<PAGE>
Goldman
Sachs Variable Insurance Trust
- -------------------------------------------------------------------------------
GOLDMAN SACHS ASSET MANAGEMENT ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK,
NEW YORK 10004
- -------------------------------------------------------------------------------
Annual Report [LOGO OF GOLDMAN SACHS
December 31, 1998 APPEARS HERE]
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND
Shareholder Letter
Dear Shareholders,
The following is a report on the performance of the Goldman Sachs Variable
Insurance Trust Growth and Income Fund. This annual report covers the period
from January 12, 1998, when the Fund began operations, through December 31,
1998.
Performance Review
From January 12, 1998 through December 31, 1998, the Fund
generated a 5.47% aggregate total return. Over the same
time period, the Fund's benchmark, the Standard & Poor's
(S&P) 500 Index (with dividends reinvested), generated an
aggregate total return of 34.44%.
The Fund's underperformance over the review period is vari-
ously attributable to the underperformance of value stocks
versus growth stocks--and the broader market--over the
year, and the Fund's lack of exposure to the narrow leader-
ship of the market. With regard to the latter, performance
was, on a relative basis, hurt by what the Fund did not
own, as the market's continued rapid ascent was led mainly
by large cap growth stocks and, in particular, high price-
/earnings and price/book value technology stocks.
Investment Strategy Update
During the period, we took steps to improve the Fund's
level of diversification and liquidity by increasing the
number of holdings in the Fund's portfolio and its concen-
tration in the large-cap market segment (companies whose
capitalizations are greater than $5 billion), and by reduc-
ing the Fund's sector concentrations.
Investment Objective
The Fund seeks long-term capital growth and growth of in-
come primarily through investments in equity securities of
companies selling at a discount to their long-term earning
and/or dividend-paying ability.
1
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND
Shareholder Letter
Portfolio Composition
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
Philip Morris Co., Inc. Tobacco 3.1%
Aetna, Inc. Healthcare Management 2.6
Loews Corp. Insurance Services 2.4
First Union Corp. Banks 2.4
Bank One Corp. Banks 2.3
BankAmerica Corp. Banks 2.2
General Motors Corp. Auto/Vehicle 2.0
Elf Aquitaine ADR Integrated Oil 2.0
Royal Dutch Petroleum Co. Integrated Oil 1.9
Atlantic Richfield Co. Integrated Oil 1.9
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
We believe that the steps we've taken to improve the Fund's
level of diversification and liquidity has the potential to
provide returns more in line with our peer group and the
S&P 500 Index going forward. As we reposition the portfo-
lio, we will maintain our value bias and hope to continue
to add value through stock selection and fundamental re-
search. Our portfolio continues to sell at a discounted
valuation relative to the S&P 500 Index.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Value Portfolio Management Team
January 29, 1999
2
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on January 12, 1998 (commencement of operations). For compara-
tive purposes, the performance of the Fund's benchmark (the Standard and
Poor's 500 Index ("S&P 500 Index")) is shown. This performance data repre-
sents past performance and should not be considered indicative of future per-
formance which will fluctuate with changes in market conditions. These
performance fluctuations will cause an investor's shares, when redeemed, to
be worth more or less than their original cost.
Growth and Income Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested January 12, 1998 to
December 31, 1998
[GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND'S LIFETIME
PERFORMANCE GRAPH APPEARS HERE]
NAV Benchmark
--- ---------
1/12/98 10,000 10,000
01/98 10,550 10,572
02/98 11,481 11,334
03/98 11,810 11,915
04/98 11,720 12,035
05/98 11,451 11,828
06/98 11,391 12,308
07/98 10,801 12,176
08/98 9,251 10,416
09/98 9,831 11,083
10/98 10,261 11,984
11/98 10,491 12,711
12/98 10,547 13,444
Since Inception
Aggregate Total Return through December 31, 1998(a)
Growth and Income Fund (commenced January 12, 1998) 5.47%
---------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
3
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 94.0%
Aerospace/Defense - 5.9%
2,500 Boeing Co. $ 81,563
4,600 General Motors Corp. Class H (Hughes) 182,563
1,100 Honeywell Inc 82,844
2,600 Lockheed Martin Corp. 220,350
4,900 Raytheon Co. * 253,269
----------
820,589
-------------------------------------------------------------
Auto Suppliers - 2.4%
1,300 Federal-Mogul Corp. 77,350
3,100 Lucasvarity PLC-ADR 103,850
2,400 Magna International, Inc. 148,800
----------
330,000
-------------------------------------------------------------
Auto/Vehicle - 3.6%
1,400 Ford Motor Co. 82,162
3,800 General Motors Corp. 271,937
6,000 Volvo Aktiebolaget ADR B 139,875
----------
493,974
-------------------------------------------------------------
Banks - 9.0%
5,100 BankAmerica Corp. 306,637
6,300 Bank One Corp. 321,694
3,000 Chase Manhattan Corp. 204,187
5,400 First Union Corp. 328,387
2,100 Wells Fargo & Co. 83,869
----------
1,244,774
-------------------------------------------------------------
Broadcast Media - 0.6%
1,900 Mediaone Group, Inc. 89,300
-------------------------------------------------------------
Chemical Products - 1.1%
1,500 Du Pont (E.I.) de Nemours & Co. 79,594
1,100 Minnesota Mining and Manufacturing Co. 78,238
----------
157,832
-------------------------------------------------------------
Construction/Environmental Services - 2.1%
6,600 Browning-Ferris Industries, Inc. 187,687
2,200 Waste Management, Inc. 102,575
----------
290,262
-------------------------------------------------------------
Consumer Staples - 0.6%
1,800 Corning, Inc. 81,000
-------------------------------------------------------------
Department Stores - 3.5%
3,000 Dayton Hudson Corp. 162,750
3,100 Federated Department Stores, Inc.* 135,044
4,400 Sears Roebuck & Co. 187,000
----------
484,794
-------------------------------------------------------------
Electronics & Other Electrical Equipment - 0.5%
1,000 Philips Electronics NV 67,688
-------------------------------------------------------------
Energy Refining & Marketing - 1.1%
3,400 Tosco Corp. 87,975
2,000 USX-Marathon Group, Inc. 60,250
----------
148,225
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Enterprise Systems - 1.8%
1,200 Hewlett-Packard Co. $ 81,975
500 International Business Machines, Inc. 92,375
600 Xerox Corp. 70,800
----------
245,150
--------------------------------------------------------------
Entertainment & Leisure - 2.4%
9,600 Hilton Hotels Corp. 183,600
9,900 Mirage Resorts, Inc.* 147,881
----------
331,481
--------------------------------------------------------------
Food & Beverages - 3.2%
10,900 Archer Daniels Midland Co. 187,344
2,700 Conagra, Inc. 85,050
2,600 Ralston Purina Co. 84,175
1,000 Unilever NV 82,938
----------
439,507
--------------------------------------------------------------
Forest Products - 1.1%
2,500 Georgia-Pacific Corp. 146,406
--------------------------------------------------------------
Health Suppliers/Services - 1.2%
1,300 Baxter International, Inc. 83,606
1,000 Johnson & Johnson 83,875
----------
167,481
--------------------------------------------------------------
Healthcare Management - 5.6%
4,500 Aetna, Inc. 353,812
6,600 Columbia/HCA Healthcare Corp. 163,350
9,600 Tenet Healthcare Corp.* 252,000
----------
769,162
--------------------------------------------------------------
Insurance Life - 1.4%
2,500 Cigna Corp. 193,281
--------------------------------------------------------------
Insurance Property and Casualty - 2.8%
4,300 Allstate Corp. 166,087
4,000 Hartford Financial Services Group, Inc. 219,500
----------
385,587
--------------------------------------------------------------
Insurance Services - 3.5%
3,400 Loews Corp. 334,050
3,700 Provident Companies, Inc. 153,550
----------
487,600
--------------------------------------------------------------
Integrated Oil - 7.4%
4,100 Atlantic Richfield Co. 267,525
4,800 Elf Aquitaine ADR 271,800
1,100 Exxon Corp. 80,437
4,200 Occidental Petroleum Corp. 70,875
5,600 Royal Dutch Petroleum Co. 268,100
1,200 Texaco, Inc. 63,450
----------
1,022,187
--------------------------------------------------------------
Logistics/Rail - 0.5%
1,900 Burlington Northern Santa Fe 64,125
--------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GROWTH AND INCOME FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Media & Communications - 3.5%
700 Alltel Corporation $ 41,869
2,800 CBS, Inc. 91,700
1,200 Gannett Co. 77,400
4,800 New York Times Co. 166,500
1,700 U.S. West, Inc. 109,863
----------
487,332
-----------------------------------------------------------
Nonferrous Metals - 0.6%
1,100 Aluminum Company of America* 82,019
-----------------------------------------------------------
Oil & Gas Services - 1.6%
4,700 Halliburton Co. 139,238
3,300 Transocean Offshore, Inc. 88,481
----------
227,719
-----------------------------------------------------------
Packaging - 1.0%
4,300 Crown Cork & Seal, Inc. 132,494
-----------------------------------------------------------
Personal Computers and Peripherals - 0.5%
1,800 Compaq Computer Corp. 75,487
-----------------------------------------------------------
Pharmaceuticals - 1.5%
2,100 American Home Products Corp. 118,256
1,500 Pharmacia & Upjohn, Inc. 84,938
----------
203,194
-----------------------------------------------------------
Publishing - 1.0%
4,300 Dun & Bradstreet Corp. 135,719
-----------------------------------------------------------
Recreational Products - 1.1%
4,100 Hasbro, Inc. 148,113
-----------------------------------------------------------
Semiconductors - 0.6%
700 Intel Corp. 82,994
-----------------------------------------------------------
Software & Services - 1.8%
7,900 First Data Corp. 250,331
-----------------------------------------------------------
Specialty Finance & Agencies - 1.1%
4,800 C.I.T. Group, Inc. 152,700
-----------------------------------------------------------
Specialty Retail - 1.7%
3,000 TJX Companies, Inc. 87,000
9,000 Toys R US, Inc.* 151,875
----------
238,875
-----------------------------------------------------------
Telecommunications - 6.1%
3,500 AT&T Corp. 263,375
5,800 BCE, Inc. 220,037
1,600 Bellsouth Corp. 79,800
3,100 GTE Corp. 201,500
1,500 Tele Communications, Inc. - Liberty* 82,969
----------
847,681
-----------------------------------------------------------
Tire & Other Related Rubber Products - 0.5%
1,500 Goodyear Tire & Rubber Co. 75,656
-----------------------------------------------------------
Tobacco - 4.2%
7,900 Philip Morris Co., Inc. 422,650
5,100 RJR Nabisco Holdings, Corp. 151,406
----------
574,056
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Utilities - 5.9%
1,500 Consolidated Edison, Inc. $ 79,312
5,400 Entergy Corp. 168,075
6,400 Northeast Utilities* 102,400
2,500 P G & E Corporation 78,750
8,700 Pacificorp 183,244
5,100 Unicom Corp. 196,669
-----------
808,450
-----------------------------------------------------
TOTAL COMMON STOCKS
(Cost $12,728,418) $12,983,225
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
U.S. Treasury Obligation - 0.7%
U.S. Treasury Bill
$100,000 4.40%(a) 02/04/99 $ 99,588
-----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATION
(Cost $99,588) $ 99,588
-----------------------------------------------------------------------------------------------
Repurchase Agreement - 5.1%
Joint Repurchase Agreement Account(b)
$700,000 4.89% 01/04/99 $ 700,000
-----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $700,000) $ 700,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $13,528,006)(c) $13,782,813
-----------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $ 674,983
Gross unrealized loss for investments in which
cost exceeds value (493,329)
-----------------------------------------------------------------------------------------------
Net unrealized gain $ 181,654
-----------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The interest rate disclosed for the security represents effective yield
to maturity.
(b) The repurchase agreement is fully collateralized by Federal Agency
obligations.
(c) The aggregate cost for federal income tax purposes is $13,601,159.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust CORE U.S. Equity Fund. This annual report covers the period
from February 13, 1998, when the Fund began operations, through December 31,
1998.
Performance Review
From February 13, 1998 through December 31, 1998, the Fund
generated a 14.73% aggregate total return. Over the same
time period, the Fund's benchmark, the Standard & Poor's
(S&P) 500 Index (with dividends reinvested), generated an
aggregate return of 21.62%.
The CORE strategy is a well-defined investment process that
has historically provided consistent, risk-managed
outperformance, with a minimized risk that returns will be
very different from those of a specific benchmark over
time. The four months ended October, however, were charac-
terized by a sharp increase in market volatility and an un-
usual profile of top-performing equities among the stocks
in our universe. As a result, our ability to outperform the
index using a systematic approach to stock selection and
portfolio construction was impaired.
At the same time, the four basic components that the CORE
investment process emphasizes in stock selection--value,
momentum, risk and research--were negatively impacted by a
market driven by uncertainty and fear rather than under-
lying company fundamentals. As a result, richly-valued
stocks outpaced cheap ones; stocks with poor momentum fared
better than those with good momentum; low beta but volatile
stocks performed well, as did those that were not favored
by industry research analysts. These are all counter to
what we've observed historically. Typically, the diversifi-
cation of our models helps because when one theme doesn't
work, others usually do (for example, when value stocks
underperform, momentum stocks advance more than average),
but diversification did not help during this period. And,
because volatility was so high, the penalty for being wrong
was higher than usual.
Investment Objective
The Fund seeks long-term capital growth and dividend income
through a broadly diversified portfolio of large-cap and
blue-chip equity securities representing all major sectors
of the U.S. economy.
The portfolio employs a disciplined approach that combines
fundamental investment research provided by Goldman, Sachs
& Co.'s Global Investment Research Department and consensus
opinions with quantitative analysis generated by the Asset
Management Division's proprietary model. This quantitative
system evaluates each stock using many different criteria,
including valuation measures, growth expectations, earnings
momentum and risk profile. It also objectively analyses the
impact of current economic conditions on different types of
stocks to determine where the emphasis should be placed.
While maintaining a profile close to that of the benchmark,
those stocks ranked highly by both the quantitative model
and the Goldman Sachs Global Investment Research Department
and consensus opinion are selected for the portfolio.
6
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
Portfolio Composition
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
Exxon Corp. Integrated Oil 4.2%
General Electric Co. Electronics & Other Electrical Equipment 3.7
American General Corp. Insurance-Life 3.5
AT&T Corp. Telecommunications 3.4
Microsoft Corp. Software & Services 3.4
International Business Machines, Inc. Enterprise Systems 3.0
Intel Corp. Semiconductors 2.8
Ford Motor Co. Auto/Vehicle 1.6
Wal Mart Stores, Inc. Retail 1.6
Pfizer, Inc. Pharmaceuticals 1.5
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
Returns reverted to a more normal pattern starting in Octo-
ber, both for the factors we track, and for the overall
portfolio. Although stock volatility remains higher than
average, we have implemented a few changes in our process
to help ensure a more accurate forecast of portfolio risk
versus the benchmark. We maintain strong conviction, howev-
er, that our model factors should, over time, lead to solid
returns. We believe that cheaper stocks should outpace more
expensive ones, good momentum stocks should do better than
poor momentum stocks, lower-risk stocks should perform bet-
ter than higher risk stocks, as should those favoured by
research analysts.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Quantitative Equity Management Team
January 29, 1999
7
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on February 13, 1998 (commencement of operations). For compara-
tive purposes, the performance of the Fund's benchmark (the Standard and
Poor's 500 Index ("S&P 500 Index")) is shown. This performance data repre-
sents past performance and should not be considered indicative of future per-
formance which will fluctuate with changes in market conditions. These
performance fluctuations will cause an investor's shares, when redeemed, to
be worth more or less than their original cost.
