N-CSRS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number: 811-21682

Sterling Capital Variable Insurance Funds
(Exact name of registrant as specified in charter)

434 Fayetteville Street Mall, 5th Floor
Raleigh, NC 27601-0575
(Address of principal executive offices) (Zip code)

E.G. Purcell, III, President
Sterling Capital Variable Insurance Funds
434 Fayetteville Street Mall, 5th Floor
Raleigh, NC 27601-0575
(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 228-1872

Date of fiscal year end: December 31

Date of reporting period: June 30, 2011

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

Sterling Capital Variable Insurance Funds

Table of Contents
Summary of Portfolio Holdings	2
Expense Example	3
Schedules of Portfolio Investments
Sterling Capital Select Equity VIF	4
Sterling Capital Strategic Allocation Equity VIF	5
Sterling Capital Special Opportunities VIF	6
Sterling Capital Total Return Bond VIF	7
Financial Statements	10
Notes to Financial Statements	16
Other Information	24

Sterling Capital Variable Insurance Funds

Summary of Portfolio Holdings (Unaudited)

June 30, 2011

Each Sterling Capital Variable Insurance Fund’s portfolio composition is as follows at June 30, 2011:

Sterling Capital Select Equity VIF (formerly known as BB&T Select Equity VIF)	Percentage of net  assets
Consumer Discretionary		10.8	%
Consumer Staples		7.8	%
Energy		12.6	%
Financials		16.4	%
Health Care		12.6	%
Industrials		10.0	%
Information Technology		23.0	%
Materials		4.8	%
Telecommunication Services		1.6	%
Exchange Traded Fund		0.3	%
Cash Equivalents		0.2	%
		100.1	%
Sterling Capital Strategic Allocation Equity VIF (formerly known as BB&T Capital Manager Equity Fund)
Sterling Capital Equity Income Fund, Institutional Class		6.8	%
Sterling Capital Equity Index Fund, Institutional Class		1.0	%
Sterling Capital International Fund, Institutional Class		8.6	%
Sterling Capital Mid Value Fund, Institutional Class		10.6	%
Sterling Capital Select Equity Fund, Institutional Class		18.0	%
Sterling Capital Small Value Fund, Institutional Class		2.8	%
Sterling Capital Special Opportunities Fund, Institutional Class		4.4	%
Sterling Capital U.S. Treasury Money Market Fund		1.4	%
Exchange Traded Funds		37.0	%
Non-Affiliated Investment Companies		9.4	%
		100.0	%
Sterling Capital Special Opportunities VIF (formerly known as BB&T Special Opportunities Equity VIF)
Consumer Discretionary		9.5	%
Consumer Staples		10.5	%
Energy		10.0	%
Financials		6.8	%
Health Care		21.3	%
Industrials		5.2	%
Information Technology		27.7	%
Materials		7.5	%
Utilities		0.5	%
Cash Equivalents		4.2	%
		103.2	%
Sterling Capital Total Return Bond VIF (formerly known as BB&T Total Return Bond VIF)
Asset Backed Securities		0.4	%
Collateralized Mortgage Obligations		12.8	%
Commercial Mortgage-Backed Securities		9.4	%
Corporate Bonds		27.1	%
Mortgage-Backed Securities		42.0	%
Municipal Bonds		3.5	%
Preferred Stocks		1.3	%
U.S. Treasury Notes		2.5	%
Cash Equivalents		2.7	%
		101.7	%

2

Sterling Capital Variable Insurance Funds

Expense Example (Unaudited)

June 30, 2011

As a shareholder of the Sterling Capital Variable Insurance Funds, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses.

These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Sterling Capital Variable Insurance Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2011 through June 30, 2011.

Actual Example

The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

	Beginning Account  Value 1/1/11	Ending Account Value 6/30/11	Expenses Paid During  Period 1/1/11 - 6/30/11*	Expense Ratio During  Period 1/1/11 - 6/30/11
Sterling Capital Select Equity VIF	$1,000.00	$1,026.70	$4.77	0.95%
Sterling Capital Strategic Allocation Equity VIF	1,000.00	1,043.90	2.43	0.48%
Sterling Capital Special Opportunities VIF	1,000.00	1,045.20	6.19	1.22%
Sterling Capital Total Return Bond VIF	1,000.00	1,027.50	5.33	1.06%

* Expenses are equal to the average account value times the Fund’s annualized expense ratio multiplied by 181 (the number of days in the most recent fiscal half-year) divided by 365 (the number of days in the fiscal year). Expenses shown do not include annuity contract fees.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on each Sterling Capital Variable Insurance Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account  Value 1/1/11	Ending Account  Value 6/30/11	Expenses Paid During Period 1/1/11 - 6/30/11*	Expense Ratio During Period 1/1/11 - 6/30/11
Sterling Capital Select Equity VIF	$1,000.00	$1,020.08	$4.76	0.95%
Sterling Capital Strategic Allocation Equity VIF	1,000.00	1,022.41	2.41	0.48%
Sterling Capital Special Opportunities VIF	1,000.00	1,018.74	6.11	1.22%
Sterling Capital Total Return Bond VIF	1,000.00	1,019.54	5.31	1.06%

* Expenses are equal to the average account value times the Fund’s annualized expense ratio multiplied by 181 (the number of days in the most recent fiscal half-year) divided by 365 (the number of days in the fiscal year). Expenses shown do not include annuity contract fees.

3

Sterling Capital Select Equity VIF

Schedule of Portfolio Investments

June 30, 2011 (Unaudited)

Shares		Fair Value
COMMON STOCKS (99.6%)
	Consumer Discretionary (10.8%)
7,020	Carnival Corp.	$	264,163
22,000	Comcast Corp., Class A		557,480
12,900	Lowe’s Cos., Inc.		300,699
39,300	Staples, Inc.		620,940
9,450	Target Corp.		443,299
13,830	Walt Disney Co. (The)		539,923
			2,726,504
	Consumer Staples (7.8%)
3,050	Coca-Cola Co. (The)		205,235
12,600	Kraft Foods, Inc., Class A		443,898
9,710	PepsiCo, Inc.		683,875
6,000	Procter & Gamble Co. (The)		381,420
4,830	Wal-Mart Stores, Inc.		256,666
			1,971,094
	Energy (12.6%)
20,220	Cenovus Energy, Inc.		761,485
3,300	Chevron Corp.		339,372
3,150	ConocoPhillips		236,849
4,650	Exxon Mobil Corp.		378,417
9,360	Schlumberger, Ltd.		808,704
17,250	Suncor Energy, Inc.		674,475
			3,199,302
	Financials (16.4%)
4,860	American Express Co.		251,262
6,240	Aon Corp.		320,112
22,000	Bank of America Corp.		241,120
3,930	Berkshire Hathaway, Inc., Class B(a)		304,143
17,000	JPMorgan Chase & Co.		695,980
18,900	MetLife, Inc.		829,143
15,000	Morgan Stanley		345,150
5,000	Travelers Cos., Inc. (The)		291,900
15,000	Wells Fargo & Co.		420,900
21,000	Weyerhaeuser Co., REIT		459,060
			4,158,770
	Health Care (12.6%)
4,560	Abbott Laboratories		239,947
7,440	Amgen, Inc.(a)		434,124
5,640	Johnson & Johnson		375,173
9,900	Medtronic, Inc.		381,447
13,500	Merck & Co., Inc.		476,415
16,500	Pfizer, Inc.		339,900
12,000	St. Jude Medical, Inc.		572,160
5,600	Thermo Fisher Scientific, Inc.(a)		360,584
			3,179,750
	Industrials (10.0%)
11,000	ABB, Ltd., ADR(a)		285,450
5,190	FedEx Corp.		492,271
42,000	General Electric Co.		792,120
54,000	Southwest Airlines Co.		616,680
7,035	Tyco International, Ltd.		347,740
			2,534,261
	Information Technology (23.0%)
2,700	Apple, Inc.(a)		906,309

Shares		Fair Value
COMMON STOCKS — (continued)
	Information Technology — (continued)
46,500	Cisco Systems, Inc.	$	725,865
13,400	Corning, Inc.		243,210
870	Google, Inc., Class A(a)		440,551
12,950	Hewlett-Packard Co.		471,380
12,000	Intel Corp.		265,920
1,610	International Business Machines Corp.		276,195
37,050	Microsoft Corp.		963,300
9,200	Oracle Corp.		302,772
21,450	TE Connectivity, Ltd.		788,502
13,200	Texas Instruments, Inc.		433,356
			5,817,360
	Materials (4.8%)
53,000	Alcoa, Inc.		840,580
3,060	Freeport-McMoRan Copper & Gold, Inc.		161,873
6,780	International Paper Co.		202,180
			1,204,633
	Telecommunication Services (1.6%)
12,600	AT&T, Inc.		395,766
	Total Common Stocks (Cost $21,944,258)		25,187,440
EXCHANGE TRADED FUND (0.3%)
2,450	Utilities Select Sector Standard and Poors Depositary Receipt Fund		82,026
	Total Exchange Traded Fund (Cost $70,552)		82,026
INVESTMENT COMPANY (0.1%)
26,160	Federated Treasury Obligations Fund, Institutional Shares		26,160
	Total Investment Company (Cost $26,160)		26,160

Principal Amount
SHORT TERM INVESTMENTS (0.1%)
$29,800	BNY Mellon Institutional Cash Reserve, Series B		7,674
	Total Short Term Investments (Cost $29,800)		7,674
Total Investments — 100.1% (Cost $22,070,770)			25,303,300
Net Other Assets (Liabilities) — (0.1)%			(20,602	)
NET ASSETS — 100.0%		$	25,282,698

(a) Represents non-income producing security.

