-----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, GTGFiDNtlCOZgs9vjPrIC4Vz/fEG9yJlHqbPHDuBoXh/P0BjMRFq4uDLVFE4/kD1 3EJOjXIm2luDoUvVs5nvkg== 0000950152-06-002028.txt : 20060313 0000950152-06-002028.hdr.sgml : 20060313 20060313171941 ACCESSION NUMBER: 0000950152-06-002028 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060313 DATE AS OF CHANGE: 20060313 EFFECTIVENESS DATE: 20060313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STI CLASSIC VARIABLE TRUST CENTRAL INDEX KEY: 0000944487 IRS NUMBER: 232808166 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09032 FILM NUMBER: 06682883 BUSINESS ADDRESS: STREET 1: 3435 STELZER RD. CITY: COLUMBUS STATE: OH ZIP: 43219 BUSINESS PHONE: 614-470-8000 MAIL ADDRESS: STREET 1: 3435 STELZER RD. CITY: COLUMBUS STATE: OH ZIP: 43219 0000944487 S000004743 STI Classic Variable Trust Capital Appreciation Fund C000012919 STI Classic Variable Trust Capital Appreciation Fund 0000944487 S000004744 STI Classic Variable Trust Large Cap Relative Value Fund C000012920 STI Classic Variable Trust Large Cap Relative Value Fund 0000944487 S000004745 STI Classic Variable Trust International Equity Fund C000012921 STI Classic Variable Trust International Equity Fund 0000944487 S000004746 STI Classic Variable Trust Investment Grade Bond Fund C000012922 STI Classic Variable Trust Investment Grade Bond Fund 0000944487 S000004747 STI Classic Variable Trust Mid-Cap Equity Fund C000012923 STI Classic Variable Trust Mid-Cap Equity Fund 0000944487 S000004748 STI Classic Variable Trust Small Cap Value Equity Fund C000012924 STI Classic Variable Trust Small Cap Value Equity Fund 0000944487 S000004749 STI Classic Variable Trust Large Cap Value Equity Fund C000012925 STI Classic Variable Trust Large Cap Value Equity Fund N-CSR 1 l18856anvcsr.txt STI CLASSIC VARIABLE TRUST N-CSR 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 811-09032 -------------------------------------------- STI Classic Variable Trust - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 101 Federal Street Boston, MA 02110 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) BISYS Fund Services, 3435 Stelzer Road Columbus, Ohio 43219 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 614-470-8000 ----------------------- Date of fiscal year end: 12/31 ----------------------- Date of reporting period: 12/31/05 ------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. 2005 ANNUAL REPORT STI CLASSIC VARIABLE TRUST December 31, 2005 STI CLASSIC VARIABLE TRUST TABLE OF CONTENTS STI CLASSIC VARIABLE TRUST December 31, 2005 Letter to Shareholders ................................... 1 MANAGEMENT DISCUSSION AND ANALYSIS Capital Appreciation Fund ................................ 3 International Equity Fund ................................ 5 Investment Grade Bond Fund ............................... 7 Large Cap Relative Value Fund ............................ 9 Large Cap Value Equity Fund .............................. 11 Mid-Cap Equity Fund ...................................... 13 Small Cap Value Equity Fund .............................. 15 Schedules of Portfolio Investments ....................... 17 Statements of Assets and Liabilities ..................... 32 Statements of Operations ................................. 33 Statements of Changes in Net Assets ...................... 34 Financial Highlights ..................................... 37 Notes to Financial Statements ............................ 39 Report of Independent Registered Public Accounting Firm... 47 Trustees and Officers of the STI Classic Variable Trust... 48 Additional Information ................................... 50
LETTER TO SHAREHOLDERS STI CLASSIC VARIABLE TRUST December 31, 2005 Dear STI Classic Variable Trust Shareholders, The post-hurricane recovery, moderating oil prices, and encouraging comments from the Federal Reserve Board (the "Fed") helped both stocks and bonds improve in the fourth quarter, though full-year performance was generally below the historic averages. We will highlight some key developments in the economy and the financial markets in the coming paragraphs, but would first like to thank you for your confidence and support in choosing the STI Classic Variable Trust to help grow your investments. We greatly value the opportunity to serve you, and we strive to earn your business every day. The economic backdrop was one of improvement and respite from the "headwinds" that restrained growth in 2005. First, the economy ended the fourth quarter on