CORE U.S. Equity Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested February 13, 1998 to
December 31, 1998
[GRAPH APPEARS HERE]
Core US Equity Fund S&P 500 Index
------------------- -------------
2/13/98 10,000 10,000
02/98 10,300 10,253
03/98 10,880 10,778
04/98 11,070 10,887
05/98 10,890 10,700
06/98 11,260 11,134
07/98 10,980 11,015
08/98 9,130 9,422
09/98 9,420 10,026
10/98 10,170 10,841
11/98 10,820 11,498
12/98 11,473 12,162
Since Inception
Aggregate Total Return through December 31, 1998(a)
CORE U.S. Equity Fund (commenced February 13, 1998) 14.73%
--------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
8
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 96.4%
Aerospace/Defense - 2.3%
2,100 General Motors Corp. Class H (Hughes) $ 83,344
800 Honeywell, Inc. 60,250
800 United Technologies Corp. 87,000
----------
230,594
---------------------------------------------------------------
Agriculture/Heavy Equipment - 0.5%
400 Case Corp. 8,725
700 Caterpillar, Inc. 32,200
200 Deere & Co. 6,625
----------
47,550
---------------------------------------------------------------
Airlines - 0.8%
900 AMR Corp.* 53,437
400 Delta Air Lines, Inc. 20,800
----------
74,237
---------------------------------------------------------------
Alcohol - 0.3%
500 Anheuser Busch Companies, Inc. 32,812
---------------------------------------------------------------
Auto/ Vehicle - 2.5%
498 Daimlerchrysler AG 47,839
2,700 Ford Motor Co. 158,456
800 Hertz Corp. 36,500
----------
242,795
---------------------------------------------------------------
Banks - 3.0%
2,331 BankAmerica Corp. 140,151
600 Bank of New York, Inc. 24,150
324 Bank One Corp. 16,544
1,400 Chase Manhattan Corp. 95,287
600 U.S. Bancorp 21,300
----------
297,432
---------------------------------------------------------------
Basic Industries - 0.3%
200 Aluminum Company of America* 14,913
900 Barrick Gold Corp. 17,550
----------
32,463
---------------------------------------------------------------
Chemical Products - 2.4%
100 Avery Dennison Corp. 4,506
1,300 Dow Chemicals Co. 118,219
500 Du Pont (E.I.) de Nemours & Co. 26,531
600 Millennium Chemicals, Inc. 11,925
200 Minnesota Mining and Manufacturing Co. 14,225
300 Ppg Industries, Inc. 17,475
2,000 Solutia, Inc. 44,750
----------
237,631
---------------------------------------------------------------
Computer Services/Software - 1.0%
1,900 Gateway 2000, Inc.* 97,256
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Conglomerates - 0.5%
500 Allied Signal, Inc. $ 22,156
400 Tyco International, Ltd. 30,175
----------
52,331
--------------------------------------------------------------
Construction/Environmental Services - 0.1%
300 Fluor Corp. 12,769
--------------------------------------------------------------
Consumer Products - 0.6%
700 Eastman Kodak Co. 50,400
400 Sara Lee Corp. 11,275
----------
61,675
--------------------------------------------------------------
Consumer Staples - 1.8%
600 Clorox Co. 70,087
600 Gillette Co. 28,987
900 Procter & Gamble Co. 82,181
----------
181,255
--------------------------------------------------------------
Electronics & Other Electrical Equipment - 4.2%
700 Emerson Electric Co.* 42,350
3,600 General Electric Co. 367,425
----------
409,775
--------------------------------------------------------------
Enterprise Systems - 5.4%
400 Ceridian Corp.* 27,925
500 EMC Corp. 42,500
400 Hewlett-Packard Co. 27,325
1,600 International Business Machines, Inc. 295,600
800 Unisys Corp.* 27,550
900 Xerox Corp. 106,200
----------
527,100
--------------------------------------------------------------
Entertainment & Leisure - 0.6%
200 Carnival Cruise Lines Corp. 9,600
200 Viacom, Inc. Class B* 14,800
1,200 Walt Disney Co. 36,000
----------
60,400
--------------------------------------------------------------
Financial Services - 0.4%
400 American Express Co. 40,900
--------------------------------------------------------------
Food & Beverages - 2.8%
1,890 Archer Daniels Midland Co. 32,484
1,700 Coca Cola Co. 113,687
300 Interstate Bakeries Corp. 7,931
800 Pepsico, Inc. 32,750
1,100 Unilever NV 91,231
----------
278,083
--------------------------------------------------------------
Health Suppliers/Services - 2.0%
200 Arterial Vascular Engineering, Inc.* 10,500
450 Cardinal Health, Inc. 34,144
200 Guidant Corp. 22,050
1,500 Johnson & Johnson 125,813
----------
192,507
--------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Healthcare Management - 0.8%
900 Columbia/HCA Healthcare Corp. $ 22,275
600 Lincare Holdings, Inc.* 24,338
800 Tenet Healthcare Corp.* 21,000
100 Wellpoint Health Networks, Inc.* 8,700
----------
76,313
--------------------------------------------------------------------
Hotels & Restaurants - 0.3%
600 Tricon Global Restaurants, Inc.* 30,075
--------------------------------------------------------------------
Industrial Machinery - 0.5%
1,000 Ingersoll-Rand Co. 46,938
--------------------------------------------------------------------
Insurance-Life - 4.0%
4,400 American General Corp.* 343,200
700 Equitable Companies, Inc. 40,512
100 SunAmerica, Inc. 8,113
----------
391,825
--------------------------------------------------------------------
Insurance-Property and Casualty - 3.3%
200 Allmerica Financial Corp. 11,575
1,800 Allstate Corp. 69,525
1,250 American International Group, Inc. 120,781
300 Conseco, Inc. 9,169
400 Hartford Financial Services Group, Inc. 21,950
2,900 Travelers Property & Casualty Corp. 89,900
----------
322,900
--------------------------------------------------------------------
Insurance Services - 0.4%
400 AMBAC, Inc. 24,075
200 MBIA, Inc. 13,113
----------
37,188
--------------------------------------------------------------------
Integrated Oil - 6.5%
100 Chevron Corp. 8,294
5,600 Exxon Corp. 409,500
700 Mobil Corp. 60,988
2,700 Royal Dutch Petroleum ADR 129,263
500 Texaco, Inc. 26,438
----------
634,483
--------------------------------------------------------------------
Internet Services - 0.5%
200 Yahoo!* 47,388
--------------------------------------------------------------------
Investment Brokers & Managers - 3.0%
2,400 Lehman Brothers Holdings, Inc. 105,750
1,100 Merrill Lynch & Company, Inc. 73,425
1,600 Morgan Stanley, Dean Witter, Discover & Co. 113,600
----------
292,775
--------------------------------------------------------------------
Local Exchange Companies - 2.5%
1,000 Bell Atlantic Corp.* 53,000
2,200 Bellsouth Corp. 109,725
1,300 GTE Corp. 84,500
----------
247,225
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Media & Communications - 2.2%
600 Gannett Co. $ 38,700
100 Mcgraw-hill Companies, Inc. 10,188
300 Meredith Corp. 11,363
1,300 SBC Communications, Inc. 69,713
800 Time Warner, Inc. 49,650
500 Tribune Co. 33,000
----------
212,614
-----------------------------------------------------------
Oil Refining & Marketing - 0.1%
300 Sunoco, Inc. 10,819
-----------------------------------------------------------
Packaging - 0.2%
500 Owens-Illinois, Inc.* 15,313
-----------------------------------------------------------
Personal Computers and Peripherals - 1.0%
600 Dell Computer Corporation* 43,912
500 Lexmark International Group, Inc.* 50,250
----------
94,162
-----------------------------------------------------------
Pharmaceuticals - 9.6%
1,000 Abbott Laboratories 49,000
1,300 American Home Products Corp. 73,206
1,100 Amgen, Inc.* 115,019
1,500 Biogen, Inc.* 124,500
900 Bristol-Myers Squibb Co. 120,431
400 Eli Lilly & Co. 35,550
700 Merck & Co. 103,381
1,200 Pfizer, Inc. 150,525
2,000 Schering-Plough Corp. 110,500
800 Warner-Lambert Co. 60,150
----------
942,262
-----------------------------------------------------------
Recreational Products - 0.4%
800 Hasbro, Inc.* 28,900
400 Mattel, Inc. 9,125
----------
38,025
-----------------------------------------------------------
Restaurants & Hotels - 0.4%
500 McDonalds Corp. 38,313
-----------------------------------------------------------
Retail - 3.0%
1,600 Dayton Hudson Corp. 86,800
800 Federated Department Stores, Inc.* 34,850
500 Ingram Micro, Inc.* 17,438
1,900 Wal Mart Stores, Inc. 154,731
----------
293,819
-----------------------------------------------------------
Semiconductors - 2.8%
2,300 Intel Corp. 272,694
-----------------------------------------------------------
Software & Services - 4.1%
300 Automatic Data Processing, Inc. 24,056
400 Computer Sciences Corp.* 25,775
200 Compuware Corp.* 15,625
2,400 Microsoft Corp.* 332,850
----------
398,306
-----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE U.S. EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Specialty Finance & Agencies - 1.0%
890 Associates First Capital Corp. $ 37,714
750 Providian Financial Corp. 56,250
----------
93,964
---------------------------------------------------------------
Specialty Retail - 3.2%
800 Abercrombie & Fitch Co.* 56,600
400 American Greetings Corp. 16,425
2,300 Best Buy Co., Inc.* 141,162
200 Home Depot, Inc. 12,238
700 Lowes Companies, Inc. 35,831
500 Ross Stores, Inc. 19,688
100 Tandy Corp. 4,119
800 TJX Companies, Inc. 23,200
----------
309,263
---------------------------------------------------------------
Steel - 0.3%
3,300 Bethlehem Steel Corp.* 27,637
---------------------------------------------------------------
Supermarkets - 2.3%
1,100 Albertson's, Inc. 70,056
3,600 Food Lion, Inc. 38,250
1,000 Kroger Co.* 60,500
1,000 Safeway, Inc.* 60,937
----------
229,743
---------------------------------------------------------------
Telecommunications - 5.2%
700 Ameritech Corp. 44,362
4,400 AT&T Corp. 331,100
1,100 MCI Worldcom, Inc.* 78,925
400 Sprint Corp. (FON Group) 33,650
200 Sprint Corp. (PCS Group)* 4,625
400 Tele Communications, Inc. (TCI Group)* 22,125
----------
514,787
---------------------------------------------------------------
Telecommunications Equipment - 2.4%
1,400 Cisco Systems, Inc.* 129,937
1,000 Lucent Technologies, Inc. 110,000
----------
239,937
---------------------------------------------------------------
Tobacco - 2.4%
4,000 Fortune Brands, Inc. 126,500
2,100 Philip Morris Companies, Inc. 112,350
----------
238,850
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Utilities - 2.5%
700 Dominion Resources, Inc. $ 32,725
500 Duke Energy Co. 32,031
900 Edison International, Inc. 25,088
600 FPL Group, Inc. 36,975
200 Pinnacle West Capital Corp. 8,475
1,600 Texas Utilities Co. 74,700
900 Unicom Corp. 34,706
----------
244,700
-------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $8,156,434) $9,451,883
-------------------------------------------------------------------
Other Investment - 4.1%
3,266 Standard & Poor's 500 Depositary Receipt* $ 401,718
-------------------------------------------------------------------
TOTAL OTHER INVESTMENT
(Cost $384,060) $ 401,718
-------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $8,540,494)(a) $9,853,601
-------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $1,560,535
Gross unrealized loss for investments in which
cost exceeds value (247,428)
-------------------------------------------------------------------
Net unrealized gain $1,313,107
-------------------------------------------------------------------
</TABLE>
*Non-income producing security.
(a) The amount stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust CORE Large Cap Growth Fund. This annual report covers the pe-
riod from February 13, 1998, when the Fund began operations, through December
31, 1998.
Performance Review
From February 13, 1998 through December 31, 1998, the Fund
generated a 16.99% aggregate total return, underperforming
the 28.66% aggregate total return generated by its bench-
mark, the Russell 1000 Growth Index.
The CORE strategy is a well-defined investment process that
has historically provided consistent, risk-managed
outperformance, with a minimized risk that returns will be
very different from those of a specific benchmark over
time. The four months ended October, however, were charac-
terized by a sharp increase in market volatility and an un-
usual profile of top-performing equities among the stocks
in our universe. As a result, our ability to outperform the
index using a systematic approach to stock selection and
portfolio construction was impaired.
At the same time, the four basic components that the CORE
investment process emphasizes in stock selection--value,
momentum, risk and research--were negatively impacted by a
market driven by uncertainty and fear rather than under-
lying company fundamentals. As a result, richly-valued
stocks outpaced cheap ones; stocks with poor momentum fared
better than those with good momentum; low beta but volatile
stocks performed well, as did those that were not favored
by industry research analysts. These are all counter to
what we've observed historically. Typically, the diversifi-
cation of our models helps because when one theme doesn't
work, others usually do (for example, when value stocks
underperform, momentum stocks advance more than average),
but diversification did not help during this period. And,
because volatility was so high, the penalty for being wrong
was higher than usual.
The qualitative research portion of the Fund's investment
model also produced mixed results, thus negatively im-
pacting performance. After adjusting for their large-cap,
high-growth bias, stocks that Goldman analysts rated highly
underperformed, by a wide margin, those they ranked only as
market performers or market underperformers.
Investment Objective
The Fund seeks long-term capital growth, primarily through
a broadly diversified portfolio of equity securities that
are expected to have better prospects for earnings growth
than the growth rate of the general domestic economy.
The portfolio employs a disciplined approach that combines
fundamental investment research provided by Goldman, Sachs
& Co.'s Global Investment Research Department and consensus
opinions with quantitative analysis generated by the Asset
Management Division's proprietary model. This quantitative
system evaluates each stock using many different criteria,
including valuation measures, growth expectations, earnings
momentum and risk profile.
12
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
It also objectively analyzes the impact of current economic
conditions on different types of stocks to determine where
the emphasis should be placed. While maintaining a profile
close to that of the benchmark, those stocks ranked highly
by both the quantitative model and the Goldman Sachs Global
Investment Research Department and consensus opinion are
selected for the portfolio.
Portfolio Composition
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
Microsoft
Corp. Software & Services 5.1%
General
Electric
Co. Electronics & Other Electrical Equipment 4.7
Intel Corp. Semiconductors 3.8
Cisco
Systems,
Inc. Telecommunications Equipment 3.4
Johnson &
Johnson Health Suppliers/Services 3.0
Pfizer,
Inc. Pharmaceuticals 2.9
Eastman
Kodak Co. Consumer Products 2.5
Merck & Co. Pharmaceuticals 2.2
General
Instrument
Corp. Telecommunications Equipment 2.1
Wal Mart
Stores,
Inc. Retail 2.0
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
As always, the Fund remains substantially invested in
stocks. Our sector and capitalization weightings are
targeted to stay close to those of the Russell 1000 Growth
index, as are exposures to other risk factors (such as div-
idend yield). Based on long-term results, our quantitative
process presently emphasizes low P/E and low price/book
stocks with good momentum characteristics; we therefore
maintain an exposure to these factors.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Quantitative Equity Management Team
January 29, 1999
13
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on February 13, 1998 (commencement of operations). For compara-
tive purposes, the performance of the Fund's benchmark (Russell 1000 Growth
Index) is shown. All performance data shown represents past performance and
should not be considered indicative of future performance which will fluctu-
ate with changes in market conditions. These performance fluctuations will
cause an investor's shares, when redeemed, to be worth more or less than
their original cost.
CORE Large Cap Growth Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested February 13, 1998 to
December 31, 1998
[CHART APPEARS HERE]
Core Large Cap Russell 2000
-------------- ------------
2/13/98 10,000 10,000
03/98 10,830 10,681
04/98 11,050 10,828
05/98 10,750 10,521
06/98 11,260 11,166
07/98 11,000 11,092
08/98 9,059 9,427
09/98 9,449 10,151
10/98 9,939 10,967
11/98 10,749 11,802
12/98 11,699 12,866
Since Inception
Aggregate Total Return through December 31, 1998(a)
CORE Large Cap Growth Fund (commenced February 13, 1998) 16.99%
----------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
14
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 95.6%
Aerospace/Defense--0.7%
1,300 General Motors Corp. Class H (Hughes) $ 51,594
100 Honeywell, Inc. 7,531
----------
59,125
---------------------------------------------------------------
Agriculture/Heavy Equipment - 0.8%
900 Caterpillar, Inc. 41,400
600 Dover Corp. 21,975
----------
63,375
---------------------------------------------------------------
Alcohol - 1.9%
700 Anheuser Busch Companies, Inc. 45,937
1,400 Brown Forman Corp. Class B 105,962
----------
151,899
---------------------------------------------------------------
Auto/Vehicle - 1.3%
500 Ford Motor Co. 29,344
1,700 Hertz Corp. 77,562
----------
106,906
---------------------------------------------------------------
Banks - 0.7%
139 BankAmerica Corp. 8,357
1,700 Dime Bancorp, Inc. 44,944
----------
53,301
---------------------------------------------------------------
Basic Industries - 0.2%
1,000 Barrick Gold Corp. 19,500
---------------------------------------------------------------
Chemical Products - 1.1%
300 Avery Dennison Corp. 13,519
500 Dow Chemicals Co. 45,469
300 IMC Global, Inc. 6,413
100 Minnesota Mining and Manufacturing Co. 7,113
900 Solutia, Inc. 20,138
----------
92,652
---------------------------------------------------------------
Conglomerates - 0.4%
400 Tyco International, Ltd. 30,175
---------------------------------------------------------------
Consumer Products - 2.5%
2,800 Eastman Kodak Co. 201,600
---------------------------------------------------------------
Consumer Staples - 1.7%
300 Clorox Co. 35,044
1,100 Procter & Gamble Co. 100,444
----------
135,488
---------------------------------------------------------------
Electronics & Other Electrical Equipment - 5.5%
600 Emerson Electric Co. 36,300
3,800 General Electric Co. 387,837
500 Johnson Controls, Inc. 29,500
----------
453,637
---------------------------------------------------------------
Energy Refining & Marketing - 0.1%
100 Columbia Gas Systems, Inc. 5,775
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Enterprise Systems - 4.6%
400 Ceridian Corp.* $ 27,925
1,000 EMC Corp.* 85,000
200 Hewlett-Packard Co. 13,662
600 International Business Machines, Inc. 110,850
600 Sun Microsystems, Inc.* 51,375
1,300 Unisys Corp.* 44,769
400 Xerox Corp. 47,200
----------
380,781
--------------------------------------------------------------
Entertainment & Leisure - 1.3%
1,200 Carnival Cruise Lines Corp. 57,600
700 Viacom, Inc. Class B* 51,800
----------
109,400
--------------------------------------------------------------
Financial Services - 0.4%
300 American Express Co. 30,675
--------------------------------------------------------------
Food & Beverages - 5.1%
1,365 Archer Daniels Midland Co. 23,461
2,000 Coca-Cola Co. 133,750
600 Coca-Cola Enterprises, Inc. 21,450
1,500 IBP, Inc. 43,688
1,900 Pepsico, Inc. 77,781
1,400 Unilever NV 116,113
----------
416,243
--------------------------------------------------------------
Health Suppliers/Services - 4.5%
100 Allergan, Inc. 6,475
2,000 Bergen Brunswig Corp. 69,750
600 Biomet, Inc. 24,150
300 Cardinal Health, Inc. 22,762
2,900 Johnson & Johnson 243,238
----------
366,375
--------------------------------------------------------------
Healthcare Management - 2.7%
900 Beverly Enterprises, Inc.* 6,075
1,700 Columbia/HCA Healthcare Corp. 42,075
200 Lincare Holdings, Inc.* 8,113
700 Tenet Healthcare Corp.* 18,375
1,700 Wellpoint Health Networks, Inc.* 147,900
----------
222,538
--------------------------------------------------------------
Hotels & Restaurants - 0.2%
300 Tricon Global Restaurants, Inc.* 15,038
--------------------------------------------------------------
Household Durables - 0.1%
100 Newell Co. 4,125
--------------------------------------------------------------
Insurance-Life - 0.9%
700 Equitable Companies, Inc. 40,512
400 Nationwide Financial Services, Inc. 20,675
200 SunAmerica, Inc. 16,225
----------
77,412
--------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Insurance-Property and Casualty - 0.9%
450 American International Group, Inc. $ 43,481
1,100 Travelers Property & Casualty Corp. 34,100
---------
77,581
-------------------------------------------------------------------
Insurance Services - 0.4%
200 AMBAC, Inc. 12,037
11 Berkshire Hathaway, Inc.* 24,675
---------
36,712
-------------------------------------------------------------------
Integrated Oil - 0.5%
500 Exxon Corp. 36,562
100 Royal Dutch Petroleum ADR 4,788
---------
41,350
-------------------------------------------------------------------
Internet Services - 2.3%
1,000 America Online, Inc.* 144,750
200 Yahoo!* 47,388
---------
192,138
-------------------------------------------------------------------
Investment Brokers & Managers - 2.4%
500 Lehman Brothers Holdings, Inc. 22,031
1,400 Merrill Lynch & Company, Inc. 93,450
1,100 Morgan Stanley, Dean Witter, Discover & Co. 78,100
---------
193,581
-------------------------------------------------------------------
Local Exchange Companies - 0.8%
1,000 GTE Corp. 65,000
-------------------------------------------------------------------
Media & Communications - 0.6%
800 Gannett Co. 51,600
-------------------------------------------------------------------
Oil & Gas Services - 0.3%
472 Schlumberger, Ltd. 21,771
-------------------------------------------------------------------
Oil Refining & Marketing - 0.1%
300 Sunoco, Inc. 10,819
-------------------------------------------------------------------
Personal Computers and Peripherals - 2.2%
300 Apple Computer, Inc.* 12,281
200 Compaq Computer Corp. 8,387
1,500 Dell Computer Corporation* 109,781
500 Lexmark International Group, Inc.* 50,250
---------
180,699
-------------------------------------------------------------------
Pharmaceuticals - 13.5%
2,800 Abbott Laboratories 137,200
800 American Home Products Corp. 45,050
800 Amgen, Inc.* 83,650
300 Biogen, Inc.* 24,900
1,100 Bristol-Myers Squibb Co. 147,194
600 Eli Lilly & Co. 53,325
1,200 Merck & Co. 177,225
1,900 Pfizer, Inc. 238,331
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Pharmaceuticals - (continued)
1,800 Schering-Plough Corp. $ 99,450
1,400 Warner-Lambert Co. 105,263
----------
1,111,588
-----------------------------------------------------------
Publishing - 0.5%
1,300 Dun & Bradstreet Corp. 41,031
-----------------------------------------------------------
Recreational Products - 0.2%
600 Mattel, Inc. 13,688
-----------------------------------------------------------
Retail - 4.5%
200 Ann Taylor Stores Corporate* 7,887
1,800 Dayton Hudson Corp. 97,650
700 Federated Department Stores, Inc.* 30,494
1,400 Ingram Micro, Inc.* 48,825
800 Saks, Inc.* 25,250
2,000 Wal Mart Stores, Inc. 162,875
----------
372,981
-----------------------------------------------------------
Semiconductors - 4.0%
2,600 Intel Corp. 308,263
600 Tech Data Corp.* 24,150
----------
332,413
-----------------------------------------------------------
Software & Services - 6.7%
700 Automatic Data Processing, Inc. 56,131
300 BMC Software, Inc.* 13,369
200 Cadence Design Systems, Inc.* 5,950
400 Computer Sciences Corp.* 25,775
400 Compuware Corp.* 31,250
200 Learning Company, Inc.* 5,188
3,000 Microsoft Corp.* 416,063
----------
553,726
-----------------------------------------------------------
Specialty Finance & Agencies - 1.0%
500 C.I.T. Group, Inc. 15,906
900 Providian Financial Corp. 67,500
----------
83,406
-----------------------------------------------------------
Specialty Retail - 3.7%
1,300 Best Buy Co., Inc.* 79,787
200 CVS Corp. 11,000
2,200 Home Depot, Inc. 134,612
500 Lowes Companies, Inc. 25,594
1,800 TJX Companies, Inc. 52,200
----------
303,193
-----------------------------------------------------------
Steel - 0.2%
2,000 Bethlehem Steel Corp.* 16,750
-----------------------------------------------------------
Supermarkets - 2.1%
300 Albertson's, Inc. 19,106
1,500 Food Lion, Inc. 15,937
700 Kroger Co.* 42,350
1,600 Safeway, Inc.* 97,500
----------
174,893
-----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Telecommunications - 2.0%
1,200 AT&T Corp. $ 90,300
1,024 MCI Worldcom, Inc.* 73,472
----------
163,772
-------------------------------------------------------------------
Telecommunications Equipment - 7.6%
3,000 Cisco Systems, Inc. * 278,437
5,000 General Instrument Corp.* 169,687
1,400 Lucent Technologies, Inc. 154,000
500 Northern Telecom, Ltd. 25,063
----------
627,187
-------------------------------------------------------------------
Textiles - 0.2%
900 Jones Apparel Group, Inc.* 19,856
-------------------------------------------------------------------
Tobacco - 2.1%
600 Fortune Brands, Inc. 18,975
2,800 Philip Morris Companies, Inc. 149,800
----------
168,775
-------------------------------------------------------------------
Transportation/rail - 0.1%
300 The St. Joe Company 7,031
-------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $6,176,310) $7,857,561
-------------------------------------------------------------------
Other Investment - 3.8%
2,530 Standard & Poor's 500 Depositary Receipt* $ 311,190
-------------------------------------------------------------------
TOTAL OTHER INVESTMENT
(Cost $296,487) $ 311,190
-------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $6,472,797)(a) $8,168,751
-------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $1,830,073
Gross unrealized loss for investments in which
cost exceeds value (134,201)
-------------------------------------------------------------------
Net unrealized gain $1,695,872
-------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $6,472,879.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depositary Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust CORE Small Cap Equity Fund. This annual report covers the pe-
riod from February 13, 1998, when the Fund began operations, through December
31, 1998.