ADR — American Depository Receipt

REIT — Real Estate Investment Trust

See accompanying notes to the financial statements.

4

Sterling Capital Strategic Allocation Equity VIF

Schedule of Portfolio Investments

June 30, 2011 (Unaudited)

Shares		Fair Value
AFFILIATED INVESTMENT COMPANIES (53.6%)
32,728	Sterling Capital Equity Income Fund, Institutional Class	$	479,145
8,006	Sterling Capital Equity Index Fund, Institutional Class		70,854
107,335	Sterling Capital International Fund, Institutional Class(a)		600,001
51,210	Sterling Capital Mid Value Fund, Institutional Class		741,007
106,010	Sterling Capital Select Equity Fund, Institutional Class		1,265,765
13,867	Sterling Capital Small Value Fund, Institutional Class		193,304
16,570	Sterling Capital Special Opportunities Fund, Institutional Class(a)		308,858
100,802	Sterling Capital U.S. Treasury Money Market Fund, Institutional Class		100,802
	Total Affiliated Investment Companies (Cost $3,121,698)		3,759,736
NON-AFFILIATED INVESTMENT COMPANIES (9.4%)
32,658	Credit Suisse Commodity Return Strategy Fund		300,782
15,456	Harding, Loevner International Equity Portfolio		244,970
3,117	Lazard Emerging Markets Equity Portfolio		67,691
1,248	Oppenheimer Developing Markets Fund		44,440
	Total Non-Affiliated Investment Companies (Cost $570,439)		657,883
EXCHANGE TRADED FUNDS (37.0%)
5,428	iShares Dow Jones US Real Estate Index Fund		327,308
4,879	iShares MSCI EAFE Small Cap Index Fund		212,871
6,785	iShares MSCI EAFE Value Index Fund		355,195
12,040	iShares MSCI Emerging Markets Index Fund		573,104
2,339	iShares Russell 2000 Index Fund		193,669
8,273	iShares Russell Midcap Growth Index Fund		511,520
3,201	iShares S&P 500 Index Fund		423,876
	Total Exchange Traded Funds (Cost $2,103,406)		2,597,543
Total Investments — 100.0% (Cost $5,795,543)			7,015,162
Net Other Assets (Liabilities) — (0.0)%			(2,261	)
NET ASSETS — 100.0%		$	7,012,901

(a) Represents non-income producing security.

See accompanying notes to the financial statements.

5

Sterling Capital Special Opportunities VIF

Schedule of Portfolio Investments

June 30, 2011 (Unaudited)

Shares		Fair Value
COMMON STOCKS (99.0%)
	Consumer Discretionary (9.5%)
90,000	Comcast Corp., Class A	$	2,280,600
33,500	Yum! Brands, Inc.		1,850,540
			4,131,140
	Consumer Staples (10.5%)
108,000	Dole Food Co., Inc.(a)(b)		1,460,160
21,000	Energizer Holdings, Inc.(b)		1,519,560
29,000	Kellogg Co.		1,604,280
			4,584,000
	Energy (10.0%)
13,500	Apache Corp.		1,665,765
11,000	EOG Resources, Inc.		1,150,050
4,000	Halliburton Co.		204,000
71,500	Weatherford International, Ltd.(b)		1,340,625
			4,360,440
	Financials (6.8%)
6,000	CME Group, Inc.		1,749,540
15,000	Och-Ziff Capital Management Group LLC, Class A		208,050
22,000	State Street Corp.		991,980
			2,949,570
	Health Care (21.3%)
7,500	Becton Dickinson & Co.		646,275
44,000	Gilead Sciences, Inc.(b)		1,822,040
19,000	McKesson Corp.		1,589,350
49,000	Merck & Co., Inc.		1,729,210
35,000	Teva Pharmaceutical Industries, Ltd., ADR		1,687,700
35,122	UnitedHealth Group, Inc.		1,811,592
			9,286,167
	Industrials (5.2%)
14,500	L-3 Communications Holdings, Inc.		1,268,025
87,000	Southwest Airlines Co.		993,540
			2,261,565
	Information Technology (27.7%)
150,000	Activision Blizzard, Inc.		1,752,000
50,000	Adobe Systems, Inc.(b)		1,572,500
10,000	Akamai Technologies, Inc.(b)		314,700
88,000	Cisco Systems, Inc.		1,373,680
25,000	Corning, Inc.		453,750
92,000	Dell, Inc.(b)		1,533,640
66,000	eBay, Inc.(b)		2,129,820
29,000	Harris Corp.		1,306,740
19,000	Intuit, Inc.(b)		985,340

Shares		Fair Value
COMMON STOCKS — (continued)
	Information Technology — (continued)
14,100	Itron, Inc.(b)	$	679,056
			12,101,226
	Materials (7.5%)
32,000	Newmont Mining Corp.		1,727,040
19,500	Teck Resources, Ltd., Class B		989,430
47,100	Yamana Gold, Inc.		547,773
			3,264,243
	Utilities (0.5%)
3,806	NextEra Energy, Inc.		218,693
	Total Common Stocks (Cost $35,525,217)		43,157,044
INVESTMENT COMPANY (1.1%)
477,691	Federated Treasury Obligations Fund, Institutional Shares		477,691
	Total Investment Company (Cost $477,691)		477,691
Principal Amount
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (3.1%)
$     37,343	BNY Mellon Institutional Cash Reserve, Series B		9,616
1,338,614	BNY Mellon Overnight Government Fund		1,338,614
	Total Securities Held as Collateral for Securities on Loan (Cost $1,375,957)		1,348,230
Total Investments — 103.2% (Cost $37,378,865)			44,982,965
Net Other Assets (Liabilities) — (3.2)%			(1,403,324	)
NET ASSETS — 100.0%		$	43,579,641

(a)  Represents that all or a portion of the security was on loan as of June 30, 2011.

(b)  Represents non-income producing security.

ADR — American Depository Receipt

See accompanying notes to the financial statements.

6

Sterling Capital Total Return Bond VIF

Schedule of Portfolio Investments

June 30, 2011 (Unaudited)

Principal   Amount		Fair Value
ASSET BACKED SECURITIES (0.4%)
$ 85,000	MBNA Credit Card Master Note Trust, Series 2006-A5, Class A5, 0.247%, 10/15/15(a)	$	84,867
	Total Asset Backed Securities (Cost $84,629)		84,867
COLLATERALIZED MORTGAGE OBLIGATIONS (12.8%)
123,752	Adjustable Rate Mortgage Trust, Series 2004-5, Class 4A1, 5.205%, 4/25/35(a)		120,607
65,746	Banc of America Alternative Loan Trust, Series 2004-10, Class 1CB1, 6.000%, 11/25/34		66,525
137,773	Banc of America Funding Corp., Series 2006-2, Class 3A1, 6.000%, 3/25/36		138,446
90,514	Countrywide Home Loan Mortgage Pass Through Trust, Series 2002-38, Class A3, 5.000%, 2/25/18		91,456
113,660	Credit Suisse First Boston Mortgage Securities Corp., Series 2005-7, Class 4A3, 5.000%, 8/25/20		113,609
189,363	Fannie Mae, Series 2011-31, Class DA, 3.500%, 11/25/28(b)		193,540
75,582	Fannie Mae, Series 2003-33, Class A, 4.000%, 5/25/33(b)		79,332
71,803	Fannie Mae, Series 2003-33, Class AQ, 4.000%, 5/25/33(b)		74,414
264,042	Fannie Mae, Series 2009-70, Class PA, 5.000%, 8/25/35(b)		280,335
117,725	Fannie Mae, Series 2008-29, Class BG, 4.700%, 12/25/35(b)		125,076
56,942	First Horizon Asset Securities, Inc., Series 2003-5, Class 1A19, 5.500%, 7/25/33		59,069
66,504	Freddie Mac, Series 2906, Class VC, 5.000%, 12/15/15(b)		70,704
67,536	Freddie Mac, Series 3773, Class AL, 3.250%, 6/15/25(b)		69,028
71,199	MASTR Alternative Loans Trust, Series 2004-13, Class 3A1, 6.500%, 1/25/35		71,817
127,263	RAAC, Series 2004-SP3, Class AI5, 4.890%, 12/25/32(a)		128,725
93,647	Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.000%, 10/25/34		95,032
58,604	Residential Asset Securitization Trust, Series 2004-IP2, Class 4A, 4.027%, 12/25/34(a)		53,399
149,934	Structured Adjustable Rate Mortgage Loan Trust, Series 2004-6, Class 4A1, 2.520%, 6/25/34(a)		140,964
90,895	Structured Asset Securities Corp., Series 2003-10, Class A, 6.000%, 4/25/33		95,733
63,335	Structured Asset Securities Corp., Series 2005-6, Class 5A1, 5.000%, 5/25/35		62,828
139,053	Wells Fargo Mortgage Backed Securities Trust, Series 2004-BB, Class A2, 2.745%, 1/25/35(a)		127,755
142,917	Wells Fargo Mortgage Backed Securities Trust, Series 2005-AR16, Class 6A3, 2.814%, 10/25/35(a)		128,524
64,552	Wells Fargo Mortgage Backed Securities Trust, Series 2007-16, Class 1A1, 6.000%, 12/28/37		67,293
	Total Collateralized Mortgage Obligations (Cost $2,424,324)		2,454,211

