-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VeWYDC2mEvtmwdGdl37h0E1GOq3maj98nCkTmITuVqgzi79LpBVkTQd0BWILOu7U 0xC75pgZS+a1is9qjtJMvw== 0000935069-97-000020.txt : 19970303 0000935069-97-000020.hdr.sgml : 19970303 ACCESSION NUMBER: 0000935069-97-000020 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STI CLASSIC FUNDS CENTRAL INDEX KEY: 0000883939 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06557 FILM NUMBER: 97547319 BUSINESS ADDRESS: STREET 1: 2 OLIVER STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6109896602 MAIL ADDRESS: STREET 1: 680 E SWEDESFORD ROAD STREET 2: 680 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087 N-30D 1 STI CLASSIC VARIABLE TRUST ANNUAL REPORT Investment Advisor: STI Capital Management, N.A. STI Classic Variable Trust Funds are not deposits, are not insured or guaranteed by the FDIC or any other government agency, and are not endorsed by and do not constitute obligations of SunTrust Banks, Inc. or any other of its affiliates. Investment in the Funds involves risk, including the possible loss of principal. There is no guarantee that any STI Classic Variable Trust Fund will achieve its investment objective. The STI Classic Variable Trust Funds are advised by an affiliate of SunTrust Banks, Inc. Distributor SEI Financial Services Company This information must be preceded or accompanied by a current prospectus for each Fund described. Annual Financial Report STI Classic Variable Trust [Logo Omitted] December 31, 1996 STI Classic Variable Trust Dear STI Classic Variable Trust Shareholders: The following 1996 Annual Financial Report provides you a detailed summary of each of the STI Classic Variable Trust Funds. The STI Classic Funds have presented investors exposure to a variety of investment opportunities since 1992. We developed the five STI Classic Variable Trust Funds specifically to meet the rapidly changing needs of today's investor. Each of these funds offers an investment discipline that identifies a specific mix of risk and return. Together, the STI Classic Variable Trust Funds compliment one another, providing access to different segments of the stock and bond markets. The combination of these funds is intended to offer an investment program for almost any investor. The STI Classic Funds and STI Classic Variable Trust Funds are well-established fund families, nationally recognized for the diversity and quality of investment options that they provide. As an advisor to the STI Classic Funds and STI Classic Variable Trust Funds, STI Capital Management is committed to providing you quality investment products which will aid you in achieving your investment objectives. I hope the following information is useful to you. It is intended to give you a better understanding of how our portfolio managers are investing your money. Thank you for your interest and participation in the STI Classic Variable Trust Funds. We look forward to many successful years of investing in the future. Sincerely, /S/ SIGNATURE Anthony R. Gray Chief Executive Officer and Chief Investment Officer STI Capital Management, N.A. VALUE INCOME STOCK FUND ----------------------- The Value Income Stock Fund (the "Fund") seeks to provide a high level of total return through investment in equity assets of high yielding, undervalued companies. The Fund's investment philosophy is a very structured, methodical approach to purchasing stocks. The bottom-up approach has three key factors to consider in all investment decisions -- minimum dividend yield criteria, low historical relative valuation, and a fundamental catalyst which could upwardly value the individual security. Most securities in the Fund's portfolio have a dividend yield of at least the average stock held in the S&P 500 market index. By screening for only high yielding securities, the Fund is ensured a high dividend component for the total return. Stocks are then screened on a relative historical valuation basis. Quantitative review is conducted on the Price to Book, Price to Earnings, Price to Cash Flow and Yield data for the past several years. Only stocks trading in the bottom third of their historical range (based on certain acceptable criteria) have the potential to be added to the portfolio. Finally, traditional fundamental analysis is applied to determine a catalyst which could, when recognized by other investors, revalue the stock positively. Only securities which appear to have a reason for attracting investor attention are then selected to be held in the Fund's portfolio. The Fund generated a total return of 18.64% for the year. This return underperformed the Lipper Equity Income Funds Average and the S&P/BARRA Value Index by 0.21% and 3.34% respectively, due to the conservative selection of securities held in the Fund. Securities held in the Fund must meet strict yield and value requirements. During 1996 many value securities with low or no yield performed well, fluctuating with the market in general. [LINE GRAPH] A line graph depicting the growth (including reinvestment of dividends and capital gains) of a hypothetical investment of $10,000 in the Fund as compared with the growth of a hypothetical investment of $10,000 in the Fund's benchmarks. COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT Period Ended Growth of $10,000 Growth of $10,000 Growth of $10,000 Invested in the STI Invested in the Invested in the Classic Variable Trust S&P/BARRA Value Lipper Equity Income Value Income Stock Fund Index Funds Average 10/31/95 $10,000 $10,000 $10,000 12/31/95 $10,828 $10,816 $10,688 12/31/96 $12,846 $13,193 $12,702 - ----------------------------------- One Year Annualized Inception Return to Date - ----------------------------------- 18.64% 21.37% - ----------------------------------- Past performance is no indication of future performance. 2 MID-CAP EQUITY FUND ------------------- The Mid-Cap Equity Fund (the "Fund") seeks to provide capital appreciation by investing in a diversified portfolio of equity assets of small-cap and mid-cap companies with above-average growth of earnings. Mid-cap securities, between $300 million to $6 billion market capitalization, with a strong growth history are the primary consideration for this investment philosophy. these companies are evaluated relative to their industry sector and the market in general. Each industry sector is considered in relation to the business cycle, and the portfolio maintains large positions in the sectors which appear to perform best in the given cycle. Stocks that fall within favored sectors are analyzed based on fundamentals -- the quality of earnings, dependability of growth rates, and relative attractiveness of price/earnings ratios. The Fund begins with securities presenting strong earnings growth relative to historical numbers. Then, business cycle analysis, sector rotation, and stock selection are applied in trading the portfolio. By evaluating the relative value of the various industry sectors at different points in the business cycle, sectors are identified that will perform well in a given environment. Stocks that fall within favored sectors are analyzed based on fundamentals -- the quality of earnings, dependability of growth rates, relative attractiveness of price/earnings ratios and the yield of the security. The Fund underperformed relative to its index (the S&P 400 Mid-Cap) as the larger, more liquid names in the index