GOLDMAN SACHS VARIABLE INSURANCE TRUST. Goldman Sachs Global Markets Navigator Fund (the Fund )

Transcription

1 GOLDMAN SACHS VARIABLE INSURANCE TRUST Goldman Sachs Global Markets Navigator Fund (the Fund ) Supplement to the Semi-Annual Report for the period ended June 30, 2013 (the Semi-Annual Report ) This Supplement updates certain information contained in the Fund s Semi-Annual Report. You may obtain a copy of the Semi-Annual Report free of charge, upon request, by calling Goldman Sachs at You can also access and download the Fund s annual and semi-annual reports at the Fund s website: The following ratio of net expenses to average net assets and ratio of total expenses to average net assets replace the existing information included in the first row of the Financial Highlights table on page 12 of the Semi-Annual Report: Ratio of net expenses to average net assets Ratio of total expenses to average net assets 1.02%(e) 1.77%(e) (e) Annualized. The expense ratios of the Fund, both current (net of applicable fee waivers and/or expense limitations) and before waivers (gross of applicable fee waivers and/or expense limitations), are as set forth above according to the most recent publicly available Prospectus for the Fund and may differ from the expense ratios disclosed in the Financial Highlights in this report. The Fund s waivers and/or expense limitations will remain in place through at least April 30, 2014, and prior to such date the investment adviser may not terminate the arrangements without the approval of the Fund s Board of Trustees. If these arrangements are discontinued in the future, the expense ratios may change without shareholder approval. This Supplement should be retained with the Semi-Annual Report for future reference. Shares of the Goldman Sachs Variable Insurance Trust Goldman Sachs Global Markets Navigator Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you realize with respect to your investments. Ask your representative for more complete information. Please consider the Fund s objective, risks and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund. The Goldman Sachs Global Markets Navigator Fund seeks to achieve investment results that approximate the performance of the Goldman Sachs Global Markets Navigator Index (the Index ). The Index is comprised of, and allocates exposure to, a set of underlying indices representing various global asset classes including, but not limited to, global equity, fixed income and commodity assets. The Index is constructed using a proprietary methodology developed by the index provider, and is rebalanced at least monthly. The Fund s performance may not match, and may vary substantially from, that of the Index. There can be no assurance that the methodology used by the index provider in constructing the Index will correctly forecast certain risks or make effective tactical decisions, and the Fund s attempt to track this Index may cause it to underperform general securities markets and/or other asset classes. Derivative instruments (including swaps) may involve a high degree of financial risk. These risks include the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument; risk of default by a counterparty; and liquidity risk. The Fund s use of derivatives may result in leverage, which can make the Fund more volatile. Over-the-counter transactions are subject to less government regulation and supervision. The Fund s equity investments are subject to market risk, which means that the value of its investments may go up or down in response to the prospects of individual companies, particular sectors and/or general economic conditions. The Fund s fixed income investments are subject to the risks associated with debt securities generally, including credit, liquidity and interest rate risk. The Fund is also subject to the risk that the issuers of sovereign debt or the government authorities that control the payment of debt

2 may be unable or unwilling to repay principal or interest when due. High yield, lower rated investments involve greater price volatility and present greater risks than higher rated fixed income securities. The value of the Fund s treasury inflation protected securities (TIPS) generally fluctuates in response to inflationary concerns, and as inflationary concerns decrease, TIPS become less valuable. Any guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund s shares. The Fund is subject to the risk that exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The Fund currently relies on an exemption from regulation as a commodity pool operator, which if altered, could affect the operations and investment strategies of the Fund and increase its expenses. Foreign and emerging markets investments may be more volatile and less liquid than investments in U.S. securities and are subject to the risks of currency fluctuations and adverse economic or political developments. At times, the Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all. The Fund s investments in other investment companies (including ETFs) subject it to additional expenses. Because the Fund may concentrate its investments in an industry (only in the event that an industry represents 20% or more of the Fund s index), the Fund may be subject to greater risk of loss as a result of adverse economic, business or other developments affecting that industry. The Fund is non-diversified and may invest more of its assets in fewer issuers than diversified funds. Accordingly, the Fund may be more susceptible to adverse developments affecting any single issuer held in its portfolio and to greater losses resulting from these developments. Shares of the Goldman Sachs VIT Funds are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you may realize with respect to your investments. Ask your representative for more complete information. Please consider a fund s objectives, risks and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund. This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus or summary prospectus, if applicable. Investors should consider a Fund s objective, risks, and charges and expenses, and read the summary prospectus, if available, and/or the Prospectus carefully before investing or sending money. The summary prospectus, if available, and the Prospectus contain this and other information about a Fund and may be obtained from your Authorized Institution or from Goldman, Sachs & Co. by calling This report is prepared for the general information of contract owners and is not an offer of shares of the Goldman Sachs Variable Insurance Trust: Goldman Sachs Global Markets Navigator Fund. Goldman, Sachs & Co. is the distributor of the Goldman Sachs Funds Goldman Sachs. All rights reserved Date of First Use: October 15, MF.OTU VITNAVSARSUP 10-13

