated
distributions and differing characterization of distributions made by each
Portfolio.
FEDERAL INCOME TAXES:
It is each Portfolio's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable to regulated investment companies and by distributing
substantially all of its earnings to its shareholders. Therefore, no federal
income or excise tax provision is required.
It is each Portfolio's policy to meet the diversification requirements of the
Code so that variable annuity and variable life contracts funded by the Trust
will not fail to qualify as annuities and life insurance contracts for tax
purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Portfolios based upon the
relative average net assets of each Portfolio. In addition, the Portfolios will
indirectly bear their prorated share of the expenses of the Underlying Funds.
Operating expenses directly attributable to a class of shares are charged to the
operations of that class of shares. Expenses of each Portfolio not directly
attributable to the operations of any class of shares are prorated among the
classes to which the expenses relate based on the relative average net assets of
each class of shares.
Custodian fees for certain Portfolios have been reduced by credits allowed by
the Portfolio's custodian for uninvested cash balances. The Portfolios could
have invested this cash in income producing investments. Fees reduced by credits
allowed by the custodian for the six months ended June 30, 2006, are shown
separately in the "Statements of Operations".
USE OF ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
The Advisor provides its proprietary asset allocation services to the
Portfolios, formulates the Portfolios' investment policies, analyzes economic
and market trends, exercises investment discretion over the assets of the
Portfolios and monitors the allocation of each Portfolio's assets and each
Portfolio's performance. For its investment advisory services to the Portfolios,
the Advisor is entitled to a monthly fee at an annual rate of 0.100% of each
Portfolio's average daily net assets up to $1 billion and 0.075% of each
Portfolio's average daily net assets over $1 billion.
The Advisor also serves as administrator to the Portfolios. For its
administrative services to the Portfolios, the Advisor is entitled to a monthly
fee at an annual rate of 0.150% of each Portfolio's average daily net assets up
to $1 billion and 0.125% of each Portfolio's average daily net assets over $1
billion.
4. TRUSTEES' FEES
No officer or employee of Washington Mutual or its subsidiaries receives any
compensation from the Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by the Advisor, pays each
Trustee who is not an officer or employee of Washington Mutual or its
subsidiaries a per annum retainer plus attendance fees for each meeting at which
they are present. The Chairman, Committee Chairs and Committee Members receive
additional remuneration for these services to the Trust. Trustees are also
reimbursed for travel and out-of-pocket expenses. Each Trustee serves in the
same capacity for all 40 funds within the WM Group of Funds.
5. DISTRIBUTION PLANS
Each of the Portfolios has adopted a distribution plan, pursuant to Rule 12b-1
under the 1940 Act, applicable to Class 2 shares of the Portfolios (a "Rule
12b-1 Plan"). Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the
"Distributor"), a registered broker/dealer and a wholly owned subsidiary of
Washington Mutual, may receive a fee at an annual rate of 0.25% of the average
daily net assets attributable to Class 2 shares. This fee may be used to cover
the expenses of the Distributor primarily intended to result in the sale of such
shares, including payments to the Distributor's representatives or others for
selling shares. The Rule 12b-1 Plan shall remain in effect from year to year,
provided such continuance is approved annually by vote of the Board of
26
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust, as defined in the 1940 Act, and who have no direct or
indirect financial interest in the operation of the distribution plan, or any
agreements related to the plan, respectively.
6. PURCHASES AND SALES OF INVESTMENTS
The aggregate cost of purchases and proceeds from sales of Underlying Funds for
the six months ended June 30, 2006, are as follows:
PURCHASES SALES
NAME OF PORTFOLIO (000S) (000S)
- ----------------- --------- -------
VT Flexible Income Portfolio ........ $ 11,359 $22,830
VT Conservative Balanced Portfolio .. 7,951 4,430
VT Balanced Portfolio ............... 109,611 34,905
VT Conservative Growth Portfolio .... 32,813 20,720
VT Strategic Growth Portfolio ....... 25,199 9,115
7. UNREALIZED APPRECIATION/(DEPRECIATION)
At June 30, 2006, the aggregate gross unrealized appreciation and depreciation
on a tax basis are as follows:
(IN THOUSANDS)
----------------------------------------------------------------------------
VT FLEXIBLE VT CONSERVATIVE VT CONSERVATIVE VT STRATEGIC
INCOME BALANCED VT BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------------- ----------- --------------- ------------
Gross tax unrealized appreciation .. $14,470 $ 6,443 $90,937 $60,345 $28,497
Gross tax unrealized depreciation .. (4,193) (1,692) (3,855) (6,122) (2,343)
------- ------- ------- ------- -------
Net tax unrealized appreciation .... $10,277 $ 4,751 $87,082 $54,223 $26,154
======= ======= ======= ======= =======
8. UNDERLYING FUNDS
The following is a summary of investment objectives and risk factors of the
Underlying Funds, and Portfolio ownership in the Underlying Funds. The WM
Variable Trust semiannual report, which is available online at
wmgroupoffunds.com or by calling 800-222-5852, contains more information
regarding the Underlying Funds.