exhibited the best performance. The Fund market cap is limited to $5 billion. The stocks in the Index above $5 billion market cap contributed 3.4% of the total 19.2% return for the S&P 400 Mid-Cap Index. The Fund benefited from its overweight position in the energy sector, and also from its technology and financials exposure. Profits have been taken in several names in the financials sector as valuations fully reflect current positive fundamentals in that group. Going forward, the Fund continues to focus on undervalued growth opportunities and is currently favorable toward the healthcare and technology sectors. [LINE GRAPH] A line graph depicting the growth (including reinvestment of dividends and capital gains) of a hypothetical investment of $10,000 in the Fund as compared with the growth of a hypothetical investment of $10,000 in the Fund's benchmark. COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT Period Ended Growth of $10,000 Growth of $10,000 Invested in the STI Invested in the Classic Variable Trust S&P Mid-Cap Mid-Cap Equity Fund 400 Index 10/31/95 $10,000 $10,000 12/31/95 $10,226 $10,408 12/31/96 $11,868 $12,410 - ----------------------------------- One Year Annualized Inception Return to Date - ----------------------------------- 16.05% 15.56% - ----------------------------------- Past performance is no indication of future performance. 3 CAPITAL GROWTH FUND ------------------- The investment objective of the Capital Growth Fund (the "Fund") is to provide capital appreciation by investing in a diversified portfolio of equity assets which have a consistent record of earnings growth and are relatively undervalued in the marketplace. Large capitalization stocks with a strong growth history are the primary consideration for this investment philosophy. Out of this universe of companies, a security is selected for the portfolio when it appears undervalued based on the relative earnings ratios. In order to make this relative value comparison, each stock is compared to its own historical price earnings ratio range, to other stocks in the sector, and to the stock market as measured by indices such as the Standard & Poor's 500 Index. The Fund focuses on business cycle analysis, sector rotation and stock selection when trading the portfolio. By evaluating the relative value of the various industry sectors at different points in the business cycle, sectors are identified that will perform well in a given environment. Stocks that fall within favored sectors are analyzed based on fundamentals -- the quality of earnings, dependability of growth rates, relative attractiveness of price/earnings ratios and the yield of the security. The Fund finished the year with a total return of 23.75%. Exposure to the technology, financial and energy sectors of the market provided returns which outperformed the Lipper Growth Funds Average and the S&P 500 Composite Index by 4.51% and 0.81% respectively. The Fund invests in large cap securities which have a historical trend of growth in earnings. The Fund has performed well in a market environment with slowing momentum, providing the manager an opportunity to invest in well-valued companies. [LINE GRAPH] A line graph depicting the growth (including reinvestment of dividends and capital gains) of a hypothetical investment of $10,000 in the Fund as compared with the growth of a hypothetical investment of $10,000 in the Fund's benchmarks. COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT Period Ended Growth of $10,000 Growth of $10,000 Growth of $10,000 Invested in the STI Invested in the Lipper Growth Classic Variable Trust S&P 500 Composite Funds Average Capital Growth Fund Index 10/31/95 $10,000 $10,000 $10,000 12/31/95 $10,632 $10,640 $10,394 12/31/96 $13,157 $13,081 $12,394 - ----------------------------------- One Year Annualized Inception Return to Date - ----------------------------------- 23.75% 25.21% - ----------------------------------- Past performance is no indication of future performance. 4 INVESTMENT GRADE BOND FUND -------------------------- The Investment Grade Bond Fund (the "Fund") seeks to provide as high a level of total return through income and capital appreciation primarily through investment in high quality fixed income securities. The Fund utilizes an investment philosophy which minimizes risk, while attempting to outperform selected market indices. The core portfolio is structured around the composition of the Lehman Government/Corporate Bond Index. The composition of the index is reviewed and quantitative historical data is analyzed to determine the optimal spread ranges of the different market sectors. Once the optimum market sectors are selected, an over- or under-weighting is developed in different sectors by investing in well-valued issues. All securities purchased are carefully reviewed for value. Yield curve analysis and credit ratings are an important part of this process. A level of technical analysis is then applied to assist in duration structure keeping the portfolio within 15% of the duration of the Lehman Government/Corporate Bond Index. By aggressively applying this investment philosophy to the fixed income markets, the Fund attempts to provide at or above market returns while keeping portfolio risk well below the market indicators and most fixed income managers. The total return for the Fund was 2.29% for the year. The Fund underperformed the Lehman Government/ Corporate Bond Index and the Lipper Intermediate Investment-Grade Debt Average by 0.62% and 0.83% respectively, due to the Fund's limited exposure to the corporate sector. Additionally, the Fund held a large percentage of well-valued mortgage securities, which did not keep up with the more overpriced corporate securities. The Fund closely monitors the value of different sectors of the yield curve and invests in securities that provide the greatest potential opportunity for appreciation. [LINE GRAPH] A line graph depicting the growth (including reinvestment of dividends and capital gains) of a hypothetical investment of $10,000 in the Fund as compared with the growth of a hypothetical investment of $10,000 in the Fund's benchmarks. COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
Period Ended Growth of $10,000 Growth of $10,000 Growth of $10,000 Invested in the STI Invested in the Lipper Intermediate Classic Variable Trust Lehman Government/ Investment-Grade Investment Grade Bond Fund Corporate Index Debt Average 10/31/95 $10,000 $10,000 $10,000 12/31/95 $10,295 $10,314 $10,270 12/31/96 $10,531 $10,615 $10,590