3 Goldman Sachs Variable Insurance Trust Goldman Sachs Global Markets Navigator Fund Semi-Annual Report June 30, 2013

4

5 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Principal Investment Strategies and Risks This is not a complete list of the risks that may affect the Fund. For additional information concerning the risks applicable to the Fund, please see the Fund s Prospectus. Shares of the Goldman Sachs Variable Insurance Trust Goldman Sachs Global Markets Navigator Fund are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Shares of the Fund are not offered directly to the general public. The variable annuity contracts and variable life insurance policies are described in the separate prospectuses issued by participating insurance companies. You should refer to those prospectuses for information about surrender charges, mortality and expense risk fees and other charges that may be assessed by participating insurance companies under the variable annuity contracts or variable life insurance policies. Such fees or charges, if any, may affect the return you realize with respect to your investments. Ask your representative for more complete information. Please consider the Fund s objective, risks and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Fund. The Goldman Sachs Global Markets Navigator Fund seeks to achieve investment results that approximate the performance of the Goldman Sachs Global Markets Navigator Index (the Index ). The Index is comprised of, and allocates exposure to, a set of underlying indices representing various global asset classes including, but not limited to, global equity, fixed income and commodity assets. The Index is constructed using a proprietary methodology developed by the index provider, and is rebalanced at least monthly. The Fund s performance may not match, and may vary substantially from, that of the Index. There can be no assurance that the methodology used by the index provider in constructing the Index will correctly forecast certain risks or make effective tactical decisions, and the Fund s attempt to track this Index may cause it to underperform general securities markets and/or other asset classes. Derivative instruments (including swaps) may involve a high degree of financial risk. These risks include the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument; risk of default by a counterparty; and liquidity risk. The Fund s use of derivatives may result in leverage, which can make the Fund more volatile. Over-the-counter transactions are subject to less government regulation and supervision. The Fund s equity investments are subject to market risk, which means that the value of its investments may go up or down in response to the prospects of individual companies, particular sectors and/or general economic conditions. The Fund s fixed income investments are subject to the risks associated with debt securities generally, including credit, liquidity and interest rate risk. The Fund is also subject to the risk that the issuers of sovereign debt or the government authorities that control the payment of debt may be unable or unwilling to repay principal or interest when due. High yield, lower rated investments involve greater price volatility and present greater risks than higher rated fixed income securities. The value of the Fund s treasury inflation protected securities (TIPS) generally fluctuates in response to inflationary concerns, and as inflationary concerns decrease, TIPS become less valuable. Any guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund s shares. The Fund is subject to the risk that exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. Foreign and emerging markets investments may be more volatile and less liquid than investments in U.S. securities and are subject to the risks of currency fluctuations and adverse economic or political developments. At times, the Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all. The Fund s investments in other investment companies (including ETFs) subject it to additional expenses. Because the Fund may concentrate its investments in an industry (only in the event that an industry represents 20% or more of 1

6 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND the Fund s index), the Fund may be subject to greater risk of loss as a result of adverse economic, business or other developments affecting that industry. The Fund is non-diversified and may invest more of its assets in fewer issuers than diversified funds. Accordingly, the Fund may be more susceptible to adverse developments affecting any single issuer held in its portfolio and to greater losses resulting from these developments. The GS Global Markets Navigator Index is a trademark or service mark of Goldman, Sachs & Co. and has been licensed for use by the Investment Adviser in connection with the Fund. As the licensor of this trademark or service mark, Goldman, Sachs & Co. does not make any representation regarding the advisability of investing in the Fund. 2