INVESTMENT OBJECTIVES OF UNDERLYING FUNDS:
The investment objectives of the Underlying Funds are as follows:
WM VT REIT Fund Seeks to provide a high level of current income
and intermediate- to long-term capital
appreciation.
WM VT Equity Income Fund Seeks to provide a relatively high level of
current income and long-term growth of income and
capital.
WM VT Growth & Income Fund Seeks to provide long-term capital growth. Current
income is a secondary consideration.
WM VT West Coast Equity Fund Seeks to provide long-term growth of capital.
WM VT Mid Cap Stock Fund Seeks to provide long-term capital appreciation.
WM VT Growth Fund Seeks to provide long-term capital appreciation.
WM VT Small Cap Value Fund Seeks to provide long-term capital appreciation.
WM VT Small Cap Growth Fund Seeks to provide long-term capital appreciation.
WM VT International Growth Fund Seeks to provide long-term capital appreciation.
WM VT Short Term Income Fund Seeks to provide as high a level of current income
as is consistent with prudent investment
management and stability of principal.
WM VT U.S. Government Securities Fund Seeks to provide a high level of current income
consistent with safety and liquidity.
WM VT Income Fund Seeks to provide a high level of current income
consistent with preservation of capital.
WM High Yield Fund Seeks to provide a high level of current income.
27
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
RISK FACTORS OF UNDERLYING FUNDS:
While no individual fund is intended as a complete investment program, this is
especially true for funds that concentrate their investments such as those
investing in particular industries or regions.
The VT REIT Fund concentrates its investments in real estate investment trust
("REIT") securities or debt securities of issuers that are principally engaged
in the U.S. real estate or related industries. The VT REIT Fund could be
adversely impacted by economic trends within this industry.
The VT West Coast Equity Fund concentrates its investments in companies located
or doing business in Alaska, California, Oregon and Washington. The VT West
Coast Equity Fund could be adversely impacted by economic trends within this
region.
The VT International Growth Fund concentrates its investments in foreign
securities in both developed and emerging market countries. Additional risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments, and the possible prevention of currency exchange or other
foreign governmental laws or restrictions. Investments in emerging markets are
subject to additional risk as less developed countries are more likely to
experience high levels of inflation, deflation, or currency devaluation, which
could harm their economies and securities markets.
The WM High Yield Fund concentrates its investments in lower rated debt
securities, which may be more susceptible to adverse economic conditions than
investment grade holdings. These securities are often subordinated to the prior
claims of other senior lenders, and uncertainties exist as to an issuer's
ability to meet principal and interest payments.
Certain Underlying Funds may invest a portion of their assets in foreign
securities of developing or emerging market countries; enter into forward
foreign currency transactions; lend their portfolio securities; enter into stock
index, interest rate and currency futures contracts, and options on such
contracts; enter into interest rate swaps or purchase or sell interest rate caps
or floors; enter into other types of options transactions; make short sales;
purchase zero coupon and payment-in-kind bonds; enter into repurchase or reverse
repurchase agreements; purchase and sell "when-issued" securities and engage in
"delayed-delivery" transactions; and enter into various other investment
practices, each with inherent risks. The risks involved in investing in a high
concentration of a single sector include those resulting from future adverse
political and economic developments or regulatory occurrences and the potential
for adverse effects to the financial conditions of the industries within the
sector due to market fluctuations.