Performance Review
The period under review was a difficult one for small cap
stocks. From February 13, 1998 through December 31, 1998,
the Fund generated an aggregate total return of -9.30%,
compared to the -5.77% aggregate total return of its bench-
mark, the Russell 2000 Index.
The CORE strategy is a well-defined investment process that
has historically provided consistent, risk-managed
outperformance, with a minimized risk that returns will be
very different from those of a specific benchmark over
time. The four months ended October, however, were charac-
terized by a sharp increase in market volatility and an un-
usual profile of top- performing equities among the stocks
in our universe. As a result, our ability to outperform the
Index using a systematic approach to stock selection and
portfolio construction was impaired.
At the same time, the four basic components that the CORE
investment process emphasizes in stock selection--value,
momentum, risk and research--were negatively impacted by a
market driven by uncertainty and fear rather than under-
lying company fundamentals. As a result, richly-valued
stocks outpaced cheap ones; stocks with poor momentum fared
better than those with good momentum; low beta but volatile
stocks performed well, as did those that were not favored
by industry research analysts. These are all counter to
what we've observed historically. Typically, the diversifi-
cation of our models helps because when one theme doesn't
work, others usually do (for example, when value stocks
underperform, momentum stocks advance more than average),
but diversification did not help during this period. And,
because volatility was so high, the penalty for being wrong
was higher than usual.
Investment Objective
The Fund seeks long-term capital growth, primarily through
a broadly diversified portfolio of equity securities of
U.S. issuers that are included in the Russell 2000 Index at
the time of investment.
The portfolio employs a disciplined approach that combines
fundamental investment research provided by Goldman, Sachs
& Co.'s Global Investment Research Department and consensus
opinions with quantitative analysis generated by the Asset
Management Division's proprietary model. This quantitative
system evaluates each stock using many different criteria,
including valuation measures, growth expectations, earnings
momentum and risk profile. It also objectively analyzes the
impact of current economic conditions on different types of
stocks to determine where the emphasis should be placed.
While maintaining a profile close to that of the benchmark,
those stocks ranked highly by both the quantitative model
and the Goldman Sachs Global Investment Research Department
are selected for the portfolio.
18
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Portfolio Composition
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
Priority Healthcare Corp. Health Suppliers/Services 1.3%
Landauer, Inc. Business Services 1.2
CNB Bancshares, Inc. Banks 0.8
Aquarion Co. Pipelines 0.7
Oneok, Inc. Pipelines 0.7
Alpharma, Inc. Pharmaceuticals 0.6
Sovereign Bancorp, Inc. Savings and loans 0.6
AK Steel Holding Corp. Steel 0.5
Charter One Financial,
Inc. Healthcare Management 0.5
Bindley West Industries,
Inc. Pharmaceuticals 0.5
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
As always, the Fund remains fully invested in stocks. The
Fund's sector weightings and distribution among size cate-
gories are targeted to stay close to those of the Russell
2000 index, as are exposures to other risk factors (such as
dividend yield). Based on long-term results, the Fund's
quantitative process presently prefers low P/E and low
price/book stocks with good momentum characteristics; we
therefore maintain an exposure to these factors. Finally,
we expect the factors that comprise the quantitative model
will return to more "normal" patterns of performance going
forward.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Quantitative Equity Management Team
January 29, 1999
19
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made February 13, 1998 (commencement of operations). For comparative
purposes, the performance of the Fund's benchmark (Russell 2000 Index) is
shown. All performance data shown represents past performance and should not
be considered indicative of future performance which will fluctuate with
changes in market conditions. These performance fluctuations will cause an
investor's shares, when redeemed, to be worth more or less than their origi-
nal cost.
CORE Small Cap Equity Fund's Lifetime Performance
Growth of a $10,000 investment, Distributions Reinvested February 13, 1998 to
December 31, 1998
[CHART APPEARS HERE]
Core Small Russell 2000
Cap Equity Growth Index
---------- ------------
2/13/98 10,000 10,000
02/98 10,160 10,221
03/98 10,720 10,642
04/98 10,920 10,701
05/98 10,440 10,124
06/98 10,520 10,145
07/98 9,650 9,323
08/98 7,640 7,513
09/98 7,860 8,101
10/98 7,990 8,432
11/98 8,499 8,873
12/98 9,070 9,423
Since Inception
Aggregate Total Return through December 31, 1998(a)
CORE Small Cap Equity Fund (commenced February 13, 1998) -9.30%
--------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
20
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 99.9%
Advertising & Marketing - 0.2%
200 Advo, Inc.* $ 5,275
100 Valassis Communications, Inc.* 5,163
----------
10,438
----------------------------------------------------------
Aerospace/Defense - 0.7%
750 AAR Corp. 17,906
300 Fairchild Corp. * 4,725
200 Gencorp, Inc. 4,987
400 Oea, Inc. 4,725
----------
32,343
----------------------------------------------------------
Agriculture/Heavy Equipment - 0.7%
800 Allied Products Corp. 5,050
400 Cort Business Services Corp.* 9,700
300 Terex Corp.* 8,569
343 United Rentals, Inc.* 11,362
----------
34,681
----------------------------------------------------------
Airfreight, Truck & Other - 0.5%
200 Airborne Freight Corp. 7,213
200 Avondale Industries, Inc.* 5,800
200 Seacor Smit, Inc.* 9,888
----------
22,901
----------------------------------------------------------
Airlines - 1.1%
500 Alaska Air Group, Inc.* 22,125
700 America West Holdings Corp.* 11,900
200 Asa Holdings, Inc. 6,100
100 Atlas Air, Inc.* 4,893
200 Skywest, Inc. 6,538
----------
51,556
----------------------------------------------------------
Alcoholic Beverages - 0.7%
400 Adolph Coors Co. Class B 22,575
100 Canandaigua Brands, Inc.* 5,781
800 The Boston Beer Company, Inc.* 6,800
----------
35,156
----------------------------------------------------------
Auto/Vehicle - 0.5%
500 Avis Rent A Car, Inc.* 12,093
400 Budget Group, Inc.* 6,350
300 Wabash National Corp. 6,094
----------
24,537
----------------------------------------------------------
Auto Suppliers - 1.7%
200 A.O. Smith Corp. 4,913
400 Arvin Industries, Inc. 16,675
100 Borg Warner Automotive, Inc. 5,581
200 Clarcor, Inc. 4,000
200 Csk Auto Corp.* 5,337
300 Excel Industries, Inc. 5,250
300 Modine Manufacturing Co. 10,875
200 SPX Corp.* 13,400
500 Standard Products Co. 10,188
300 Superior Industries International 8,344
----------
84,563
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Banks - 6.1%
300 Bancorp South, Inc. $ 5,418
300 Bancwest Corporation 14,400
855 CNB Bancshares, Inc. 39,864
220 CVB Financial Corp. 4,950
400 Commerce Bancorp, Inc. 21,000
300 Cullen Frost Bankers, Inc. 16,462
200 Downey Financial Corp. 5,087
1,000 First Commonwealth Financial Corp. 24,500
400 First Republic Bank* 10,025
100 Greater Bay Bancorp 3,375
300 Hubco, Inc. 9,037
300 Imperial Bancorp* 4,987
600 Independence Community BA* 9,563
100 Mainstreet Financial Corp. 4,644
206 Mid America Bancorp 5,588
400 One Valley Bancorp, Inc. 13,150
133 Oriental Financial Group 4,165
100 Pacific Capital Bancorp 2,575
500 Republic Security Financial 6,063
200 Riggs National Corp. 4,075
400 Roslyn Bancorp, Inc. 8,600
1,000 Southwest Bancorp of Texas, Inc.* 17,875
400 Staten Island Bancorp, Inc. 7,975
200 Sterling Bancorp 4,563
200 Triangle Bancorp, Inc. 3,163
115 Trustco Bank Corp. 3,450
500 United Bankshares, Inc. 13,250
500 UST Corp. 11,781
200 Westamerica Bancorp 7,350
100 Western Bancorp 2,925
100 Whitney Holding Corp. 3,750
----------
293,610
-------------------------------------------------------------
Broadcast Media - 1.0%
500 Century Communications * 15,859
500 Cox Radio, Inc. * 21,125
300 Macromedia, Inc.* 10,106
----------
47,090
-------------------------------------------------------------
Business Services - 5.3%
100 Abacus Direct Corp* 4,550
100 Abm Industries, Inc. 3,463
400 AC Nielsen Corp.* 11,300
300 Acxiom Corp.* 9,300
100 Catalina Marketing Corp.* 6,837
100 Computer Task Group 2,712
300 Cotelligent, Inc.* 6,394
200 Devry, Inc.* 6,125
200 Excite, Inc.* 8,412
200 Ha-lo Industries, Inc.* 7,525
100 Incyte Pharmaceuticals, Inc.* 3,737
100 Infoseek Corp.* 4,937
700 Interim Services, Inc.* 16,363
100 International Telecomm Data Systems* 1,475
1,800 Landauer, Inc. 58,275
200 Legato Systems, Inc.* 13,187
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Business Services - (continued)
200 Lycos, Inc.* $ 11,112
100 Medquist, Inc.* 3,950
400 Metzler Group, Inc.* 19,475
300 Mindspring Enterprises, Inc.* 18,319
200 National Data Corp. 9,737
200 Service Experts, Inc.* 5,850
400 StaffMark, Inc.* 8,950
200 Sylvan Learning System, Inc.* 6,100
200 Urs Corporation* 4,675
200 Wallace Computer Services, Inc. 5,275
----------
258,035
--------------------------------------------------------------
Chemical Products - 1.5%
500 Bio-Rad Laboratories, Inc.* 10,500
200 Cambrex Corporation 4,800
200 Catalytica, Inc.* 3,600
600 Dexter Corp. 18,862
300 Nova Corp.* 10,406
200 Scotts Co.* 7,688
300 Wd 40 Co. 8,588
900 Wellman, Inc. 9,169
----------
73,613
--------------------------------------------------------------
Chemicals-Commodity - 0.5%
200 Geon Co. 4,600
500 Winstar Communications, Inc.* 19,500
----------
24,100
--------------------------------------------------------------
Commercial Products - 0.3%
400 Knoll, Inc.* 11,850
100 Vwr Scientific Products Corp.* 1,738
----------
13,588
--------------------------------------------------------------
Commercial Services - 1.8%
800 Bowne & Company, Inc. 14,300
300 Century Business Services, Inc.* 4,312
200 Dendrite International, Inc.* 4,994
300 Integrated Electrical Services, Inc.* 6,675
500 Metamor Worldwide, Inc.* 12,500
900 Sensormatic Electronics* 6,244
200 Standard Register Co. 6,188
700 Wackenhut Corp. 17,806
400 World Color Press Co.* 12,175
----------
85,194
--------------------------------------------------------------
Communications & Media Service - 2.2%
300 Adelphia Communications * 13,725
300 Aliant Communications, Inc. 12,263
500 American Tower Corp.* 14,781
300 CFW Communications Co. 7,012
600 Centennial Cellular Corp.* 24,600
400 E Spire Communications, Inc.* 2,550
100 Exodus Communications* 6,425
500 Foster Wheeler Corp. 6,594
300 Kaman Corp. 4,819
200 Regal Beloit Corp. 4,600
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Communications & Media Service - (continued)
100 Transaction Network Services* $ 2,006
200 Vanguard Cellular System* 5,163
----------
104,538
-----------------------------------------------------------
Computer Services/Software - 4.1%
1,200 Acclaim Entertainment, Inc.* 14,700
200 American Management Systems, Inc.* 8,000
200 Apex PC Solutions, Inc.* 5,775
200 Aris Corp.* 2,388
100 Aspect Development, Inc.* 4,431
400 Avt Corporation* 11,600
200 Axent Technologies, Inc.* 6,112
300 Broadvision, Inc.* 9,600
400 CACI International, Inc.* 6,750
200 Cerner Corp.* 5,350
200 Clarify, Inc.* 4,887
200 Geotel Communications Corp.* 7,450
200 Hnc Software, Inc.* 8,087
300 Hyperion Solutions Corp.* 5,400
300 Idt Corp.* 4,612
800 Informix Corp.* 7,900
100 Jack Henry & Assoc., Inc. 4,975
100 Mercury Interactive Corp.* 6,325
500 Microchip Technology, Inc.* 18,500
100 Peregrine Systems, Inc.* 4,638
600 Rational Software Corp.* 15,900
400 Read Rite Corp.* 5,913
100 Sapient Corporation* 5,600
300 Software AG Systems, Inc.* 5,438
200 Transaction Systems Architects* 10,000
200 Wind River Systems, Inc.* 9,400
----------
199,731
-----------------------------------------------------------
Construction/Environmental Services - 2.7%
500 ACX Technologies, Inc.* 6,625
165 Allied Waste Industries, Inc.* 3,898
200 Ameron International Corp. 7,400
300 Butler Manufacturing Co. 6,712
400 Carlisle Companies, Inc. 20,650
200 Coachmen Industries, Inc. 5,250
300 Comfort Systems U.S.A.* 5,362
400 Dycom Industries, Inc.* 22,850
100 Elcor Corporation 3,231
200 Florida Rock Industrial, Inc. 6,200
300 Granite Construction, Inc. 10,069
200 Lone Star Industries, Inc. 7,362
200 Nci Building Systems, Inc.* 5,625
100 Stone & Webster, Inc. 3,325
300 Texas Industries, Inc. 8,081
300 Tower Automotive, Inc.* 7,481
----------
130,121
-----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Consumer Products - 0.7%
800 Herbalife International, Inc. $ 11,400
600 Jo-ann Stores, Inc.* 9,675
200 Nu Skin Asia Pacific, Inc.* 4,725
500 Playtex Products, Inc.* 8,031
----------
33,831
-----------------------------------------------------------
Consumer Staples - 0.4%
300 First Brands Corp. 11,831
500 Media Arts Group, Inc.* 7,031
----------
18,862
-----------------------------------------------------------
Diversified Manufacturing - 0.7%
600 Federal Signal Corp. 16,425
300 General Cable Corp. 6,150
200 Getchell Gold Corp.* 5,450
100 Precision Castparts Corp. 4,425
----------
32,450
-----------------------------------------------------------
Electrical Services - 1.6%
100 Black Hills Corp. 2,637
100 Cilcorp, Inc. 6,119
500 Eastern Utilities Assoc. 14,125
200 Empire District Electric Co. 4,950
400 Hawaiian Electric Industries, Inc. 16,100
100 Minnesota Power & Light Co. 4,400
300 Nevada Power Company 7,800
200 Rochester Gas & Electric 6,250
100 United Illuminating Co. 5,150
500 Washington Water Power Co. 9,625
----------
77,156
-----------------------------------------------------------
Electronics & Other Electrical Equipment - 1.7%
300 Baldor Electric Co. 6,075
100 Barnes Group, Inc. 2,938
200 C-cube Microsystems, Inc.* 5,425
300 Group Maintenance America* 3,637
100 Hughes Supply, Inc. 2,925
100 Jabil Circuit, Inc.* 7,462
200 Kuhlman Corp. 7,575
100 Micro Systems, Inc.* 3,288
200 Novellus Systems, Inc.* 9,900
300 Park Electrochemical Corp. 8,588
400 Silicon Valley Group, Inc.* 5,100
400 Technitrol, Inc. 12,750
300 Unitrode Corp.* 5,250
200 Watsco, Inc. 3,350
----------
84,263
-----------------------------------------------------------
Energy Refining & Marketing - 1.0%
600 Berry Petroleum Co. 8,512
300 Calpine Corp.* 7,575
200 Holly Corp. 3,375
200 Newfield Exploration Co.* 4,175
1,000 Octel Corp.* 13,875
300 Penn Va Corp. 5,513
400 Snyder Oil Corporation 5,325
----------
48,350
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Engineering - 0.2%
200 Jacobs Engineering Group, Inc.* $ 8,150
---------------------------------------------------------------
Enterprise Systems - 0.4%
400 Avid Technology, Inc.* 9,350
300 Electronics For Imaging, Inc.* 12,056
----------
21,406
---------------------------------------------------------------
Entertainment & Leisure - 0.8%
300 Hollywood Entertainment Co.* 8,175
300 Premier Parks, Inc.* 9,075
1,400 Sunterra Corp.* 21,000
----------
38,250
---------------------------------------------------------------
Financial Services - 1.8%
500 Americredit Corp.* 6,906
300 Chittenden Corp. 9,600
1,100 Credit Acceptance Corp. * 8,044
300 Everen Capital Corp. 6,825
300 F & M National Corp. 8,981
100 Fair Isaac & Co., Inc. 4,619
100 Fund American Enterprises Holdings 14,006
300 JSB Financial, Inc. 16,312
315 NBT Bancorp, Inc. 7,363
200 Reliance Bancorp, Inc. 5,563
----------
88,219
---------------------------------------------------------------
Food & Beverages - 1.2%
400 Agribrands International* 12,000
200 Corn Products International 6,075
400 International Multifoods Corp. 10,325
400 Michael Foods, Inc. 12,000
300 Pilgrims Pride Corp. 5,981
300 Ralcorp Holdings, Inc.* 5,475
300 Universal Foods Corp. 8,231
----------
60,087
---------------------------------------------------------------
Forest Products - 0.8%
200 Kimball International, Inc. Class-B 3,800
700 Schweitzer-Mauduit International, Inc. 10,806
1,800 Unisource Worldwide, Inc. 13,050
500 United Stationers, Inc.* 13,000
----------
40,656
---------------------------------------------------------------
Gaming - 0.5%
2,700 Boyd Gaming Corp.* 8,944
600 Dover Downs Entertainment, Inc. 7,237
1,000 Grand Casinos, Inc.* 8,062
----------
24,243
---------------------------------------------------------------
Healthcare Management - 1.8%
1,600 American Homepatient, Inc.* 2,900
907 Charter One Financial, Inc. 25,169
700 Integrated Health Services, Inc. 9,887
1,300 Mariner Post-acute Network* 5,931
100 Maximus, Inc.* 3,700
1,600 Novacare, Inc.* 4,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Healthcare Management - (continued)
600 OEC Medical Systems, Inc.* $ 18,862
200 Quest Diagnostics, Inc.* 3,563
200 Sierra Health Services, Inc.* 4,213
1,100 Sun Healthcare Group, Inc.* 7,219
----------
85,444
----------------------------------------------------------
Health & Medical Services - 5.0%
200 Agouron Pharmaceuticals, Inc.* 11,750
1,200 Ameripath, Inc.* 10,725
300 Amerisource Health Corp.* 19,500
200 Ballard Medical Products 4,863
100 Barr Labs, Inc.* 4,800
600 Chemed Corp. 20,100
400 Covance, Inc.* 11,650
200 Diagnostic Products Corp. 6,225
100 Entremed, Inc.* 2,100
200 Gilead Sciences, Inc. * 8,212
200 Hanger Orthopedic Group* 4,500
200 Icos Corp.* 5,950
200 Idexx Laboratories, Inc.* 5,381
100 Idx Systems Corp.* 4,400
100 Inhale Therapeutic Systems* 3,300
100 International Network Services* 6,650
400 Ivax Corp.* 4,975
100 Jones Pharmaceutical, Inc. 3,650
200 Maxxim Medical, Inc.* 5,950
100 Medicis Pharmaceutical Co.* 5,962
100 Medimmune, Inc.* 9,944