solid footing following a brief hurricane induced stumble. Job growth returned and manufacturing accelerated, setting the stage for firm expansion at the beginning of 2006. A second positive development was moderation in energy prices which spiked in September. This lowered home heating and driving costs and boosted consumer confidence during the holiday shopping season. The third factor was a shift in the Fed's policy rhetoric. After raising the overnight fed funds rate in thirteen consecutive meetings to 4.25%, the Fed stopped viewing policy as "accommodative," raising hopes that the long string of rate hikes would end soon. Equities moved broadly higher during the quarter, led again by mid-cap stocks and internationals. The combination of a growing preference for higher quality companies and an extended period of outperformance by small-caps exerted a significant influence on the market in the fourth quarter. The S&P 500 rose 2.1% on a total return basis and 4.9% for all of 2005. This performance was positive and better than that in the bond market, but it was less than half the historic average. Mid-caps as measured by the Russell Midcap(R) Index, gained 2.3% in the final quarter and 12.7% for the year, while the Russell 2000 Small Cap(R) index trailed with a 1.1% rise and 4.6% in 2005. International stocks enjoyed the strongest gains with 4.1% in the fourth quarter and 14.0% for the year. An eclectic mix of Industrials, Financials, and Materials stocks led the market, while high-flying Energy and Utility stocks retreated from the year's highs. In the fixed-income markets, the yield on the 10-year Treasury note was relatively unchanged in the final three months and closed the year at 4.39%. However, the additional rate hikes from the Federal Reserve continued to lift short-term yields causing the yield curve to flatten, and by December 31, the yield on the 2-year Treasury was slightly above 5- and 10-year yields: technically a yield curve "inversion." Still the Lehman Aggregate Bond index added 0.6% in the fourth quarter and 2.4% in 2005. The quality theme in the equity markets was also evident in the bond markets. Treasuries outperformed Corporate bonds, and credit quality spreads increased slightly. The outlook for the New Year is generally favorable and equity valuations are reasonable, but the markets will have their share of challenges, known and yet to be known. Consumers should enjoy reasonable job growth over the near term which could provide income for spending. However, the extra stimulus from such things as tax cuts, home refinancing, and easy access to home equity will be either reduced or eliminated, so that consumer momentum could begin to slow. Corporate profits finished the year with another double-digit increase, but the pace of corporate investment could also slow if earnings growth decelerates as expected and cost pressures 1 continue to increase. We expect the Federal Reserve to take a "pause" in its long string of interest rate increases over the course of 2006, but final policy decisions will depend heavily on the evolution of the inflation mosaic. Core inflation remained moderate for most of 2005, but the relative steadiness of inflation was the result of rising costs in some segments being offset by deflation in other areas. We believe that dynamic will continue in 2006 and that core inflation be remain reasonably contained. Overall, we believe stocks can move higher in this environment, and that any rise in bond yields should be moderate. We close this letter with thanks to you, our valued clients, and also to Doug Phillips, CFA, the founding president of Trusco Capital Management. Under Doug's outstanding leadership, the STI Classic Variable Trust thrived even in challenging markets to become one of the leading fund families in the nation. But perhaps we are most grateful to Doug Phillips for his strong sense of discipline, integrity, and commitment to the highest levels of client service. He will be missed, but his legacy will endure. Sincerely, /s/ David H. Eidson - --------------------------------- David H. Eidson, Chairman and CEO /s/ Robert J. Rhodes - ---------------------------------------------- Robert J. Rhodes, CFA, Executive Vice President PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. The foregoing information and opinions are for general information only. STI Classic Variable Trust and Trusco Capital Management do not assume liability for any loss which may result from the reliance by any person upon such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sale of any security, or as offering individual or personalized investment advice. THIS MATERIAL IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. AN INVESTOR SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING OR SENDING MONEY. THIS AND OTHER IMPORTANT INFORMATION ABOUT THE STI CLASSIC VARIABLE TRUST CAN BE FOUND IN THE FUND'S PROSPECTUS. TO OBTAIN MORE INFORMATION, CALL 1-888-STI-FUND. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. STI Classic Variable Trust is distributed by BISYS Fund Services Limited Partnership, which is not affiliated with Trusco Capital Management, Inc. 2 CAPITAL APPRECIATION FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. MANAGEMENT DISCUSSION & ANALYSIS Q: HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: Fund performance in 2005 was very disappointing. Total return was -0.90%, compared to +4.91% for the S&P 500 Index. One bright spot was a strong recovery in the fourth quarter, where the Fund gained +3.53% while the S&P 500 was up only +2.08%. Many of the strategies we put in place finally paid off, but too late to benefit the full year. In particular, the impact of two major hurricanes in the third quarter was detrimental to many quality growth stocks held by the Fund, while energy and utility stocks continued to soar.* Q: WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The major factors in 2005 performance were as follows. Stock selection in the Healthcare sector was ineffective. We emphasized medical device stocks because they had strong growth, but the stocks failed to perform well. Stock selection also lagged in Information Technology, although the Fund's overweight helped somewhat. Additionally, underweighting the portfolio in the Energy and Utilities sectors was detrimental, as those sectors were by far the highest performers in the S&P 500. We offset the negatives somewhat with the good stock selection in Consumer Discretionary and Industrial sectors.* Q: HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: As 2006 begins, several important aspects of the U.S. equity market dominate our attention. First, after three years of market recovery, investors appear to be under pricing risk. With the Fed tightening, very high energy prices, and consumers stretched in terms of debt levels, the lower quality, more leveraged stocks look expensive while higher quality stocks look very reasonable. For example, per data received from Merrill Lynch--a well-known broker-dealer--stocks rated B-minus sell at an average of 23 times the 2006 estimated earnings, while stocks in the A+ to A- category range from 16-19 times. This gap of over 30% in valuations provides strong incentive to go with higher quality. Second, we believe earnings growth should slow in 2006, from mid-teens to single-digit year/year rates. This is because most of the cyclical expansion in profit margins has already been seen, and comparisons are finally becoming fairly difficult. In this environment, we believe companies with visible top and bottom line growth should do better. Third, at the sector level, we are wary of energy stocks until they have a significant price correction. Energy valuations based on price/book(1) and dividends are quite high, as is the price of oil relative to its reasonable trend. This makes the reward versus risk less appealing for energy stocks, unlike 1999 through 2000 when they were cheap and oil was low. Lastly, at this stage of the economic cycle, consumer related spending will persist, but with more modest progress. Corporations, with healthy cash, slower debt levels, and strong cash flow, are in a better position to spend on acquisitions, capital investment, and returning capital to shareholders. Pulling all of these trends together, the Fund is thus tilted toward higher quality stocks which we believe to have sustainable growth in the year ahead. Also, the Fund is currently underweight in lower growth cyclicals such as, Energy and Utilities, and overweight in Industrial and Technology related industries which benefit from capital spending.* 3 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. CAPITAL APPRECIATION FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) CAPITAL APPRECIATION FUND