Principal   Amount		Fair Value
COMMERCIAL MORTGAGE-BACKED SECURITIES (9.4%)
$ 55,000	Banc of America Commercial Mortgage, Inc., Series 2004-4, Class A6, 4.877%, 7/10/42(a)	$	58,522
14,000	Banc of America Commercial Mortgage, Inc., Series 2005-1, Class A5, 5.329%, 11/10/42(a)		15,245
115,000	Banc of America Commercial Mortgage, Inc., Series 2005-1, Class AJ, 5.352%, 11/10/42(a)		116,845
53,412	Banc of America Commercial Mortgage, Inc., Series 2007-2, Class A2, 5.634%, 4/10/49(a)		53,894
195,000	Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2005-CD1, Class AM, 5.394%, 7/15/44(a)		197,570
95,000	Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A5, 5.617%, 10/15/48		103,116
90,000	Credit Suisse First Boston Mortgage Securities Corp., Series 2002-CP5, Class C, 5.230%, 12/15/35		92,917
139,000	Credit Suisse First Boston Mortgage Securities Corp., Series 2005-C1, Class AJ, 5.075%, 2/15/38(a)		138,279
101,000	DBUBS Mortgage Trust, Series 2011-LC2A, Class A4, 4.537%, 7/10/44(c)		100,530
100,000	LB-UBS Commercial Mortgage Trust, Series 2004-C7, Class A6, 4.786%, 10/15/29(a)		106,376
28,000	Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2006-3, Class A3, 5.389%, 7/12/46(a)		28,581
220,000	Morgan Stanley Capital I, Series 2005-HQ6, Class A4A, 4.989%, 8/13/42		238,085
80,000	Morgan Stanley Capital I, Series 2006-HQ8, Class AM, 5.648%, 3/12/44(a)		83,064
196,000	Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class AMFX, 5.179%, 7/15/42(a)		204,298
154,000	Wachovia Bank Commercial Mortgage Trust, Series 2007-C30, Class A3, 5.246%, 12/15/43		157,650
104,000	WF-RBS Commercial Mortgage Trust, Series 2011-C2, Class A4, 4.869%, 2/15/44(c)		106,607
	Total Commercial Mortgage-Backed Securities (Cost $1,726,357)		1,801,579
CORPORATE BONDS (27.1%)
	Consumer Discretionary (2.7%)
104,000	CBS Corp., 8.875%, 5/15/19(d)		132,575
154,000	Comcast Cable Communications Holdings, Inc., 9.455%, 11/15/22(d)		214,236
180,000	News America, Inc., 6.150%, 2/15/41(c)(d)		178,314
			525,125
	Consumer Staples (1.5%)
103,000	Altria Group, Inc., 9.950%, 11/10/38		144,720
138,000	Lorillard Tobacco Co., 6.875%, 5/1/20		149,720
			294,440
	Energy (1.5%)
90,000	Energy Transfer Partners LP, 9.000%, 4/15/19(d)		111,905

Continued

7

Sterling Capital Total Return Bond VIF

Schedule of Portfolio Investments — (continued)

June 30, 2011 (Unaudited)

Principal   Amount		Fair Value
CORPORATE BONDS — (continued)
	Energy — (continued)
$142,000	NuStar Logistics LP, 7.650%, 4/15/18(d)	$	169,615
			281,520
	Financials (14.7%)
31,000	Aflac, Inc., 8.500%, 5/15/19		37,913
177,000	Bear Stearns Cos. LLC (The), 7.250%, 2/1/18(d)		210,186
137,000	Colonial Realty LP, 6.250%, 6/15/14		146,881
203,000	Credit Suisse AG, 5.400%, 1/14/20		205,513
200,000	Ford Motor Credit Co. LLC, 7.000%, 10/1/13(d)		213,735
100,000	Ford Motor Credit Co. LLC, 7.000%, 4/15/15		108,016
282,000	General Electric Capital Corp., GMTN, 6.875%, 1/10/39(d)		319,229
101,000	Goldman Sachs Group, Inc. (The), 7.500%, 2/15/19		117,518
199,000	Health Care REIT, Inc., 4.950%, 1/15/21(d)		193,890
100,000	ING Bank NV, 4.000%, 3/15/16(c)		101,204
92,000	Jefferies Group, Inc., 8.500%, 7/15/19		108,807
47,000	KeyCorp, MTN, 5.100%, 3/24/21		47,869
172,000	Macquarie Bank, Ltd., 6.625%, 4/7/21(c)		173,044
180,000	Merrill Lynch & Co., Inc., MTN, 6.875%, 4/25/18		199,155
115,000	MetLife, Inc., 6.750%, 6/1/16		133,855
194,000	Morgan Stanley, MTN, 6.625%, 4/1/18(d)		213,709
83,000	Prudential Financial, Inc., 8.875%, 6/15/38(a)		96,903
59,000	Simon Property Group LP REIT, 10.350%, 4/1/19		81,668
64,000	Ventas Realty LP/Ventas Capital Corp. REIT, 4.750%, 6/1/21(d)		62,474
58,000	WEA Finance LLC, 4.625%, 5/10/21(c)		56,286
			2,827,855
	Industrials (2.2%)
198,000	Corrections Corp. of America, 6.250%, 3/15/13(d)		198,495
209,000	Verisk Analytics, Inc., 5.800%, 5/1/21(d)		221,686
			420,181
	Materials (2.7%)
233,000	Sealed Air Corp., 6.875%, 7/15/33(c)		205,201
183,000	Vale Overseas, Ltd., 6.875%, 11/21/36		198,699
105,000	Xstrata Finance Canada, Ltd., 5.800%, 11/15/16(c)		117,589
			521,489
	Telecommunication Services (1.8%)
135,000	America Movil SAB de CV, 6.375%, 3/1/35		145,109
100,000	Crown Castle International Corp., 9.000%, 1/15/15(d)		108,500
82,000	Telefonica Emisiones SAU, 5.134%, 4/27/20(d)		81,284
			334,893
	Total Corporate Bonds (Cost $4,981,902)		5,205,503
MORTGAGE-BACKED SECURITIES (42.0%)
	Fannie Mae(b) (18.5%)
13,364	4.500%, 10/1/18, Pool #752030		14,301
6,032	5.500%, 12/1/20, Pool #831138		6,559
21,331	5.500%, 5/1/21, Pool #895628		23,193
24,271	5.000%, 10/1/25, Pool #255894		26,130

Principal   Amount		Fair Value
MORTGAGE-BACKED SECURITIES — (continued)
	Fannie Mae(b) — (continued)
$391,000	4.000%, 12/1/25, Pool #AH0973	$	408,129
778,000	3.500%, 6/1/26, Pool #AB3171		793,605
21,154	5.500%, 2/1/27, Pool #256600		22,976
17,064	6.000%, 9/1/34, Pool #790912		18,854
8,689	7.000%, 6/1/35, Pool #255820		9,999
45,668	5.000%, 11/1/35, Pool #842402		48,758
38,779	6.000%, 12/1/36, Pool #902054		42,738
23,133	6.000%, 1/1/37, Pool #906095		25,495
20,189	6.000%, 4/1/37, Pool #914725		22,212
38,842	6.000%, 7/1/37, Pool #256800		42,735
157,673	6.000%, 7/1/37, Pool #940807		173,475
6,247	6.000%, 9/1/37, Pool #955005		6,873
138,634	4.746%, 7/1/38, Pool #981430(a)		147,542
46,957	5.500%, 7/1/38, Pool #934323		50,826
78,438	5.000%, 1/1/39, Pool #995245		83,500
98,083	4.500%, 1/1/40, Pool #AC8568		101,653
309,360	4.500%, 6/1/40, Pool #AD6432		320,523
85,106	5.000%, 6/1/40, Pool #AD4927		90,598
224,583	5.000%, 6/1/40, Pool #AD7860		239,077
83,958	5.000%, 6/1/40, Pool #AD8842		89,350
94,012	4.500%, 8/1/40, Pool #AE2305		97,404
162,340	5.000%, 9/1/40, Pool #AE0530		172,767
174,806	4.000%, 3/1/41, Pool #AH8824		175,052
101,500	4.500%, 3/1/41, Pool #AH8825		105,170
191,612	4.500%, 5/1/41, Pool #AI1023		198,541
			3,558,035
	Freddie Mac(b) (14.5%)
28,108	6.000%, 10/1/19, Pool #G11679		30,662
13,261	5.500%, 10/1/21, Pool #G12425		14,350
17,952	5.500%, 7/1/35, Pool #A36540		19,518
9,814	6.000%, 7/1/35, Pool #A36304		10,836
26,985	5.500%, 2/1/36, Pool #G08111		29,258
42,238	5.500%, 4/1/37, Pool #G08192		45,731
181,169	5.500%, 5/1/37, Pool #G03240		196,433
24,483	5.000%, 6/1/37, Pool #G03094		26,044
127,668	6.000%, 8/1/37, Pool #A64401		140,722
64,352	6.000%, 8/1/37, Pool #A64981		70,831
23,154	5.613%, 9/1/37, Pool #1Q0319(a)		25,057
80,085	6.500%, 12/1/37, Pool #A69955		90,305
15,128	5.500%, 1/1/38, Pool #A71523		16,378
263,838	5.500%, 10/1/38, Pool #G04814		285,655
357,000	5.000%, 2/1/39, Pool #G05253		379,532
181,503	4.500%, 1/1/40, Pool #A90764		187,939
473,405	5.500%, 1/1/40, Pool #G06021		512,552
189,804	3.759%, 7/1/40, Pool #1B4948(a)		199,290
247,214	5.000%, 7/1/40, Pool #A93070		262,971
82,997	5.000%, 7/1/40, Pool #C03487		88,287
144,085	4.000%, 9/1/40, Pool #A93643		144,173
			2,776,524
	Ginnie Mae (9.0%)
98,295	5.500%, 6/15/38, Pool #782333		108,286
276,090	5.500%, 1/15/39, Pool #646685		304,131
172,236	4.500%, 3/15/39, Pool #697957		182,499
345,049	4.500%, 2/15/40, Pool #737031		364,854
86,201	5.000%, 2/15/40, Pool #737037		93,546
277,372	4.500%, 9/20/40, Pool #4801		292,526
115,000	4.000%, 7/15/41(e)		117,138
74,000	5.000%, 7/15/41(e)		80,151