200 Millennium Pharmaceutical* 5,175
200 Neurogen Corp.* 3,500
100 Pathogenesis Corp.* 5,800
100 Pediatrix Medical Group, Inc.** 5,994
400 Primark Corp.* 10,850
200 Protein Design Labs, Inc.* 4,625
200 Renal Care Group, Inc.* 5,763
300 Roberts Pharmaceutical Co.* 6,525
100 Sepracor, Inc.* 8,813
300 Sequus Pharmaceuticals, Inc.* 6,075
200 Vertex Pharmaceuticals, Inc.* 5,950
200 Veterinary Centers America, Inc.* 3,988
100 Visx, Inc.* 8,744
----------
242,389
----------------------------------------------------------
Health Suppliers/Services - 2.3%
200 Haemonetics Corp.* 4,550
400 Imation Corporation* 7,000
900 Input/Output, Inc.* 6,581
200 Mettler-toldeo, Inc.* 5,612
300 Owens & Minor, Inc. 4,725
1,200 Priority Healthcare Corp.* 62,250
400 PSS World Medical, Inc.* 9,200
400 Thermo Bioanalysis* 5,300
150 Xomed Surgical Products, Inc.* 4,800
----------
110,018
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Home Builders - 2.2%
400 Champion Enterprises, Inc.* $ 10,950
800 Fairfield Communities, Inc.* 8,850
600 Kaufman & Broad Home Co. 17,250
600 Lennar Corp. 15,150
400 NVR, Inc.* 19,075
400 Pulte Corp. 11,125
300 Ryland Group, Inc. 8,663
300 Toll Brothers, Inc.* 6,769
200 U S Home Corp.* 6,650
----------
104,482
--------------------------------------------------------------
Home Furnishing & Services - 0.5%
200 Ethan Allen Interiors, Inc. 8,200
500 Furniture Brands International, Inc.* 13,625
----------
21,825
--------------------------------------------------------------
Hotels & Restaurants - 1.5%
800 Buffets, Inc.* 9,550
100 Harveys Casino Resorts 2,769
600 Lubys Cafeterias, Inc. 9,262
800 Ruby Tuesday, Inc. 17,000
850 Sonic Corp.* 21,144
2,500 Sunburst Hospitality Corp.* 10,625
----------
70,350
--------------------------------------------------------------
Household Durables - 0.3%
300 La-Z-Boy, Inc. 5,344
300 Mascotech, Inc. 5,137
100 Pillowtex Corp. 2,675
----------
13,156
--------------------------------------------------------------
Industrial Machinery - 1.5%
600 Applied Power, Inc. 22,650
200 Briggs & Stratton Corp. 9,975
100 Idex Corp. 2,450
500 Kaydon Corp. 20,031
200 Nacco Industries, Inc. 18,400
----------
73,506
--------------------------------------------------------------
Information Management - 1.4%
800 BA Merchant Services, Inc.* 16,100
100 Choicepoint, Inc.* 6,450
300 Earthlink Network, Inc.* 17,100
1,600 Infousa, Inc. Class B* 8,400
200 Mastech Corporation* 5,725
100 National Computer Systems, Inc. 3,700
200 Sabre Group Holdings, Inc.* 8,900
----------
66,375
--------------------------------------------------------------
Insurance Brokers & Other Insurance - 2.9%
500 Arthur J Gallagher & Co. 22,062
700 Capital Re Corp. 14,044
440 Fidelity National Financial, Inc. 13,420
300 Financial Security Assurance Holdings 16,275
500 First American Financial Corp. 16,062
200 Express Scripts, Inc.* 13,425
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Insurance Brokers & Other Insurance - (continued)
100 E. W. Blanch Holding, Inc. $ 4,744
1,000 Hilb Rogal & Hamilton Co. 19,875
100 Landamerica Financial Group 5,581
100 Poe & Brown, Inc. 3,494
400 SCPIE Holdings, Inc. 12,125
----------
141,107
------------------------------------------------------------
Insurance-Life - 1.9%
200 America Heritage Life Investments 4,887
200 ARM Financial Group, Inc. 4,437
326 Delphi Financial Group, Inc.* 17,095
1,000 FBL Financial Group, Inc. 24,250
200 Hartford Life, Inc. 11,650
200 Nationwide Financial Services, Inc. 10,338
300 Reinsurance Group of America, Inc. 21,000
----------
93,657
------------------------------------------------------------
Insurance-Property and Casualty - 1.7%
600 American Medical Security Group 8,738
900 Argonaut Group, Inc. 22,050
400 Chartwell Re Corp. 9,500
300 Commerce Group, Inc. 10,631
600 Fremont General Corp. 14,850
200 Pxre Corp. 5,013
300 Tig Holdings, Inc. 4,669
400 Zenith National Insurance Corp. 9,250
----------
84,701
------------------------------------------------------------
Investment Brokers & Managers - 0.6%
100 Dain Rauscher Corp. 2,950
900 Friedman Billings Ramsey* 5,850
300 Jeffries Group, Inc. 14,888
200 John Nuveen Co. 7,425
----------
31,113
------------------------------------------------------------
Machinery - 0.9%
500 Columbus Mckinnon Corp. 9,000
800 Commercial Intertech Corp. 10,350
200 Flowserve Corporation 3,312
800 Thomas Industries, Inc. 15,700
100 Zebra Technologies, Inc.* 2,875
----------
41,237
------------------------------------------------------------
Media & Communications - 1.1%
1,700 Ascent Entertainment Group* 12,538
500 Big Flower Press Holdings, Inc.* 11,031
600 McClatchy Newspapers, Inc. 21,225
100 Media General, Inc. 5,300
100 Metris Companies, Inc. 5,031
----------
55,125
------------------------------------------------------------
Metals-Diversified - 0.2%
500 Asarco, Inc. 7,531
400 Southern Peru Copper Corp. 3,775
----------
11,306
------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Mining - 0.1%
800 Hecla Mining Co.* $ 2,900
-----------------------------------------------------
Nonferrous Metals - 0.8%
500 AFC Cable Systems, Inc.* 16,813
1,500 Battle Mountain Gold Co. 6,188
650 Encore Wire Corp.* 6,012
100 Stillwater Mining Company* 4,100
100 Superior Telecom, Inc. 4,725
----------
37,838
-----------------------------------------------------
Office & Business Equipment - 1.9%
100 Adac Laboratories* 1,997
100 Csg Systems* 7,900
300 Data General Corp.* 4,931
300 Gerber Scientific, Inc. 7,144
300 Micron Electronics, Inc.* 5,194
400 Network Appliances, Inc.* 18,000
500 Pairgain Technologies, Inc.* 3,844
400 Psinet, Inc.* 8,350
200 Safeguard Scientifics, Inc.* 5,488
300 Wang Laboratories, Inc.* 8,325
400 Xircom, Inc.* 13,600
300 Xylan Corp.* 5,269
----------
90,042
-----------------------------------------------------
Oil & Gas Exploration - 0.4%
1,200 Cabot Oil & Gas Corp. 18,000
100 Devon Energy Corp. 3,069
----------
21,069
-----------------------------------------------------
Oil & Gas Services - 1.0%
500 Barrett Resources Corp.* 12,000
200 Cross Timbers Oil Co. 1,500
200 Hanover Compressor* 5,137
100 Peoples Energy Corp. 3,988
1,200 Pool Energy Services Co.* 12,975
600 Seitel, Inc.* 7,463
400 Veritas DGC, Inc.* 5,200
----------
48,263
-----------------------------------------------------
Packaging & Container - 0.2%
400 Aptargroup, Inc. 11,225
-----------------------------------------------------
Paper & Forest Products - 0.5%
300 Glatfelter (PH) Co. 3,712
300 Longview Fibre Co. 3,469
500 Potlatch Corp. 18,438
----------
25,619
-----------------------------------------------------
Personal Computers and Peripherals - 1.2%
600 Banctec, Inc.* 7,538
400 Bell & Howell Company* 15,125
1,200 CHS Electronics, Inc.* 20,325
100 Scm Microsystems, Inc.* 7,106
200 Visio Corp.* 7,313
----------
57,407
-----------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Pharmaceuticals - 1.5%
800 Alpharma, Inc. $ 28,250
200 Applied Micro Circuits* 6,794
500 Bindley Western Industries, Inc. 24,625
300 ICN Pharmaceuticals, Inc. 6,787
1,200 NBTY, Inc.* 8,550
----------
75,006
---------------------------------------------------------
Pipelines - 1.3%
800 Aquarion Co. 32,800
900 Oneok, Inc. 32,513
----------
65,313
---------------------------------------------------------
Real Estate - 0.6%
600 Calmat Co. 18,525
400 Ingles Markets, Inc. 4,375
300 Security Capital Group, Inc.* 4,069
----------
26,969
---------------------------------------------------------
Recreational Products - 0.8%
800 Huffy Corp. 13,200
200 Jostens, Inc. 5,237
800 Russ Berrie and Company, Inc. 18,800
200 Strum Ruger & Co., Inc. 2,388
----------
39,625
---------------------------------------------------------
Recreational Services - 0.1%
200 Carematrix Corporation* 6,125
---------------------------------------------------------
Restaurants & Hotels - 0.1%
200 CEC Entertainment, Inc.* 5,550
---------------------------------------------------------
Retail - 3.9%
125 99 Cents Only Stores* 6,141
300 Ames Deparment Stores, Inc.* 8,100
300 Anntaylor Stores Corp.* 11,831
500 Blair Corp. 11,094
200 Central Garden & Pet Co.* 2,875
300 Department 56, Inc.* 11,269
1,400 Genesco, Inc.* 7,962
200 Genovese Drug Stores 5,700
400 Hancock Fabrics, Inc. 3,350
200 Haverty Furniture Cos., Inc. 4,200
500 Heilig Meyers Co. 3,344
100 Henry Schein, Inc.* 4,475
400 Inacom Corp.* 5,950
200 Long Drug Stores, Inc. 7,500
500 Michaels Stores, Inc.* 9,047
200 Micro Warehouse, Inc.* 6,762
300 Musicland Stores Corp.* 4,481
500 Petsmart, Inc.* 5,500
1,250 Pier 1 Imports, Inc. 12,109
400 The Buckle, Inc.* 9,600
200 Transworld Entertainment Corp.* 3,813
500 Unifirst Corporation 11,406
200 Williams-Sonoma, Inc.* 8,063
700 Zale Corp.* 22,575
----------
187,147
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Savings and Loans - 0.8%
600 FirstFed Financial Corp.* $ 10,725
1,960 Sovereign Bancorp, Inc. 27,930
----------
38,655
-----------------------------------------------------------------
Semiconductors - 2.6%
300 Aavid Thermal Technologies* 5,063
700 Anixter International, Inc.* 14,218
200 Benchmark Electronics, Inc.* 7,325
600 Brightpoint, Inc.* 8,250
200 CTS Corporation 8,700
600 Cypress Semiconductor Corp.* 4,987
200 Dallas Semiconductor Corp. 8,150
400 Esterline Technologies Corp.* 8,700
200 Level One Communications, Inc.* 7,100
200 Marshall Industries, Inc.* 4,900
300 Methode Electronics, Inc. 4,687
100 Micrel, Inc.* 5,500
400 Neomagic Corp.* 8,850
200 Oak Industries, Inc.* 7,000
200 Pmc-Sierra, Inc.* 12,625
100 Sanmina Corp.* 6,250
200 Smart Modular Technologies* 5,550
----------
127,855
-----------------------------------------------------------------
Software & Services - 1.1%
300 Avant Corporation* 4,800
200 Complete Business Solution* 6,775
200 Computer Horizons Corp.* 5,325
186 DST Systems, Inc.* 10,614
200 Learning Company, Inc.* 5,187
300 New Era of Networks Inc* 13,200
100 Realnetworks, Inc.* 3,588
300 Systems & Computer Tech Corp.* 4,125
----------
53,614
-----------------------------------------------------------------
Specialty Finance & Agencies - 0.6%
100 Rambus, Inc.* 9,625
1,300 Resource Bancshares Mortgage Group, Inc. 21,531
----------
31,156
-----------------------------------------------------------------
Specialty Retail - 1.0%
700 Fingerhut Companies, Inc. 10,806
500 Goody's Family Clothing Inc.* 5,016
900 Handleman Co.* 12,656
200 Insight Enterprises, Inc.* 10,175
200 Linens-n-Things, Inc.* 7,925
250 Pacific Sunwear of California, Inc.* 4,094
----------
50,672
-----------------------------------------------------------------
Steel - 1.7%
200 A. M. Castle & Co. 3,000
1,100 AK Steel Holding Corp. 25,850
1,500 Bethlehem Steel Corp.* 12,562
100 Cleveland Cliffs, Inc. 4,031
600 LTV Corp. 3,487
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CORE SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Steel - (continued)
1,700 National Steel Corp. $ 12,112
400 Quanex Corp. 9,025
400 Reliance Steel & Aluminum Corp. 11,050
----------
81,117
---------------------------------------------------------
Supermarkets - 0.5%
1,100 Fleming Companies, Inc. 11,412
200 Great A&P Tea Co., Inc. 5,925
100 Whole Foods Market, Inc.* 4,838
----------
22,175
---------------------------------------------------------
Telecommunications - 0.2%
1,900 Paging Network, Inc.* 8,906
---------------------------------------------------------
Telecommunications Equipment - 1.2%
75 Ascend Communications, Inc.* 4,931
300 Aspect Telecommunications Corp.* 5,175
100 Concord Communications, Inc.* 5,675
100 L-3 Communications Corp.* 4,656
200 Plantronics, Inc.* 17,200
400 Polycom, Inc.* 8,900
300 Skytel Communications, Inc.* 6,638
300 Tekelec* 4,969
----------
58,144
---------------------------------------------------------
Textiles - 1.8%
100 American Eagle Outfitters* 6,663
300 Brown Group, Inc. 5,269
100 Footstar, Inc.* 2,500
300 Kellwood Company 7,500
200 Kenneth Cole Productions* 3,750
500 Nautica Enterprises, Inc.* 7,500
500 Oxford Industries, Inc. 14,125
500 Phillips-van Heusen Corp. 3,594
200 Quiksilver, Inc.* 6,000
100 Rayonier, Inc. 4,594
300 Russell Corp. 6,094
300 Springs Industries, Inc. 12,431
200 Talbots, Inc. 6,275
----------
86,295
---------------------------------------------------------
Tires & Rubber - 0.4%
400 Bandag, Inc. 15,975
300 Mark IV Industries, Inc. 3,900
----------
19,875
---------------------------------------------------------
Tobacco - 0.3%
700 Dimon Incorporated 5,206
300 Universal Corp. 10,538
----------
15,744
---------------------------------------------------------
Transportation/Storage - 0.5%
300 Alexander & Baldwin, Inc. 6,975
100 Midwest Express Holdings* 2,631
300 Overseas Shipholding Group 4,819
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Transportation/Storage - (continued)
200 Wisconsin Central Transportation* $ 3,438
100 Xtra Corp. 4,138
----------
22,001
--------------------------------------------------------------
Trucking - 1.3%
1,400 Consolidated Freightways Corp.* 22,225
1,400 Rollins Truck Leasing Corp. 20,650
1,000 Yellow Corp.* 19,125
----------
62,000
--------------------------------------------------------------
Utilities - 2.2%
200 Agl Resources, Inc. 4,613
600 California Water Services Group 18,787
200 Equitable Resources, Inc. 5,825
100 Idacorp, Inc. 3,619
100 Laclede Gas Co. 2,675
300 Northwestern Corporation 7,931
1,200 Public Service Company of New Mexico 24,525
100 South Jersey Industries 2,619
400 Southwestern Energy Co. 3,000
400 TNP Enterprises, Inc. 15,175
400 Ugi Corporation 9,500
200 United Water Resource, Inc. 4,788
100 Wps Resources Corp. 3,525
----------
106,582
--------------------------------------------------------------
Waste Management - 0.1%
100 Eastern Environment Services* 2,969
--------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $4,534,117) $4,835,367
--------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $4,534,117)(a) $4,835,367
--------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in
which value exceeds cost $ 836,486
Gross unrealized loss for investments in
which cost exceeds value (546,676)
--------------------------------------------------------------
Net unrealized gain $ 289,810
--------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $4,545,557.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust Capital Growth Fund. This annual report covers the period from
April 30, 1998, when the Fund began operations, through December 31, 1998.
Performance Review
From April 30, 1998 through December 31, 1998, the Fund
generated a 13.40% aggregate total return. Over the same
time period, the Fund's benchmark, the Standard & Poor's
500 Index (with dividends reinvested), generated an aggre-
gate total return of 11.71%.
Investment Objective
The Fund seeks long-term capital growth, primarily through
investments in a diversified portfolio of companies strate-
gically poised for long-term growth.
Sector Performance
As bottom-up stock pickers, we focus on the real worth of
the business, and to the extent that we find several busi-
nesses in related industries that we believe have long-term
growth potential, the Fund may develop an overweight in a
given sector. Recently, the Fund benefited from positions
in the consumer staples sector, which we find fundamentally
attractive. All of the companies owned in this sector fit
our strategy of owning the stocks of companies with per-
ceived strong business franchises, dominant market posi-
tions and sustainable growth rates.
28
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND
Portfolio Composition
Throughout the review period, in a market that rewarded
consistency and sustainability of above-average earnings
growth, the Fund benefited from our focus on companies that
offer enduring, strategic, competitive advantages.
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
Microsoft Corp. Software & Services 3.1%
AES Corp. Energy Refining & Marketing 2.5
Pfizer, Inc. Pharmaceuticals 2.5
Bristol-Myers Squibb Co. Pharmaceuticals 2.4
Liberty Media Group Media & Communications 2.4
Federal Home Loan Mortgage Corp. Specialty Finance & Agencies 2.3
General Electric Co. Appliance 2.3
BankAmerica Corp. Banks 2.2
Federal National Mortgage Association Specialty Finance & Agencies 2.2
CBS, Inc. Media & Communications 2.1
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
While we neither make nor rely on economic forecasts to
make investment decisions, we are generally bullish on the
U.S. economy. Over the last decade, global communication
has increased, a result of significant technological ad-
vances as well as generally stable political conditions
worldwide. We believe that this trend, combined with favor-
able demographic trends (such as the aging baby boom popu-
lation and the spread of capitalism), will benefit U.S.
companies over the long term. More fundamentally, though,
we continue to focus on the core business characteristics
which we believe provide a foundation for long-term growth,
such as strength of franchise, quality of management, and
free cash flow, along with favorable demographic trends. We
believe that the enduring competitive advantages of the
companies we own -- based on the criteria mentioned above--
has the potential to withstand even an uncertain market en-
vironment.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Growth Equity Management Team
January 29, 1999
29
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on April 30, 1998 (commencement of operations). For comparative
purposes, the performance of the Fund's benchmark (the Standard and Poor's
500 Index ("S&P 500 Index")) is shown. This performance data represents past
performance and should not be considered indicative of future performance
which will fluctuate with changes in market conditions. These performance
fluctuations will cause an investor's shares, when redeemed, to be worth more
or less than their original cost.