Capital App S&P 500 Lipper Large-Cap Core 12/31/95 10000 10000 10000 10621 10537 10594 11135 11009 10997 11622 11349 11344 12/96 12375 12295 12134 12758 12625 12272 15081 14827 14217 16177 15937 15408 12/97 16897 16395 15646 19315 18680 17601 20171 19300 17970 17769 17385 15932 12/98 21793 21084 19254 22185 22134 19969 24085 23691 21366 21772 22215 19974 12/99 23694 25518 22937 24643 26103 23814 25124 25409 23224 25291 25163 23292 12/00 24422 23196 21727 22475 20447 19145 24000 21643 20166 20459 18468 17138 12/01 23117 20441 19011 22958 20497 18978 20181 17753 16533 17391 14687 13867 12/02 18057 15925 14807 17669 15423 14293 19223 17796 16310 19473 18267 16691 12/03 21388 20490 18578 21846 20837 18814 22069 21195 19004 21139 20799 18521 12/04 22833 22718 20148 21990 22230 19737 21800 22535 19977 21856 23347 20709 12/31/05 22628 23833 21180
This chart assumes an initial hypothetical investment of $10,000 made on 12/31/95. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the S&P 500 Index an unmanaged index that consists of 500 selected common stocks, most of which are listed on the New York Stock Exchange, and is a measure of the U.S. stock market as a whole. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. The Lipper Mutual Funds Average is an equally weighted average of the mutual funds within their respective investment objectives, adjusted for the reinvestment of capital gains distributions and income dividends. AVERAGE ANNUAL TOTAL RETURNS(2) (As of December 31, 2005)
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS - -------- ----------- ---------- --------- -0.90% 7.81% -1.51% 8.51%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) The ratio of price-to-book value gives an investor an idea about the relationship between the stock's price and the company's underlying value. Other things being equal, people who invest for value prefer companies with a low ration of price-to-book value. (2) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* Information Technology............... 23.2% Industrials.......................... 17.7% Financials........................... 14.0% Consumer Discretionary............... 13.3% Short-Term Investment................ 11.6% Health Care.......................... 10.3% Consumer Staples..................... 4.1% Energy............................... 3.4% Materials............................ 1.0% Telecommunications Services.......... 1.0% Money Market Funds................... 0.4% 4 INTERNATIONAL EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS International investing involves increased risk and volatility. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. MANAGEMENT DISCUSSION & ANALYSIS Q: HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: Over the course of 2005, international equities outperformed domestic equities. The Fund's return of 12.96% was modestly behind the benchmark. The Fund's benchmark, the MSCI EAFE, returned 13.54% for the year. The regions that contributed the most to the Fund's performance were Japan and continental Europe while the sectors that contributed the most to the Fund's performance were Industrials and Financials.* Q: WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund outperformed the benchmark in 4 out of 5 regions. The Fund underperformed in Australia and a majority of the under performance was from 2 stocks: Bluescope Steel (-15.8%) and Pacific Brands (-17.5%). However, the Fund did well in Japan with the best performing stocks for the year: Sumitomo Metal (+193%), Yamada Denki (+193%), and Ibiden (+178%). Stock selection was particularly strong in Japanese Industrials and Materials as well as European Utilities.* Q: HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: We believe quality stock selection will continue to be the best source of out performance for the Fund. We believe each stock in the Fund is one of the best investment opportunities in its sector and that the stocks in the Fund possess a superior combination of growth and valuation characteristics versus the benchmark. While we do not make extreme sector or region allocations relative to the benchmark, we believe areas for the best return potential for the year will be Information Technology, Healthcare, Energy and from a regional standpoint Japan.* 5 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INTERNATIONAL EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Int Equity
Int Equity MSCI EAFE 11/7/96 10000 10000 12/96 10170 9871 10680 9717 11911 10978 12633 10900 12/97 11882 10047 13604 11525 13714 11647 11289 9992 12/98 13166 12056 13156 12224 13509 12534 13523 13084 12/99 14325 15307 14099 15291 14819 14685 13661 13500 12/00 13834 13138 12178 11337 12325 11219 10959 9648 12/01 11427 10321 11560 10421 11200 10154 8860 8150 12/02 9303 8676 8564 7963 10177 9498 10837 10269 12/03 12775 12023 13262 12545 13208 12572 13330 12537 12/04 15246 14458 15136 14434 14901 14288 16529 15771 12/31/05 17221 16415