PORTFOLIO OWNERSHIP IN THE UNDERLYING FUNDS:
At June 30, 2006, the Portfolios hold investments in a number of the Underlying
Funds. The figures presented below represent the percentage of shares
outstanding of each Fund owned by the Portfolios:
PORTFOLIOS
------------------------------------------------------------------------------------
VT FLEXIBLE VT CONSERVATIVE VT CONSERVATIVE VT STRATEGIC
INCOME BALANCED VT BALANCED GROWTH GROWTH
NAME OF UNDERLYING FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
- ----------------------- ----------- --------------- ----------- --------------- ------------ -----
VT REIT Fund ......................... 3.9% 3.0% 41.0% 31.1% 15.6% 94.6%
VT Equity Income Fund ................ 2.8% 2.1% 26.8% 19.6% 10.5% 61.8%
VT Growth & Income Fund .............. 4.8% 2.4% 34.7% 25.3% 13.6% 80.8%
VT West Coast Equity Fund ............ 1.7% 1.9% 27.1% 19.7% 11.3% 61.7%
VT Mid Cap Stock Fund ................ 5.3% 2.4% 32.8% 23.9% 14.6% 79.0%
VT Growth Fund ....................... 4.9% 2.5% 38.1% 26.0% 15.6% 87.1%
VT Small Cap Value Fund .............. 6.4% 2.7% 40.7% 32.2% 17.2% 99.2%
VT Small Cap Growth Fund ............. 4.4% 1.8% 28.2% 22.1% 12.0% 68.5%
VT International Growth Fund ......... -- 2.9% 41.4% 28.7% 16.4% 89.4%
VT Short Term Income Fund ............ 49.1% 8.6% 14.6% -- -- 72.3%
VT U.S. Government Securities Fund ... 23.3% 7.2% 46.2% 10.8% -- 87.5%
VT Income Fund ....................... 25.0% 6.6% 37.4% 7.7% -- 76.7%
High Yield Fund* ..................... 1.5% 0.5% 3.7% 1.1% 0.9% 7.7%
- ----------
* Does not include approximately 55.8% of the High Yield Fund held by WM
Strategic Asset Management Portfolios, LLC, which is managed in a style
substantially identical to that of the Portfolios.
28
Notes to Financial Statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
OTHER FACTORS OF UNDERLYING FUNDS:
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. For example, under certain circumstances, an
Underlying Fund may determine to make payment of a redemption request by a
Portfolio wholly or partly by a distribution in kind of securities from its
portfolio, instead of cash, in accordance with the rules of the Securities and
Exchange Commission. In such cases, the Portfolios may hold securities
distributed by an Underlying Fund until the Advisor determines that it is
appropriate to dispose of such securities.
The officers and Trustees, the Advisor, and the Distributor of the Portfolios
and WM Shareholder Services, Inc. (the "Transfer Agent") serve in the same
capacity for the Underlying Funds. Conflicts may arise as these persons and
companies seek to fulfill their fiduciary responsibilities to both the
Portfolios and the Underlying Funds.
From time to time, one or more of a Portfolio's Underlying Funds used for
investment may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios as recommended by the Advisor.
These transactions will affect the Underlying Funds, since the Underlying Funds
that experience redemptions as a result of the reallocations or rebalancings may
have to sell portfolio securities. At the same time, the Underlying Funds that
receive additional cash will have to invest such cash. While it is impossible to
predict the overall impact of these transactions over time, there could be
adverse effects on Underlying Fund performance to the extent that the Underlying
Funds may be required to sell securities or invest cash at times when they would
not otherwise do so. These transactions could also accelerate the realization of
taxable income if sales of securities resulted in gains and could also increase
transaction costs. Because the Portfolios own substantial portions of the
Underlying Funds, redemptions and reallocations by the Portfolios away from an
Underlying Fund could cause the Underlying Fund's expenses to increase and may
result in an Underlying Fund becoming too small to be economically viable. The
Advisor is committed to minimizing such impact on the Underlying Funds to the
extent it is consistent with pursuing the investment objectives of the
Portfolios. The Advisor may nevertheless face conflicts in fulfilling its dual
responsibilities to the Portfolios and Underlying Funds. The Advisor will, at
all times, monitor the impact on the Underlying Funds of transactions by the
Portfolios.
9. SUBSEQUENT EVENTS
On July 25, 2006, Washington Mutual, the parent of the Advisor, Distributor, and
Transfer Agent, announced that it had entered into an agreement with Principal
Financial Group to sell the Advisor, Distributor, and Transfer Agent to
Principal Management Corporation, subject to, among other things, approval by
the Trustees and shareholders of the Portfolios of the mergers of various
Portfolios into funds advised by Principal Management Corporation. The Trustees
of the Portfolios are currently considering proposals relating to such mergers.
If approved by the Trustees, each such merger would be subject to approval by
the shareholders of the relevant Portfolios, which would be sought through a
proxy statement.
29
Supplemental Information (unaudited)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Each year, the Board of Trustees of the Trust (the "Board"), including a
majority of the Trustees who are not interested persons of the Trust (the
"Independent Trustees"), is required to determine whether to continue the
Trust's advisory agreement. The Investment Company Act of 1940, as amended,
requires that the Board request and evaluate, and that the investment manager
furnish, such information as may reasonably be necessary to evaluate the terms
of the Trust's advisory agreement. In May 2006, the Board and the Independent
Trustees approved the continuation of the Trust's investment advisory agreement
with the Advisor (the "Agreement"), in each case following the recommendation of
the Investment Committee (the "Committee"), a majority of the members of which
are Independent Trustees, and the recommendations of the Independent Trustees as
a whole. The material factors and conclusions that formed the basis for the
Committee's recommendation and the subsequent approval by the Board and the
Independent Trustees are discussed below.