Continued

8

Sterling Capital Total Return Bond VIF

Schedule of Portfolio Investments — (continued)

June 30, 2011 (Unaudited)

Principal Amount		Fair Value
MORTGAGE-BACKED SECURITIES — (continued)
	Ginnie Mae — (continued)
$160,000	5.500%, 7/15/41(e)	$	176,050
			1,719,181
	Total Mortgage-Backed Securities (Cost $7,945,264)		8,053,740
MUNICIPAL BONDS (3.5%)
	California (1.8%)
65,000	California State, Build America Bonds, School Improvements G.O., Taxable, 7.625%, 3/1/40		75,198
30,000	Los Angeles Harbor Department, Crossover Refunding Revenue, Series A, Callable 8/1/12 @ 100 (AMBAC), 5.500%, 8/1/14		31,238
220,000	Metropolitan Water District of Southern California, Build America Bonds, Water Utility Improvements Revenue, Callable 7/1/19 @ 100, 6.538%, 7/1/39		230,135
			336,571
	New York (1.7%)
70,000	New York & New Jersey Port Authority, Port, Airport & Marina Improvements Revenue, Series 122, Callable 8/1/11 @ 100 (G.O. of Authority), 5.500%, 7/15/15		70,197
95,000	New York City Municipal Water Finance Authority, Water Utility Improvements Revenue, Series EE, Build America Bonds Taxable, Callable 6/15/20 @ 100, 6.491%, 6/15/42		99,668
155,000	New York, NY, Build America Bonds, Public Improvements G.O., Series G1, 4.774%, 3/1/20		162,088
			331,953
	Total Municipal Bonds (Cost $641,709)		668,524
U.S. TREASURY NOTES (2.5%)
113,000	1.750%, 5/31/16(f)		113,176
365,000	4.500%, 8/15/39(d)		373,213
	Total U.S. Treasury Notes (Cost $492,583)		486,389

Shares		Fair Value
PREFERRED STOCKS (1.3%)
	Financials (1.3%)
4,200	Citigroup Capital XIII, 7.875%	$	116,676
4,999	Fifth Third Capital Trust VI, 7.250%		126,375
	Total Preferred Stocks (Cost $234,527)		243,051
INVESTMENT COMPANY (2.7%)
516,555	Federated Treasury Obligations Fund, Institutional Shares		516,555
	Total Investment Company     (Cost $516,555)		516,555
Principal Amount
SHORT TERM INVESTMENTS (0.0%)
$17,758	BNY Mellon Institutional Cash Reserve, Series B		4,573
	Total Short Term Investments     (Cost $17,758)		4,573
Total Investments — 101.7% (Cost $19,065,608)			19,518,992
Net Other Assets (Liabilities) — (1.7)%			(327,056	)
NET ASSETS — 100.0%		$	19,191,936

(a) The interest rate for this variable rate note, which will change periodically, is based either on the prime rate or an index of market rates. The reflected rate is in effect as of June 30, 2011. The maturity date reflected is the final maturity date.

(b) On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship with FHFA as the conservator. The conservatorship is a statutory process designed to stabilize a troubled institution with the objective of returning the entities to normal business operations.

(c) Rule 144A, Section 4(2) or other security which is restricted as to resale to qualified institutional investors. The Investment Advisor, using Board approved procedures, has deemed these securities or a portion of these securities to be liquid.

(d) Represents that all or a portion of the security was pledged as collateral for securities purchased on a when-issued basis.

(e) Represents securities purchased on a when-issued basis. At June 30, 2011, total cost of investments purchased on a when-issued basis was $374,501.

(f) Represents that all or a portion of the security was on loan as of June 30, 2011.

AMBAC — American Municipal Bond Insurance Corp.

G.O. — General Obligation

GMTN — Global Medium Term Note

MTN — Medium Term Note

REIT — Real Estate Investment Trust

See accompanying notes to the financial statements.

9

Sterling Capital Variable Insurance Funds

Statements of Assets and Liabilities

June 30, 2011 (Unaudited)

	Sterling Capital Select Equity VIF				Sterling Capital Strategic Allocation Equity VIF				Sterling Capital Special Opportunities VIF				Sterling Capital Total Return Bond VIF
Assets:
Investments:
Investments - unaffiliated, at cost*		$	22,070,770			$	2,673,845			$	37,378,865			$	19,065,608
Investments - affiliated, at cost			—				3,121,698				—				—
Total investments, at cost			22,070,770				5,795,543				37,378,865				19,065,608
Unrealized appreciation			3,232,530				1,219,619				7,604,100				453,384
Investments, at value			25,303,300				7,015,162				44,982,965				19,518,992
Cash			—				—				—				5,596
Interest and dividends receivable			28,268				1				33,434				156,159
Receivable for investments sold			642,536				—				—				621,550
Receivable for capital shares issued			9,815				1,648				—				—
Prepaid expenses & other expenses			11,713				2,943				18,254				8,311
Total Assets			25,995,632				7,019,754				45,034,653				20,310,608
Liabilities:
Payable for investments purchased			645,287				—				—				984,025
Payable for capital shares redeemed			8,440				194				21,073				93,502
Payable for collateral received on loaned securities			—				—				1,375,957				—
Payable to securities lending agent			29,800				—				—				17,758
Accrued expenses and other payables:
Investment advisory fees			10,279				1,411				28,374				8,022
Administration fees			2,078				—				3,582				1,608
Audit fees			9,808				2,632				15,610				7,101
Compliance service fees			26				7				38				20
Trustee fees			5				9				—				—
Printing fees			5,639				2,177				8,270				4,285
Transfer agent fees			1,572				423				2,108				1,222
Other fees			—				—				—				1,129
Total Liabilities			712,934				6,853				1,455,012				1,118,672
Net Assets:		$	25,282,698			$	7,012,901			$	43,579,641			$	19,191,936
Net Assets Consist of:
Capital		$	43,630,058			$	11,996,970			$	33,336,220			$	17,369,930
Accumulated undistributed (distributions in excess of) net investment income (loss)			2,003				(135	)			(17,958	)			315,275
Accumulated realized gain (loss)			(21,581,893	)			(6,203,553	)			2,657,279				1,053,347
Net unrealized appreciation/depreciation			3,232,530				1,219,619				7,604,100				453,384
Net Assets		$	25,282,698			$	7,012,901			$	43,579,641			$	19,191,936
Shares of Beneficial Interest Outstanding (Unlimited number of shares authorized, no par value)			2,943,006				1,009,639				2,511,341				1,774,446
Net Asset Value - offering and redemption price per share		$	8.59			$	6.95			$	17.35			$	10.82

* The Sterling Capital Special Opportunities VIF and Sterling Capital Total Return Bond VIF include securities on loan of $1,333,004 and $9,144, respectively.

See accompanying notes to the financial statements.