- ----------------------------------- One Year Annualized Inception Return to Date - ----------------------------------- 2.29% 4.83% - ----------------------------------- Past performance is no indication of future performance. 5 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 VALUE INCOME STOCK FUND - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- COMMON STOCK (96.2%) AUTOMOTIVE (2.1%) Echlin 10,300 $ 326 Ford Motor 10,100 322 -------- 648 -------- BANKS (6.2%) AmSouth Bancorp 3,200 155 Central Fidelity Banks 6,050 156 Crestar Financial 2,600 193 First of America Bank 2,600 156 First American-Tennessee 3,200 184 Fleet Financial Group 6,000 299 Great Western Financial 5,300 154 Magna Group 5,000 147 Merchantile Bancorp 3,500 180 Signet Banking 5,300 163 Summit Bancorp 3,670 161 -------- 1,948 -------- CHEMICALS (6.9%) Akzo NV ADR 2,400 162 Ethyl 34,900 336 Imperial Chemical Industries ADR 8,900 463 Nalco Chemical 8,100 293 Olin 8,800 331 Rohm & Haas 3,200 261 Witco Chemical 10,400 317 -------- 2,163 -------- ELECTRICAL EQUIPMENT (1.4%) General Signal 10,500 449 -------- FINANCIAL - INSURANCE (7.4%) American Financial Group 8,300 313 American General 11,300 462 ITT Hartford Group 6,800 459 Lincoln National 9,000 472 Providian 5,600 288 Torchmark 6,300 318 -------- 2,312 -------- - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO (7.3%) BAT Industries ADR 19,300 $ 318 Cadbury Schweppes PLC ADR 11,300 386 ConAgra 6,300 313 CPC International 6,400 496 Grand Metropolitan ADR 14,600 462 McCormick 12,600 297 -------- 2,272 -------- HEALTHCARE (5.4%) Bristol-Myers Squibb 2,900 315 Glaxo PLC ADR 12,500 397 Pharmacia & Upjohn 17,100 678 Schering Plough 4,400 285 -------- 1,675 -------- HOUSEHOLD PRODUCTS (5.8%) Masco 12,700 457 Maytag 15,000 296 Philips Electronics ADR 12,100 484 Snap-On Tools 6,850 244 Stanley Works 12,100 327 -------- 1,808 -------- LUMBER & WOOD PRODUCTS (1.5%) Georgia-Pacific 6,700 482 -------- MACHINERY (3.1%) Cooper Industries 12,100 510 Tenneco* 10,000 451 -------- 961 -------- MEDICAL PRODUCTS & SERVICES (3.2%) Baxter International 15,600 640 C.R. Bard 12,400 347 -------- 987 -------- 6 - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- METALS & MINING (2.7%) Allegheny Teledyne 9,400 $ 216 Phelps Dodge 2,700 182 Reynolds Metals 7,900 445 -------- 843 -------- MISCELLANEOUS (3.7%) ITT Industries 26,400 647 Kelly Services, Cl A 8,100 219 Ogden 15,900 298 -------- 1,164 -------- MISCELLANEOUS CONSUMER SERVICES (0.9%) H & R Block 10,000 290 -------- PAPER & PAPER PRODUCTS (3.2%) Consolidated Papers 3,200 157 International Paper 12,300 497 Tambrands 8,400 343 -------- 997 -------- PETROLEUM & FUEL PRODUCTS (9.5%) Amoco 7,700 620 Chevron 7,500 487 Mobil 3,900 477 Occidental Petroleum 13,600 318 Phillips Petroleum 9,700 429 Questar 4,100 151 Sun Company 6,800 166 USX-Marathon Group 13,100 313 -------- 2,961 -------- PRINTING & PUBLISHING (6.7%) American Greetings, Cl A 15,300 434 Deluxe 5,400 177 Dow Jones 14,300 484 McGraw-Hill 10,600 489 Reader's Digest, Cl A 4,300 173 R.R. Donnelley & Sons 10,900 342 -------- 2,099 -------- - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- RETAIL (2.9%) J.C. Penney 9,100 $ 444 May Department Stores 6,600 309 Mercantile Stores 2,800 138 -------- 891 -------- RUBBER & PLASTIC (1.1%) Rubbermaid 15,200 346 -------- TECHNOLOGY (2.0%) AMP 16,300 626 -------- TRANSPORTATION (0.7%) Ryder System 7,200 203 -------- UTILITIES (12.5%) Alltel 13,400 420 AT&T 8,100 352 Central & South West 11,600 297 Frontier 18,200 412 GPU 9,600 323 GTE 12,900 587 PacifiCorp 15,100 310 Southern 21,800 493 Southern New England Telecom 9,500 369 Sprint 8,500 339 -------- 3,902 -------- Total Common Stock (Cost $28,697) 30,027 -------- 7 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 VALUE INCOME STOCK FUND--CONCLUDED - ---------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - ---------------------------------------------------------------------- REPURCHASE AGREEMENT (9.3%) Morgan Stanley 6.200%, dated 12/31/96, matures 01/02/97, repurchase price $2,915,078 (collateralized by FNMA, par value $3,960,000, 6.306%, 09/25/07: market value $3,000,190) $2,914 $ 2,914 ------- Total Repurchase Agreement (Cost $2,914) 2,914 ------- Total Investments (105.5%) (Cost $31,611) 32,941 ------- OTHER ASSETS AND LIABILITIES (-5.5%) Payable for investment securities purchased (1,772) Other assets and liabilities, net 47 ------- Total Other Assets and Liabilities (1,725) ------- - ---------------------------------------------------------------------- VALUE (000) - ---------------------------------------------------------------------- NET ASSETS: Portfolio Shares (unlimited authorization -- no par value) based on 2,515,729 outstanding shares of beneficial interest $28,753 Accumulated net realized gain on investments 1,127 Net unrealized appreciation on investments 1,330 Undistributed net investment income 6 ------- Total Net Assets (100.0%) $31,216 ======= Net Asset Value, Offering Price and Redemption Price Per Share $12.41 ======= *NON-INCOME PRODUCING SECURITY ADR -- AMERICAN DEPOSITORY RECEIPT CL -- CLASS FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION PLC -- PUBLIC LIMITED COMPANY THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 8 MID-CAP EQUITY FUND (FORMERLY THE AGGRESSIVE GROWTH FUND) - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- COMMON STOCK (91.8%) AEROSPACE & DEFENSE (1.2%) Sundstrand 4,000 $ 170 -------- AUTOMOTIVE (3.7%) Harley-Davidson 3,700 174 Lear* 6,000 205 Magna International, Cl A 2,700 150 -------- 529 -------- BANKS (6.7%) Bancorp Hawaii 1,900 80 Crestar Financial 1,500 112 First Security 3,750 127 Northern Trust 3,800 138 Regions Financial 1,400 72 Republic New York 1,600 131 Southtrust 1,900 66 Summit Bancorp 3,000 131 Trustmark 3,800 97 -------- 954 -------- BUILDING (0.9%) Foster Wheeler 3,400 126 -------- CHEMICALS (1.8%) IMC Fertilizer Group 6,700 262 -------- COMPUTERS & SERVICES (2.2%) BA Merchant Services* 5,000 89 Ceridian* 3,500 142 Structural Dynamics Research* 4,500 90 -------- 321 -------- ELECTRICAL EQUIPMENT (4.1%) General Signal 1,300 56 Hubbell, Cl B 3,800 164 Solectron* 3,200 171 Teradyne* 8,000 195 -------- 586 -------- - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- ENTERTAINMENT (0.8%) International Speedway* 5,500 $ 113 -------- ENVIRONMENTAL SERVICES (2.2%) USA Waste Services* 10,000 319 -------- FINANCIAL - INSURANCE (4.4%) Equitable of Iowa 2,000 92 Healthcare Compare* 2,000 85 MGIC Investment 3,000 228 Progressive of Ohio 2,000 135 Sunamerica 2,100 93 -------- 633 -------- FOOD, BEVERAGE & TOBACCO (2.6%) Dole Food 4,600 156 Nabisco Holdings, Cl A 5,500 214 -------- 370 -------- HEALTHCARE (9.6%) Apria Healthcare Group* 7,000 131 Allergan 5,050 180 Biogen* 1,000 39 Elan* 4,700 156 Healthcare & Retirement* 2,500 72 Nellcor* 6,500 142 Pacificare Health Systems, Cl B* 1,800 153 Tenet Healthcare* 6,600 144 Teva Pharmaceuticals ADR 3,900 196 Watson Pharmaceuticals* 3,700 166 -------- 1,379 -------- HOUSEHOLD PRODUCTS (1.1%) Stanley Works 5,600 151 -------- MACHINERY (3.2%) Agco 8,100 232 American Standard Companies* 2,100 80 York International 2,700 151 -------- 463 -------- 9 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 MID-CAP EQUITY FUND--CONCLUDED (FORMERLY THE AGGRESSIVE GROWTH FUND) - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- MEDIA (1.4%) American Greetings, Cl A 1,800 $ 51 New York Times, Cl A 3,700 141 -------- 192 -------- MEDICAL PRODUCTS & SERVICES (2.6%) Depuy* 7,000 142 Vencor* 4,000 126 Xomed Surgical Products* 5,000 100 -------- 368 -------- METALS & MINING (1.7%) Potash of Saskatchewan 2,900 246 -------- MISCELLANEOUS (1.6%) Fisher Scientific International 2,700 127 Molten Metal Technology* 8,700 102 -------- 229 -------- PAPER & PAPER PRODUCTS (0.7%) Westvaco 3,500 101 -------- PETROLEUM & FUEL PRODUCTS (9.3%) Anadarko Petroleum 3,900 253 Apache 2,500 88 Kerr-McGee 4,100 295 Noble Affiliates 3,700 177 Questar 3,800 140 Tosco 2,000 158 Western Atlas* 3,000 213 -------- 1,324 -------- RETAIL (10.2%) Cracker Barrel Old Country Stores 5,500 140 Dollar General 5,150 165 Fred Meyer* 3,700 131 Hannaford Brothers 6,200 211 Men's Wearhouse* 7,600 186 Price/Costco* 9,100 