REVIEW PROCESS:
The Independent Trustees received assistance and advice, including a written
memorandum, regarding the legal standards applicable to the consideration of
advisory arrangements from independent counsel to the Trust and the Independent
Trustees. The Independent Trustees discussed the continuation of the Agreement
with representatives of the Advisor and in private session with independent
legal counsel at which no representatives of the Advisor were present. The
Committee, in deciding to recommend continuation of the Agreement, and the Board
and the Independent Trustees, in approving such continuation, did not identify
any particular information that was all-important or controlling, and each
Trustee attributed different weights to the various factors. The Trustees
evaluated all information available to them on a Portfolio-by-Portfolio basis,
and their deliberations were made separately in respect of each Portfolio. This
summary describes the most important, but not all, of the factors considered by
the Board, the Independent Trustees and the Committee. The Board, the
Independent Trustees and the Committee considered the fact that each of the
Portfolios is managed in a style substantially identical to that of a
corresponding series of WM Strategic Asset Management Portfolios, LLC (each, a
"SAM Portfolio"), and reviewed the Portfolios simultaneously with their review
of the corresponding SAM Portfolios.
MATERIALS REVIEWED:
During the course of each year, the Board receives a wide variety of materials
relating to the services provided by the Advisor and its affiliates, including
reports on: each SAM Portfolio's investment results; portfolio construction;
portfolio composition; performance attribution; shareholder services; the
Advisor's views on the economy and capital markets; and other information
relating to the nature, extent and quality of services provided by the Advisor
and its affiliates to the Portfolios. With respect to performance attribution,
the Board, the Independent Trustees and the Committee focused in particular on
the SAM Balanced Portfolio, as the corresponding performance attribution for the
other Portfolios typically varies in proportion to the greater or lesser risk
profiles of those Portfolios. In addition, in connection with its annual
consideration of the Trust's advisory arrangements, the Board requests and
reviews supplementary information regarding the terms of the Agreement,
performance and expense information for other investment companies derived from
data compiled by Lipper Inc., a third-party data provider ("Lipper"), data on
pre- and post-marketing profit margins for investment advisory subsidiaries of
publicly traded companies prepared by Lipper, as well as additional information
prepared by the Advisor, including financial and profitability information
regarding the Advisor and its affiliates, descriptions of various functions
undertaken by the Advisor, such as compliance monitoring practices, and
information about the personnel providing investment management to the
Portfolios. The Board, the Independent Trustees and the Committee also
considered information regarding "revenue sharing" arrangements that the Advisor
and its affiliates have entered into with various intermediaries that sell
shares of the Portfolios. The Board also requested and reviewed information
relating to other services provided to the Portfolios by the Advisor and its
affiliates under other agreements, information regarding so-called "fall-out"
benefits to the Advisor and its affiliates due to their other relationships with
the Portfolios, such as the administrative services contract with the Advisor
described below. The Board and the Committee also received and reviewed
comparative performance information regarding the SAM Portfolios at each of the
quarterly Board and Committee meetings.
NATURE, EXTENT AND QUALITY OF SERVICES:
Nature and Extent of Services -- In considering the continuation of the
Agreement for the current year, the Board, the Independent Trustees and the
Committee evaluated the nature and extent of the services provided by the
Advisor and its affiliates. The Advisor formulates each Portfolio's investment
policies (subject to the terms of the prospectus); analyzes economic trends and
capital market developments with a view to optimizing asset allocations;
evaluates the consistency, style and quality of the investment services provided
to the Underlying Funds in which the Portfolios invest; evaluates the
risk/return characteristics of each of the Underlying Funds by reference to the
specific security holdings of each Underlying Fund; constructs each Portfolio
(including actively managing the asset allocation through daily cash flows);
monitors each Portfolio's investment performance; and reports to the Board and
the Committee. The Board, the Independent Trustees and the Committee considered
information concerning the investment philosophy and investment process used by
the Advisor in managing the Portfolios. The Board, the Independent Trustees and
the Committee considered the extent to which the investment style employed for
the Portfolios differs from that of
30
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
funds that are simply rebalanced periodically to specific static allocations,
including performance attribution information showing the effect on performance
of the Advisor's asset allocation decisions. In this context, the Board, the
Independent Trustees and the Committee considered the in-house research
capabilities of the Advisor as well as other resources available to the Advisor,
including research services available to the Advisor as a result of securities
transactions effected for the Underlying Funds. The Board, the Independent
Trustees and the Committee considered the managerial and financial resources
available to the Advisor and concluded that they would be sufficient to meet any
reasonably foreseeable obligations under the Agreement. The Board, the
Independent Trustees and the Committee noted that the standard of care under the
Agreement was comparable to that typically found in mutual fund investment
advisory agreements, and considered the record of the Advisor in resolving
potential disputes arising under its investment advisory agreements with the WM
Group of Funds to be in the best interests of shareholders.