Capital Growth Fund's Lifetime Performance
Growth of a $10,000 investment, Distributions Reinvested April 30, 1998 to
December 31, 1998
(CHART APPEARS HERE)
Capital S&P 500
Growth Fund Index
----------- -----
04/98 10,000 10,000
05/98 9,720 9,828
06/98 10,280 10,227
07/98 10,189 10,118
08/98 8,590 8,655
09/98 9,120 9,209
10/98 9,960 9,958
11/98 10,539 10,562
12/98 11,340 11,171
Since Inception
Aggregate Total Return through December 31, 1998(a)
Capital Growth Fund (commenced April 30, 1998) 13.40%
---------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
30
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 95.9%
Advertising & Marketing - 1.6%
1,400 Valassis Communications, Inc.* $ 72,275
-----------------------------------------------------------------
Appliance - 2.3%
1,000 General Electric Co. 102,062
-----------------------------------------------------------------
Banks - 7.4%
1,600 BankAmerica Corp. 96,200
1,400 Bank One Corp. 71,487
750 Citigroup, Inc. 37,125
600 First Union Corp. 36,487
1,300 State Street Boston Corp. 90,431
----------
331,730
-----------------------------------------------------------------
Chemical Products - 0.7%
300 Du Pont (E.I.) de Nemours & Co. 15,919
200 Minnesota Mining and Manufacturing Co. 14,225
----------
30,144
-----------------------------------------------------------------
Commercial Services - 1.4%
900 Ecolab, Inc. 32,569
700 Galileo International, Inc. 30,450
----------
63,019
-----------------------------------------------------------------
Consumer Staples - 6.0%
1,400 Avon Products, Inc. 61,950
200 Clorox Co. 23,362
1,000 Colgate Palmolive Co. 92,875
500 Gillette Co. 24,156
700 Procter & Gamble Co. 63,919
----------
266,262
-----------------------------------------------------------------
Energy Refining & Marketing - 2.6%
2,400 AES Corp.* 113,700
-----------------------------------------------------------------
Enterprise Systems - 3.1%
800 EMC Corp. 68,000
200 International Business Machines, Inc. 36,950
400 Sun Microsystems, Inc.* 34,250
----------
139,200
-----------------------------------------------------------------
Entertainment & Leisure - 0.8%
1,200 Marriott International, Inc. 34,800
-----------------------------------------------------------------
Food & Beverages - 6.0%
800 Coca Cola Co. 53,500
1,100 Nabisco Holdings Corp. 45,650
1,500 Pepsico, Inc. 61,406
1,900 Ralston Purina Co. 61,513
500 William Wrigley Jr. Co. 44,781
----------
266,850
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<S> <C> <C>
Common Stocks - (continued)
Funeral Services - 2.0%
2,400 Service Corp. International $ 91,350
-------------------------------------------------------------
Health Suppliers/Services - 1.5%
800 Johnson & Johnson 67,100
-------------------------------------------------------------
Healthcare Management - 0.9%
500 Aetna, Inc. 39,312
-------------------------------------------------------------
Insurance Brokers & Other Insurance - 0.5%
400 AMBAC, Inc. 24,075
-------------------------------------------------------------
Insurance-Life - 2.4%
400 Hartford Life, Inc. 23,300
500 Nationwide Financial Services, Inc. 25,844
700 SunAmerica, Inc. 56,787
----------
105,931
-------------------------------------------------------------
Integrated Oil - 2.2%
100 Atlantic Richfield Co. 6,525
400 Exxon Corp. 29,250
300 Mobil Corp. 26,138
500 Texaco, Inc. 26,438
300 Unocal Corp. 8,756
----------
97,107
-------------------------------------------------------------
Internet Services - 1.0%
300 America Online, Inc.* 43,425
-------------------------------------------------------------
Media & Communications - 17.6%
2,200 AH Belo Corp. 43,862
800 Cablevision Systems Corp.* 40,150
2,900 CBS, Inc. 94,975
500 Central Newspapers, Inc. 35,719
1,400 Chancellor Media Corp.* 67,025
400 Comcast Corp. 23,475
600 Gannett Co. 38,700
1,800 HBO & Co. 51,637
1,800 Infinity Broadcasting Corp.* 49,275
700 Jacor Communications, Inc.* 45,062
900 New York Times Co. 31,219
2,300 Liberty Media Group* 105,944
1,300 TCI Group* 71,906
1,000 Time Warner, Inc. 62,062
300 Tribune Co. 19,800
300 Ziff Davis, Inc.* 4,744
----------
785,555
-------------------------------------------------------------
Oil & Gas Services - 1.3%
1,300 Schlumberger, Ltd. 59,963
-------------------------------------------------------------
Pharmaceuticals - 9.8%
1,600 American Home Products Corp. 90,100
800 Bristol-Myers Squibb Co. 107,050
900 Pfizer, Inc. 112,894
800 Schering-Plough Corp. 44,200
1,100 Warner-Lambert Co. 82,706
----------
436,950
-------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST CAPITAL GROWTH FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Recreational Products - 0.8%
1,000 Hasbro, Inc. $ 36,125
----------------------------------------------------------------
Retail - 1.8%
1,000 Wal-Mart Stores, Inc. 81,437
----------------------------------------------------------------
Semiconductors - 0.8%
300 Intel Corp. 35,569
----------------------------------------------------------------
Software & Services - 5.2%
1,900 First Data Corp. 60,206
1,000 Microsoft Corp.* 138,688
700 Sterling Commerce, Inc.* 31,500
----------
230,394
----------------------------------------------------------------
Specialty Finance & Agencies - 6.6%
600 C.I.T. Group, Inc. 19,088
1,600 Federal Home Loan Mortgage Corp. 103,100
1,300 Federal National Mortgage Association 96,200
3,000 MBNA Corp. 74,813
----------
293,201
----------------------------------------------------------------
Specialty Retail - 1.8%
600 Home Depot, Inc. 36,713
1,100 Tandy Corp. 45,306
----------
82,019
----------------------------------------------------------------
Supermarkets - 2.7%
500 CVS Corp. 27,500
600 Rite Aid Corp. 29,738
1,100 Walgreen Co. 64,419
----------
121,657
----------------------------------------------------------------
Telecommunications - 1.0%
600 MCI Worldcom, Inc.* 43,050
----------------------------------------------------------------
Telecommunications Equipment - 2.7%
700 Cisco Systems, Inc.* 64,969
500 Lucent Technologies, Inc. 55,000
----------
119,969
----------------------------------------------------------------
Tobacco - 1.4%
1,200 Philip Morris Companies, Inc. 64,200
----------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $3,745,142) $4,278,431
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<C> <S> <C> <C>
Repurchase Agreement - 2.2%
Joint Repurchase Agreement Account(a)
$100,000 4.89% 01/04/99 $ 100,000
--------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $100,000) $ 100,000
--------------------------------------------
TOTAL INVESTMENTS
(Cost $3,845,142)(b) $4,378,431
--------------------------------------------
Federal Income Tax Informa-
tion:
Gross unrealized gain for
investments in which value
exceeds cost $ 669,406
Gross unrealized loss for
investments in which cost
exceeds value (137,940)
--------------------------------------------
Net unrealized gain $ 531,466
--------------------------------------------
</TABLE>
* Non-income producing security.
(a) The repurchase agreement is fully collateralized by Federal Agency
obligations.
(b) The aggregate cost for federal income tax purposes is $3,846,965.
The percentage shown for each investment category reflects the value of in-
vestments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP EQUITY FUND
Shareholder Letter
Dear Shareholders,
The following is a report on the performance of the Goldman Sachs Variable
Insurance Trust Mid Cap Equity Fund. This annual report covers the period
from May 1, 1998, when the Fund began operations, through December 31, 1998.
Performance Review
From May 1, 1998 through December 31, 1998, the Fund gener-
ated a negative return of 13.56%. Over the same time peri-
od, the Fund's benchmark, the Russell Midcap Index,
generated a negative return of 0.90%.
Early in the review period, stocks fared poorly in reaction
to global economic uncertainties and a concomitant decline
in liquidity. Investors sought security (Treasuries) and
sold uncertainty (most stocks) with a vengeance. Stocks in
the lower capitalization ranges, including mid-cap stocks,
of which your Fund is primarily composed--suffered the
steepest declines as a result. Although these stocks recov-
ered somewhat toward the end of the period under review,
they finished far behind large-cap stocks.
In addition to a capitalization bias, investors appeared to
prefer growth versus value investing. This aspect of the
market environment particularly affected the Fund's perfor-
mance. We buy stocks that we believe are typically subject
to uncertainty or pessimism; in our view these conditions
create value buying opportunities. As of December 31, 1998,
the average stock in the VIT Mid Cap Equity Fund was valued
at only 12.4 times projected 1999 earnings and 1.7 times
book value. The underlying stocks of the Russell Midcap In-
dex were valued at 18.4 times projected 1999 earnings and
2.9 times book value, and the underlying stocks of the S&P
500 at 24.8 times projected 1999 earnings and 4.9 times
book value. We believe that near-term uncertainty associ-
ated with individual securities has resulted in a market
discount in the values of the portfolio's securities. In
our view, as uncertainty surrounding industry or company-
specific problems, cyclical issues or reorganizations dis-
sipates, the portfolio has the potential to achieve solid
returns as the long-term earnings and cash flow potential
of the Fund's holdings are realized.
Investment Objective
The Fund seeks long-term capital growth, primarily through
equity securities of companies with public stock market
capitalizations within the range of the market capitaliza-
tion of companies constituting the Russell Midcap Index at
the time of investment. (Currently, between $400 million
and $16 billion at the time of investment.)
33
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP EQUITY FUND
Shareholder Letter
Portfolio Composition
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Line of Business Net Assets
------- ---------------- -------------
<S> <C> <C>
CMP Group, Inc. Utilities 2.7%
Aetna, Inc. Healthcare Management 2.7
Avnet Inc. Electronics 2.5
Georgia-Pacific
Corp. Forest Products 2.3
Loews Corp. Insurance Brokers & Other Insurance 2.3
Pacific Century
Financial Corp. Banks 2.3
Vishay
Intertechnology,
Inc. Electronics 2.0
Quantum Corp. Personal Computers and Peripherals 1.9
Tenet Healthcare
Corp. Healthcare Management 1.9
Quest
Diagnostics,
Inc. Healthcare Management 1.8
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
We remain enthusiastic about the potential long term value
offered by mid-cap companies, particularly those comprising
the portfolio. In our view, the asset class became tremen-
dously discounted during the past year relative to larger
cap issues. We believe the discounted valuations will re-
attract capital and drive valuations to historical means,
with mid caps trading more in line with larger companies.
In all environments, we perform rigorous, first-hand re-
search into mid cap stocks which trade at a discount to the
market and their peers due to uncertainty or obscurity. We
aim to exploit anomalies by investigating what is misunder-
stood or undiscovered by the marketplace. Mid cap stocks'
recovery at the end of the period from third quarter lows
strengthens our conviction that our disciplined value-based
approach has the potential to deliver strong returns to the
long-term investor.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Value Portfolio Management Team
January 29, 1999
34
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP EQUITY FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on May 1, 1998 (commencement of operations). For comparative
purposes, the performance of the Fund's benchmark (the Russell Midcap Index)
is shown. This performance data represents past performance and should not be
considered indicative of future performance which will fluctuate with changes
in market conditions. These performance fluctuations will cause an investor's
shares, when redeemed, to be worth more or less than their original cost.
Mid Cap Equity Fund's Lifetime Performance
Growth of a $10,000 investment, Distributions Reinvested May 1, 1998 to
December 31, 1998
[CHART APPEARS HERE]
Mid Cap Russell Mid
Equity Cap Index
------ ---------
5/1/98 10,000 10,000
05/98 9,710 9,690
06/98 9,400 9,825
07/98 8,760 9,356
08/98 7,400 7,859
09/98 7,820 8,368
10/98 8,230 8,938
11/98 8,530 9,362
12/98 8,644 9,910
Since Inception
Aggregate Total Return through December 31, 1998(a)
Mid Cap Fund (commenced May 1, 1998) -13.56%
---------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
35
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 70.3%
Air Freight, Truck & Other - 1.4%
2,100 CNF Transportation, Inc. $ 78,881
---------------------------------------------------------------
Auto Suppliers - 4.1%
500 Federal-Mogul Corp. 29,750
1,300 Lear Corp.* 50,050
2,200 Lucasvarity PLC ADR 73,700
1,200 Magna International, Inc. 74,400
----------
227,900
---------------------------------------------------------------
Banks - 4.0%
5,200 Pacific Century Financial Corp. 126,750
2,100 Republic New York Corp. 95,681
----------
222,431
---------------------------------------------------------------
Chemical Products - 1.0%
2,100 IMC Global, Inc. 44,888
400 Olin Corp. 11,325
----------
56,213
---------------------------------------------------------------
Construction/Environmental Services - 1.0%
1,900 Browning-Ferris Industries, Inc. 54,031
---------------------------------------------------------------
Consumer Staples - 0.9%
5,900 Perrigo Co.* 51,994
---------------------------------------------------------------
Department Stores - 2.0%
1,200 Federated Department Stores, Inc.* 52,275
1,400 Sears Roebuck & Co. 59,500
----------
111,775
---------------------------------------------------------------
Electronics - 4.5%
2,300 Avnet, Inc. 139,150
7,750 Vishay Intertechnology, Inc.* 112,375
----------
251,525
---------------------------------------------------------------
Energy Refining & Marketing - 1.7%
3,100 Tosco Corp. 80,213
600 USX-Marathon Group, Inc. 18,075
----------
98,288
---------------------------------------------------------------
Entertainment & Leisure - 3.4%
3,400 Hilton Hotels Corp. 65,025
3,200 Mirage Resorts, Inc.* 47,800
1,600 Tricon Global Restaurants, Inc.* 80,200
----------
193,025
---------------------------------------------------------------
Forest Products - 4.8%
1,300 Georgia-Pacific Corp. 76,131
5,500 Georgia-Pacific Corp. (Timber Group) 130,969
4,061 Smurfit-Stone Container Corp.* 64,215
----------
271,315
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Healthcare Management - 6.4%
1,900 Aetna, Inc. $ 149,387
5,800 Quest Diagnostics Inc.* 103,312
4,000 Tenet Healthcare Corp.* 105,000
----------
357,699
------------------------------------------------------------------
Insurance Brokers & Other Insurance - 2.3%
1,300 Loews Corp. 127,725
------------------------------------------------------------------
Insurance-Life - 0.8%
400 Reliastar Financial Corp. 18,450
700 Torchmark Corp. 24,719
----------
43,169
------------------------------------------------------------------
Insurance-Property and Casualty - 2.2%
800 Allmerica Financial Corp. 46,300
1,200 CNA Financial Corp.* 48,300
700 Everest Reinsurance Holdings, Inc. 27,256
----------
121,856
------------------------------------------------------------------
Integrated Oil - 1.9%
1,000 Elf Aquitaine ADR 56,625
2,900 Occidental Petroleum Corp. 48,938
----------
105,563
------------------------------------------------------------------
Investment Brokers & Managers - 1.7%
68 Waddell & Reed Financial, Inc. 1,611
3,993 Waddell & Reed Financial, Inc. Class B* 92,837
----------
94,448
------------------------------------------------------------------
Logistics/Rail - 1.2%
3,700 Canadian Pacific, Ltd. 69,837
------------------------------------------------------------------
Media & Communications - 3.0%
2,300 AH Belo Corp. 45,856
1,800 Dun & Bradstreet Corp. 56,813
1,900 New York Times Co. 65,906
----------
168,575
------------------------------------------------------------------
Oil & Gas Services - 2.8%
2,700 Baker Hughes, Inc. 47,756
2,200 Transocean Offshore, Inc. 58,988
1,600 Veritas DGC, Inc.* 20,800
1,600 Weatherford International* 31,000
----------
158,544
------------------------------------------------------------------
Packaging - 1.6%
1,400 Crown Cork & Seal, Inc. 43,138
900 Sealed Air Corp.* 45,956
----------
89,094
------------------------------------------------------------------
Personal Computers and Peripherals - 1.9%
5,100 Quantum Corp.* 108,375
------------------------------------------------------------------
Recreational Products - 1.3%
2,000 Hasbro, Inc. 72,250
------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST MID CAP EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Specialty Finance & Agencies - 1.8%
1,600 C.I.T. Group, Inc. $ 50,900
900 Finova Group, Inc. 48,544
----------
99,444
------------------------------------------------------
Specialty Retail - 1.1%
3,600 Toys R Us, Inc.* 60,750
------------------------------------------------------
Steel - 3.2%
2,400 AK Steel Holding Corp. 56,400
5,900 Ispat International NV 45,725
4,200 Ucar International, Inc.* 74,813
----------
176,938
------------------------------------------------------
Supermarkets - 1.2%
6,500 Fleming Companies, Inc. 67,437
------------------------------------------------------
Textiles - 0.8%
3,300 Fruit of the Loom, Inc.* 45,581
------------------------------------------------------
Tire & Other Related Rubber Products - 0.9%
1,000 Goodyear Tire & Rubber Co. 50,437
------------------------------------------------------
Tobacco - 2.0%
1,600 RJR Nabisco Holdings, Corp. 47,500
1,900 UST, Inc. 66,263
----------
113,763
------------------------------------------------------
Utilities - 3.4%
8,000 CMP Group, Inc. 151,000
2,400 Northeast Utilities* 38,400
----------
189,400
------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $4,093,358) $3,938,263
------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
U.S. Treasury Obligation - 1.1%
United States Treasury Bill
$60,000 4.57%(a) 02/04/99 59,738
---------------------------------------------------------------------------------------------------
TOTAL U.S. Treasury Obligation
(Cost $59,738) $ 59,738
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Repurchase Agreement - 30.3%
Joint Repurchase Agreement Account(b)
$1,700,000 4.89% 01/04/99 $1,700,000
-------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,700,000) $1,700,000
-------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $5,853,096)(c) $5,698,001
-------------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost
$ 200,558
Gross unrealized loss for investments in which
cost exceeds value
(397,485)
-------------------------------------------------------------------------------------------------
Net unrealized loss $ (196,927)
-------------------------------------------------------------------------------------------------
</TABLE>
Futures contracts open at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Number of
Contracts Settlement Unrealized
Type Long(d) Month Gain
<S> <C> <C> <C>
-----------------------------------------------------
S&P 500 Stock Index 3 March 1999 $ 42,855
-----------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The interest rate disclosed for this security represents the effective
yield to maturity and is being segregated as collateral for open futures
contracts.
(b) The repurchase agreement is fully collateralized by Federal Agency
obligations and is being segregated as collateral for open futures
contracts.
(c) The aggregate cost for federal income tax purposes is $5,894,928.
(d) Each S&P 500 Stock Index represents $250,000 in notional par value. The
total net notional amount and net market value are $750,000 and $934,125,
respectively. The determination of notional amounts as presented here are
indicative only of volume of activity and not a measure of market risk.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust International Equity Fund. This annual report covers the period
from January 12, 1998, when the Fund began operations, through December 31,
1998.