229 Staples* 15,150 274 - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- RETAIL (CONTINUED) Wendy's International 6,000 $ 123 -------- 1,459 -------- TECHNOLOGY (5.3%) Adobe Systems 5,300 198 Cadence Design Systems* 3,300 131 Informix* 10,500 214 Network General* 4,000 121 Symantec* 6,300 91 -------- 755 -------- TELEPHONES & TELECOMMUNICATION (9.1%) 360 Communications* 6,500 150 ADC Telecommunications* 2,500 78 Analog Devices* 6,400 217 Atmel* 6,550 217 Cabletron Systems* 2,000 66 Century Telephone Enterprises 6,300 194 Millipore 3,500 145 Molex 2,100 82 Nextel Communications, Cl A* 11,500 150 -------- 1,299 -------- TRANSPORTATION (1.6%) Atlantic Southeast Airlines 6,300 138 Illinois Central 3,000 96 -------- 234 -------- UTILITIES (3.1%) Southwestern Public Service 6,000 212 Wisconsin Energy 8,500 228 -------- 440 -------- WHOLESALE (0.7%) Prosource* 8,500 101 -------- Total Common Stock (Cost $12,421) 13,124 -------- 10 - -------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------- REPURCHASE AGREEMENT (11.1%) Morgan Stanley 5.950%, dated 12/31/96, matures 01/02/97, repurchase price $1,590,286 (collateralized by U.S. Treasury Note, par value $1,560,000, 6.875%, 08/31/99: market value $1,632,945) $1,590 $ 1,590 -------- Total Repurchase Agreement (Cost $1,590) 1,590 -------- Total Investments (102.9%) (Cost $14,011) 14,714 -------- OTHER ASSETS AND LIABILITIES, NET (-2.9%) (420) -------- - -------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------- NET ASSETS: Portfolio Shares (unlimited authorization -- no par value) based on 1,205,572 outstanding shares of beneficial interest $12,880 Accumulated net realized gain on investments 711 Net unrealized appreciation on investments 703 -------- Total Net Assets (100.0%) $14,294 ======== Net Asset Value, Offering Price and Redemption Price Per Share $11.86 ======== *NON-INCOME PRODUCING SECURITY ADR -- AMERICAN DEPOSITORY RECEIPT CL -- CLASS THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 11 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 CAPITAL GROWTH FUND - ----------------------------------------------------------------------- SHARES VALUE (000) - ----------------------------------------------------------------------- COMMON STOCK (84.7%) AEROSPACE & DEFENSE (4.7%) Allied Signal 6,000 $ 402 Boeing 1,000 106 Lockheed Martin 2,200 201 Textron 2,100 198 United Technologies 4,100 271 ------- 1,178 ------- AIR TRANSPORTATION (0.8%) Delta Air Lines 1,500 106 UAL* 1,300 81 ------- 187 ------- AUTOMOTIVE (1.6%) General Motors 2,300 128 Lear* 8,000 273 ------- 401 ------- BANKS (5.9%) Barnett Banks of Florida 1,000 41 Boatmen's Bancshares 2,100 135 Chase Manhattan Bank 2,300 205 Cullen/Frost Bankers 5,000 166 First Chicago NBD 2,700 145 First Union 2,700 200 Mellon Bank 4,200 298 Norwest 3,500 152 Southern National 4,000 145 ------- 1,487 ------- BEAUTY PRODUCTS (2.5%) Avon Products 6,000 343 Colgate-Palmolive 3,200 295 ------- 638 ------- - -------------------------------------------------------------------- SHARES VALUE (000) - -------------------------------------------------------------------- BUILDING (2.5%) American Standard Companies* 3,900 $ 149 Fluor 1,700 107 Foster Wheeler 1,800 67 Halliburton 4,800 289 -------- 612 -------- CHEMICALS (2.6%) E.I. du Pont de Nemours 1,400 132 Hercules 2,000 86 IMC Fertilizer Group 2,000 78 Monsanto 3,100 121 Morton International 4,100 167 W.R. Grace & Company 1,600 83 -------- 667 -------- COMPUTERS & SERVICES (6.3%) Automatic Data Processing 800 34 Cadence Design Systems* 3,500 139 Ceridian* 2,700 109 Cisco Systems* 5,400 344 Electronic Data Systems 3,200 138 Hewlett Packard 4,900 246 IBM 1,500 227 Informix* 1,000 20 Microsoft* 4,000 331 -------- 1,588 -------- ELECTRICAL EQUIPMENT (3.5%) General Electric 5,200 514 General Signal 6,600 282 Thomas & Betts 1,906 85 -------- 881 -------- 12 - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- ENVIRONMENTAL SERVICES (1.5%) USA Waste Services* 4,500 $ 143 Wheelabrator Technologies 6,000 98 WMX Technologies 4,100 134 -------- 375 -------- FINANCIAL SERVICES (0.7%) FNMA 4,000 149 GCR Holdings 1,200 27 -------- 176 -------- FOOD, BEVERAGE & TOBACCO (5.7%) Coca Cola 5,300 279 ConAgra 2,500 124 CPC International 4,600 356 Philip Morris 1,900 214 Ralston Purina Group 3,000 220 Sysco 3,300 108 UST 4,000 129 -------- 1,430 -------- GAS/NATURAL GAS (1.1%) Consolidated Natural Gas 3,000 166 Enron 2,800 121 -------- 287 -------- HOUSEHOLD (2.0%) Duracell International 3,200 224 Gillette 300 23 Newell 1,700 54 Procter & Gamble 2,000 215 -------- 516 -------- - ----------------------------------------------------------------------- SHARES VALUE (000) - ----------------------------------------------------------------------- HEALTHCARE (11.2%) Allergan 4,900 $ 175 American Home Products 3,200 188 Amgen* 2,300 125 Baxter International 4,000 164 Bristol-Myers Squibb 500 54 Columbia/HCA Healthcare 8,700 355 Johnson & Johnson 7,950 396 Merck 4,900 388 Ornda Healthcorp* 3,600 105 Pacificare Health Systems, Cl B* 1,800 153 Pfizer 1,600 133 Schering Plough 2,800 181 SmithKline Beecham PLC 3,600 245 Vencor* 4,600 145 -------- 2,807 -------- INSURANCE (4.0%) American International Group 3,300 357 Chubb 600 32 CMAC Investment 5,200 191 ITT Hartford Group 3,000 202 Travelers 2,333 106 Washington National 4,000 110 -------- 998 -------- LEISURE (2.6%) Carnival 5,600 185 Marriott 1,100 61 Mattel 6,400 178 Viacom, Cl B* 3,000 105 Walt Disney 1,719 120 -------- 649 -------- 13 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 CAPITAL GROWTH FUND--CONCLUDED - ----------------------------------------------------------------------- SHARES VALUE (000) - ----------------------------------------------------------------------- MACHINERY (3.4%) Black & Decker 3,500 $ 105 Deere 5,000 203 Dover 1,200 60 Dresser Industries 1,200 37 Pall 4,400 112 Tyco Labs 6,500 344 -------- 861 -------- MEDICAL PRODUCTS & SERVICES (1.8%) Becton Dickinson 2,800 121 Health Images 2,500 42 HEALTHSOUTH Rehabilitation* 4,000 154 Tenet Healthcare* 6,000 131 -------- 448 -------- METALS & MINING (0.8%) Aluminum of America 2,000 128 Potash of Saskatchewan 1,000 85 -------- 213 -------- MISCELLANEOUS BUSINESS SERVICES (1.2%) Oracle Systems* 2,800 117 First Data 5,000 183 -------- 300 -------- PETROLEUM & FUEL PRODUCTS (3.0%) Kerr-McGee 3,500 252 Mobil 3,000 367 Union Pacific Resources Group 5,101 149 -------- 768 -------- PRINTING & PUBLISHING (2.2%) Gannett 4,200 314 McGraw-Hill 4,000 185 New York Times, Cl A 1,400 53 -------- 552 -------- - ---------------------------------------------------------------------- SHARES VALUE (000) - ---------------------------------------------------------------------- PHOTOGRAPHIC EQUIPMENT & SUPPLIES (1.0%) Eastman Kodak 3,200 $ 257 -------- RETAIL (7.6%) American Stores 6,300 258 CVS 5,800 240 Federated Department Stores* 6,100 208 Home Depot 4,700 236 Intimate Brands 2,100 36 McDonald's 3,100 140 Office Depot* 8,300 147 Price/Costco* 5,800 146 Staples* 2,500 45 Vons* 3,300 198 Wal-Mart Stores 9,100 208 Wendy's International 3,000 61 -------- 1,923 -------- SEMI-CONDUCTORS/INSTRUMENTS (0.5%) Motorola 1,900 117 -------- SERVICE (0.3%) Molten Metal Technology* 5,600 66 -------- TECHNOLOGY (2.1%) Intel 1,600 210 Scientific-Atlanta 2,000 30 TCI Satellite Entertainment* 300 3 Xerox 5,300 279 -------- 522 -------- 14 - ---------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) - ---------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATION (1.3%) Airtouch Communications* 1,700 $ 43 L.M. Ericsson Telephone ADR 2,800 85 Lucent Technologies 4,593 212 -------- 340 -------- TRANSPORTATION (0.3%) Burlington Northern Santa Fe 900 78 -------- Total Common Stock (Cost $19,964) 21,322 -------- CONVERTIBLE PREFERRED STOCK (3.8%) American General Finance, CV to 1.2288 shares 4,000 220 Crown Cork & Seal, CV to .9112 shares 2,600 135 International Paper, CV to .9259 shares 1,800 82 Microsoft*, CV to 1.00 shares 4,000 321 Occidental Petroleum, CV to 2.1970 shares 1,600 90 Sunamerica, CV to 1.00 shares 2,600 110 -------- Total Convertible Preferred Stock (Cost $921) 958 -------- REPURCHASE AGREEMENT (9.8%) Morgan Stanley 6.200%, dated 12/31/96, matures 01/02/97, repurchase price $2,480,551 (collateralized by FNMA obligation, par value $2,471,000, 9.000%, 12/01/17: total market value $2,550,029) $2,480 2,480 -------- Total Repurchase Agreement (Cost $2,480) 2,480 -------- - --------------------------------------------------------------------- VALUE (000) - --------------------------------------------------------------------- Total Investments (98.3%) (Cost $23,365) $ 24,760 -------- OTHER ASSETS AND LIABILITIES, NET (1.7%) 429 -------- NET ASSETS: Portfolio Shares (unlimited authorization -- no par value) based on 1,928,508 outstanding shares of beneficial interest 22,449 Accumulated net realized gain on investments 1,344 Net unrealized appreciation on investments 1,395 Undistributed net investment income 1 -------- Total Net Assets (100.0%) $ 25,189 ======== Net Asset Value, Offering Price and Redemption Price Per Share $13.06 ======== *NON-INCOME PRODUCING SECURITY ADR -- AMERICAN DEPOSITORY RECEIPT CL -- CLASS FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION PLC -- PUBLIC LIMITED COMPANY THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 15 STATEMENT OF NET ASSETS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 INVESTMENT GRADE BOND FUND - ----------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - ----------------------------------------------------------------------- CORPORATE OBLIGATIONS (40.3%) Aristar 6.750%, 05/15/99 $500 $ 504 Franklin Resources, MTN 6.190%, 12/15/99 100 99 General Electric Capital 6.660%, 05/01/18 150 150 General Motors Acceptance, MTN 6.750%, 11/04/04 200 197 Household Finance, MTN 7.150%, 06/15/00 250 255 Lockheed Martin 6.550%, 05/15/99 250 251 May Department Stores 6.875%, 11/01/05 100 100 Merrill Lynch, MTN, Ser B 6.375%, 10/17/00 200 198 Philip Morris 6.800%, 12/01/03 250 247 Salomon 6.750%, 02/15/03 200 195 Salomon, MTN 7.590%, 01/28/00 350 358 Sears Roebuck Acceptance, MTN 6.560%, 11/20/03 150 148 Smith Barney 6.625%, 11/15/03 300 294 Sunamerica 6.200%, 10/31/99 250 248 ------ Total Corporate Obligations (Cost $3,245) 3,244 ------ U.S. TREASURY OBLIGATIONS (44.1%) U.S. Treasury Bonds 7.500%, 11/15/16 250 271 8.125%, 08/15/19 850 983 7.625%, 02/15/25 250 277 - ----------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - ----------------------------------------------------------------------- U.S. Treasury Notes 6.875%, 07/31/99 $725 $ 740 6.250%, 08/31/00 600 602 7.875%, 11/15/04 475 518 6.500%, 10/15/06 150 151 ------ Total U.S. Treasury Obligations (Cost $3,501) 3,542 ------ U.S. GOVERNMENT AGENCY MORTGAGE-BACKED BONDS (10.0%) FHLMC 7.500%, 09/01/03 296 301 FNMA 7.500%, 12/01/03 493 501 ------ Total U.S. Government Agency Mortgage-Backed Bonds (Cost $806) 802 ------ REPURCHASE AGREEMENT (4.5%) Lehman Brothers 5.580%, dated 12/31/96, matures 01/02/97, repurchase price $358,982 (collateralized by U.S. Treasury Bond, par value $358,870, 7.250%, 05/15/16: market value $372,974) 359 359 ------ Total Repurchase Agreement (Cost $359) 359 ------ Total Investments (98.9%) (Cost $7,911) 7,947 ------ OTHER ASSETS AND LIABILITIES, NET (1.1%) 92 ------ 16 - -------------------------------------------------------------------- Value (000) - -------------------------------------------------------------------- NET ASSETS: Portfolio Shares (unlimited authorization -- no par value) based on 810,347 outstanding shares of beneficial interest $ 8,043 Accumulated net realized loss on investments (40) Net unrealized appreciation on investments 36 -------- Total Net Assets (100.0%) $ 8,039 ======== Net Asset Value, Offering Price and Redemption Price Per Share $9.92 ======== MTN -- MEDIUM TERM NOTE FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION SER -- SERIES THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 17 SCHEDULE OF INVESTMENTS STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 INTERNATIONAL EQUITY FUND - ----------------------------------------------------------------------- SHARES VALUE (000) - ----------------------------------------------------------------------- FOREIGN STOCKS (72.9%) ARGENTINA (2.3%) YPF Sociedad Anonima, Cl D, ADR 900 $ 23 ----- BRAZIL (4.6%) Telecom Brazil ADR 600 46 ----- FINLAND (4.6%) Nokia ADR 800 46 ----- FRANCE (9.0%) SGS -Thomson Microelectronics* 1,000 70 Technip 200 19 ----- 89 ----- GERMANY (1.7%) Veba 300 17 ----- HONG KONG (1.7%) HSBC Holdings 800 17 ----- ITALY (1.6%) Saipem 3,500 16 ----- JAPAN (9.8%) Sony ADR 700 46 Canon 1,000 22 Honda Motor 1,000 29 ----- 97 ----- NETHERLANDS (1.8%) Ing Groep 500 18 ----- PANAMA (4.6%) Banco Latinamericano de Exportaciones 900 46 ----- - ------------------------------------------------------------------------ SHARES VALUE (000) - ------------------------------------------------------------------------ PERU (4.5%) CPT Telefoncia del Peru 2,400 $ 45 ----- SPAIN (1.6%) Telefonica de Espana 700 16 ----- SWEDEN (1.5%) Ericsson Telephone, Ser B 500 15 ----- SWITZERLAND (14.4%) Novartis* 124 143 ----- UNITED KINGDOM (9.2%) BAT Industries ADR 2,800 46 Bank of Ireland 3,000 27 London Forfaiting 3,500 18 ----- 91 ----- Total Foreign Stocks (Cost $711) 725 ----- Total Investments (72.9% of Net Assets) (Cost $711) $ 725 ===== * NON-INCOME PRODUCING SECURITY ADR -- AMERICAN DEPOSITORY RECEIPT CL -- CLASS SER -- SERIES THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 18 THIS PAGE INTENTIONALLY LEFT BLANK 19 STATEMENT OF ASSETS AND LIABILITIES (000) ================================================================================ STI CLASSIC VARIABLE TRUST FUNDS FOR THE YEAR ENDED DECEMBER 31, 1996 -------------- INTERNATIONAL EQUITY FUND ------------ Assets: Investments at Market Value (Cost $711) .............. $ 725 Cash and Foreign Currency ............................ 326 Other Assets ......................................... 12 ------ Total Assets ......................................... 1,063 ------ Liabilities: Payables for Investment Securities Purchased ......... 57 Accrued Expenses ..................................... 11 ------ Total Liabilities .................................... 68 ------ Net Assets: Portfolio Shares (Unlimited Authorization -- No Par Value) Based on 97,922 Outstanding Shares of Beneficial Interest .............................. 980 Accumulated Net Realized Gain on Foreign Currency Transactions ........................................ 1 Net Unrealized Appreciation on Investments ........... 14 ------ Total Net Assets ..................................... $ 995 ====== Net Asset Value, Offering and Redemption Price Per Share $10.16 ====== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 20 STATEMENT OF OPERATIONS (000) ================================================================================ STI CLASSIC VARIABLE TRUST FUNDS