7 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND INVESTMENT OBJECTIVE The Fund seeks to achieve investment results that approximate the performance of the GS Global Markets Navigator Index. Portfolio Management Discussion and Analysis Below, the Goldman Sachs Quantitative Investment Strategies Team discusses the Goldman Sachs Variable Insurance Trust Goldman Sachs Global Markets Navigator Fund s (the Fund ) performance and positioning for the six-month period ended June 30, 2013 (the Reporting Period ). How did the Fund perform during the Reporting Period? During the Reporting Period, the Fund s Service Shares generated a cumulative total return of 6.37%. This return compares to the 8.30% cumulative total return of the Fund s benchmark, the GS Global Markets Navigator Index (the Index ), during the same time period. A blended index comprised 60% of the Standard & Poor s 500 Index a (with dividends reinvested) and 40% of the Barclays U.S. Aggregate Bond Index b (with dividends reinvested) generated a cumulative total return of 7.10% during the same time period. The S&P 500 Index and the Barclays U.S. Aggregate Bond Index generated cumulative total returns of 13.82% and -2.44%, respectively, during the same time period. Importantly, during the Reporting Period, the Fund s overall annualized volatility was 10.50%, less than the S&P 500 Index s annualized volatility of 12.10% during the same time period. What economic and market factors most influenced the Fund during the Reporting Period? U.S. equity markets rallied during the first quarter of 2013 despite the overhang of automatic spending cuts, or sequestration, that went into effect in March U.S. equity performance reflected a variety of improving U.S. economic indicators strong momentum in the housing market continued and the employment picture improved. However, in the second quarter of 2013, bullish sentiment began to fade, and the U.S. equity rally halted in mid-may 2013 when Federal Reserve ( Fed ) Chair Bernanke announced the potential tapering of the pace of quantitative easing asset purchases. U.S. equity markets reacted negatively again in June 2013 to news the slowing of the asset purchase program could begin later in the year, with the program ending by the middle of 2014 if the economy grows as expected. U.S. equity markets calmed toward the end of the month as a downward revision of first quarter Gross Domestic Product ( GDP ) from 2.4% to 1.8% supported reassurance from the Fed that it would only begin reducing asset purchases if the economy was clearly on track. In the international equity markets, European equities managed gains during the Reporting Period overall, despite a banking crisis in Cyprus and further economic contraction in the Eurozone. Strong performance by the Japanese equity market dominated returns for the Reporting Period but was partially offset by weaker returns for the Asia ex-japan region, where such returns were exaggerated by depreciating currencies. The yen weakened to its lowest level against the U.S. dollar since mid-2009 on expectations the new head of the Bank of Japan will aggressively pursue a 2% inflation target. Japanese equities hit a five-year high during May 2013 before taking a sharp turn down with a number of other global equity markets. However, after Fed Chair Bernanke s comments about the potential tapering of the pace of quantitative easing asset purchases, the rally in international equities virtually halted. In June, international equity markets also reacted negatively to news the Fed could begin slowing its asset purchase program later in The global fixed income markets, which had begun the Reporting Period in January 2013 with a rally, reversed course during February 2013, primarily on worries about U.S. fiscal policy gridlock and Italy s elections. In March 2013, Cyprus bailout by Euro-area finance ministers raised the prospect of a tax on bank deposits, prompting fears of a more widespread run on European banks. Investors grew more defensive, and government bond yields declined. In contrast, spread, or non-u.s. Treasury, sectors a The S&P 500 Index is the Standard & Poor s 500 Composite Stock Prices Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index. b The Barclays U.S. Aggregate Bond Index represents an unmanaged diversified portfolio of fixed income securities, including U.S. Treasuries, investment-grade corporate bonds, and mortgage-backed and asset-backed securities. The Index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index. 3

