<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
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SUPPLEMENT DATED SEPTEMBER 1, 1998 TO
PROSPECTUS DATED JANUARY 1, 1998
On the Cover Page and under "FUND HIGHLIGHTS--What are the Investment
Objectives and Policies of the Funds" and "INVESTMENT OBJECTIVES AND
POLICIES--Mid Cap Equity Fund," the following changes are made:
The range of public stock market capitalizations in which the Fund will
invest is amended such that the Mid Cap Equity Fund will seek to meet its
objective primarily through investments in equity securities of companies
with public stock market capitalizations within the range of the market
capitalization of companies constituting the Russell Midcap Index at the
time of investment (currently between $400 million and $16 billion).
Under "OVERVIEW OF INVESTMENT STYLES--EQUITY FUNDS" the International Equity
Fund is deleted from the "Growth Style " section and the following paragraph
is added:
ACTIVELY MANAGED FUND. The International Equity Fund is managed using an
active international approach, which utilizes a consistent process of stock
selection undertaken by portfolio management teams located within each of
the major investment regions, including Europe, Japan, Asia and the United
States. In selecting securities, the Investment Adviser uses a long-term,
bottom-up strategy based on first-hand fundamental research that is
designed to give broad exposure to the available opportunities while
seeking to add return primarily through stock selection. Equity securities
for this Fund are evaluated based on three key factors--the business, the
management and the valuation. The Investment Adviser ordinarily seeks
securities that have, in the Investment Adviser's opinion, superior
earnings growth potential, sustainable franchise value with management
attuned to creating shareholder value and relatively discounted valuations.
In addition, the Investment Adviser uses a multi-factor risk model which
seeks to assure that deviations from the benchmark are justifiable.
Under "INVESTMENT OBJECTIVES AND POLICIES" the second sentence of the
"Primary Investment Focus" of the CORE U.S. Equity Fund, and the first
sentence of "Primary Investment Focus" of each of the CORE Large Cap Growth
and CORE Small Cap Equity Funds have been revised to delete the requirement
that equity securities of foreign issuers, in which each Fund may invest, must
comply with U.S. accounting standards.
Under "INVESTMENT OBJECTIVES AND POLICIES" subsections "Global Income Fund"
and "High Yield Fund" the second sentence of subsection "Other" for each Fund
is revised to add credit swaps as one of the active management techniques that
the Fund may employ to manage its duration and term structure, to seek to
hedge its exposure to foreign currencies and to seek to enhance returns. In
addition, credit swaps, which is limited to 5% of net assets, is added to item
(iii) of subsection "Miscellaneous Techniques" under the section "INVESTMENT
TECHNIQUES."
Under "DESCRIPTION OF SECURITIES" subsection "Foreign Investments--Foreign
Securities" the following language has been added after the fourth sentence of
the second paragraph:
The expected introduction of a single currency, the euro, on January 1,
1999 for participating European nations in the Economic and Monetary Union
("EU") presents unique uncertainties, including whether the payment and
operational systems of banks and other financial institutions will be ready
by the scheduled launch date; the creation of suitable clearing and
settlement payment systems for the new currency; the legal treatment of
certain outstanding financial contracts after January 1, 1999 that refer to
existing currencies rather than the euro; the establishment and maintenance
of exchange rates for currencies being converted into the euro and the
euro; the fluctuation of the euro relative to non-euro currencies during
the transition period from January 1, 1999 to December 31, 2000 and beyond;
whether the interest rate, tax and labor regimes of European countries
participating in the euro will converge over time; and whether the
conversion of the currencies of other EU countries such as the United
Kingdom, Denmark and Greece into the euro and the admission of other non-EU
countries such as Poland, Latvia and Lithuania as members of the EU may
have an impact on the euro. These or other factors, including political and
economic risks, could cause market disruptions before or after the
introduction of the euro, and could adversely affect the value of
securities and foreign currencies held by the Funds.
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Under "INVESTMENT TECHNIQUES" subsection "Futures Contracts and Options on
Futures Contracts" the third sentence of the first paragraph has been revised
to read as follows:
The futures contracts may be based on various securities (such as U.S.
Government securities), foreign currencies, securities indices and other
financial instruments and indices, whether domestic or foreign.
Under "INVESTMENT TECHNIQUES" the following two paragraphs are added after
subsection "Futures Contracts and Options on Futures Contracts":
STANDARD & POOR'S DEPOSITORY RECEIPTS
Each Fund (other than the High Yield and Global Income Funds) may,
consistent with its objectives, purchase Standard & Poor's Depository
receipts ("SPDRs"). SPDRs are American Stock Exchange-traded securities
that represent ownership in the SPDR Trust, a trust which has been
established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the S&P 500.