VALUE INCOME MID-CAP CAPITAL INVESTMENT INTERNATIONAL STOCK EQUITY GROWTH GRADE EQUITY FUND FUND FUND BOND FUND FUND -------- -------- -------- ---------- -------- 01/01/96- 01/01/96- 01/01/96- 01/01/96- 11/07/96* 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 -------- -------- -------- -------- -------- Investment Income: Interest Income $ 73 $ 59 $ 99 $ 369 $ 2 Dividend Income 428 82 179 -- -- ------ ------ ------- ------ ------ Total Investment Income 501 141 278 369 2 ------ ------ ------- ------ ------ Expenses: Investment Advisory Fees 118 94 139 43 1 Investment Advisory Fees Waived (118) (94) (139) (43) (1) Reimbursement from Advisor (29) (40) (15) (76) (14) Administrator Fees 63 63 63 63 11 Custody Fees 30 22 26 18 -- Transfer Agent Fees 24 17 21 15 2 Professional Fees 26 16 22 12 1 Trustee Fees 6 4 5 4 -- Registration Fees 8 3 6 1 -- Printing Expenses 11 8 10 6 -- Insurance and Other Fees -- -- -- -- 1 Amortization of Deferred Organization Costs 1 1 1 1 -- ------ ------ ------- ------ ------ Total Expenses 140 94 139 44 1 ------ ------ ------- ------ ------ Net Investment Income 361 47 139 325 1 ------ ------ ------- ------ ------ Net Realized Gain (Loss) on Securities Sold 1,122 702 1,357 (40) -- Net Realized Gain on Foreign Currency Transactions -- -- -- -- 1 Net Unrealized Appreciation (Depreciation) on Investments 1,133 637 1,199 (34) 14 ------ ------ ------- ------ ------ Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency 2,255 1,339 2,556 (74) 15 ------ ------ ------- ------ ------ Increase in Net Assets from Operations $2,616 $1,386 $ 2,695 $ 251 $ 16 ====== ====== ======= ====== ======
*Commencement of Operations Amounts designated as "--" are either $0 or have been rounded to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 21 STATEMENT OF CHANGES IN NET ASSETS (000) STI CLASSIC VARIABLE TRUST FUNDS
VALUE INCOME STOCK FUND MID-CAP EQUITY FUND --------------------- ----------------------- 01/01/96- 10/02/95* 01/01/96- 10/02/95*- 12/31/96 12/31/95 12/31/96 12/31/95 -------- -------- -------- --------- Investment Activities: Net Investment Income $ 361 $ 23 $ 47 $ 16 Net Realized Gain (Loss) on Investments 1,122 5 702 9 Net Realized Gain on Foreign Currency Transactions -- -- -- -- Net Unrealized Appreciation (Depreciation) on Investments 1,133 197 637 66 -------- -------- -------- -------- Increase in Net Assets Resulting from Operations 2,616 225 1,386 91 -------- -------- -------- -------- Distributions to Shareholders: Net Investment Income (355) (23) (47) (16) Capital Gains -- -- -- -- -------- -------- -------- -------- Total Distributions (355) (23) (47) (16) -------- -------- -------- -------- Capital Transactions: Proceeds from Shares Issued 24,660 3,790 9,578 3,318 Reinvestment of Cash Distributions 355 23 47 16 Cost of Shares Repurchased (75) -- (79) -- -------- -------- -------- -------- Increase in Net Assets from Share Transactions 24,940 3,813 9,546 3,334 -------- -------- -------- -------- Total Increase in Net Assets 27,201 4,015 10,885 3,409 -------- -------- -------- -------- Net Assets: Beginning of Period 4,015 -- 3,409 -- -------- -------- -------- -------- End of Period $31,216 $ 4,015 $14,294 $ 3,409 ======== ======== ======== ======== Shares Issued and Redeemed: Shares Issued 2,116 374 877 330 Shares Issued in Lieu of Cash Distributions 30 2 4 2 Shares Redeemed (6) -- (7) -- -------- -------- -------- -------- Net Share Transactions 2,140 376 874 332 ======== ======== ======== ======== INVESTMENT GRADE BOND CAPITAL GROWTH FUND FUND ----------------------- ------------------------- 01/01/96- 10/02/95*- 01/01/96- 10/02/95*- 12/31/96 12/31/95 12/31/96 12/31/95 -------- -------- -------- --------- Investment Activities: Net Investment Income $ 139 $ 13 $ 325 $ 35 Net Realized Gain (Loss) on Investments 1,357 (13) (40) -- Net Realized Gain on Foreign Currency Transactions -- -- -- -- Net Unrealized Appreciation (Depreciation) on Investments 1,199 196 (34) 70 -------- -------- -------- -------- Increase in Net Assets Resulting from Operations 2,695 196 251 105 -------- -------- -------- -------- Distributions to Shareholders: Net Investment Income (138) (13) (325) (35) Capital Gains -- -- -- -- -------- -------- -------- -------- Total Distributions (138) (13) (325) (35) -------- -------- -------- -------- Capital Transactions: Proceeds from Shares Issued 18,759 3,582 5,002 3,010 Reinvestment of Cash Distributions 139 13 325 35 Cost of Shares Repurchased (44) -- (329) -- -------- -------- -------- -------- Increase in Net Assets from Share Transactions 18,854 3,595 4,998 3,045 -------- -------- -------- -------- Total Increase in Net Assets 21,411 3,778 4,924 3,115 -------- -------- -------- -------- Net Assets: Beginning of Period 3,778 -- 3,115 -- -------- -------- -------- -------- End of Period $25,189 $ 3,778 $ 8,039 $ 3,115 ======== ======== ======== ======== Shares Issued and Redeemed: Shares Issued 1,567 354 506 301 Shares Issued in Lieu of Cash Distributions 11 1 33 3 Shares Redeemed (4) -- (33) -- -------- -------- -------- -------- Net Share Transactions 1,574 355 506 304 ======== ======== ======== ======== INTERNATIONAL EQUITY FUND ------------- 11/07/96*- 12/31/96 --------- Investment Activities: Net Investment Income $ 1 Net Realized Gain (Loss) on Investments -- Net Realized Gain on Foreign Currency Transactions 1 Net Unrealized Appreciation (Depreciation) on Investments 14 -------- Increase in Net Assets Resulting from Operations 16 -------- Distributions to Shareholders: Net Investment Income (1) Capital Gains -- -------- Total Distributions (1) -------- Capital Transactions: Proceeds from Shares Issued 979 Reinvestment of Cash Distributions 1 Cost of Shares Repurchased -- -------- Increase in Net Assets from Share Transactions 980 -------- Total Increase in Net Assets 995 -------- Net Assets: Beginning of Period -- -------- End of Period $ 995 ======== Shares Issued and Redeemed: Shares Issued 98 Shares Issued in Lieu of Cash Distributions -- Shares Redeemed -- -------- Net Share Transactions 98 ======== *Commencement of operations Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 22 & 23 FINANCIAL HIGHLIGHTS STI CLASSIC VARIABLE TRUST FUNDS FOR THE PERIODS ENDED DECEMBER 31, FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET NET REALIZED AND NET ASSET VALUE INVESTMENT UNREALIZED GAINS (LOSSES) DISTRIBUTIONS FROM DISTRIBUTIONS FROM BEGINNING OF PERIOD INCOME ON INVESTMENTS NET INVESTMENT INCOME REALIZED CAPITAL GAINS ------------------- ---------- ------------------------ --------------------- ---------------------- VALUE INCOME STOCK FUND 1996 $10.67 $0.23 $1.74 $(0.23) $ -- 1995 (1) 10.00 0.06 0.67 (0.06) -- MID-CAP EQUITY FUND (A) 1996 $10.27 $0.06 $1.59 $(0.06) $ -- 1995 (1) 10.00 0.05 0.27 (0.05) -- CAPITAL GROWTH FUND 1996 $10.66 $0.12 $2.40 $(0.12) $ -- 1995 (1) 10.00 0.04 0.66 (0.04) -- INVESTMENT GRADE BOND FUND 1996 $10.25 $0.54 $(0.33) $(0.54) $ -- 1995 (1) 10.00 0.13 0.25 (0.13) -- INTERNATIONAL EQUITY FUND 1996 (2) $10.00 $0.01 $ 0.16 $(0.01) $ --