8 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND remained relatively firm. In early April 2013, government bond yields declined on disappointing economic data before stabilizing later in the month. Spread sectors performed well, as investors looked past sluggish economic data for higher yielding assets in the exceptionally low interest rate environment. After Fed Chair Bernanke said the U.S. central bank could begin reducing asset purchases, government bond yields rose substantially. At the same time, spread sectors grew more volatile, reflecting widespread uncertainty over how markets may function as the Fed withdraws support. In June 2013, bond investors focused on the U.S. economy and stronger than expected payrolls data, which reinforced expectations the Fed would start reducing its quantitative easing during Government bond yields continued to increase, as the Fed meeting and press conference were more hawkish than expected. Spread sectors remained volatile. Meanwhile, European economic data improved, with modest increases in the Eurozone Purchasing Managers Indices and accelerating expansion in the U.K. Japan s economy continued to respond positively to its government and central bank policies. In contrast, China s economic data raised concerns about the extent of that nation s slowdown. What key factors were responsible for the Fund s performance during the Reporting Period? The Fund seeks to achieve its objective by investing in financial instruments that provide exposure to the various underlying global equity and fixed income indices that comprise the Index. Using a momentum-based methodology, the Fund strives to manage risk and hedge this with potential in changing market environments. Momentum investing seeks growth of capital by gaining exposure to asset classes that have exhibited trends in price performance over selected time periods. In managing the Fund, we use a methodology that evaluates historical three-, six- and nine-month returns, volatilities and correlations across a range of nine global asset classes. Represented by indices, these asset classes include, within the equities category, U.S. large-cap, Europe, Asia, emerging markets, U.K. and small-cap stocks. Within the fixed income category, the Fund may allocate assets to U.S., European and Japanese fixed income securities. The analysis of these asset classes drives the aggregate allocations of the Fund over time. We believe market price momentum either positive or negative has significant predictive power. During the Reporting Period, the Fund s fixed income allocations detracted from its relative performance. The Fund s allocation to German government bonds hurt returns most, especially during May and June Its exposure to U.S. Treasury securities also detracted from relative returns during the Reporting Period. On the positive side, the Fund s positioning in equities added to its relative performance. In particular, the Fund benefited from its allocation to Japanese equities and its exposure to U.S. large-cap and small-cap stocks. How did volatility affect the Fund during the Reporting Period? As part of our investment approach, we seek to mitigate the Fund s volatility. As mentioned earlier, during the Reporting Period, the Fund s actual volatility (annualized, using daily returns) was 10.50% versus the S&P 500 Index s annualized volatility of 12.10%. How was the Fund positioned during the Reporting Period? During the Reporting Period, we tactically managed the Fund s allocations across equity and fixed income markets based on the momentum and volatility of these asset classes. When the Reporting Period began, the Fund s allocations were split rather evenly between equities and fixed income. By the end of March 2013, the Fund s allocation to equities had risen to approximately 80% of its total assets, as the Fund benefited from the strong first calendar quarter rally in the global equity markets. During the first quarter of 2013, we concentrated the Fund s equity investments in U.S. and Japanese equities and eliminated its position in emerging markets equities. Within its fixed income allocation at the beginning of the Reporting Period, the Fund had a weighting of approximately 40% of its total assets in U.S. Treasury securities. By the end of March 2013, the Fund s weighting in U.S. Treasury securities had dipped to less than 5% of its total assets, and we held it near zero throughout the second quarter of In addition, toward the end of June 2013, the Fund s daily volatility control was triggered (that is, the Fund s 90-day realized volatility exceeded our predetermined 10% threshold) and in keeping with our momentum-based methodology, we proportionally reduced portfolio risk by 20% and added an allocation to cash. 4

9 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND How did the Fund use derivatives and similar instruments during the Reporting Period? During the Reporting Period, the Fund used exchange-traded index futures contracts to gain exposure to U.S. small-cap equities and to non-u.s. developed market equities, including those in Europe and Japan, as well as to gain exposure to U.S. and non-u.s. fixed income. Were there any changes to the Fund s portfolio management team during the Reporting Period? After 33 years of distinguished service, Don Mulvihill, CIO of Customized Beta Strategies within the Quantitative Investment Strategies ( QIS ) team, decided to retire from the firm. As of June 2013, Gary Chropuvka assumed Mr. Mulvihill s role as Head of the Customized Beta Strategies business, overseeing the team s tax-efficient, rules-based and customized beta investment strategies. Mr. Chropuvka brings extensive experience having joined QIS in 1999 with Mr. Mulvihill to manage the team s taxefficient investment strategies. All of Mr. Mulvihill s direct investment responsibilities were performed within a co-lead or team leadership structure and follow processes that provide continuity in day-to-day investment decision-making in each portfolio. What is the Fund s tactical asset allocation view and strategy for the months ahead? By the end of the Reporting Period, we had reduced the Fund s allocation to equities and fixed income. We had added a significant allocation to cash, as we sought to reduce risk, largely in response to heightened volatility and poor momentum across the financial markets during June In fixed income, at the end of the Reporting Period, the Fund had exposure to German and Japanese government bonds. Within equities, it had exposure to U.S. large-cap and small-cap equities. At the end of the Reporting Period, the Fund had a reduced allocation to Japanese equities because of the increased volatility in the Japanese equity market. The Fund, like the Index, had neutral exposure to emerging markets equities. Going forward, we intend to position the Fund to provide exposure to price momentum from among nine underlying asset classes, while dynamically seeking to manage the volatility, or risk, of the overall portfolio. When volatility increases, our goal is to preserve capital by moving the Fund into less volatile assets such as fixed income. When we believe the financial markets have become more stable, we expect to allocate a greater portion of the Fund s assets to equities. There is no guarantee the Fund s dynamic management strategy will cause it to achieve its investment objective. 5