This trust is sponsored by a subsidiary of the American Stock Exchange.
SPDRs may be used for several reasons, including but not limited to:
facilitating the handling of cash flows or trading, or reducing transaction
costs. The use of SPDRs would introduce additional risks to the portfolio
as the price movement of the instrument does not perfectly correlate with
the price action of the underlying index.
EQUITY SWAPS
Each Fund (other than the High Yield and Global Income Funds) may invest up
to 10% of its total assets in equity swaps. Equity swaps allow the parties
to a swap agreement to exchange the dividend income or other components of
return on an equity investment (e.g., a group of equity securities or an
index) for a component of return on another non-equity or equity
investment. An equity swap may be used by a Fund to invest in a market
without owning or taking physical custody of securities in circumstances in
which direct investment is restricted for legal reasons or is otherwise
impractical. Equity swaps are derivatives and their value can be very
volatile. To the extent that the Investment Adviser does not accurately
analyze and predict the potential relative fluctuation of the components
swapped with another party, a Fund may suffer a loss. The value of some
components of an equity swap (such as the dividends on a common stock) may
also be sensitive to changes in interest rates. Furthermore, during the
period a swap is outstanding, a Fund may suffer a loss if the counterparty
defaults. In connection with its investments in equity swaps, a Fund will
either segregate cash or liquid assets or otherwise cover its portion in a
manner required by the SEC.
Under "INVESTMENT TECHNIQUES" the second paragraph after subsection
"Currency Swaps" has been revised to read as follows:
A Fund will not enter into swap transactions unless the unsecured
commercial paper, senior debt or claims-paying ability of the other party
thereto is rated investment grade by S&P or Moody's, or, if unrated by such
rating organizations, determined to be of comparable quality by the
Investment Adviser. The use of currency swaps is a highly specialized
activity which involves investment techniques and risks different from
those associated with ordinary portfolio securities transactions.
Under "INVESTMENT TECHNIQUES" subsection "When-Issued Securities and Forward
Commitments" the following sentence is added:
Each Fund may sell securities on a forward commitment basis; that is, make
contracts to sell securities for a fixed price at a future date beyond the
customary, three-day settlement. Securities sold on a forward commitment
basis involve the risk that the value of the securities to be sold may
increase prior to the settlement date.
Under "INVESTMENT TECHNIQUES" subsection "Miscellaneous Techniques" the
language "and Standard and Poor's Depository Receipts" under item (i) is
deleted and the following language is added at the end of the paragraph:
(viii) reverse repurchase agreements for investment purposes (Global Income
and High Yield Funds only).
Under "MANAGEMENT" subsection "Investment Adviser," the following language
is added after the fourth sentence of the first paragraph:
The Goldman Sachs Group, L.P., which controls the Investment Advisers, has
announced that it will pursue an inital public offering of the firm during
the fourth quarter of 1998; if the public offering is consummated, The
Goldman Sachs Group, L.P. will merge into the new public company, which
will be called The Goldman Sachs Group, Inc.
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Under "MANAGEMENT" subsection "Investment Advisers--Fund Managers" the
following portfolio managers have been added:
FUND MANAGERS
<TABLE>
<CAPTION>
YEARS
PRIMARILY FIVE YEAR
NAME AND TITLE FUND RESPONSIBILITY RESPONSIBLE EMPLOYMENT HISTORY
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<C> <C> <C> <S>
Guy P. de C. Bennett Portfolio Manager-- Since Mr. Bennett joined the
Vice President International Equity 1997 Investment Adviser in
1996 and is also co-head
of GSAM's Japanese
Equity Group in Tokyo.
From 1984 to 1996, he
was a portfolio manager
and an Executive
Director at CIN
Management.
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Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE U.S. Equity 1998 Investment Adviser in
CORE Large Cap Growth 1998 1998. From 1984 to 1998,
CORE Small Cap Equity 1998 she was the director of
Quantitative Equity
Research and served on
the Investment Policy
Committee at Prudential
Securities.
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Paul D. Farrell Senior Portfolio Manager-- Since Mr. Farrell joined the
Vice President Mid Cap Equity 1998 Investment Adviser in
1991. During 1991, he
served as a managing
director at Plaza
Investment Managers, the
investment subsidiary of
GEICO Corp., a major
insurance company. From
1986 to 1991, he was
employed by Goldman
Sachs as a Vice
President in the
investment research
department and was
responsible for the
formation of the firm's
Emerging Growth Research
Group.