RATIO OF RATIO OF EXPENSES TO NET ASSET NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS VALUE END TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS OF PERIOD RETURN PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) --------- ------ ------------ ------------------ ------------------ ------------------- VALUE INCOME STOCK FUND 1996 $12.41 18.64% $31,216 0.95% 2.45% 1.95% 1995 (1) 10.67 7.31* 4,015 0.95 2.98 5.72 MID-CAP EQUITY FUND (A) 1996 $11.86 16.05% $14,294 1.15% 0.58% 2.79% 1995 (1) 10.27 3.19* 3,409 1.15 2.22 6.34 CAPITAL GROWTH FUND 1996 $13.06 23.75% $25,189 1.15% 1.15% 2.43% 1995 (1) 10.66 6.96* 3,778 1.15 1.69 6.18 INVESTMENT GRADE BOND FUND 1996 $ 9.92 2.29% $ 8,039 0.75% 5.54% 2.78% 1995 (1) 10.25 3.68* 3,115 0.75 5.04 6.05 INTERNATIONAL EQUITY FUND 1996 (2) $10.16 1.70%* $ 995 1.60% 1.83% 31.39%
RATIO OF NET INVESTMENT INCOME INCOME (LOSS) TO AVERAGE NET ASSETS PORTFOLIO AVERAGE (EXCLUDING WAIVERS TURNOVER COMMISSION AND REIMBURSEMENTS) RATE RATE(3) ------------------- --------- ----------- VALUE INCOME STOCK FUND 1996 1.45% 79.80% $0.054 1995 (1) (1.79) 7.17 n/a MID-CAP EQUITY FUND (A) 1996 (1.06)% 139.60% $0.053 1995 (1) (2.97) 13.29 n/a CAPITAL GROWTH FUND 1996 (0.13)% 148.48% $0.053 1995 (1) (3.34) 8.05 n/a INVESTMENT GRADE BOND FUND 1996 3.51% 303.30% n/a 1995 (1) (0.26) 108.55 n/a INTERNATIONAL EQUITY FUND 1996 (2) (27.96)% --% $0.062 (1) Commenced operations on October 2, 1995. All ratios for the period have been annualized. (2) Commenced operations on November 7, 1996. All ratios for the period have been annualized. (3) Average commission rate paid per share for security purchases and sales during the period. Presentation of the rate is only required for fiscal years beginning after September 1, 1995. * Returns are for the period indicated and have not been annualized. (A) During the fiscal year ended December 31, 1996, the Aggressive Growth Fund changed its name to the Mid-Cap Equity Fund. Amounts designated as "--" are either zero or rounded to zero.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 24 & 25 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 1. Organization: The STI Classic Variable Trust (the "Trust") was organized as a Massachusetts business trust under a Declaration of Trust dated April 18, 1995. The Trust is registered under the Investment Trust Act of 1940, as amended, as an open-end management investment Trust with five funds: the Value Income Stock Fund, the Mid-Cap Equity Fund (formerly the Aggressive Growth Fund), the Capital Growth Fund, the International Equity Fund (collectively "the Equity Funds") and the Investment Grade Bond Fund. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. The Fund's prospectus provides a description of each Fund's investment objective policies and strategies. 2. Significant Accounting Policies: The following is a summary of significant accounting policies followed by the Trust. These policies are in conformity with generally accepted accounting principles. SECURITY VALUATION -- Investments in equity securities which are traded on a national securities exchange (or reported on the NASDAQ national market system) are stated at the last quoted sales price if readily available for such equity securities on each business day. If there is no such reported sale, these securities, and unlisted securities for which market quotations are readily available, are valued at the most recently quoted bid price. Foreign securities in the International Equity Fund are valued based upon quotations from the primary market in which they are traded. Debt obligations exceeding sixty days to maturity for which market quotations are readily available are valued at the most recently quoted bid price. Debt obligations with sixty days or less until maturity may be valued either at the most recently quoted bid price or at their amortized cost. FEDERAL INCOME TAXES -- It is each Fund's intention to qualify as a regulated investment company for Federal income tax purposes and distribute all of its taxable income and net capital gains. Accordingly, no provisions for Federal income taxes are required. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the trade date of the security purchase or sale. Dividend income is recognized on ex-dividend date, and interest income is recognized on an accrual basis and includes, where applicable, the pro rata amortization of premium or accretion of discount. The cost used in determining net realized capital gains and losses on the sale of securities are those of the specific securities sold, adjusted for the accretion and amortization of purchase discounts and premiums during the applicable holding period. Purchase discounts and premiums on securities held by the Investment Grade Bond and the Equity Funds are accreted and amortized to maturity using the scientific interest method, which approximates the effective interest method. REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase agreements are held by the custodian bank until the repurchase agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued interest thereon, is sufficient in the event of default of the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Funds may be delayed or limited. NET ASSET VALUE PER SHARE-- The net asset value per share of each Fund is calculated on each business 26 day. In general, it is computed by dividing the assets of each Fund, less its liabilities, by the number of outstanding shares of the respective class of the Fund. The offering price per share for the shares of the Investment Grade Bond and Equity Funds is the net asset value per share. FOREIGN CURRENCY TRANSACTIONS--With respect to the International Equity Fund, the books and records are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (I) market value of investment securities, assets and liabilities at the current rate of exchange; and (II) purchases and sales of investment securities, income, and expenses at the relevent rates of exchange prevailing on the respective dates of such transactions. The International Equity Fund does not isolate the portion of gains and losses on investments in equity securities that is due to changes in the foreign exchange rates from that which is due to change in market prices of equity securities. The International Equity Fund reports certain foreign currency-related transactions as components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income for Federal income tax purposes. OTHER -- Distributions from net investment income for the Investment Grade Bond Fund are declared daily and paid monthly to shareholders. Distributions from net investment income for the Value Income Stock Fund, the Mid-Cap Equity Fund and the Capital Growth Fund are declared and paid quarterly to shareholders. Distributions from net investment income for the International Equity Fund are declared and paid annually to shareholders. Any net realized capital gains are distributed to shareholders at least annually. Expenses related to a specific Fund are charged to that Fund. Other operating expenses of the Trust are pro-rated to the Funds on the basis of relative net assets. USE OF ESTIMATES -- The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates. 3. Administration and Distribution Agreements The Trust and SEI Fund Resources (the "Administrator") are parties to an administration agreement (the "Administration Agreement") dated May 29, 1995. Under the terms of the Administration Agreement the Administrator is entitled to a fee, subject to a minimum, (expressed as a percentage of the combined average daily net assets of the Trust and the STI Classic Funds) of: .10% up to $1 billion, .07% on the next $4 billion, .05% on the next $3 billion, .045% on the next $2 billion, and .04% for over $10 billion. The Trust and Federated Services Company are parties to a Transfer Agency servicing agreement dated May 29, 1995 under which Federated Services Company provides transfer agency services to the Trust. The Trust and SEI Financial Services Company ("the Distributor") are parties to a Distribution Agreement dated May 29, 1995. The Distributor receives no fees for its services under this agreement. 