10 FUND BASICS Global Markets Navigator Fund as of June 30, 2013 STANDARDIZED TOTAL RETURNS 1 For the period ended 6/30/13 One Year Since Inception Inception Date Service 11.81% 8.50% 4/16/12 1 Standardized Total Returns are average annual total returns as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value ( NAV ). Because Service Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns. Total return figures in the above chart represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the total return figures in the above chart. Please visit to obtain the most recent month-end returns. Performance reflects fee waivers and/or expense limitations in effect during the periods shown. In their absence, performance would be reduced. EXPENSE RATIOS 2 Net Expense Ratio (Current) Gross Expense Ratio (Before Waivers) Service 1.08% 3.78% 2 The expense ratios of the Fund, both current (net of applicable fee waivers and/or expense limitations) and before waivers (gross of applicable fee waivers and/or expense limitations), are as set forth above according to the most recent publicly available Prospectus for the Fund and may differ from the expense ratios disclosed in the Financial Highlights in this report. The Fund s waivers and/or expense limitations will remain in place through at least April 30, 2014, and prior to such date the Investment Adviser may not terminate the arrangements without the approval of the Fund s Board of Trustees. If these arrangements are discontinued in the future, the expense ratios may change without shareholder approval. 6

11 FUND BASICS FUND COMPOSITION 3 50% as of 6/30/13 as of 12/31/12 40% 37.5% 30% 20% 10% 11.9% 17.1% 21.3% 23.4% 17.0% 9.7% 9.9% 0% U.S. Treasury Obligations Agency Debentures 4 Exchange Traded Funds Investment Companies 3 The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities. Underlying sector allocations of exchange traded funds ( ETFs ) held by the Fund are not reflected in the graph above. Consequently, the Fund s overall sector allocations may differ from the percentages contained in the graph above. The graph depicts the Fund s investments but may not represent the Fund s market exposure due to the exclusion of certain derivatives, if any, as listed in the Additional Investment Information section of the Schedule of Investments. 4 Agency Debentures include agency securities offered by companies such as Federal Home Loan Bank and Federal Home Loan Mortgage Corporation, which operate under a government charter. While they are required to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company. 7

12 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Schedule of Investments June 30, 2013 (Unaudited) Principal Amount Interest Rate Maturity Date Value Principal Amount Interest Rate Maturity Date Value Agency Debentures (a) 17.1% FHLB $4,724, % 09/20/13 $ 4,723,575 FNMA 4,724, /18/13 4,723,584 TOTAL AGENCY DEBENTURES (Cost $9,445,376) $ 9,447,159 Shares Description Values Exchange Traded Fund 23.4% 175,974 Vanguard S&P 500 $12,916,492 (Cost $12,537,769) U.S. Treasury Obligations 11.9% United States Treasury Bill (a) $6,028, % 08/01/13 $ 6,027,974 United States Treasury Note 535, /15/21 574,435 TOTAL U.S. TREASURY OBLIGATIONS (Cost $6,632,355) $ 6,602,409 TOTAL INVESTMENTS 62.1% (Cost $33,987,692) $34,338,252 OTHER ASSETS IN EXCESS OF LIABILITIES 37.9% 20,986,466 NET ASSETS 100.0% $55,324,718 Shares Rate Value Investment Company (b) 9.7% Goldman Sachs Financial Square Government Fund FST Shares 5,372, % $ 5,372,192 (Cost $5,372,192) The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. (a) Issued with a zero coupon. Income is recognized through the accretion of discount. (b) Represents an affiliated issuer. Investment Abbreviations: FHLB Federal Home Loan Bank FNMA Federal National Mortgage Association ADDITIONAL INVESTMENT INFORMATION FUTURES CONTRACTS At June 30, 2013, the Fund had the following futures contracts: Type Number of Contracts Long (Short) Expiration Date Current Value Unrealized Gain (Loss) EURO STOXX 50 Index 47 September 2013 $ 1,589,393 $ (53,076) Euro-Bund 53 September ,763,104 (112,234) FTSE 100 Index 29 September ,717,687 (50,452) Russell 2000 Mini Index 14 September ,364,580 12,120 TSE TOPIX Index 106 September ,087, ,613 TOTAL $ (12,029) 8 The accompanying notes are an integral part of these financial statements.