10

Sterling Capital Variable Insurance Funds

Statements of Operations

For the Six Months Ended June 30, 2011 (Unaudited)

	Sterling  Capital Select Equity VIF				Sterling Capital Strategic Allocation Equity VIF				Sterling  Capital Special Opportunities VIF				Sterling Capital Total Return Bond VIF
Investment Income:
Interest income		$	—			$	—			$	—			$	452,750
Dividend income - unaffiliated			269,632				28,004				252,632				8,849
Dividend income - affiliated			—				12,826				—				—
Foreign tax withholding			(3,914	)			—				(2,178	)			—
Income from securities lending			538				—				3,756				3
Total investment income			266,256				40,830				254,210				461,602
Expenses:
Investment advisory fees (See Note 5)			100,216				9,102				178,983				59,588
Administration fees (See Note 5)			13,835				—				22,775				10,107
Audit fees			10,794				2,909				17,131				7,857
Compliance service fees (See Note 5)			167				45				268				121
Custodian fees			870				188				1,649				569
Fund accounting fees (See Note 5)			1,354				364				2,237				993
Insurance fees			10,255				2,822				14,851				8,176
Legal fees			7,035				1,885				11,162				5,096
Printing fees			5,863				2,256				8,930				4,491
Transfer agent fees (See Note 5)			4,691				1,268				7,334				3,447
Trustee fees			1,085				301				1,701				803
Other fees			4,738				2,427				5,499				13,914
Total expenses before waivers			160,903				23,567				272,520				115,162
Less expenses waived/reimbursed by the Investment Advisor (See Note 5)			(32,748	)			(6,254	)			(352	)			(10,128	)
Net expenses			128,155				17,313				272,168				105,034
Net investment income (loss)			138,101				23,517				(17,958	)			356,568
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investment transactions - unaffiliated			1,536,739				67,986				1,215,739				407,675
Investment transactions - affiliated			—				12,938				—				—
Written Options			—				—				74,015				—
Change in unrealized appreciation/depreciation on:
Investments			(899,164	)			219,224				701,033				(226,896	)
Written Options			—				—				(26,729	)			—
Net realized and unrealized gain			637,575				300,148				1,964,058				180,779
Change in net assets from operations		$	775,676			$	323,665			$	1,946,100			$	537,347

See accompanying notes to the financial statements.

11

Sterling Capital Variable Insurance Funds

Statements of Changes in Net Assets

	Sterling Capital Select Equity VIF						Sterling Capital Strategic Allocation Equity VIF
	For the Six Months Ended June 30, 2011 (Unaudited)			For the Year Ended December 31, 2010			For the Six Months Ended June 30, 2011 (Unaudited)			For the Year Ended December 31, 2010
From Investment Activities:
Operations:
Net investment income (loss)	$	138,101		$	346,877		$	23,517		$	92,516
Net realized gain (loss)		1,536,739			1,473,764			80,924			(1,016,139	)
Change in unrealized appreciation/depreciation		(899,164	)		1,254,956			219,224			1,965,251
Change in net assets from operations		775,676			3,075,597			323,665			1,041,628
Distributions to Shareholders:
Net investment income		(136,334	)		(349,287	)		(23,652	)		(117,201	)
Net realized gains from investment transactions		—			—			—			—
Change in net assets from shareholders distributions		(136,334	)		(349,287	)		(23,652	)		(117,201	)
Capital Transactions:
Proceeds from shares issued		169,846			119,554			174,578			408,975
Distributions reinvested		136,334			349,287			23,652			117,201
Value of shares redeemed		(3,980,529	)		(7,001,138	)		(1,155,398	)		(1,727,268	)
Change in net assets from capital transactions		(3,674,349	)		(6,532,297	)		(957,168	)		(1,201,092	)
Change in net assets		(3,035,007	)		(3,805,987	)		(657,155	)		(276,665	)
Net Assets:
Beginning of period		28,317,705			32,123,692			7,670,056			7,946,721
End of period	$	25,282,698		$	28,317,705		$	7,012,901		$	7,670,056
Accumulated undistributed (distributions in excess of) net investment income (loss)	$	2,003		$	236		$	(135	)	$	—
Share Transactions:
Issued		19,519			15,933			24,837			67,323
Reinvested		15,758			45,575			3,403			18,879
Redeemed		(458,241	)		(915,381	)		(166,727	)		(285,890	)
Change in Shares		(422,964	)		(853,873	)		(138,487	)		(199,688	)

See accompanying notes to the financial statements.

12

Sterling Capital Special Opportunities VIF						Sterling Capital Total Return Bond VIF
For the Six Months Ended June 30, 2011 (Unaudited)			For the Year Ended December 31, 2010			For the Six Months Ended June 30, 2011 (Unaudited)			For the Year Ended December 31, 2010
	$(17,958)		$	(110,418	)	$	356,568		$	782,977
	1,289,754			4,579,201			407,675			770,050
	674,304			1,393,992			(226,896	)		(9,535	)
	1,946,100			5,862,775			537,347			1,543,492
	—			(23,790	)		(377,803	)		(819,377	)
	—			—			—			(35,714	)
	—			(23,790	)		(377,803	)		(855,091	)
	2,325,216			5,126,387			2,118,864			3,090,265
	—			23,790			377,803			855,091
	(4,036,037	)		(7,806,727	)		(4,861,349	)		(5,298,937	)
	(1,710,821	)		(2,656,550	)		(2,364,682	)		(1,353,581	)
	235,279			3,182,435			(2,205,138	)		(665,180	)
	43,344,362			40,161,927			21,397,074			22,062,254
$	43,579,641		$	43,344,362		$	19,191,936		$	21,397,074
$	(17,958	)	$	—		$	315,275		$	336,510
	136,345			331,860			196,376			287,744
	—			1,564			35,005			79,711
	(236,549	)		(532,383	)		(451,796	)		(499,141	)
	(100,204	)		(198,959	)		(220,415	)		(131,686	)

13

Sterling Capital Variable Insurance Funds

Financial Highlights

The financial highlights table is intended to help you understand the Funds’ financial performance for the past 5 years or, if shorter, the period of the Funds’ operations. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).

				Investment Activities									Distributions
	Net Asset Value, Beginning of Period			Net investment income (loss)			Net realized/ unrealized  gains (losses) on investments			Total  from Investment Activities			Net Investment income			Net realized gains on investments			Total Distributions
Sterling Capital Select Equity VIF
Six Months Ended June 30, 2011 (Unaudited)		$	8.41		0.04	(d)		0.19			0.23			(0.05	)		—			(0.05	)
Year Ended December 31, 2010		$	7.61		0.09	(d)		0.81			0.90			(0.10	)		—			(0.10	)
Year Ended December 31, 2009		$	6.49		0.07	(d)		1.12			1.19			(0.07	)		—			(0.07	)
Year Ended December 31, 2008		$	13.69		0.16	(d)		(4.63	)		(4.47	)		(0.16	)		(2.57	)		(2.73	)
Year Ended December 31, 2007		$	16.75		0.23			(1.08	)		(0.85	)		(0.31	)		(1.90	)		(2.21	)
Year Ended December 31, 2006		$	14.00		0.27			2.68			2.95			(0.20	)		—			(0.20	)
Sterling Capital Strategic Allocation Equity VIF(e)
Six Months Ended June 30, 2011 (Unaudited)		$	6.68		0.02	(d)		0.27			0.29			(0.02	)		—			(0.02	)
Year Ended December 31, 2010		$	5.90		0.07	(d)		0.81			0.88			(0.10	)		—			(0.10	)
Year Ended December 31, 2009		$	4.75		0.06	(d)		1.14			1.20			(0.05	)		—			(0.05	)
Year Ended December 31, 2008		$	10.33		0.09	(d)		(3.50	)		(3.41	)		(0.10	)		(2.07	)		(2.17	)
Year Ended December 31, 2007		$	11.65		0.25			—	(f)		0.25			(0.30	)		(1.27	)		(1.57	)
Year Ended December 31, 2006		$	10.51		0.16			1.45			1.61			(0.12	)		(0.35	)		(0.47	)
Sterling Capital Special Opportunities VIF
Six Months Ended June 30, 2011 (Unaudited)		$	16.60		(0.01	)(d)		0.76			0.75			—			—			—
Year Ended December 31, 2010		$	14.29		(0.04	)(d)		2.36			2.32			(0.01	)		—			(0.01	)
Year Ended December 31, 2009		$	10.27		(0.03	)(d)		4.47			4.44			—			(0.42	)		(0.42	)
Year Ended December 31, 2008		$	16.03		0.02	(d)		(5.28	)		(5.26	)		(0.02	)		(0.48	)		(0.50	)
Year Ended December 31, 2007		$	15.07		(0.02	)		2.02			2.00			—			(1.04	)		(1.04	)
Year Ended December 31, 2006		$	12.70		(0.02	)		3.07			3.05			(0.01	)		(0.67	)		(0.68	)
Sterling Capital Total Return Bond VIF
Six Months Ended June 30, 2011 (Unaudited)		$	10.73		0.19	(d)		0.10			0.29			(0.20	)		—			(0.20	)
Year Ended December 31, 2010		$	10.37		0.40	(d)		0.39			0.79			(0.41	)		(0.02	)		(0.43	)
Year Ended December 31, 2009		$	9.94		0.41	(d)		0.42			0.83			(0.40	)		—			(0.40	)
Year Ended December 31, 2008		$	10.02		0.41	(d)		(0.08	)		0.33			(0.41	)		—			(0.41	)
Year Ended December 31, 2007		$	9.83		0.31			0.31			0.62			(0.43	)		—			(0.43	)
Year Ended December 31, 2006		$	9.92		0.50			(0.17	)		0.33			(0.42	)		—			(0.42	)

* During the period certain fees were reduced. If such reductions had not occurred, the ratios would have been as indicated.