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Greg Gigliotti Senior Portfolio Manager-- Since Mr. Gigliotti joined the
Vice President Growth and Income 1998 Investment Adviser in
Mid Cap Equity 1998 1997. From 1996 to 1997
he was a Vice President
and senior analyst at
Franklin Mutual
Advisors, Inc., the
asset management
division of Franklin
Resources, Inc. From
1989 to 1996 he was a
Vice President and
senior analyst at Heine
Securities Corporation
which was purchased by
Franklin Resources, Inc.
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Rachel Golder Portfolio Manager-- Since Ms. Golder joined the
Vice President High Yield Fund 1998 Investment Adviser in
1997. Prior to joining
the Investment Adviser,
Ms. Golder spent six
years at Saudi
International Bank in
London as a high yield
credit analyst and
portfolio manager. Prior
to that, she was with
Kleinworth Benson Ltd.,
where she managed
investments in corporate
loans.
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Matthew B. McLennan Senior Portfolio Manager-- Since Mr. McLennan joined the
Vice President Mid Cap Equity 1998 Investment Adviser in
1995. From 1994 to 1995,
he worked in the
Investment Banking
Division of Goldman
Sachs in Australia. From
1991 to 1994, Mr.
McLennan worked at
Queensland Investment
Corporation in
Australia.
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Susan Noble Senior Portfolio Manager-- Since Ms. Noble joined the
Executive Director International Equity 1998 Investment Adviser in
October 1997 as Senior
Portfolio Manager and
head of the European
Equity team. From 1986
to 1997, she worked at
Fleming Investment
Management in London,
where she most recently
was Portfolio Management
Director for the
European equity
investment strategy and
process.
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Thomas S. Price Senior Portfolio Manager-- Since Mr. Price joined the
Vice President Growth and Income 1998 Investment Adviser in
Mid Cap Equity 1998 1997. From 1996 to 1997
he was a Vice President
and senior analyst at
Franklin Mutual
Advisors, Inc., the
asset management
division of Franklin
Resources, Inc. From
1993 to 1996 he was a
Vice President and
senior analyst at Heine
Securities Corporation
which was purchased by
Franklin Resources, Inc.
- --------------------------------------------------------------------------------------
Lawrence S. Sibley Senior Portfolio Manager-- Since Mr. Sibley joined the
Vice President Growth and Income 1997 Investment Adviser in
Mid Cap Equity 1997 1997. From 1994 to 1997
he headed Institutional
Equity Sales at J.P.
Morgan Securities and
from 1987 to 1994, he
was a principal of
Sanford C. Bernstein &
Co. in its Institutional
Sales Department.
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Karma Wilson Senior Portfolio Manager-- Since Ms. Wilson joined the
Vice President Growth and Income 1998 Investment Adviser in
Mid Cap Equity 1998 1994. Prior to 1994, she
was an investment
analyst with Bankers
Trust Australia Ltd.
Before 1992, she was
employed at Arthur
Andersen LLP.
</TABLE>
In addition, Richard Buckholz is no longer serving as a portfolio manager of
the High Yield Fund; Allessandro P.G. Lunghi and Danny Truell are no longer
serving as portfolio managers of the International Equity Fund; and G. Lee
Anderson and Ronald E. Gutfleish are no longer serving as portfolio managers
of the Growth and Income and Mid Cap Equity Funds.
Under "MANAGEMENT," the following paragraph is added to the end of the
section:
YEAR 2000
Many computer systems were designed using only two digits to signify the
year (for example, "98" for "1998"). On January 1, 2000, if these computer
systems are not corrected, they may incorrectly interpret "00" as the year
"1900" rather than the year "2000," leading to computer shutdowns or errors
(commonly known as the "Year 2000 Problem"). To the extent these systems
conduct forward-looking calculations, these computer problems may occur
prior to January 1, 2000. Like other investment companies and financial and
business organizations, the Funds could be adversely affected in their
ability to process securities trades, price securities, provide shareholder
account services and otherwise conduct normal business operations if the
computer systems used by the Investment Adviser or other Fund service
providers do not adequately address this problem in a timely manner. The
Investment Adviser has established a dedicated group to analyze these
issues and to implement the systems modifications necessary to prepare for
the Year 2000 Problem. Currently, the Investment Adviser does not
anticipate that the transition to the 21st Century will have any material
impact on their ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has sought assurances from the Funds'
other service providers that they are taking the steps necessary so that
they do not experience Year 2000 Problems, and the Investment Adviser will
continue to monitor the situation. At this time, however, no assurance can
be given that the actions taken by the Investment Adviser and the Funds'
other service providers will be sufficient to avoid any adverse effect on
the Funds due to the Year 2000 Problem.