13 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Statement of Assets and Liabilities June 30, 2013 (Unaudited) Assets: Investments of unaffiliated issuers, at value (cost $28,615,500) $28,966,060 Investments of affiliated issuer, at value (cost $5,372,192) 5,372,192 Cash 15,725,356 Receivables: Investments sold 2,924,705 Fund shares sold 1,264,174 Collateral on certain derivative contracts (a) 1,077,516 Futures variation margin 223,908 Reimbursement from investment adviser 16,595 Dividends and interest 2,145 Other assets 702 Total assets 55,573,353 Liabilities: Payables: Investments purchased 121,048 Amounts owed to affiliates 40,249 Fund shares redeemed 27,483 Accrued expenses 59,855 Total liabilities 248,635 Net Assets: Paid-in capital 52,491,158 Undistributed net investment loss (22,055) Accumulated net realized gain 2,513,156 Net unrealized gain 342,459 NET ASSETS $55,324,718 Total Service Shares of beneficial interest outstanding $0.001 par value (unlimited shares authorized): 5,018,547 Net asset value, offering and redemption price per share: $11.02 (a) Represents cash on deposit with counterparty relating to initial margin requirements on future transactions of $1,077,516. The accompanying notes are an integral part of these financial statements. 9

14 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Statement of Operations For the Six Months Ended June 30, 2013 (Unaudited) Investment income: Dividends unaffiliated issuers $ 102,685 Interest 19,612 Dividends affiliated issuer 285 Total investment income 122,582 Expenses: Management fees 156,686 Amortization of offering costs 65,817 Distribution and Service fees Service Class 49,584 Professional fees 38,344 Custody, accounting and administrative services 29,076 Printing and mailing costs 27,715 Trustee fees 8,787 Transfer Agent fees 3,966 Other 4,763 Total expenses 384,738 Less expense reductions (182,946) Net expenses 201,792 NET INVESTMENT LOSS (79,210) Realized and unrealized gain (loss): Net realized gain (loss) from: Investments (146,845) Futures contracts 2,364,084 Foreign currency transactions (65,358) Net change in unrealized gain (loss) on: Investments 149,419 Futures contracts (161,664) Foreign currency translation 9,432 Net realized and unrealized gain 2,149,068 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,069, The accompanying notes are an integral part of these financial statements.

15 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Statements of Changes in Net Assets For the Six Months Ended June 30, 2013 (Unaudited) For the Period Ended December 31, 2012 (a) From operations: Net investment income (loss) $ (79,210) $ 20,384 Net realized gain 2,151, ,993 Net change in unrealized gain (loss) (2,813) 345,272 Net increase in net assets resulting from operations 2,069, ,649 Distributions to shareholders: From net realized gains (33,093) From share transactions: Proceeds from sales of shares 31,011,557 29,921,805 Reinvestment of distributions 33,093 Cost of shares redeemed (3,746,273) (4,728,878) Net increase in net assets resulting from share transactions 27,265,284 25,226,020 TOTAL INCREASE 29,335,142 25,989,576 Net assets: Beginning of period 25,989,576 End of period $55,324,718 $25,989,576 Undistributed net investment income (loss) $ (22,055) $ 57,155 Summary of share transactions: Shares sold 2,848,414 2,978,079 Shares issued on reinvestment of distributions 3,229 Shares redeemed (339,529) (471,646) NET INCREASE 2,508,885 2,509,662 (a) Commenced operations on April 16, The accompanying notes are an integral part of these financial statements. 11

16 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Financial Highlights Selected Data for a Share Outstanding Throughout Each Period Income (loss) from investment operations Year Net asset value, beginning of period Net investment income (loss) (a) Net realized and unrealized gain Total from investment operations Distributions from net realized gains Net asset value, end of period Total return (b) Net assets, end of period (in 000s) Ratio of net expenses to average net assets (c) Ratio of total expenses to average net assets (c) Ratio of net investment income (loss) to average net assets Portfolio turnover rate (d) FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED) 2013 $10.36 $(0.02) $0.68 $0.66 $ $ % $55, % (e) 1.94% (e) (0.40)% (e) 177% FOR THE PERIOD ENDED DECEMBER 31, 2012 (Commenced April 16, 2012) (0.01) , (e) 4.21 (e) 0.27 (e) 300 (a) Calculated based on the average shares outstanding methodology. (b) Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions, and a complete redemption of the investment at the net asset value at the end of the period. Total returns for periods less than one full year are not annualized. (c) Expense ratios exclude expenses of the Underlying Funds in which the Fund invests. (d) The Fund s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund s portfolio turnover rate may be higher. (e) Annualized. The accompanying notes are an integral part of these financial statements. 12