(a) Not annualized for periods less than one year.

(b) Total return ratios assume reinvestment of distributions at net asset value. Total return ratios do not reflect charges pursuant to the terms of the insurance contracts funded by separate accounts that invest in the Fund’s shares.

(c) Annualized for periods less than one year.

(d) Per share net investment income (loss) has been calculated using the average daily shares method.

(e) The expense ratios exclude the impact of fees/expenses paid by each underlying fund.

(f) Amount is less than $0.005.

See accompanying notes to the financial statements.

14

		Ratios/Supplemental Data
Net Asset    Value,     End of     Period	Total Return(a)(b)	Net Assets, End of Period (000)	Ratio of net expenses to average net assets(c)	Ratio of net investment income (loss) to average net assets(c)	Ratio of expenses to average net assets*(c)	Portfolio turnover rate(a)
$  8.59	2.67%	$25,283	0.95%	1.02%	1.19%	27.86%
$  8.41	11.93%	$28,318	0.94%	1.22%	1.21%	63.34%
$  7.61	18.50%	$32,124	1.00%	1.01%	1.24%	137.52%
$  6.49	(37.43)%	$35,978	0.81%	1.52%	1.16%	49.73%
$13.69	(5.87)%	$87,171	0.77%	1.50%	1.08%	52.81%
$16.75	21.28%	$93,143	0.77%	1.72%	1.01%	45.76%
$  6.95	4.39%	$  7,013	0.48%	0.65%	0.65%	0.83%
$  6.68	14.98%	$  7,670	0.40%	1.21%	0.68%	64.81%
$  5.90	25.24%	$  7,947	0.41%	1.21%	0.66%	18.04%
$  4.75	(38.22)%	$  8,528	0.31%	1.15%	0.59%	61.04%
$10.33	1.98%	$18,495	0.18%	2.27%	0.51%	40.70%
$11.65	15.82%	$18,222	0.17%	1.15%	0.54%	20.55%
$17.35	4.52%	$43,580	1.22%	(0.08)%	1.22%	10.21%
$16.60	16.24%	$43,344	1.24%	(0.28)%	1.27%	39.24%
$14.29	43.53%	$40,162	1.26%	(0.28)%	1.29%	32.57%
$10.27	(33.71)%	$26,684	1.10%	0.14%	1.18%	35.80%
$16.03	13.41%	$35,620	1.06%	(0.16)%	1.11%	23.86%
$15.07	24.71%	$21,294	1.06%	(0.05)%	1.06%	59.93%
$10.82	2.75%	$19,192	1.06%	3.59%	1.16%	74.84%
$10.73	7.73%	$21,397	1.07%	3.70%	1.20%	140.32%
$10.37	8.57%	$22,062	0.94%	4.09%	1.24%	109.12%
$  9.94	3.38%	$20,996	0.81%	4.11%	1.03%	152.74%
$10.02	6.47%	$14,064	0.77%	4.42%	1.01%	252.64%
$  9.83	3.47%	$  6,767	0.77%	4.34%	0.88%	188.24%

15

Sterling Capital Variable Insurance Funds

Notes to Financial Statements

June 30, 2011 (Unaudited)

1. Organization:

The Sterling Capital Variable Insurance Funds (formerly known as BB&TVariable Insurance Funds) (the “Trust”) was organized on November 8, 2004, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end investment company established as a Massachusetts business trust. The Trust commenced operations on May 1, 2005 and presently offers shares of the Sterling Capital Select Equity VIF, the Sterling Capital Strategic Allocation Equity VIF, the Sterling Capital Special Opportunities VIF, and the Sterling Capital Total Return Bond VIF (referred to individually as a “Fund” and collectively as the “Funds”). The Trust is authorized to issue an unlimited number of shares of beneficial interest without par value. Shares of the Funds are offered through variable annuity contracts offered through the separate accounts of participating insurance companies. All Funds are “diversified” funds.

The Sterling Capital Strategic Allocation Equity VIF invests primarily in underlying mutual funds and exchange traded funds as opposed to individual securities. By owning shares of underlying investment companies (including exchange traded funds), Sterling Capital Strategic Allocation Equity VIF invests, to varying degrees, in securities of U.S. and non-U.S. companies, including small and medium sized companies, and in fixed-income securities. In addition, Sterling Capital Strategic Allocation Equity VIF’s exposure to underlying equity funds may include funds that invest in real estate or other similar securities and invest in derivatives.

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Funds may enter into contracts with their vendors and others that provide for general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote.

2. Significant Accounting Policies:

The following is a summary of significant accounting policies followed by the Funds. The policies are in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates.

Securities Valuation — Investments in common stocks, commercial paper, corporate bonds, municipal securities, U.S. Government securities, U.S. Government agency securities, and options, the principal market for which is a securities exchange or an over-the-counter market, are valued at their latest available sale price (except for those securities that are traded on NASDAQ, which will be valued at the NASDAQ official closing price) or in the absence of such a price, by reference to the latest available bid price in the principal market in which such securities are normally traded. The Funds may also use an independent pricing service approved by the Board of Trustees (the “Board”) to value certain securities, including through the use of electronic and matrix techniques. Short-term obligations without significant credit risk that mature in 60 days or less are valued at either amortized cost or original cost plus interest, which approximates current value. Investments in open-end investment companies, including the underlying funds in which the Sterling Capital Strategic Allocation Equity VIF invests, are valued at their respective net asset values as reported by such companies. Investments in closed-end investment companies are valued at their market values based upon the latest available sale price or, absent such a price, by reference to the latest available bid prices in the principal market in which such securities are normally traded. The differences between cost and fair values of investments are reflected as either unrealized appreciation or depreciation. Securities for which market quotations are not readily available or deemed unreliable (e.g., an approved pricing service does not provide a price, a furnished price is in error, certain stale prices, or an event occurs that materially affects the furnished price) will be fair valued in accordance with procedures established in good faith under the general supervision of the Board. No securities were valued in accordance with these procedures as of June 30, 2011.

Fair Value Measurements — The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

16

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

• Level 1 – quoted prices in active markets for identical securities

• Level 2 – based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 – based on significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. During the period ended June 30, 2011 there were no significant changes to the valuation policies and procedures.

The summary of inputs used to determine the fair value of each Fund’s investments as of June 30, 2011 is as follows:

Investments in Securities	Level 1– Quoted Prices		Level 2– Other Significant Observable Inputs		Level 3– Significant Unobservable Inputs	Total
Sterling Capital Select Equity VIF	$	25,295,626(a)	$	7,674	$—	$	25,303,300
Sterling Capital Strategic Allocation Equity VIF		7,015,162(a)		—	—		7,015,162
Sterling Capital Special Opportunities VIF		43,634,735(a)		1,348,230(b)	—		44,982,965
Sterling Capital Total Return Bond VIF		516,555(c)		18,994,048(a)(b)	—		19,510,603
(a)    Industries or security types are disclosed in the Schedules of Portfolio Investments. (b)    All or part of the balance represents securities held as collateral for securities on loan. (c)    Represents investment companies.

There were no significant transfers between Level 1 and Level 2 during the period ended June 30, 2011.

In May 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2011-04: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU No. 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. In addition, ASU No. 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. ASU No. 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU No. 2011-04 and its impact on the financial statements.

Security Transactions and Related Income — During the period, security transactions are accounted for no later than one business day after trade date. For financial reporting purposes, however, security transactions are accounted for on the trade date of the last business day of the reporting period. Interest income is recognized on the accrual basis and includes, where applicable, the amortization/accretion of premium or discount. Dividend income is recorded on the ex-dividend date. Gains or losses realized from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

When-Issued and Forward Commitments — The Funds may purchase securities on a “when-issued” basis. The Funds record when-issued securities on the trade date and pledge assets with a value at least equal to the purchase commitment for payment of the securities purchased. The value of the securities underlying when-issued or forward commitments to purchase securities, and any subsequent fluctuation in their value, is taken into account when determining the net asset value of the Funds commencing with the date the Funds agree to purchase the securities. The Funds do not accrue interest or dividends on “when-issued” securities until the underlying securities are received.

Mortgage Dollar Rolls — The Sterling Capital Total Return Bond VIF may sell mortgage-backed securities for delivery in the current month and simultaneously contract to repurchase substantially similar (same type, coupon and maturity) securities on a specific future date at an agreed-upon price. The market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. Pools of mortgages collateralizing those securities may have different prepayment histories than those sold. During the period between the sale and repurchase,

17

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in additional instruments for the Fund, and the income from these investments will generate income for the Fund. If such income does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what the performance would have been without the use of dollar rolls. The Funds account for mortgage dollar roll transactions as purchases and sales.

Option Contracts — The Sterling Capital Special Opportunities VIF writes (sells) “covered” call options and may purchase options to close out options previously written by it. These transactions are entered into to hedge against changes in security prices (equity risk) or for the purposes of earning additional income (i.e., speculation).