Performance Review
From January 12, 1998 through December 31, 1998, the Fund
generated a 20.07% aggregate total return. Over the same
time period, the Fund's benchmark, the FT/Actuaries EuroPac
Total Return Index (unhedged with dividends reinvested),
generated an aggregate total return of 22.84%.
The Fund outperformed its benchmark for most of the year.
However, in the final three months of the period under re-
view, stock selection in both Japan and Europe slightly
hurt performance. In Japan, the Fund suffered from over-
weight positions in a number of export oriented companies
within the technology sector. All of these stocks suffered
from unprecedented yen strength in the month of October.
Also in the fourth quarter, the Fund was somewhat disadvan-
taged by its lack of exposure to Japanese banks, which per-
formed strongly in October, although the underweight bank
position in general benefited the Fund over the year.
In Europe, strong first half performance was impacted by
the increased volatility in the markets in September and
October. However, the positioning towards strong business
franchises in sectors we believe offer good structural
growth prospects, strong cash generation and reinvestment
opportunities allowed the portfolio to benefit from the
substantial market re-rating of November and December. Spe-
cifically, the business services sector and the telecommu-
nications sector continue to feature prominently in the
portfolio. Although the financials sector is facing unprec-
edented change and consolidation with the advent of the Eu-
ro, we also see a number of competitive threats facing the
sector. Accordingly, the portfolio is only neutrally
weighted in European banks, with exposure to selected banks
possessing strong franchise value.
Investment Objective
The Fund seeks long-term capital appreciation, primarily
through equity securities of companies that are organized
outside the United States or whose securities are princi-
pally traded outside the United States.
38
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
Portfolio Composition
As of December 31, 1998, 95.6% of the Fund was invested in
equity securities, with the remaining position in cash.
Top 10 Portfolio Holdings as of December 31, 1998*
<TABLE>
<CAPTION>
Percentage of
Company Country Line of Business Net Assets
------- ------- ---------------- -------------
<S> <C> <C> <C>
Bank of
Ireland Ireland Banks 3.3%
Rentokil
Initial PLC United Kingdom Business Services 3.1
TNT Post
Groep NV Netherlands Business Services 3.1
Wolters
Kluwer NV Netherlands Media & Communications 2.8
Dexia France France Banks 2.7
VNU Netherlands Media & Communications 2.6
Telecom
Italia
Mobile SPA Italy Utilities 2.6
Misys PLC United Kingdom Business Services 2.6
Glaxo
Wellcome
PLC United Kingdom Pharmaceuticals 2.4
Elf
Aquitaine France Oil & Gas 2.3
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual securities should
not be construed as a commitment that such securities will
be retained in the Fund. From time to time, the Fund may
change the individual securities it holds, the number or
types of securities held and the markets in which it in-
vests. References to individual securities do not consti-
tute a recommendation to the investor to buy, hold or sell
such securities. In addition, references to past perfor-
mance of the Fund do not indicate future returns, which are
not guaranteed and will vary. Furthermore, the value of
shares of the Fund may fall as well as rise.
Outlook
. Europe--With the advent of the single currency, the euro,
prospects for equities are bright. We believe that the
consolidation process within industries will continue un-
abated, and as companies strive to lower their costs and
to dominate in Europe, investors will benefit. The Fund
remains overweight in continental Europe, which, from a
research perspective, is increasingly viewed as a single
region. In comparison, the UK economy has slowed consid-
erably, and expectations for earnings growth in the UK
are modest.
. Japan--Japan's economy is expected to contract more than
2% over the fiscal year ending March 1999, and lackluster
performance is expected to continue into the following
fiscal year. Faced with weak domestic demand, the govern-
ment is expected to implement stimulatory economic pack-
ages, including tax cuts, which we believe could have a
positive impact on bottom-line earnings next year given
the continued cost-cutting efforts of Japanese companies.
To be fair, the corporate earnings forecast for the cur-
rent fiscal year has been downgraded after a difficult
first half. However, weak market performance over the
summer, in our opinion, indicates that the current year's
poor earnings have already been discounted in stock pric-
es. In addition, earnings for the next fiscal year are
expected to rise, with a weak first half followed by a
recovery in the second half due to the bottoming-out of
domestic demand. If the outlook for the economy stops de-
teriorating, and
we find any signs of a pick-up in corporate earnings, in-
vestors will likely find the market attractive given inex-
pensive valuation levels relative to interest rates and to
the book value of shareholders' equity.
39
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
Shareholder Letter
. Asia--The sharp appreciation of most Asian stock markets
between September and November 1998 was driven by a con-
fluence of events, the most important of which were grow-
ing account surpluses, the stability and appreciation of
Asian currencies led by the Yen, a sharp drop in interest
rates in several countries and a "buying panic" by insti-
tutional investors who were very underweight in Asia.
This liquidity rally lifted a wide range of stocks with-
out particular regard to company-specific considerations.
Macro risks going forward include a slowing of the U.S.
and European economies and a possible renewed weakness in
the Yen. We also believe that investors will begin to fo-
cus on the timing of economic recoveries in Asian coun-
tries, as well as a possible earnings recovery for many
companies. Therefore, bottom-up stock selectivity will
become more important in the coming year, since not all
companies or sectors will participate equally in the eco-
nomic recovery. We intend to continue our focus on find-
ing companies whose earnings we believe are likely to
grow sharply as these economies recover.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs International Equity Management Team
January 29, 1999
40
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on January 12, 1998 (commencement of operations). For compara-
tive purposes, the performance of the Fund's benchmark (FT Euro-Pac Unhedged)
are shown. This performance data represents past performance and should not
be considered indicative of future performance which will fluctuate with
changes in market conditions. These performance fluctuations will cause an
investor's shares, when redeemed, to be worth more or less than their origi-
nal cost.
International Equity Fund's Lifetime Performance
Growth of a $10,000 investment, Distributions Reinvested January 12, 1998 to
December 31, 1998
[CHART APPEARS HERE]
Intl Equity
Fund FT Euro
---- -------
1/12/98 10,000 10,000
01/98 10,350 10,789
02/98 11,040 11,478
03/98 11,671 11,802
04/98 11,841 11,845
05/98 12,131 11,820
06/98 11,952 11,835
07/98 11,982 11,911
08/98 10,702 10,442
09/98 10,352 10,162
10/98 10,832 11,245
11/98 11,402 11,861
12/98 12,007 12,284
Since Inception
Aggregate Total Return through December 31, 1998(a)
International Equity Fund (commenced January 12, 1998) 20.07%
----------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
41
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 93.4%
Australian Dollar - 2.8%
2,800 AMP, Ltd. (Insurance) $ 35,474
13,800 Fosters Brewing Group, Ltd. (Alcohol) 37,377
3,768 Lend Lease Corp. (Financial Services) 50,797
4,550 Tab Corp Holdings, Ltd. (Entertainment & Leisure) 27,882
15,500 Telstra Corp. (Utilities) 72,471
7,100 Westpac Banking Corp. (Banks) 47,510
12,200 Woolworths, Ltd. (Retail) 41,536
----------
313,047
-----------------------------------------------------------------------------
British Pound Sterling - 14.2%
7,812 Glaxo Wellcome PLC (Pharmaceuticals) 268,923
11,804 Great Universal Stores PLC (Retail) 124,531
23,798 Hays PLC (Business Services) 209,552
38,949 Misys PLC (Business Services) 286,019
46,164 Rentokil Initial PLC (Business Services) 348,972
17,658 Select Appointments Holdings PLC (Business Services) 181,890
10,753 Vodafone Group PLC (Utilities) 174,721
----------
1,594,608
-----------------------------------------------------------------------------
Danish Krone - 1.8%
1,995 ISS International Service System (Business Services) 129,775
515 Novo-Nordisk A/S (Pharmaceuticals) 67,973
----------
197,748
-----------------------------------------------------------------------------
French Franc - 12.3%
1,551 Axa (Insurance) 224,702
1,930 Dexia France (Banks) 297,215
597 Vivendi (Utilities) 154,829
2,276 Elf Aquitaine (Oil & Gas) 262,976
2,325 STMicroelectronics (Electronics) 182,973
1,556 Societe Generale (Banks) 251,866
----------
1,374,561
-----------------------------------------------------------------------------
Hong Kong Dollar - 1.9%
5,000 Asia Satellite Telecom Holdings, Ltd. (Utilities) 8,906
13,000 Cheung Kong Holdings, Ltd. (Real Estate) 93,545
42,000 China Telecom (Hong Kong), Ltd. (Utilities) 72,642
8,000 CLP Holdings, Ltd. (Utilities) 39,858
----------
214,951
-----------------------------------------------------------------------------
Irish Punt - 3.3%
16,528 Bank of Ireland (Banks) 367,491
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Italian Lira - 3.5%
3,085 Arnoldo Mondadori Editore SPA (Utilities) $ 40,768
92,618 SEAT Pagine Gialle (Media & Communications) 71,139
38,903 Telecom Italia Mobile SPA (Utilities) 287,046
----------
398,953
-------------------------------------------------------------------------
Japanese Yen - 21.6%
2,500 Aderans Company, Ltd. (Retail) 77,621
6,000 Canon, Inc. (Computers/Office) 128,173
3,400 Circle K Japan Co. (Retail) 149,474
4,000 Fuji Photo Film, Ltd. (Entertainment & Leisure) 148,607
1,300 Ito En, Ltd. (Food & Beverages) 67,041
7,000 Kao Corp. (Consumer Goods) 157,895
11,000 Kirin Brewery, Ltd. (Alcohol) 140,115
7,000 Kokuyo Company, Ltd. (Computers/Office) 94,180
3,000 Mirai Industry Company, Ltd. (Electronics) 29,987
25,000 Mitsui Marine & Fire (Insurance) 131,579
10,000 NGK Insulators, Ltd. (Diversified Industrial
Manufacturing) 128,881
1,300 Nintendo Company, Ltd. (Entertainment & Leisure) 125,918
3 NTT Mobile Communications (Utilities) 123,395
1,000 Rohm Co. (Electronics) 91,022
8,000 Sankyo Company, Ltd. (Pharmaceuticals) 174,790
1,100 SMC Corp. (Industrial Machinery) 87,766
2,000 Takefuji Corp. (Financial Services) 145,953
2,000 TDK Corp. (Consumer Goods) 182,751
8,000 Toppan Forms Company, Ltd. (Printing) 142,238
3,000 Yamanouchi Pharmaceutical (Pharmaceuticals) 96,594
----------
2,423,980
-------------------------------------------------------------------------
Netherlands Guilder - 12.3%
1,939 Aegon NV (Insurance) 238,001
2,974 Benckiser NV (Consumer Goods) 194,710
10,691 TNT Post Groep NV (Business Services) 344,284
7,625 VNU (Media & Communications) 287,353
1,470 Wolters Kluwer NV (Media & Communications) 314,391
----------
1,378,739
-------------------------------------------------------------------------
Portuguese Escudo - 1.5%
7,516 Electricidade de Portugal SA (Utilities) 165,554
-------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Singapore Dollar - 0.6%
3,000 Singapore Airlines, Ltd. (Transportation) $ 21,987
4,000 Singapore Press Holdings, Ltd. (Media &
Communications) 43,610
-----------
65,597
------------------------------------------------------------------------
Spanish Peseta - 3.1%
10,275 Banco Santander SA (Banks) 203,881
3,277 Telefonica de Espana SA (Utilities) 145,496
-----------
349,377
------------------------------------------------------------------------
Swedish Krona - 6.9%
6,090 Ericsson Telecommunications (Computers/Office) 144,664
15,942 Securitas AB (Business Services) 247,230
8,099 Skandia Forsakring (Insurance) 123,606
9,969 ForeningSparbanken AB (Banks) 257,667
-----------
773,167
------------------------------------------------------------------------
Swiss Franc - 7.6%
452 Adecco SA (Business Services) 206,307
115 Nestle SA (Food & Beverages) 250,309
114 Novartis AG (Pharmaceuticals) 224,066
548 UBS AG (Banks) 168,345
-----------
849,027
------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $9,174,972) $10,466,800
------------------------------------------------------------------------
Preferred Stock - 2.2%
German Deutschemark - 2.2%
2,749 Henkel KGAA - Vorzug (Chemical Products) $ 245,770
------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $193,435) $ 245,770
------------------------------------------------------------------------
Rights - 0.0%
Spanish Peseta - 0.0%
3,277 Telefonica de Espana SA* (Utilities) $ 2,905
------------------------------------------------------------------------
TOTAL RIGHTS
(Cost $0) $ 2,905
------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $9,368,407)(a) $10,715,475
------------------------------------------------------------------------
</TABLE>
<TABLE>
----------------------------
<S> <C> <C>
Federal Income
Tax Informa-
tion:
Gross
unrealized gain
for investments
in which value
exceeds cost $1,626,347
Gross
unrealized loss
for investments
in which cost
exceeds value (291,763)
----------------------------
Net unrealized
gain $1,334,584
----------------------------
</TABLE>
*Non-income producing security.
(a)The aggregate cost for federal income tax purposes is $9,380,891.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
<TABLE>
Common and Preferred Stock
Industry Concentrations
<S> <C>
Alcohol 1.3%
Banks 14.2
Business Services 17.4
Chemical Products 2.2
Computers/Office 3.3
Consumer Goods 4.8
Diversified
Industrial
Manufacturing 1.2
Electronics 2.7
Entertainment &
Leisure 2.7
Financial
Services 1.8
Food & Beverages 2.8
Industrial
Machinery 0.8
Insurance 7.1
Media &
Communications 6.4
Oil & Gas 2.2
Pharmaceuticals 7.4
Printing 1.3
Real Estate 0.8
Retail 3.5
Transportation 0.2
Utilities 11.5
-----------------------------
TOTAL COMMON AND
PREFERRED STOCK 95.6%
-----------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL INCOME FUND
Shareholder Letter
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs Variable In-
surance Trust Global Income Fund. This annual report covers the period from
January 12, 1998, when the Fund began operations, through December 31, 1998.
Performance Review
From January 12, 1998 through December 31, 1998, the Fund
generated an 8.29% aggregate total return. Over the same
time period, the Fund's benchmark, the JP Morgan Global
Government Bond Index (hedged into U.S. dollars), generated
an aggregate total return of 9.77%.
The primary factor behind the Fund's slight
underperformance relative to its benchmark was the Fund's
overweight position in New Zealand bonds during the first
quarter of 1998.
Investment Objective
The Fund seeks high total return, emphasizing current in-
come and, to a lesser extent, providing opportunities for
capital appreciation, primarily through investments in
fixed income securities of U.S. and foreign issuers and
foreign currencies.
Portfolio Composition
Top Portfolio Holdings (by currency) as of December 31,
1998*
<TABLE>
<CAPTION>
Percentage of
Bonds Denomination Net Assets
------------------ -------------
<S> <C>
United States Dollar 42.2%
British Pound Sterling 13.9
Japanese Yen 10.5
German Deutschemark 9.6
Danish Krone 5.1
Italian Lira 4.2
Spanish Peseta 2.8
Canadian Dollar 1.8
French Franc 1.0
</TABLE>
* Opinions expressed in this report represent our present
opinions only. Reference to individual bonds should not be
construed as a commitment that such bonds will be retained
in the Fund. From time to time, the Fund may change the in-
dividual bonds it holds, the number or types of bonds held
and the markets in which it invests. References to individ-
ual bonds do not constitute a recommendation to the in-
vestor to buy, hold or sell such bonds. In addition,
references to past performance of the Fund do not indicate
future returns, which are not guaranteed and will vary.
Furthermore, the value of shares of the Fund may fall as
well as rise.
44
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL INCOME FUND
Outlook
We believe conditions remain favorable for bond markets
globally with inflationary pressures continuing to decline
and economic conditions remaining sluggish. Furthermore,
the economic problems facing Brazil may intensify, which
could cause a further bout of economic weakness. In the
U.S., economic data remains buoyant with housing activity
and consumer confidence at historically high levels. Howev-
er, we expect that Treasuries will be supported by a favor-
able inflationary environment and by the expectations that
the weak global economy will ultimately impact the U.S.
economy -- especially if conditions were to deteriorate in
South America.
Within the EMU region, weak manufacturing activity, high
levels of unemployment, deteriorating business and consumer
confidence, and falling commodity prices are all counter-
acting inflationary pressures that are beneficial for
bonds. Similarly, in the UK, weakness in the manufacturing
and export sectors, as well as extremely poor business con-
fidence, should place downward pressure on UK bond yields.
We believe the rise in yields in Japan has been caused by
supply side fears, and not an improvement in Japan's eco-
nomic outlook. The steepness of the yield curve and the
magnitude of the fall mean that the argument for
underweighting Japanese bonds has weakened in recent days,
and it is possible that Japanese bonds will remain firm in
the short term.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Global Income Management Team
London, January 29, 1999
45
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL INCOME FUND
Performance Summary
December 31, 1998
The following graph shows the value as of December 31, 1998, of a $10,000 in-
vestment made on January 12, 1998. For comparative purposes, the performance
of the Fund's benchmark (the J.P. Morgan Global Government Bond Index hedged
to U.S. Dollars (the "J.P. Morgan GGB Index - $ Hedged")) is shown. This per-
formance data represents past performance and should not be considered indic-
ative of future performance which will fluctuate with changes in market
conditions. These performance fluctuations will cause an investor's shares,
when redeemed, to be worth more or less than their original costs.
Global Income Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested January 12, 1998 to
December 31, 1998
[CHART APPEARS HERE]
Global J.P. Morgan
Income GGB Index
------ ---------
1/12/98 10,000 10,000
01/98 9,950 9,993
02/98 9,980 10,034
03/98 10,090 10,099
04/98 10,130 10,149
05/98 10,250 10,276
06/98 10,270 10,350
07/98 10,340 10,416
08/98 10,530 10,653
09/98 10,840 10,925
10/98 10,750 10,901
11/98 10,810 10,978
12/98 10,829 10,977
Since Inception
Aggregate Annual Total Return through December 31, 1998(a)
Global Income Fund (commenced January 12, 1998) 8.29%
-------------------------------------------------------------------------------
(a) Represents aggregate total return since the Fund has not been in
operation for a full 12 months.
46
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL INCOME FUND
Statement of Investments
December 31, 1998
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount(a) Rate Date Value
<S> <C> <C> <C>
Foreign Debt Obligations - 43.5%
British Pound Sterling - 10.7%
United Kingdom Treasury
BPS 200,000 9.50% 10/25/04(b) $ 416,264
100,000 7.75 09/08/06(b) 201,208
----------
$ 617,472
------------------------------------------------------------------------------------
Canadian Dollar - 1.8%
Government of Canada
CAD 150,000 6.00% 06/01/08(b) $ 106,232
------------------------------------------------------------------------------------
Danish Krone - 5.1%
Kingdom of Denmark
DKK 1,600,000 8.00% 05/15/03(b) $ 291,807
------------------------------------------------------------------------------------
French Franc - 1.0%
Government of France
FRF 200,000 8.50% 04/25/23(b) $ 55,395
------------------------------------------------------------------------------------
German Deutschemark - 7.4%
Federal Republic of Germany
DEM 300,000 6.00% 01/04/07 $ 206,381
300,000 6.25 01/04/24(b) 216,679
----------
$ 423,060
------------------------------------------------------------------------------------
Italian Lira - 4.2%
Republic of Italy
ITL 70,000,000 6.75% 07/01/07(b) $ 50,586
200,000,000 9.00 11/01/23(b) 189,878
----------
$ 240,464
------------------------------------------------------------------------------------
Japanese Yen - 10.5%
Asian Development Bank
JPY 20,000,000 5.63% 02/18/02 $ 200,749
Government of Japan
40,000,000 0.90 12/22/08(b) 313,100
International Bank for Reconstruction and Development
10,000,000 2.00 02/18/08 87,990
----------
$ 601,839
------------------------------------------------------------------------------------
Spanish Peseta - 2.8%
Government of Spain
ESP 20,000,000 6.00% 01/31/08(b) $ 161,976
------------------------------------------------------------------------------------
TOTAL FOREIGN DEBT OBLIGATIONS
(Cost $2,408,994) $2,498,245
------------------------------------------------------------------------------------
Corporate Bonds - 24.3%
British Pound Sterling - 3.2%
Abbey National Treasury
BPS 100,000 8.00% 04/02/03 $ 183,051
------------------------------------------------------------------------------------
German Deutschemark - 2.2%
Baden-Wuerttembergische Land--Finance
DEM 200,000 5.38% 02/05/10 $ 129,478
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount(a) Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - continued
United States Dollar - 18.9%
Bayerische Landesbank Girozentrale
USD 250,000 6.63% 06/25/07 $ 264,610
Ford Motor Credit Corp.