17 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Notes to Financial Statements June 30, 2013 (Unaudited) 1. ORGANIZATION Goldman Sachs Variable Insurance Trust (the Trust or VIT ) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the Act ), as an open-end management investment company. The Trust includes the Goldman Sachs Global Markets Navigator Fund (the Fund ). The Fund is a non-diversified portfolio under the Act offering one class of shares Service Shares. Shares of the Trust are offered to separate accounts of participating life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Goldman Sachs Asset Management, L.P. ( GSAM ), an affiliate of Goldman, Sachs & Co. ( Goldman Sachs ), serves as investment adviser to the Fund pursuant to a management agreement (the Agreement ) with the Trust. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( GAAP ) and require management to make estimates and assumptions that may affect the reported amounts and disclosures. Actual results may differ from those estimates and assumptions. A. Investment Valuation The Fund s valuation policy is to value investments at fair value. B. Investment Income and Investments Investment income includes interest income and dividend income, net of any foreign withholding taxes, less any amounts reclaimable. Interest income is accrued daily and adjusted for amortization of premiums and accretion of discounts. Dividend income is recognized on ex-dividend date or, for certain foreign securities, as soon as such information is obtained subsequent to the ex-dividend date. Investment transactions are reflected on trade date. Realized gains and losses are calculated using identified cost. Investment transactions are recorded on the following business day for daily net asset value ( NAV ) calculations. Any foreign capital gains tax is accrued daily based upon net unrealized gains, and is payable upon sale of such investments. For derivative contracts, realized gains and losses are recorded upon settlement of the contract. C. Expenses Expenses incurred directly by the Fund are charged to the Fund, and certain expenses incurred by the Trust that may not solely relate to the Fund are allocated to the Fund and the other funds of the Trust on a straight-line and/or pro-rata basis depending upon the nature of the expenses and are accrued daily. D. Offering Costs Offering costs paid in connection with the offering of shares of the Fund have been amortized on a straightline basis over 12 months from the date of commencement of operations. E. Federal Taxes and Distributions to Shareholders It is the Fund s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended (the Code ), applicable to regulated investment companies (mutual funds) and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, the Fund is not required to make any provisions for the payment of federal income tax. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gains distributions, if any, are declared and paid annually. Net capital losses are carried forward to future fiscal years and may be used to the extent allowed by the Code to offset any future capital gains. Losses that are carried forward will retain their character as either short-term or long-term capital losses. Utilization of capital loss carryforwards will reduce the requirement of future capital gains distributions. 13

18 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Notes to Financial Statements (continued) June 30, 2013 (Unaudited) 2. SIGNIFICANT ACCOUNTING POLICIES (continued) The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules, which may differ from GAAP. The source of the Fund s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gain or capital. Certain components of the Fund s net assets on the Statement of Assets and Liabilities reflect permanent GAAP/tax differences based on the appropriate tax character. F. Foreign Currency Translation The accounting records and reporting currency of the Fund are maintained in United States ( U.S. ) dollars. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the current exchange rates at the close of each business day. The effect of changes in foreign currency exchange rates on investments is included within net realized and unrealized gain (loss) on investments. Changes in the value of other assets and liabilities as a result of fluctuations in foreign exchange rates are included in the Statement of Operations within net change in unrealized gain (loss) on foreign currency transactions. Transactions denominated in foreign currencies are translated into U.S. dollars on the date the transaction occurred, the effects of which are included within net realized gain (loss) on foreign currency transactions. 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these investments. The three levels of the fair value hierarchy are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in markets that are not active or financial instruments for which significant inputs are observable (including, but not limited to, quoted prices for similar investments, interest rates, foreign exchange rates, volatility and credit spreads), either directly or indirectly; Level 3 Prices or valuations that require significant unobservable inputs (including GSAM s assumptions in determining fair value measurement). The Trustees have adopted Valuation Procedures that govern the valuation of the portfolio investments held by the Fund, including investments for which market quotations are not readily available. The Trustees have delegated to GSAM day-to-day responsibility for implementing and maintaining internal controls and procedures related to the valuation of the Fund s portfolio investments. To assess the continuing appropriateness of pricing sources and methodologies, GSAM regularly performs price verification procedures and issues challenges as necessary to third party pricing vendors or brokers, and any differences are reviewed in accordance with the Valuation Procedures. 14