Quality of Services -- The Board, the Independent Trustees and the Committee
considered the quality of the services provided by the Advisor and the quality
of the Advisor's resources that are available to the Portfolios. The Board, the
Independent Trustees and the Committee considered the investment experience and
professional qualifications of the personnel of the Advisor and its affiliates
and the size and functions of their staffs, as well as the reputation of the
Advisor. The Board, the Independent Trustees and the Committee considered the
complexity of managing the Portfolios relative to other types of funds,
including both other funds that pursue their objectives through investments in
mutual funds (so-called "funds-of-funds"), other funds that pursue their
objectives by investing directly in portfolio securities, and mutual fund wrap
accounts that offer asset allocation services. In evaluating the scope and
quality of the services provided by the Advisor to the Portfolios, the Board,
the Independent Trustees and the Committee members also drew on their
experiences as directors or trustees of the Underlying Funds and, for certain
Trustees, other funds. The Board, the Independent Trustees and the Committee
also received and reviewed information regarding the quality of non-investment
advisory services provided to the Portfolios by the Advisor and its affiliates
under other agreements.
The Board, the Independent Trustees and the Committee concluded that the
services provided by the Advisor have benefited and should continue to benefit
the Portfolios and their shareholders. The Board, the Independent Trustees and
the Committee concluded that the investment philosophy, process, and research
capabilities of the Advisor were well suited to the Portfolios, given their
investment objectives and policies. The Board, the Independent Trustees and the
Committee concluded that the scope of the services provided to the Portfolios by
the Advisor and its affiliates under the Agreement was consistent with the
Portfolios' operational requirements, including, in addition to their investment
objectives, compliance with the Portfolios' investment restrictions, tax and
reporting requirements and related shareholder services. The Board, the
Independent Trustees and the Committee concluded that the nature, scope and
quality of the services provided by the Advisor were sufficient, in light of the
resources dedicated by the Advisor and its integrity, personnel, systems and
financial resources, to merit approval of the continuation of the Agreement.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE:
In their evaluation of the quality of the portfolio management services provided
by the Advisor, the Board, the Independent Trustees and the Committee considered
the professional credentials and investment experience of the Portfolios'
portfolio managers. The Board, the Independent Trustees and the Committee
considered the Portfolios' record of compliance with investment restrictions.
The Board, the Independent Trustees and the Committee reviewed information
comparing the Portfolios' historical performance to relevant blends of market
indices for the 1-, 3- and 5-year periods ended March 31, 2006, and to average
performance information for peer groups prepared by Lipper based on the
performance of other investment companies with similar investment objectives
(including, separately, both funds-of-funds and funds investing directly in
portfolio securities) over the 1-, 3- and 5-year periods ended December 31,
2005. The Board, the Independent Trustees and the Committee focused, in
particular, on the performance comparisons of the Balanced Portfolio as compared
to other mutual funds categorized by Lipper as "balanced funds." The Board, the
Independent Trustees and the Committee considered the difficulty in identifying
peer groups for the Portfolios other than the Balanced Portfolio. The Board, the
Independent Trustees and the Committee determined that the Portfolios other than
the Balanced Portfolio performed consistently with their risk profiles relative
to the Balanced Portfolio and that such Portfolios' performance should be and
was symmetrically arrayed around the performance of the Balanced Portfolio. The
Board, the Independent Trustees and the Committee noted that the Portfolios had
performed well relative to their respective blended index benchmarks over the
1-, 3- and 5-year periods and that the Balanced Portfolio had outperformed its
peer average (for both funds-of-funds and funds investing directly in portfolio
securities) for the 1-, 3- and 5-year periods. The Board, the Independent
Trustees and the Committee noted that the other Portfolios had outperformed
their peer averages (for both funds-of-funds and funds investing directly in
portfolio securities) for the 5-year period, although they had generally
underperformed their peer averages (for both funds-of-funds and funds investing
directly in portfolio securities) for the 1- and 3-year periods. The Board, the
Independent Trustees and the Committee discussed with the Advisor the reasons
for this recent relative underperformance, and the conditions under which the
Portfolios other than the Balanced Portfolio should be expected to outperform or
underperform relative to their Lipper peer averages, given the "core"
allocations of such Portfolios. The Board, the Independent Trustees and the
Committee concluded that the Advisor's performance record and investment process
used in managing the Portfolios were sufficient to merit approval of the
continuation of the Agreement.