200,000 6.13 04/28/03 203,624
International Bank for Reconstruction and Development
100,000 5.63 03/17/03 101,163
100,000 5.75 02/06/08 103,610
Merrill Lynch and Company, Inc.
100,000 6.00 02/12/03 101,500
Nederlandse Waterschapsbank
100,000 6.13 02/13/08 104,277
Ontario Hydro
100,000 6.10 01/30/08(b) 104,283
Prudential Insurance Company of America
100,000 6.38 07/23/06 102,070
----------
$1,085,137
--------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $1,353,196) $1,397,666
--------------------------------------------------------------------------------------
U.S. Treasury Obligations - 23.3%
United States Treasury Bond
USD 100,000 6.75% 08/15/26(b) $ 119,796
United States Treasury Notes
300,000 5.38 01/31/00(b) 302,250
100,000 6.25 02/15/03 105,750
650,000 7.00 07/15/06(b) 740,084
60,000 6.63 05/15/07(b) 67,472
--------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,303,679) $1,335,352
--------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $5,065,869)(c) $5,231,263
--------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
47
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST GLOBAL INCOME FUND
Statement of Investments
December 31, 1998
<TABLE>
---------------------------
<S> <C> <C>
Federal Income Tax
Information:
Gross
unrealized gain
for investments
in which value
exceeds cost $ 194,013
Gross
unrealized loss
for investments
in which cost
exceeds value (30,476)
---------------------------
Net unrealized
gain $ 163,537
---------------------------
</TABLE>
(a) The principal amount of each security is stated in the currency in which
the bond is denominated. See below.
BPS = British Pound Sterling
ITL = Italian Lira
CAD = Canadian Dollar
JPY = Japanese Yen
DKK = Danish Krone
ESP = Spanish Peseta
DEM = German Deutschemark
USD = United States Dollar
FRF = French Franc
(b) The security is being segregated as collateral for forward foreign
currency exchange contracts.
(c) The aggregate cost for federal income tax purposes is $5,067,726.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
48
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Variable Insurance
Trust
We have audited the accompanying statements of assets and liabilities of
Goldman Sachs Growth and Income Fund, CORE U.S. Equity Fund, CORE Large Cap
Growth Fund, CORE Small Cap Equity Fund, Capital Growth Fund, Mid Cap Equity
Fund, International Equity Fund and Global Income Fund, portfolios
constituting the Goldman Sachs Variable Insurance Trust (a Delaware Business
Trust), including the statements of investments, as of December 31, 1998, and
the related statements of operations and the statements of changes in net
assets and the financial highlights for the periods presented. These
financial statements and the financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Goldman Sachs
Variable Insurance Trust as of December 31, 1998, the results of their
operations, the changes in their net assets and the financial highlights for
the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 4, 1999
49
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Growth and
Income Fund
Assets:
<S> <C>
Investment in securities, at value (identified cost
$13,528,006, $8,540,494, $6,472,797, $4,534,117, $3,845,142,
$5,853,096, $9,368,407, $5,065,869) $13,782,813
Cash 26,407
Receivables:
Investment securities sold 1,595
Forward foreign currency exchange contracts --
Fund shares sold 19,406
Dividends and interest 18,110
Variation margin --
Deferred organization expenses 16,656
Other assets 18,237
----------------------------------------------------------------------------
Total assets 13,883,224
----------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased --
Forward foreign currency exchange contracts --
Fund shares repurchased 8,923
Management fees 8,273
Transfer Agent fees 8,039
Accrued expenses and other liabilities 43,560
----------------------------------------------------------------------------
Total liabilities 68,795
----------------------------------------------------------------------------
Net Assets:
Paid-in capital 14,014,385
Accumulated distributions in excess of net investment income --
Accumulated undistributed net realized gain (loss) on
investments, futures and foreign currency transactions (454,763)
Net unrealized gain (loss) on investments, futures and
translation of assets and liabilities denominated in foreign
currencies 254,807
----------------------------------------------------------------------------
NET ASSETS $13,814,429
----------------------------------------------------------------------------
Total shares of beneficial interest outstanding, no par value
(unlimited shares authorized) 1,321,884
Net asset value and redemption price per share $ 10.45
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
<TABLE>
<CAPTION>
CORE U.S. CORE Large Cap CORE Small Cap Capital Mid Cap International Global
Equity Fund Growth Fund Equity Fund Growth Fund Equity Fund Equity Fund Income Fund
<S> <C> <C> <C> <C> <C> <C>
$9,853,601 $8,168,751 $4,835,367 $4,378,431 $5,698,001 $10,715,475 $5,231,263
-- 4,865 13,918 73,811 3,458 499,083 400,438
24,697 12,349 -- 15,993 15,800 920 --
-- -- -- -- -- 7,328 31,618
2,856 45,885 -- 104,170 18 25,906 1,123
10,823 7,378 3,401 3,095 4,013 13,343 139,066
-- -- -- -- 2,550 -- --
17,019 17,020 17,020 17,882 17,893 16,656 16,656
16,711 22,617 24,078 10,181 9,588 20,905 17,118
----------------------------------------------------------------------------------------------------
9,925,707 8,278,865 4,893,784 4,603,563 5,751,321 11,299,616 5,837,282
----------------------------------------------------------------------------------------------------
9,904 9,904 -- 67,350 63,290 -- --
-- -- -- -- -- 25,104 37,513
35,833 247 95 -- 8,290 516 813
5,581 4,566 2,922 2,563 3,433 8,993 4,381
10,955 8,802 6,280 9,310 9,704 10,003 8,609
54,573 40,957 43,595 61,286 62,708 49,278 44,680
----------------------------------------------------------------------------------------------------
116,846 64,476 52,892 140,509 147,425 93,894 95,996
----------------------------------------------------------------------------------------------------
8,732,725 7,146,086 5,311,057 3,953,090 5,939,157 9,870,592 5,585,944
-- -- -- -- -- (12,690) (6,552)
(236,971) (627,651) (771,415) (23,325) (223,029) 7,926 (1,856)
1,313,107 1,695,954 301,250 533,289 (112,232) 1,339,894 163,750
----------------------------------------------------------------------------------------------------
$9,808,861 $8,214,389 $4,840,892 $4,463,054 $5,603,896 $11,205,722 $5,741,286
----------------------------------------------------------------------------------------------------
859,002 703,221 535,508 394,437 653,841 941,060 556,488
$ 11.42 $ 11.68 $ 9.04 $ 11.31 $ 8.57 $ 11.91 $ 10.32
----------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Statements of Operations
For the Period Ended December 31, 1998(a)
<TABLE>
<CAPTION>
Growth and
Income Fund
<S> <C>
Investment income(b):
Dividends $ 98,920
Interest 76,118
-----------------------------------------------------------------------------
Total income 175,038
-----------------------------------------------------------------------------
Expenses:
Management fees 47,801
Custodian fees 43,223
Transfer agent fees 26,530
Professional fees 34,553
Amortization of deferred organization expenses 4,016
Trustee fees 5,543
Other 9,537
-----------------------------------------------------------------------------
Total expenses 171,203
-----------------------------------------------------------------------------
Less -- expenses reimbursed by Goldman Sachs (113,842)
-----------------------------------------------------------------------------
Net expenses 57,361
-----------------------------------------------------------------------------
NET INVESTMENT INCOME 117,677
-----------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments, futures and foreign
currency transactions:
Net realized gain (loss) from:
Investment transactions (510,320)
Futures transactions 55,557
Foreign currency related transactions --
Net change in unrealized gain (loss) on:
Investments 254,807
Futures --
Translation of assets and liabilities denominated
in foreign currencies --
-----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments, futures and foreign currency
transactions (199,956)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (82,279)
-----------------------------------------------------------------------------
</TABLE>
(a) The Growth and Income, International Equity and Global Income Funds
commenced operations on January 12, 1998; the CORE U.S. Equity, CORE
Large Cap Growth and CORE Small Cap Equity Funds commenced operations on
February 13, 1998; the Capital Growth and Mid Cap Equity Funds commenced
operations on April 30, 1998 and May 1, 1998, respectively.
(b) For the Growth and Income, CORE U.S. Equity, CORE Large Cap Growth, Mid
Cap Equity, International Equity and Global Income Funds, taxes withheld
on dividends and interest were $766, $427, $225, $325, $15,495 and
$1,422, respectively.
The accompanying notes are an integral part of these financial statements.
52
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
<TABLE>
<CAPTION>
CORE U.S. CORE Large Cap CORE Small Cap Capital Mid Cap International Global
Equity Fund Growth Fund Equity Fund Growth Fund Equity Fund Equity Fund Income Fund
<S> <C> <C> <C> <C> <C> <C>
$ 79,736 $ 46,614 $ 46,750 $ 24,980 $ 26,963 $ 111,164 $ --
9,937 6,653 4,631 5,084 36,107 15,850 291,028
----------------------------------------------------------------------------------------------------
89,673 53,267 51,381 30,064 63,070 127,014 291,028
----------------------------------------------------------------------------------------------------
41,825 37,366 32,003 17,067 18,776 85,560 46,434
46,810 36,700 55,644 25,156 27,974 84,442 37,983
26,705 25,676 26,065 21,905 18,123 28,662 27,998
34,785 34,786 34,785 33,867 33,869 36,589 38,754
3,654 3,654 3,654 2,791 2,778 4,016 4,016
5,544 5,542 5,544 5,544 5,316 5,557 5,543
9,539 9,547 9,550 5,600 5,597 9,549 9,499
----------------------------------------------------------------------------------------------------
168,862 153,271 167,245 111,930 112,433 254,375 170,227
----------------------------------------------------------------------------------------------------
(121,062) (110,583) (128,862) (91,450) (90,137) (147,424) (116,054)
----------------------------------------------------------------------------------------------------
47,800 42,688 38,383 20,480 22,296 106,951 54,173
----------------------------------------------------------------------------------------------------
41,873 10,579 12,998 9,584 40,774 20,063 236,855
----------------------------------------------------------------------------------------------------
(189,538) (618,244) (771,415) (23,325) (177,110) 97,996 100,192
(47,433) (9,407) -- -- (45,919) -- --
-- -- -- -- (2) (38,843) (76,247)
1,313,107 1,695,954 301,250 533,289 (155,095) 1,347,068 165,394
-- -- -- -- 42,855 --
-- -- -- -- 8 (7,174) (1,644)
----------------------------------------------------------------------------------------------------
1,076,136 1,068,303 (470,165) 509,964 (335,263) 1,399,047 187,695
----------------------------------------------------------------------------------------------------
$1,118,009 $1,078,882 $(457,167) $519,548 $(294,489) $1,419,110 $ 424,550
----------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Statements of Changes in Net Assets
For the Period Ended December 31, 1998(a)
<TABLE>
<CAPTION>
Growth and
Income Fund
<S> <C>
From operations:
Net investment income $ 117,677
Net realized gain (loss) on investments, futures and foreign
currency transactions (454,763)
Net change in unrealized gain (loss) on investments, futures
and translation of assets and liabilities denominated in
foreign currencies 254,807
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (82,279)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (117,677)
In excess of net investment income (3,441)
From net realized gain on investment transactions --
------------------------------------------------------------------------------
Total distributions to shareholders (121,118)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 14,318,816
Reinvestment of dividends and distributions 121,118
Cost of shares repurchased (522,108)
------------------------------------------------------------------------------
Net increase in net assets resulting from share transactions 13,917,826
------------------------------------------------------------------------------
TOTAL INCREASE 13,714,429
------------------------------------------------------------------------------
Net assets:
Beginning of period 100,000
------------------------------------------------------------------------------
End of period $13,814,429
------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ --
------------------------------------------------------------------------------
Summary of share transactions:
Shares sold 1,362,585
Shares issued on reinvestment of dividends and distributions 11,782
Shares repurchased (52,483)
------------------------------------------------------------------------------
TOTAL 1,321,884
------------------------------------------------------------------------------
</TABLE>
(a) The Growth and Income, International Equity and Global Income Funds
commenced operations on January 12, 1998; the CORE U.S. Equity, CORE
Large Cap Growth and CORE Small Cap Equity Funds commenced operations on
February 13, 1998; the Capital Growth and Mid Cap Equity Funds commenced
operations on April 30, 1998 and May 1, 1998, respectively.
The accompanying notes are an integral part of these financial statements.
54
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
<TABLE>
<CAPTION>
CORE U.S. CORE Large Cap CORE Small Cap Capital Mid Cap International Global
Equity Fund Growth Fund Equity Fund Growth Fund Equity Fund Equity Fund Income Fund
<S> <C> <C> <C> <C> <C> <C>
$ 41,873 $ 10,579 $ 12,998 $ 9,584 $ 40,774 $ 20,063 $ 236,855
(236,971) (627,651) (771,415) (23,325) (223,031) 59,153 23,945
1,313,107 1,695,954 301,250 533,289 (112,232) 1,339,894 163,750
------------------------------------------------------------------------------------------------
1,118,009 1,078,882 (457,167) 519,548 (294,489) 1,419,110 424,550
------------------------------------------------------------------------------------------------
(41,873) (10,579) (12,998) (9,584) (40,774) -- (213,231)
(1,567) (1,864) (1,946) (1,046) (2,334) -- --
-- -- -- -- -- (85,668) (57,323)
------------------------------------------------------------------------------------------------
(43,440) (12,443) (14,944) (10,630) (43,108) (85,668) (270,554)
------------------------------------------------------------------------------------------------
9,097,369 7,271,607 5,329,424 3,988,296 6,990,413 9,861,289 5,338,273
43,440 12,443 14,944 10,630 43,107 85,668 270,269
(406,517) (136,100) (31,365) (44,790) (1,092,027) (74,677) (21,252)
------------------------------------------------------------------------------------------------
8,734,292 7,147,950 5,313,003 3,954,136 5,941,493 9,872,280 5,587,290
------------------------------------------------------------------------------------------------
9,808,861 8,214,389 4,840,892 4,463,054 5,603,896 11,205,722 5,741,286
------------------------------------------------------------------------------------------------
-- -- -- -- -- -- --
------------------------------------------------------------------------------------------------
$9,808,861 $8,214,389 $4,840,892 $4,463,054 $ 5,603,896 $11,205,722 $5,741,286
------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ -- $ -- $ (12,690) $ (6,552)
------------------------------------------------------------------------------------------------
893,251 715,088 537,211 397,752 781,599 940,178 532,484
3,963 1,122 1,756 995 5,238 7,521 26,012
(38,212) (12,989) (3,459) (4,310) (132,996) (6,639) (2,008)
------------------------------------------------------------------------------------------------
859,002 703,221 535,508 394,437 653,841 941,060 556,488
------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(b) Distributions to shareholders
------------------------------- ------------------------------
Net realized
and unrealized
gain (loss) on
Net asset investments, In excess
value, Net futures and From net of net From net
beginning investment foreign currency investment investment realized
of period income related transactions income income gain
FOR THE PERIOD ENDED DECEMBER 31, 1998(a)
<S> <C> <C> <C> <C> <C> <C>
Growth and Income Fund $10.00 $0.09 $ 0.45 $(0.09) $ -- $ --
-----------------------------------------------------------------------------------------------
CORE U.S. Equity Fund 10.00 0.05 1.42 (0.05) -- --
-----------------------------------------------------------------------------------------------
CORE Large Cap Growth
Fund 10.00 0.02 1.68 (0.02) -- --
-----------------------------------------------------------------------------------------------
CORE Small Cap Equity
Fund 10.00 0.02 (0.95) (0.02) (0.01) --
-----------------------------------------------------------------------------------------------
Capital Growth Fund 10.00 0.03 1.31 (0.03) -- --
-----------------------------------------------------------------------------------------------
Mid Cap Equity Fund 10.00 0.07 (1.43) (0.07) -- --
-----------------------------------------------------------------------------------------------
International Equity
Fund 10.00 0.02 1.98 -- -- (0.09)
-----------------------------------------------------------------------------------------------
Global Income Fund 10.00 0.45 0.38 (0.40) -- (0.11)
-----------------------------------------------------------------------------------------------
</TABLE>
(a) The Growth and Income, International Equity and Global Income Funds
commenced operations on January 12, 1998; the CORE U.S. Equity, CORE
Large Cap Growth and CORE Small Cap Equity Funds commenced operations on
February 13, 1998; the Capital Growth and Mid Cap Equity Funds commenced
operations on April 30, 1998 and May 1, 1998, respectively.
(b) Includes the balancing effect of calculating per share amounts.
(c) 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 period.
(d) Annualized.
The accompanying notes are an integral part of these financial statements.
56
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
<TABLE>
<CAPTION>
Ratios assuming
no expense
reimbursements
---------------------------
Ratio of
Ratio net
Net Ratio of net investment
Net increase Net asset assets at of net investment Ratio of income
(decrease) value, end of expenses income expenses (loss) to Portfolio
in net end of Total period to average to average to average average turnover
asset value period return(c) (in 000's) net assets(d) net assets(d) net assets(d) net assets(d) rate
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.45 $10.45 5.47 % $13,814 0.90% 1.85% 2.69% 0.06 % 88%
-----------------------------------------------------------------------------------------------------------------
1.42 11.42 14.73 9,809 0.80 0.70 2.83 (1.33) 75
-----------------------------------------------------------------------------------------------------------------
1.68 11.68 16.99 8,214 0.80 0.20 2.87 (1.87) 69
-----------------------------------------------------------------------------------------------------------------
(0.96) 9.04 (9.30) 4,841 0.90 0.30 3.92 (2.72) 74
-----------------------------------------------------------------------------------------------------------------
1.31 11.31 13.40 4,463 0.90 0.42 4.92 (3.60) 20
-----------------------------------------------------------------------------------------------------------------
(1.43) 8.57 (13.56) 5,604 0.95 1.74 4.79 (2.10) 38
-----------------------------------------------------------------------------------------------------------------
1.91 11.91 20.07 11,206 1.25 0.23 2.97 (1.49) 76
-----------------------------------------------------------------------------------------------------------------
0.32 10.32 8.29 5,741 1.05 4.59 3.30 2.34 203
-----------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION
Goldman Sachs Variable Insurance Trust (the "Trust") is a Delaware business
trust registered under the Investment Company Act of 1940, as amended ("the
Act") as an open-end, management investment company. The Trust includes
Goldman Sachs Growth and Income Fund ("Growth and Income"), Goldman Sachs
CORE U.S. Equity Fund ("CORE U.S. Equity"), Goldman Sachs CORE Large Cap
Growth Fund ("CORE Large Cap Growth"), Goldman Sachs CORE Small Cap Equity
Fund ("CORE Small Cap Equity"), Goldman Sachs Capital Growth Fund ("Capital
Growth"), Goldman Sachs Mid Cap Equity Fund ("Mid Cap Equity"), Goldman Sachs
International Equity Fund ("International Equity") and Goldman Sachs Global
Income Fund ("Global Income"), collectively, "the Funds" or individually a
"Fund". Each Fund, except the Global Income Fund is diversified under the
Act. The Global Income Fund is a "non-diversified" Fund under the Act.
Shares of the Trust may be purchased and held by separate accounts of par-
ticipating life insurance companies for the purpose of funding variable annu-
ity contracts and variable life insurance policies. Shares of the Trust are
not offered directly to the general public.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make es-
timates and assumptions that may affect the reported amounts.