27 NOTES TO FINANCIAL STATEMENTS (CONCLUDED) - -------------------------------------------------------------------------------- STI CLASSIC VARIABLE TRUST FUNDS DECEMBER 31, 1996 4. Investment Advisory Agreement Investment advisory services are provided to the Trust by STI Capital Management, N.A. ("STI Capital"). Under the terms of the investment advisory agreements, STI Capital is entitled to receive a fee from the Fund, computed daily and paid monthly, at an annual rate of .74%, 1.15%, .80%, 1.15% and 1.25% of the average daily net assets of the Investment Grade Bond Fund, Capital Growth Fund, Value Income Stock Fund, Mid-Cap Equity Fund and International Equity Fund, respectively. STI Capital has voluntarily agreed to waive all or a portion of its fees (and to reimburse Funds' expenses) in order to limit operating expenses. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. SunTrust Bank, Atlanta acts as Custodian for all the Funds except the International Equity Fund which has a custodian agreement with the Bank of New York. Fees of the Custodian are paid on the basis of net assets. The Custodian plays no role in determining the investment policies of the Trust or which securities are to be purchased or sold in the Funds. 5. Organizational Costs and Transactions with Affiliates Organizational costs have been capitalized by the Trust and are being amortized on a straight line basis over a maximum of sixty months following commencement of operations. In the event any of the initial shares of the Trust are redeemed by any holder thereof during the period that the Trust is amortizing its organizational costs, the redemption proceeds payable to the holder thereof by the Trust will be reduced by the unamortized organizational cost in the same ratio as the number of initial shares being redeemed bears to the number of initial shares outstanding at the time of redemption. Certain officers of the Trust are also officers of the Administrator and/or SEI Financial Services Company (the "Distributor"). Such officers are paid no fees by the Trust for serving as officers of the Trust. 6. Investment Transactions The cost of security purchases and the proceeds from security sales, excluding short-term investments, for the period ended December 31, 1996 were as follows: U.S. GOVT. U.S. GOVT. PURCHASES SALES PURCHASES SALES (000) (000) (000) (000) --------- ----- --------- ---------- Value Income Stock Fund $35,134 $10,960 $ -- $ -- Mid-Cap Equity Fund 18,766 9,875 -- -- Capital Growth Fund 31,973 15,068 -- -- Investment Grade Bond Fund 5,936 2,708 14,983 13,381 International Equity Fund 711 -- -- -- At December 31, 1996, the total cost of securities and the net realized gains or losses on securities sold for Federal income tax purposes was not materially different from amounts reported for financial reporting purposes. The aggregate gross unrealized appreciation and depreciation for securities held by the Investment Grade Bond and Equity Funds at December 31, 1996 was as follows: APPRECIATED DEPRECIATED NET UNREALIZED SECURITIES SECURITIES APPRECIATION (000) (000) (000) ----------- ----------- -------------- Value Income Stock Fund $1,695 $(365) $1,330 Mid-Cap Equity Fund 1,131 (428) 703 Capital Growth Fund 1,757 (362) 1,395 Investment Grade Bond Fund 67 (31) 36 International Equity Fund 15 (1) 14 At December 31, 1996 the following Fund had a capital loss carryforward: AMOUNT EXPIRES ------ ------- Investment Grade Bond Fund $2,212 2004 28 7. Concentration of Credit Risk: The Investment Grade Bond Fund invests primarily in investment grade obligations rated at least BBB or better by S & P or Baa or better by Moody's. Changes by recognized rating agencies in the ratings of any fixed income security or in the ability of an issuer to make payments of interest and principal may affect the value of these investments. The following is a summary of credit quality ratings for securities held by the Fund at December 31, 1996: MOODY'S % OF PORTFOLIO VALUE - ------------------------ -------------------- Aaa 56.5% Aa 2.5% A 26.4% Baa 10.1% Repurchase Agreement 4.5% ---------- 100% ========== S & P % OF PORTFOLIO VALUE - ------------------------ -------------------- Aaa 56.6% Aa 2.5% A 26.3% BBB 10.1% Repurchase Agreement 4.5% --------- 100% ========== 29 Unaudited NOTICE TO SHAREHOLDERS OF STI CLASSIC VARIABLE TRUST FUNDS For shareholders that do not have a December 31, 1996 tax year end, this notice is for informational purposes only. For shareholders with a December 31, 1996 tax year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended December 31, 1996, each portfolio is designating the following items with regard to distributions paid during the year: (A) (B) (C) LONG TERM ORDINARY CAPITAL GAINS INCOME TOTAL DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) - --------- ------------- ------------- ------------- Value Income Stock Fund 0% 100% 100% Mid-Cap Equity Fund 0% 100% 100% Capital Growth Fund 0% 100% 100% Investment Grade Bond Fund 0% 100% 100% International Equity Fund 0% 100% 100% (D) (E) QUALIFYING TAX-EXEMPT PORTFOLIO DIVIDENDS (1) INTEREST - --------- ------------- ---------- Value Income Stock Fund 83% 0% Mid-Cap Equity Fund 100% 0% Capital Growth Fund 85% 0% Investment Grade Bond Fund 0% 0% International Equity Fund 0% 0% - ------------ (1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction. * Items (A) and (B) are based on a percentage of each portfolio's total distributions. ** Item (D) is based on the net income of the portfolio. *** Item (E) is based on the gross income of the portfolio. 30 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Trustees of STI Classic Variable Trust: We have audited the accompanying statements of net assets of Value Income Stock, Mid-Cap Equity (formerly Aggressive Growth), Capital Growth, Investment Grade Bond and International Equity Funds of STI Classic Variable Trust (the "Trust") as of December 31, 1996, and the related statements of operations, changes in net assets, and financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and 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 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, 1996, by correspondence with the custodians. 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 financial highlights referred to above present fairly, in all material respects, the financial position of Value Income Stock, Mid-Cap Equity, Capital Growth, Investment Grade Bond and International Equity Funds of STI Classic Variable Trust as of December 31, 1996, the results of their operations, changes in their net assets, and financial highlights for the periods presented, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa. February 4, 1997 31 -----END PRIVACY-ENHANCED MESSAGE-----