31
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
MANAGEMENT FEES AND EXPENSES:
The Board, the Independent Trustees and the Committee reviewed information,
including comparative information provided by Lipper, regarding the advisory,
administrative, transfer agent, and service and distribution fees paid to the
Advisor and its affiliates and the total expenses borne by the Portfolios. The
Board, the Independent Trustees and the Committee considered both the total
expenses borne directly by the Portfolios and the total expenses borne on an
aggregate basis, including the expenses borne indirectly through the Portfolios'
investments in the Underlying Funds. They discussed trends in total expense
ratios for the Portfolios. The Board, the Independent Trustees and the Committee
reviewed the administrative fees paid by the Portfolios to the Advisor and the
distribution (12b-1) fees paid to the Distributor. The Board, the Independent
Trustees and the Committee considered average expenses for peer groups
identified by Lipper for the Portfolios, including Lipper peer groups comprised
of funds that invest directly in portfolio securities and Lipper peer groups
comprised exclusively of funds-of-funds. The Board, the Independent Trustees and
the Committee noted that the number of funds-of-funds identified by Lipper had
increased from prior years, and considered the relative merits of broader and
more focused expense comparison groups. The Board, the Independent Trustees and
the Committee considered the similarity of the Portfolios to mutual fund wrap
accounts, and reviewed and considered a report provided by Cerulli on mutual
fund wrap accounts, including data on average annual advisory fees. The Board,
the Independent Trustees and the Committee considered information provided by
Lipper comparing the total expenses of funds-of-funds, including and excluding
underlying fund expenses, to those of the Portfolios. The Board, the Independent
Trustees and the Committee concluded that the total expenses of funds-of-funds,
including underlying fund expenses, represented the best comparison for the
expenses of the Portfolios, because they reflected all of the expenses borne
directly and indirectly by investors. The Board, the Independent Trustees and
the Committee concluded that the fees to be charged under the Agreement bore a
reasonable relationship to the scope and quality of the services provided.
PROFITABILITY AND ECONOMIES OF SCALE:
Profitability -- The Board, the Independent Trustees and the Committee reviewed
information regarding the cost of services provided by the Advisor and its
affiliates and the profitability (before and after distribution expenses and
prior to taxes) of their relationships with the Portfolios. The Board, the
Independent Trustees and the Committee considered trends in the profitability of
the Advisor and its affiliates, and information provided by Lipper regarding the
pre- and post-marketing profitability of other investment advisers with
publicly-traded parent companies. The Board, the Independent Trustees and the
Committee considered that the Advisor must be able to pay and retain experienced
professional personnel at competitive rates to provide services to the
Portfolios (and in connection therewith reviewed information regarding the
structure of compensation of the Advisor's investment professionals) and that
maintaining the financial viability of the Advisor is important in order for it
to continue to provide significant services to the Portfolios and their
shareholders. In addition, the Board, the Independent Trustees and the Committee
considered information regarding the direct and indirect benefits the Advisor
receives as a result of its relationship with the Portfolios, including
compensation paid to the Advisor and its affiliates under other agreements, such
as administrative fees to the Advisor, and 12b-1 fees and sales charges to the
Distributor, as well as research provided to the Advisor in connection with
portfolio transactions effected on behalf of the Underlying Funds (soft dollar
arrangements) and reputational benefits.
Economies of Scale -- The Board, the Independent Trustees and the Committee
reviewed the extent to which the Advisor may realize economies of scale in
managing and supporting the Portfolios and the current level of Portfolio assets
in relation to the breakpoints in each Portfolio's advisory fees. The Board, the
Independent Trustees and the Committee considered the extent to which economies
of scale might be realized (if at all) by the Advisor across a variety of
products and services, including the SAM Portfolios.
The Board, the Independent Trustees and the Committee concluded that the
Portfolios' cost structure was reasonable given the scope and quality of the
services provided to the Portfolios and that the Advisor was sharing any
economies of scale with the Portfolios and their shareholders.
ADDITIONAL CONSIDERATIONS:
The Board, the Independent Trustees and the Committee also considered possible
conflicts of interest associated with the provision of investment advisory
services by the Advisor to other clients. The Trustees considered the procedures
of the Advisor designed to fulfill its fiduciary duties to its advisory clients
with respect to possible conflicts of interest, including the codes of ethics,
the integrity of the systems in place to ensure compliance with the foregoing,
and the record of the Advisor in these matters.