The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of the premium and change in value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as other securities owned. The cost of securities acquired through the exercise of call options is increased by the premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid.

In writing an option, the Fund contracts with a specified counterparty to purchase (put option written) or sell (call option written) a specified quantity (notional amount) of an underlying asset at a specified price during a specified period upon demand of the counterparty. The risk associated with writing an option is that the Fund bears the market risk of an unfavorable change in the price of an underlying asset and is required to buy or sell an underlying asset under the contractual terms of the option at a price different from the current fair value. The Fund executes transactions in both listed and over-the-counter options. When purchasing over-the-counter options, the Fund bears the risk of economic loss from counterparty default, equal to the market value of the option. Listed options involve minimal counterparty risk since the listed options are guaranteed against default by the exchange on which they trade. Transactions in over-the-counter options expose the Fund to the risk of default by the counterparty to the transaction. In the event of default by the counterparty to the over-the-counter transaction, the Fund’s maximum amount of loss is the premium paid (as the purchaser) or the unrealized loss of the contract (as the writer).

The Sterling Capital Special Opportunities VIF invested in written options to economically hedge the downside exposure by collecting a premium when sold against the equity holding. No written options were held at June 30, 2011. Detail of written options activity for the period ended June 30, 2011 is as follows:

	Sterling Capital Special  Opportunities VIF
Covered Call Options	Number of Contracts			Premiums Received
Balance at beginning of period		550			$	80,679
Options written		150				20,163
Options closed		(150	)			(38,403	)
Options expired		(400	)			(42,276	)
Options exercised		(150	)			(20,163	)
Balance at end of period		—			$	—

Security Loans — The Funds may loan securities secured by collateral in the form of securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, irrevocable letters of credit, U.S. dollars, cash or other forms of collateral as may be agreed between the Trust and The Bank of New York Mellon, the lending agent (“BNY Mellon Bank”). A Fund may receive compensation for lending securities in the form of fees payable by the borrower or by retaining a portion of income and earnings from the investment and reinvestment of cash collateral received and held on behalf of the Fund (after payment of a “broker rebate fee” to the borrower). In extremely low interest rate environments, the broker rebate fee may exceed the interest earned on the cash collateral which would result in a loss to the Fund. A Fund also continues to receive interest or dividends on the securities loaned. Although security loans are secured at all times by collateral, the loans may not be fully supported if, for example, the instruments in which cash collateral is invested decline in value or the borrower fails to provide additional collateral when required in a timely manner or at all. Concurrently with the delivery of a Fund’s securities to a borrower, BNY Mellon Bank is required to obtain from the borrower collateral equal to at least 102% of the market value of the securities loaned plus accrued interest in the case of U.S. securities, and at least 105% of the market value of the securities loaned plus accrued interest in the case of foreign securities. If at the

18

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

close of trading on any business day the market value of the collateral is less than 100% of the market value of such loaned securities as of such business day, the borrower is required to deliver additional collateral which will cause the total collateral to be equal to not less than 102% of the market value of the securities loaned plus accrued interest in the case of U.S. securities and 105% of the market value of the securities loaned plus accrued interest in the case of foreign securities. A Fund bears all of the gains and losses on such investments. Cash collateral received by a Fund at June 30, 2011 was invested in the BNY Mellon Overnight Government Fund and the BNY Mellon Institutional Cash Reserve Fund (“ICRF”) Series B, an unregistered investment pool managed by BNY Mellon Bank, which was invested in repurchase agreements and Lehman Brothers floating rate medium term notes.

Effective July 1, 2010, the Trust, on behalf of each applicable Fund, entered into an agreement with BNY Mellon Bank and the Bank of New York Mellon Corporation (“BNYMC”) with respect to each Fund’s position in the ICRF, pursuant to which (i) BNYMC will support the value of certain defaulted securities issued by Lehman Brothers and held by ICRF, and (ii) if certain conditions are met, each Fund will have the right to sell the defaulted securities to BNYMC at a price equal to 80% of par value.

There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. Another risk from securities lending is that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. The Funds are indemnified from losses resulting from brokers failing to return securities. The securities lending agent may make payments to borrowers and placing brokers, who may not be affiliated, directly or indirectly, with the Trust, the adviser or the distributor. In connection with lending securities, a Fund may pay reasonable administrative and custodial fees. As of June 30, 2011, the following Funds had loans outstanding:

	Value of Loaned Securities		Cost of Cash Collateral		Value of Cash Collateral			Average Value on  Loan for the period ended June 30, 2011
Sterling Capital Special Opportunities VIF		$1,333,004		$1,375,957		$1,348,230			$1,079,938
Sterling Capital Total Return Bond VIF		9,144		9,369		(3,816	)		6,402

Expenses and Allocation Methodology — Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributable to a Fund are allocated proportionately among all Funds daily in relation to the net assets of each Fund or on another reasonable basis. Expenses which are attributable to both the Funds and the Sterling Capital Funds are allocated across the Funds and Sterling Capital Funds, based upon relative net assets or on another reasonable basis.

Distributions to Shareholders — Dividends from net investment income are declared and paid quarterly for the Funds, with the exception of the Sterling Capital Total Return Bond VIF, in which case dividends from net investment income are declared daily and paid monthly. Distributable net realized gains, if any, are declared and distributed at least annually. Distributions to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital.

The character of income and gains distributed are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., reclass of net operating losses, market discounts, gain/loss, paydowns and distributions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. These reclassifications have no impact on net assets or net asset values per share.

Credit Enhancements — Certain obligations held in the Funds have credit enhancement or liquidity features that may, under certain circumstances, provide for repayment of principal and interest on the obligation upon demand date, interest rate reset date or final maturity. These enhancements may include: letters of credit; liquidity guarantees; security purchase agreements; tender option purchase agreements; and third party insurance (i.e., AMBAC).

Federal Income Taxes — It is the policy of the Funds to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and to make distributions of net investment income and net

19

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

realized capital gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income tax is required.

3. Purchases and Sales of Securities:

Purchases and sales of securities (excluding U.S. Government Securities and securities maturing less than one year from acquisition) for the period ended June 30, 2011 were as follows:

	Purchases		Sales
Sterling Capital Select Equity VIF	$	7,627,326	$	11,276,633
Sterling Capital Strategic Allocation Equity VIF		60,768		1,013,542
Sterling Capital Special Opportunities VIF		7,910,072		4,223,068
Sterling Capital Total Return Bond VIF		5,272,092		8,454,125

Purchases and sales of U.S. Government Securities (excluding securities maturing less than one year from acquisition) for the period ended June 30, 2011 for the Sterling Capital Total Return Bond VIF were $9,775,893 and $8,085,008, respectively.

4. Investments in Affiliated Issuers:

A summary of the Sterling Capital Strategic Allocation Equity VIF’s transactions in the shares of affiliated issuers during the period ended June 30, 2011 is set forth below:

	Shares Held at December 31, 2010		Shares Purchased		Shares Sold		Shares Held at June 30, 2011		Value at June 30, 2011			Dividend Income January 1, 2011 - June 30, 2011			Net Realized Gain (Loss) January 1, 2011 - June 30, 2011
Sterling Capital Equity Income Fund, Institutional Class		35,249		—		2,521		32,728		$	479,145		$	3,810		$	2,701
Sterling Capital Equity Index Fund, Institutional Class		8,757		49		800		8,006			70,854			428			(1,069	)
Sterling Capital International Fund, Institutional Class		116,664		—		9,329		107,335			600,001			—			6,076
Sterling Capital Mid Value Fund, Institutional Class		60,431		—		9,221		51,210			741,007			1,463			21,907
Sterling Capital Select Equity Fund, Institutional Class		115,999		—		9,989		106,010			1,265,765			7,119			(26,024	)
Sterling Capital Small Value Fund, Institutional Class		16,167		—		2,300		13,867			193,304			—			7,018
Sterling Capital Special Opportunities Fund, Institutional Class		18,042		—		1,472		16,570			308,858			—			2,329
Sterling Capital U.S. Treasury Money Market Fund, Institutional Class		155,712		15,652,723		15,707,633		100,802			100,802			6			—
Total Affiliates		527,021		15,652,772		15,743,265		436,528		$	3,759,736		$	12,826		$	12,938

5. Related Party Transactions:

Under the terms of the investment advisory agreement the Sterling Capital Management LLC (“Sterling Capital” or the “Advisor”) is entitled to receive fees based on a percentage of the average daily net assets of the Funds. These fees are accrued daily and payable on a monthly basis and are reflected on the Statements of Operations as “Investment advisory fees.” Sterling Capital waived investment advisory fees and reimbursed certain expenses for the Funds referenced below which are not subject to recoupment and are included on the Statements of Operations as “Less expenses waived/reimbursed by the Investment Advisor.” Information regarding these transactions is as follows for the period ended June 30, 2011:

	Contractual Fee Rate		Fee Rate after Voluntary Waivers
Sterling Capital Select Equity VIF		0.74%		0.50%	1
Sterling Capital Strategic Allocation Equity VIF		0.25%		0.08%	1
Sterling Capital Special Opportunities VIF		0.80%		0.80%
Sterling Capital Total Return Bond VIF		0.60%		0.50%	1

  ¹ For all or a portion of the period ended June 30, 2011, Sterling Capital voluntarily agreed to limit the investment advisory fees paid by the Fund. All voluntary waivers are not subject to recoupment in subsequent fiscal periods and may be discontinued at any time.