19 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued) A. Level 1 and Level 2 Fair Value Investments The valuation techniques and significant inputs used in determining the fair values for investments classified as Level 1 and Level 2 are as follows: Equity Securities Equity securities and investment companies traded on a U.S. securities exchange or the NASDAQ system, or those located on certain foreign exchanges, including but not limited to the Americas, are valued daily at their last sale price or official closing price on the principal exchange or system on which they are traded. If no sale occurs, equity securities and exchange traded investment companies are valued at the last bid price for long positions and at the last ask price for short positions. Investments in investment companies (other than those that are exchange traded) are valued at the NAV on the valuation date. To the extent these investments are actively traded, they are classified as Level 1 of the fair value hierarchy. Unlisted equity securities for which market quotations are available are valued at the last sale price on the valuation date, or if no sale occurs, at the last bid price. Securities traded on certain foreign securities exchanges are valued daily at fair value determined by an independent fair value service (if available) under Valuation Procedures approved by the Trustees and consistent with applicable regulatory guidance. The independent fair value service takes into account multiple factors including, but not limited to, movements in the securities markets, certain depositary receipts, futures contracts and foreign currency exchange rates that have occurred subsequent to the close of the foreign securities exchange. These investments are generally classified as Level 2 of the fair value hierarchy. Debt Securities Debt securities for which market quotations are readily available are valued daily on the basis of quotations supplied by dealers or an independent pricing service approved by the Trustees. The pricing services may use valuation models or matrix pricing, which consider: (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date or (ii) quotations from securities dealers to determine current value. Short-term debt obligations that mature in sixty days or less and that do not exhibit signs of credit deterioration are valued at amortized cost, which approximates fair value. With the exception of treasury securities, which are generally classified as Level 1, these investments are generally classified as Level 2 of the fair value hierarchy. Derivative Contracts A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Exchange-traded derivatives, including futures contracts, typically fall within Level 1 of the fair value hierarchy. Over-thecounter ( OTC ) derivatives are valued using market transactions and other market evidence, including market-based inputs to models, calibration to market-clearing transactions, broker or dealer quotations, or other alternative pricing sources. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument, as well as the availability of pricing information in the market. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, voluntary and involuntary prepayment rates, loss severity rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, model inputs can generally be verified and model selection does not involve significant management judgment. OTC derivatives are classified within Level 2 of the fair value hierarchy when significant inputs are corroborated by market evidence. i. Futures Contracts Futures contracts are contracts to buy or sell a standardized quantity of a specified commodity or security and are valued based on exchanged settlement prices or independent market quotes. Futures contracts are valued at the last settlement price, or in the absence of a sale, the last bid price for long positions and at the last ask price for short positions, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, a Fund deposits cash or securities in an account on behalf of the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin receivable or payable with a corresponding offset to unrealized gains or losses. 15

20 GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL MARKETS NAVIGATOR FUND Notes to Financial Statements (continued) June 30, 2013 (Unaudited) 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS (continued) B. Level 3 Fair Value Investments To the extent that the aforementioned significant inputs are unobservable, or if quotations are not readily available, or if GSAM believes that such quotations do not accurately reflect fair value, the fair value of the Fund s investments may be determined under Valuation Procedures approved by the Trustees. GSAM, consistent with its procedures and applicable regulatory guidance, may make an adjustment to the most recent valuation prices of either domestic or foreign securities in light of significant events to reflect what it believes to be the fair value of the securities at the time of determining a Fund s NAV. Significant events which could affect a large number of securities in a particular market may include, but are not limited to: significant fluctuations in U.S. or foreign markets; market dislocations; market disruptions; or unscheduled market closings. Significant events which could also affect a single issuer may include, but are not limited to: corporate actions such as reorganizations, mergers and buy-outs; ratings downgrades; and bankruptcies. C. Fair Value Hierarchy The following is a summary of the Fund s investments and derivatives classified in the fair value hierarchy as of June 30, 2013: Investment Type Level 1 Level 2 Level 3 Assets Fixed Income Agency Debentures $ $9,447,159 $ U.S. Treasury Obligations and/or Other U.S. Government Agencies 6,602,409 Exchange Traded Fund 12,916,492 Investment Company 5,372,192 Total $24,891,093 $9,447,159 $ Derivative Type Assets (a) Futures Contracts $ 203,733 $ $ Liabilities (a) Futures Contracts $ (215,762) $ $ (a) Amount shown represents unrealized gain (loss) at period end. For further information regarding security characteristics, see the Schedule of Investments. 16