32
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
CONCLUSIONS:
Based on their review, including their consideration of each of the factors
referred to above, the Board, the Independent Trustees and the Committee
concluded that the Agreement, including the fees payable to the Advisor, is fair
and reasonable to the Portfolios and their shareholders given the scope and
quality of the services provided to the Portfolios and such other considerations
as the Trustees considered relevant in the exercise of their reasonable business
judgment and that the continuation of the Agreement was in the best interests of
the Portfolios and their shareholders. The Board and the Independent Trustees
unanimously approved the continuation of the Agreement.
33
Supplemental Information (unaudited) (continued)
PORTFOLIO MANAGER
Craig V. Sosey
VT U.S. Government Securities Fund WM Advisors, Inc.
Note: Pages 34 and 35 provide information about certain WM Funds in which the VT
SAM Portfolios invest a significant portion of their assets. For additional
information about these and other WM Funds, please see the WM Variable Trust
semiannual report, which is available online at wmgroupoffunds.com or by calling
800-222-5852.
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. Your
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. Performance shown below does not account for fees,
expenses, and charges of any variable insurance contract or retirement plan. If
these fees were reflected, performance would be lower.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES -0.16% 0.22% 4.18% 5.59% 5.21% 5/6/93
CLASS 2 SHARES -0.39% -0.10% -- -- 3.01% 11/6/01
Citigroup Mortgage Index(3) -0.12% 0.44% 4.72% 6.15% 6.05%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
FHLMC/FGLMC 32% 34% -2%
FNMA 27% 24% +3%
CMOs 19% 22% -3%
U.S. Treasuries 8% 5% +3%
GNMA 5% 6% -1%
U.S. Government Agency 5% 6% -1%
Cash Equivalents 4% 3% +1%
(1) Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The VT U.S. Government Securities Fund's
performance in 1995 and 1998 benefited from the agreement of WM Advisors
and its affiliates to limit the Fund's expenses. On 3/1/04, the investment
policies of the Fund were modified. As a result, the Fund's performance for
periods prior to that date may not be representative of the performance it
would have achieved had its current investment policies been in place.
(2) Periods of less than one year are not annualized.
34
PORTFOLIO MANAGERS
John R. Friedl, CFA and
Gary J. Pokrzywinski, CFA
WM Advisors, Inc. VT Income Fund
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise.
VT U.S. Government Securities Fund: Neither the principal of government bond
funds nor their yields are guaranteed by the U.S. government.
VT Income Fund: Lower-rated securities are subject to additional credit and
default risks.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF JUNE 30, 2006
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS 1 SHARES -0.37% -0.08% 6.37% 6.68% 6.21% 5/7/93
CLASS 2 SHARES -0.40% -0.31% -- -- 5.18% 11/6/01
Citigroup Broad Investment-Grade
Bond Index(3) -0.78% -0.81% 5.02% 6.24% 6.10%
PORTFOLIO COMPOSITION(4)
As of 6/30/06
(PIE CHART)
As of As of
Asset Class 6/30/06 12/31/05 Change
- ----------- ------- -------- ------
Domestic Corporate Bonds 58% 58% 0%
Mortgage-Backed Bonds 23% 22% +1%
Foreign Corporate
Bonds (U.S. $) 8% 8% 0%
U.S. Treasuries 7% 7% 0%
Foreign Government
Bonds (U.S. $) 1% 1% 0%
Equities 0% 1% -1%
Cash Equivalents 3% 3% 0%
(3) See page 7 for definitions of indices. Returns shown for the indices assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the indices are calculated from 4/30/93. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) May not reflect the current portfolio composition.
35
Supplemental Information (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
OTHER PORTFOLIO INFORMATION
SCHEDULES OF INVESTMENTS:
The Trust files its complete schedules of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Trust's Form N-Q is available at http://www.sec.gov and
also may be reviewed and copied at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling 800-SEC-0330.
PROXY VOTING INFORMATION:
The policies and procedures that the Trust uses to determine how to vote proxies
relating to portfolio securities held by the Portfolios are included in the
Trust's Statement of Additional Information which is available, without charge
and upon request, by calling 800-222-5852. Information regarding how the
Portfolios voted proxies relating to portfolio securities during the most recent
twelve-month period ended June 30 is available at http://www.wmgroupoffunds.com.
This information is also available at http://www.sec.gov.
36
(GRAPHIC)
(WM VARIABLE TRUST LOGO)
A variable insurance product's unit value and investment returns will vary with
market conditions, and an investor's units when redeemed may be worth more or
less than their original cost.
This semiannual report is published as general information for the shareholders
of the WM Variable Trust. This material is not authorized for distribution
unless preceded or accompanied by a current prospectus that includes more
information regarding the risk factors, expenses, policies, and objectives of
the contract. Investors should read the prospectus carefully before investing.
To obtain an additional prospectus, please call 800-222-5852.