20

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

Pursuant to a sub-advisory agreement with Sterling Capital, Scott & Stringfellow LLC (Scott & Stringfellow), a wholly owned subsidiary of BB&T Corporation, serves as the sub-advisor to the Sterling Capital Special Opportunities VIF, subject to the general supervision of the Funds’ Board and Sterling Capital. For their services, Scott & Stringfellow is entitled to a fee, payable by Sterling Capital.

Sterling Capital serves as the administrator to the Funds pursuant to an administration agreement. The Funds pay their portion of a fee to Sterling Capital for providing administration services based on the aggregate assets of the Funds and the Sterling Capital Funds, excluding the assets of the Funds of Funds, at a rate of 0.11% on the first $3.5 billion of average net assets; 0.075% on the next $1 billion of average net assets; 0.06% on the next $1.5 billion of average net assets; and 0.04% of average net assets over $6 billion. This fee is accrued daily and payable on a monthly basis. Expenses incurred are reflected on the Statements of Operations as “Administration fees.” Pursuant to a sub-administration agreement with Sterling Capital, BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon” or the “Sub-Administrator”), serves as the sub-administrator to the Funds subject to the general supervision of the Board and Sterling Capital. For these services, BNY Mellon is entitled to a fee payable by Sterling Capital.

BNY Mellon serves as the Funds’ fund accountant and transfer agent and receives compensation by the Funds for these services. Expenses incurred are reflected on the Statements of Operations as “Fund accounting fees” and “Transfer agent fees.”

Sterling Capital’s Chief Compliance Officer (“CCO”) serves as the Funds’ CCO. The CCO’s compensation is reviewed and approved by the Funds’ Board and paid by Sterling Capital. However, the Funds reimburse Sterling Capital for their allocable portion of the CCO’s salary. Expenses incurred for the Funds are reflected on the Statements of Operations as “Compliance service fees.”

For the period ended June 30, 2011, the Funds paid $1,542 in brokerage fees to Scott & Stringfellow, related to the execution of purchases and sales of the Funds’ portfolio investments.

The Trust has adopted a Variable Contract Owner Servicing Plan (the “Service Plan”) under which the Funds may pay a fee computed daily and paid monthly, at an annual rate of up to 0.25% of the average daily net assets of the Funds. A servicing agent may periodically waive all or a portion of its servicing fees. For the period ended June 30, 2011 the Funds did not participate in any service plans.

Certain Officers and a Trustee of the Funds are affiliated with Sterling Capital or the Sub-Administrator. Such Officers and Trustee receive no compensation from the Funds for serving in their respective roles. Each of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust who serve on the Board are compensated at the annual rate of $40,000 plus $5,000 for each regularly scheduled quarterly meeting attended, $4,000 for each special meeting attended in person and $3,000 for each special meeting attended by telephone, plus reimbursement for certain out of pocket expenses. Each Trustee serving on a Committee of the Board receives a fee of $4,000 for each Committee meeting attended in person and $3,000 for each Committee meeting attended by telephone, plus reimbursement for certain out of pocket expenses. Additionally, the Chairman of the Board and the Audit Committee Chairman each receive an annual retainer of $15,000, and the Chairman of the Nominations Committee receives additional compensation at the rate of $1,000 for each meeting over which he or she presides as Chairman. The fees are allocated across the Funds and the Sterling Capital Funds based upon relative net assets.

6. Line of Credit:

U.S. Bank, N.A. has made available a credit facility to the Funds, pursuant to a Credit Agreement (the “Agreement”). The primary purpose of the Agreement is to allow the Funds to avoid security liquidations that Sterling Capital believes are unfavorable to shareholders. Outstanding principal amounts under the Agreement bear interest at a rate per annum equal to the Prime Rate minus two percent (2%), but never a net rate of less than two percent (2%) per annum. The line of credit was not used during the period ended June 30, 2011.

7. Federal Tax Information:

Management evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax liabilities in the financial statements. Recognition of tax benefits of an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds recognize

21

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

interest and penalties, if any, related to unrecognized tax benefits as “Income tax expense” in the Statements of Operations. During the period, the Funds did not incur any interest or penalties.

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (current year and prior three tax years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

At December 31, 2010, the following Funds had net capital loss carry forwards available to offset future net capital gains, if any, to the extent provided by the Treasury regulations. To the extent that these carry forwards are used to offset future capital gains, it is possible that the gains that are offset will not be distributed to shareholders.

	Amount			Expires
Sterling Capital Select Equity VIF		$	19,677,086		2016
Sterling Capital Select Equity VIF			3,263,903		2017
Sterling Capital Strategic Allocation Equity VIF			2,272,242		2016
Sterling Capital Strategic Allocation Equity VIF			1,989,928		2017
Sterling Capital Strategic Allocation Equity VIF			1,467,590		2018

Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after December 31, 2011 will not be subject to expiration. In addition, these losses must be utilized prior to the losses incurred in pre-enactment taxable years.

The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2010, were as follows:

	Distributions paid from
	Ordinary Income			Net Long-Term Gains			Total Distributions Paid*
Sterling Capital Select Equity VIF		$	349,287		$	—		$	349,287
Sterling Capital Strategic Allocation Equity VIF			117,201			—			117,201
Sterling Capital Special Opportunities VIF			23,790			—			23,790
Sterling Capital Total Return Bond VIF			819,377			35,714			855,091

  * Total Distributions Paid may differ from the Statements of Changes in Net Assets because distributions are recognized when actually paid for tax purposes.

Under current tax law, capital losses after October 31st of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Fund had deferred post-October capital losses, which were treated as arising on the first business day of the current fiscal year:

	Post- October Capital Losses
Sterling Capital Strategic Allocation Equity VIF		$	6,016

At June 30, 2011, federal income tax cost, gross unrealized appreciation and gross unrealized depreciation on securities were as follows:

	Tax Cost			Tax Unrealized Appreciation			Tax Unrealized Depreciation				Net Tax Unrealized Appreciation
Sterling Capital Select Equity VIF		$	22,262,141		$	3,898,956		$	(857,797	)		$	3,041,159
Sterling Capital Strategic Allocation Equity VIF			6,378,447			1,219,619			(582,904	)			636,715
Sterling Capital Special Opportunities VIF			37,439,722			8,682,485			(1,139,242	)			7,543,243
Sterling Capital Total Return Bond VIF			19,066,122			541,192			(96,711	)			444,481

22

Sterling Capital Variable Insurance Funds

Notes to Financial Statements — (continued)

June 30, 2011 (Unaudited)

8. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued, and has noted no events that require recognition or disclosure in the financial statements.

23

Sterling Capital Variable Insurance Funds

Other Information

June 30, 2011 (Unaudited)

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1-800-228-1872; and (ii) on the Securities and Exchange Commission’s (the “Commission”) website at http://www.sec.gov.

Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available (i) without charge, upon request, by calling 1-800-228-1872 and (ii) on the Commission’s website at http://www.sec.gov.

The Funds file complete Schedules of Portfolio Holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available without charge on the Commission’s website at http://www.sec.gov, or may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

24

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by the registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)	Not applicable.
(a)(2)	Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3)	Not applicable.
(b)	Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Sterling Capital Variable Insurance Funds

By (Signature and Title)	/s/ E.G. Purcell, III
	E.G. Purcell, III, President
	(principal executive officer)

Date 8/26/11

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)	/s/ E.G. Purcell, III
	E.G. Purcell, III, President
	(principal executive officer)

Date 8/26/11

By (Signature and Title)	/s/ James T. Gillespie
	James T. Gillespie, Treasurer
	(principal financial officer)

Date 8/26/11

EX-99.CERT

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the

Sarbanes-Oxley Act

I, E.G. Purcell, III, certify that:

1. I have reviewed this report on Form N-CSR of Sterling Capital Variable Insurance Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 8/26/11	/s/ E.G. Purcell, III
	E.G. Purcell, III, President
	(principal executive officer)

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the

Sarbanes-Oxley Act

I, James T. Gillespie, certify that:

1. I have reviewed this report on Form N-CSR of Sterling Capital Variable Insurance Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 8/26/11	/s/ James T. Gillespie
	James T. Gillespie, Treasurer
	(principal financial officer)

EX-99.906CERT

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the

Sarbanes-Oxley Act

I, E.G. Purcell, III, President of Sterling Capital Variable Insurance Funds (the “Registrant”), certify that, to the best of my knowledge:

1. The Form N-CSR of the Registrant for the period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: 8/26/11	/s/ E.G. Purcell, III
	E.G. Purcell, III, President
	(principal executive officer)

I, James T. Gillespie, Treasurer of Sterling Capital Variable Insurance Funds (the “Registrant”), certify that, to the best of my knowledge:

1. The Form N-CSR of the Registrant for the period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: 8/26/11	/s/ James T. Gillespie
	James T. Gillespie, Treasurer
	(principal financial officer)