A. Investment Valuation -- Securities listed on any U.S. or foreign stock ex-
change or on the National Association of Securities Dealers Automated Quota-
tions System ("NASDAQ") will be valued at the last sale price on the exchange
or system in which they are principally traded on the valuation date. If
there is no sale on the valuation day, securities traded will be valued at
the mean between the closing bid and asked prices. Over-the-counter securi-
ties not quoted on NASDAQ will be valued at the last sale price on the valua-
tion day or, if no sale occurs, at the mean between the last bid and asked
price. Debt securities are valued at prices supplied by an independent pric-
ing service, which reflect broker/dealer-supplied valuations and matrix pric-
ing systems. Short-term debt obligations maturing in sixty days or less are
valued at amortized cost. Restricted securities, and other securities for
which quotations are not readily available, are valued at fair value using
methods approved by the Board of Trustees of the Trust.
B. Securities Transactions and Investment Income -- Securities transactions
are recorded on the trade date. Realized gains and losses on sales of invest-
ments are calculated on the identified-cost basis. Dividend income is re-
corded on the ex-dividend date. Dividends for which the fund has the choice
to receive either cash or stock are recognized as investment income in an
amount equal to the cash dividend. Interest income is determined on the basis
of interest accrued, premium amortized and discount earned. Growth and Income
and Global Income do not amortize premiums. In addition, it is the Funds'
policy to accrue for estimated capital gains taxes on foreign securities held
by the Funds, which are subject to such taxes.
C. Foreign Currency Translations -- Amounts denominated in foreign currencies
are translated into U.S. dollars on the following basis: (i) investment valu-
ations, other assets and liabilities initially expressed in foreign curren-
cies are converted each business day into U.S. dollars based upon current
exchange rates; (ii) purchases and sales of foreign investments, income and
expenses are converted into U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions.
58
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign currency exchange gains and losses from the sale
and holdings of foreign currencies; (ii) gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of interest and dividend recorded and the amounts actually received.
D. Forward Foreign Currency Exchange Contracts -- International Equity and
Global Income may enter into forward foreign currency exchange contracts for
the purchase or sale of a specific foreign currency at a fixed price on a fu-
ture date as a hedge or cross-hedge against either specific transactions or
portfolio positions. International Equity and Global Income may also purchase
and sell forward contracts to seek to increase total return. All commitments
are "marked-to-market" daily at the applicable translation rates and any re-
sulting unrealized gains or losses are recorded in each Fund's financial
statements. The Funds record realized gains or losses at the time the forward
contract is offset by entry into a closing transaction or extinguished by de-
livery of the currency. Risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
E. Mortgage Dollar Rolls -- The Global Income may enter into mortgage "dollar
rolls" in which the Fund sells securities in the current month for delivery
and simultaneously contracts with the same counterparty to repurchase similar
(same type, coupon and maturity) but not identical securities on a specified
future date. During the roll period, the Fund loses the right to receive
principal and interest paid on the securities sold. However, the Fund bene-
fits to the extent of any difference between the price received for the secu-
rities sold and the lower forward price for the future purchase (often
referred to as the "drop") or fee income plus the interest earned on the cash
proceeds of the securities sold until the settlement date of the forward pur-
chase. The Fund will hold and maintain in a segregated account, until the
settlement date, cash or liquid assets, high-grade debt securities in an
amount equal to the forward purchase price. For financial reporting and tax
reporting purposes, the Fund treats mortgage dollar rolls as two separate
transactions; one involving the purchase of a security and a separate trans-
action involving a sale.
F. Futures Contracts -- The Funds may enter into futures transactions to
hedge against changes in interest rates, securities prices, currency exchange
rates or to seek an increase of total return.
Upon entering into a futures contract, the Funds are required to deposit
with a broker an amount of cash or securities equal to the minimum initial
margin requirement of the futures exchange on which the contract is traded.
Payments for mark to market on futures contracts ("variation margin") are
paid or received by the Funds daily, dependent on the daily fluctuations in
the value of the contracts, and are recorded for financial reporting purposes
as unrealized gains or losses. When contracts are closed, the Funds realize a
gain or loss equal to the difference between the value of the futures con-
tract to sell and the value of futures contract to buy. Gains and losses are
reported in the Statements of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statements of Assets and Liabilities. Changes in the value of the futures
contract may not directly correlate with changes in the value of the under-
lying securities. This risk may decrease the effectiveness of the Funds'
hedging strategies and potentially result in a loss.
G. Federal Taxes -- It is each Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
and tax-
exempt income to its shareholders. Accordingly, no federal tax provisions are
required.
59
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Notes to Financial Statements
December 31, 1998
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of a portfolio's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in-capital, de-
pending on the type of book/tax differences that may exist as well as timing
differences.
As of December 31, 1998, the following Funds had capital loss carryforwards
for U.S. federal tax purposes. This amount is available to be carried forward
to offset future capital gains to the extent permitted by applicable laws or
regulations.
<TABLE>
<CAPTION>
Year of
Fund Amount Expiration
- -----------------------------------------------
<S> <C> <C>
Growth and Income Fund $382,000 2006
- -----------------------------------------------
CORE U.S. Equity Fund 237,000 2006
- -----------------------------------------------
CORE Large Cap Growth Fund 628,000 2006
- -----------------------------------------------
CORE Small Cap Equity Fund 760,000 2006
- -----------------------------------------------
Capital Growth Fund 22,000 2006
- -----------------------------------------------
Mid Cap Equity Fund 138,000 2006
- -----------------------------------------------
</TABLE>
H. Deferred Organization Expenses -- Organization-related costs are being am-
ortized on a straight-line basis over a period of five years. Included in
"Accrued expenses and other liabilities" in the accompanying Statements of
Assets and Liabilities, the Capital Growth and Mid Cap Equity Funds each owed
$11,781 to an affiliate for organization expenses incurred for the period
ended December 31, 1998.
The deferred organization costs for the Growth and Income, International
Equity and Global Income Funds each have an unamortized period remaining
through January 12, 2003; the CORE U.S. Equity, CORE Large Cap Growth and
CORE Small Cap Equity Funds each have an unamortized period remaining through
February 13, 2003; the Capital Growth and Mid Cap Equity Funds have an unam-
ortized period remaining through April 30, 2003 and May 1, 2003, respective-
ly.
I. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual portfolio of the Trust are generally allocated to the port-
folios on a pro-rata basis.
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment advisor for the
Growth and Income, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap
Equity, Capital Growth and Mid Cap Equity Funds. Goldman Sachs Asset Manage-
ment International ("GSAMI"), an affiliate of Goldman Sachs, serves as the
investment advisor for International Equity and Global Income Fund. Under the
Agreement, the advisers, subject to the general supervision of the Trust's
Board of Trustees, manage the Funds' portfolios (GSAM and GSAMI are each re-
ferred to herein as the "investment advisor.") As compensation for the serv-
ices rendered pursuant to the Agreement, the assumption of the expenses
related thereto and administering the Funds' business affairs, including pro-
viding facilities, the advisor is entitled to a fee, computed daily and pay-
able monthly at an annual rate equal to .75%, .70%, .70%, .75%, .75%, .80%,
1.00% and .90% of average daily net assets of Growth and Income, CORE U.S.
Equity, CORE Large Cap Growth, CORE Small Cap Equity, Capital Growth, Mid Cap
Equity, International Equity and Global Income, respectively.
The advisor has voluntarily agreed to limit certain "Other Expenses" of the
Funds (excluding management fees, taxes, interest, brokerage fees, litigation
and indemnification and other extraordinary expenses) to the extent that such
expenses exceed .15%, .10%, .10%, .15%, .15%, .15%, .25% and .15% of the av-
erage daily net assets of Growth and Income, CORE
60
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, Capital Growth,
Mid Cap Equity, International Equity and Global Income, respectively.
Goldman Sachs also serves as the Transfer Agent of the Funds for a fee.
Goldmans Sachs serves as the distributor of each Fund's shares at no cost to
the Funds.
As of December 31, 1998, Goldman Sachs was the beneficial owner of 16%,
58%, 71%, 94%, 76%, 31%, 83% and 94% of the outstanding shares of the Growth
and Income, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity,
Capital Growth, Mid Cap, International Equity and Global Income Funds, re-
spectively.
For the period ended December 31, 1998, the advisor has voluntarily agreed
to reimburse other expenses as follows (amounts in thousands):
<TABLE>
<CAPTION>
Reimbursement
Fund Reimbursement Outstanding
-----------------------------------------------------------------------------------------
<S> <C> <C>
Growth and Income $114 $18
-----------------------------------------------------------------------------------------
CORE U.S. Equity 121 17
-----------------------------------------------------------------------------------------
CORE Large Cap Growth 111 23
-----------------------------------------------------------------------------------------
CORE Small Cap Equity 129 24
-----------------------------------------------------------------------------------------
Capital Growth 91 10
-----------------------------------------------------------------------------------------
Mid Cap Equity 90 10
-----------------------------------------------------------------------------------------
International Equity 147 21
-----------------------------------------------------------------------------------------
Global Income 116 17
-----------------------------------------------------------------------------------------
</TABLE>
The reimbursement outstanding balance is included in other assets in the ac-
companying statements of assets and liabilities.
4. PORTFOLIO SECURITY TRANSACTIONS
Purchases and proceeds of sales or maturities of long-term securities for the
period ended December 31, 1998, were as follows:
<TABLE>
<CAPTION>
Sales or Sales or Maturities
Purchases of Purchases Maturities of (excluding U.S.
U.S. Government (excluding U.S. U.S. Government Government and
and agency Government and and agency agency
obligations agency obligations) obligations obligations)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth and
Income -- $18,156,349 -- $4,917,610
--------------------------------------------------------------------------------------
CORE U.S. Eq-
uity -- 13,803,509 -- 5,073,477
--------------------------------------------------------------------------------------
CORE Large
Cap Growth -- 11,263,545 -- 4,172,504
--------------------------------------------------------------------------------------
CORE Small
Cap Equity -- 8,849,890 -- 3,544,358
--------------------------------------------------------------------------------------
Capital
Growth -- 4,425,556 -- 657,008
--------------------------------------------------------------------------------------
Mid Cap Eq-
uity -- 5,312,296 -- 1,041,828
--------------------------------------------------------------------------------------
International
Equity -- 15,832,457 -- 6,562,046
--------------------------------------------------------------------------------------
Global Income 3,427,184 11,517,813 2,311,961 7,667,469
--------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Notes to Financial Statements
December 31, 1998
At December 31, 1998, the International Equity Fund had open forward for-
eign currency exchange contracts both to purchase and sell foreign currencies
as follows:
<TABLE>
<CAPTION>
Forward Foreign Currency Contractual Current Unrealized
Purchase Contracts Value Value Gain (Loss)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Deutschemark Expiring 1/25/99 $ 280,271 $ 278,458 $ (1,813)
Deutschemark Expiring 1/29/99 118,176 116,509 (1,667)
Deutschemark Expiring 1/29/99 14,387 14,323 (64)
Japanese Yen Expiring 2/10/99 116,038 120,640 4,602
------------------------------------------------------------------------------
TOTAL FORWARD FOREIGN CURRENCY PURCHASE
CONTRACTS $ 528,872 $ 529,930 $ 1,058
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Forward Foreign Currency Contractual Current Unrealized
Sale Contracts Value Value Gain (Loss)
------------------------------------------------------------------------------
<S> <C> <C> <C>
British Pound Expiring 1/29/99 $ 118,177 $ 116,152 $ 2,025
British Pound Expiring 1/29/99 14,862 14,934 (72)
Hong Kong Dollar Expiring 12/8/99 223,411 226,290 (2,879)
Japanese Yen Expiring 3/4/99 113,877 120,995 (7,118)
Swiss Franc Expiring 2/17/99 256,746 259,189 (2,443)
------------------------------------------------------------------------------
TOTAL FORWARD FOREIGN CURRENCY SALE CON-
TRACTS $ 727,073 $ 737,560 $(10,487)
------------------------------------------------------------------------------
At December 31, 1998, the Global Income Fund had open forward foreign cur-
rency exchange contracts both to purchase and sell foreign currencies as fol-
lows:
<CAPTION>
Forward Foreign Currency Contractual Current Unrealized
Purchase Contracts Value Value Gain (Loss)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Deutschemark Expiring 1/29/99 $ 39,666 $ 39,491 $ (175)
Swedish Krona Expiring 1/22/99 34,792 33,470 (1,322)
------------------------------------------------------------------------------
TOTAL FORWARD FOREIGN CURRENCY PURCHASE
CONTRACTS $ 74,458 $ 72,961 (1,497)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Forward Foreign Currency Contractual Current Unrealized
Sale Contracts Value Value Gain Loss)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Canadian Dollar Expiring 2/22/99 $ 103,083 $ 104,328 $ (1,245)
British Pound Expiring 1/29/99 551,755 540,935 10,820
British Pound Expiring 1/29/99 63,793 63,603 190
British Pound Expiring 1/29/99 212,560 209,942 2,618
Deutschemark Expiring 1/22/99 36,363 35,729 634
Deutschemark Expiring 1/25/99 22,189 22,257 (68)
Deutschemark Expiring 1/25/99 214,864 215,958 (1,094)
Deutschemark Expiring 1/25/99 54,000 53,898 102
Deutschemark Expiring 2/10/99 109,441 108,721 720
Danish Krone Expiring 1/13/99 307,274 301,110 6,164
French Franc Expiring 1/14/99 54,356 53,188 1,168
Italian Lira Expiring 1/12/99 230,317 231,693 (1,376)
Japanese Yen Expiring 2/10/99 380,011 392,114 (12,103)
Japanese Yen Expiring 2/10/99 77,473 80,188 (2,715)
Japanese Yen Expiring 2/10/99 1,428 1,510 (82)
Japanese Yen Expiring 2/10/99 167,003 171,393 (4,390)
Spanish Pesta Expiring 1/20/99 161,325 161,976 (651)
Swiss Franc Expiring 2/17/99 134,530 135,810 (1,280)
------------------------------------------------------------------------------
TOTAL FORWARD FOREIGN CURRENCY SALE CON-
TRACTS $2,881,765 $2,884,353 $ (2,588)
------------------------------------------------------------------------------
</TABLE>
62
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At December 31,
1998, International Equity and Global Income had sufficient cash and/or secu-
rities to cover any commitments under these contracts.
At December 31, 1998, the International Equity and Global Income Funds have
recorded open forward foreign currency contracts which are included in the
accompanying Statements of Assets and Liabilities according to the following
amounts:
<TABLE>
<CAPTION>
International Equity Global Income
Fund Fund
-----------------------------------------------------------------------------
<S> <C> <C>
Receivable for open forward foreign
currency exchange contracts $ 6,627 $22,416
-----------------------------------------------------------------------------
Payable for open forward foreign currency
exchange contracts 16,056 26,501
-----------------------------------------------------------------------------
</TABLE>
Included in the receivable and payable for foreign currency exchange con-
tracts in the accompanying Statements of Assets and Liabilities are closed
but unsettled forward foreign currency exchange contracts of the following
amounts as of December 31, 1998:
<TABLE>
<CAPTION>
International Equity Global Income
Fund Fund
----------------------------------------------------------------------------
<S> <C> <C>
Receivable for closed but unsettled
forward foreign currency exchange
contracts $ 701 $ 9,202
----------------------------------------------------------------------------
Payable for closed but unsettled forward
foreign currency exchange contracts 9,048 11,012
----------------------------------------------------------------------------
</TABLE>
Mid Cap Equity is due $2,550 from Goldman Sachs related to variation margin
on futures contracts as of December 31, 1998. For the period ended December
31, 1998, the Trust paid Goldman Sachs approximately $14,000 of brokerage
commissions from portfolio transactions.
5. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu-
rities, including accrued interest, is required to equal or exceed the value
of the repurchase agreement. The underlying securities for all repurchase
agreements are held in safekeeping at the Funds' custodian.
6. JOINT REPURCHASE AGREEMENT ACCOUNT
The Funds, together with other registered investment companies having manage-
ment agreements with GSAM or their affiliates, transfer uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
63
<PAGE>
GOLDMAN SACHS VARIABLE INSURANCE TRUST
Notes to Financial Statements
December 31, 1998
At December 31, 1998, Growth and Income, Capital Growth and Mid Cap had un-
divided interests in the repurchase agreements in the following joint account
which equaled $700,000, $100,000 and $1,700,000, respectively, in principal
amount. At December 31, 1998, the following repurchase agreements held in
this joint account were fully collateralized by Federal Agency obligations.
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABN-AMRO, Inc. $120,000,000 5.15% 01/04/1999 $ 120,000,000
------------------------------------------------------------------------------
Deutsche Bank 77,300,000 5.07 01/04/1999 77,300,000
------------------------------------------------------------------------------
Donaldson, Lufkin &
Jenrette, Inc. 150,000,000 4.95 01/04/1999 150,000,000
------------------------------------------------------------------------------
J.P. Morgan Securities, Inc. 700,000,000 4.75 01/04/1999 700,000,000
------------------------------------------------------------------------------
Morgan Stanley & Co. 200,000,000 4.95 01/04/1999 200,000,000
------------------------------------------------------------------------------
NationsBanc Montgomery
Securities LLC 125,000,000 5.15 01/04/1999 125,000,000
------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE
AGREEMENT ACCOUNT $1,372,300,000
------------------------------------------------------------------------------
</TABLE>
7. LINE OF CREDIT FACILITY
The Funds participate in a $250,000,000 uncommitted, unsecured revolving line
of credit facility. The facility is to be used solely for temporary or emer-
gency purposes. Under the most restrictive arrangement, each Fund must own
securities having a market value in excess of 300% of the total bank
borrowings. The interest rate on the borrowings is based on the Federal Funds
Rate at the time of participation. During the period ended December 31, 1998,
the Funds did not have any borrowings under this facility.
8. CERTAIN RECLASSIFICATIONS
In accordance with statement 93-2, the Growth and Income, CORE U.S. Equity,
CORE Large Cap Growth, CORE Small Cap Equity, Capital Growth, Mid Cap Equity,
International Equity and Global Income Funds have reclassified $3,441,
$1,567, $1,864, $1,946, $1,046, $2,336, $1,688 and $1,346, respectively, from
paid in capital to accumulated undistributed net investment income. Addition-
ally, the Mid Cap Equity, International Equity and the Global Income Funds
have reclassified $2, $34,441 and $31,522, respectively, from accumulated un-
distributed net realized loss on investments, futures, and foreign currency
transactions to accumulated undistributed net investment income. These re-
classifications have no impact on the net asset value of the Funds and are
designed to present the Funds' capital accounts on a tax basis.
64
<PAGE>
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65
<PAGE>
TRUSTEES OFFICERS
Ashok N. Bakhru, Chairman Douglas C. Grip, President
David B. Ford Jesse Cole, Vice President
Douglas C. Grip James A. Fitzpatrick, Vice President
John P. McNulty Anne Marcel, Vice President
Mary P. McPherson Nancy L. Mucker, Vice President
Alan A. Shuch John M. Perlowski, Treasurer
Jackson W. Smart, Jr. Philip V. Giuca, Jr., Assistant Treasurer
William H. Springer Michael J. Richman, Secretary
Richard P. Strubel Howard B. Surloff, Assistant Secretary
Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent
GOLDMAN SACHS ASSET MANAGEMENT
Investment Adviser
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
133 Peterborough Court
London, England EC4A 2BB
Toll Free (in U.S.): 800-292-4726
This report is prepared for the general information of contract owners and is
not an offer of shares of the Goldman Sachs Variable Insurance Trust: Growth and
Income, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, Capital
Growth, Mid Cap Equity, International Equity and Global Income Funds.
This material is not authorized for distribution to prospective investors unless
preceded or accompanied by a current Prospectus which contains facts concerning
the Fund's objectives, policies, management, expenses and other information.