The WM Variable Trust Funds are advised by WM Advisors, Inc. (WMAI). They are
available through variable insurance products distributed by WM Funds
Distributor, Inc. (WMFD) and sold through WM Financial Services, Inc. (WMFS) and
independent broker/ dealers. WMAI, WMFD, and WMFS are affiliates of Washington
Mutual, Inc.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
(WM VARIABLE TRUST LOGO)
WM Funds Distributor, Inc.
1100 Investment Blvd., Suite 200
El Dorado Hills, CA 95762
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer, a copy of which is attached hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that there is at least
one Trustee who is an audit committee financial expert serving on its Audit
Committee and has designated Daniel L. Pavelich as an "audit committee financial
expert." Mr. Pavelich is "independent," as such term has been defined by the
Securities and Exchange Commission (the "SEC") for purposes of implementing
Section 407 of the Sarbanes Oxley Act of 2002. The SEC has stated that the
designation or identification of a person as an audit committee financial expert
pursuant to this Item 3 of Form N-CSR does not impose on such person any duties,
obligations or liability that are greater than the duties, obligations and
liability imposed on such person as a member of the Audit Committee and the
Board of Trustees in the absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
2004 2005
- ---- ----
$456,700 $472,800
(b) Audit-Related Fees
2004 2005
- ---- ----
None None
For the last two fiscal years, no audit-related fees were required to be
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(c) Tax Fees
2004 2005
- ---- ----
$39,295 $42,912
The tax fees consist of fees billed in connection with reviewing the federal
regulated investment company income tax returns for WM Variable Trust for the
tax years ended December 31, 2004 and December 31, 2005.
(d) All Other Fees
For the last two fiscal years, no other fees were required to be approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(e) (1) Pre-approval Policies and Procedures
Pursuant to the Audit Committee charter, the Audit Committee of the registrant
will review and pre-approve or disapprove its principal accountant's engagement
for all services with the registrant and its principal accountant's engagement
for non-audit services with the registrant's investment advisor (not including a
sub-advisor whose role is primarily portfolio management and is sub-contracted
or overseen by another investment advisor) and any entity controlling,
controlled by or under common control with the investment advisor that provides
ongoing services to the funds in accordance with paragraph (c)(7)(i) of Rule
2-01 of Regulation S-X, if the engagement relates directly to the operations and
financial reporting of the registrant.
(2) None of the services described in paragraphs (b) through (d) of this Item 4
were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X.
(f) Not applicable.
(g) For the fiscal year ended December 31, 2005, the registrant's principal
accountant billed aggregate non-audit fees in the amount of $42,912 for services
rendered to the registrant, WM Advisors, Inc., WM Funds Distributor, Inc., WM
Shareholder Services, Inc. and WM Financial Services, Inc. For the fiscal year
ended December 31, 2004, the registrant's principal accountant billed aggregate
non-audit fees in the amount of $78,295 for services rendered to the registrant,
WM Advisors, Inc., WM Funds Distributor, Inc., WM Shareholder Services, Inc. and
WM Financial Services, Inc.
(h) The Audit Committee has considered whether the provision of non-audit
services that were rendered to the registrant's investment advisor (not
including any sub-advisor whose role is primarily portfolio management and is
subcontracted with or overseen by another investment advisor), and any entity
controlling, controlled by, or under common control with the investment advisor
that provides ongoing services to the registrant that were not pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule is included as part of the report to shareholders filed under Item 1 of
this Form.
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
COMPANIES AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 11. CONTROLS AND PROCEDURES:
(a) The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the effectiveness of the design and
operation of the registrant's disclosure controls and procedures as of a date
within 90 days of the filing date of this report on Form N-CSR, that the design
and operation of such procedures are effective to provide reasonable assurance
that information required to be disclosed by the registrant in the reports that
it files or submits on Form N-CSR is recorded, processed, summarized, and
reported within the time periods specified in the SEC's rules and forms.
(b) There have been no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940, as amended) that occurred during the registrant's second fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
(a) Registrant's Code of Ethics. The registrant's code of ethics required to
be disclosed under Item 2 of Form N-CSR attached hereto at Exhibit 99.CODE ETH.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 of the Investment
Company Act of 1940 attached hereto as Exhibit 99.CERT.
(c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
attached hereto as Exhibit 99.906 CERT.
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.
WM Variable Trust
By: /s/William G. Papesh
William G. Papesh
President and Chief Executive Officer
Date: August 31, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities an on the
dates indicated.
By: /s/Jeffrey L. Lunzer
Jeffrey L. Lunzer
Treasurer and Chief Financial Officer
Date: August 31, 2006
By: /s/William G. Papesh
William G. Papesh
President and Chief Executive Officer
Date: August 31, 2006