This chart assumes an initial hypothetical investment of $10,000 made on 11/7/96. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the Morgan Stanley Europe, Australiasia and Far East (MSCI EAFE) Index which is an unmanaged market capitalization-weighted equity index comprising 20 of the 48 countries in the MSCI universe and representing the developed world outside of North America. Each MSCI country index is created separately, then aggregated, without change, into regional MSCI indices. EAFE performance data is calculated in U.S. dollars and in local currency. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. AVERAGE ANNUAL TOTAL RETURNS(1) (As of December 31, 2005)
ANNUALIZED INCEPTION TO ONE YEAR THREE YEARS FIVE YEARS DATE (11/7/96) - -------- ----------- ---------- -------------- 12.96% 22.78% 4.48% 6.12%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* [PIE CHART] Financials 29.6% Industrials 12.1% Consumer Discretionary 10.5% Energy 9.2% Materials 8.1% Health Care 7.8% Telecommunication Services 6.6% Consumer Staples 5.7% Information Technology 5.1% Utilities 4.0% Short-Term Investment 1.3%
6 INVESTMENT GRADE BOND FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Mutual fund investing involves risk, including possible loss of principal. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. The Fund is subject to the risk that principal value reacts in opposition to the movement of interests rates and that a rising interest rate environment increases the risk of loss of principal. MANAGEMENT DISCUSSION & ANALYSIS Q. HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: For the year ended December 31, 2005, the Fund had a total return of 2.18%, slightly lagging the 2.37% return for the Fund's benchmark index, Lehman Brothers U.S. Government/Credit Index. The Fund's results in 2005 reflected our overall defensive view of valuation levels for the non-Treasury sectors of the investment grade fixed income markets. With incremental yield spreads approaching historically tight levels, we chose to overweight Treasuries, both to protect the portfolio from the negative effects of widening spreads and to give us the ability to reinvest in corporates at more attractive levels. In fact, increasing risk added little reward for managers in 2005, as the margin between top quartile and median results was the tightest in five years. Accordingly, the Fund's returns were consistent with our strategy and close to the benchmark.* Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The most important factors affecting performance was our overweight of Treasuries which caused the Fund to modestly under-yield the benchmark. The corresponding underweight in corporate bonds protected the Fund from modest spread widening. The net result of these two aspects substantially offset each other, generating index-like returns.* Q. HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: Our strategy for 2006 will show little change until technical aspects of the market catch up with fundamentals. Seeing some equilibrium between supply and demand is the highest priority. Current corporate spreads do not accurately discount creditworthiness. We are not overly concerned with the well-being of the companies we invest in but are reluctant to accept less of a premium for what we deem to be riskier assets. When spreads correct to better reflect the trade-off between risk and value, we are prepared to increase credit exposure.* 7 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT GRADE BOND FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Investment Grade Bond Fund
Lipper Intermediate Investment Investment Grade Bond Fund Lehman Brothers U.S. Government/Credit Index -Grade Debt ~Funds Average 12/31/95 10000 10000 10000 9798 9766 9807 9830 9812 9841 9963 9985 10028 12/96 10229 10290 10332 10146 10202 10277 10499 10573 10637 10825 10943 10983 12/97 11133 11294 11249 11328 11466 11426 11614 11765 11670 12231 12348 12071 12/98 12178 12364 12095 12101 12217 12033 11953 12083 11890 12050 12148 11947 12/99 11974 12099 11931 12237 12424 12149 12021 12604 12283 12326 12966 12619 12/00 12731 13533 13091 13394 13965 13494 13427 14007 13537 14031 14674 14109 12/01 13901 14683 14078 13756 14614 14047 13979 15162 14427 14684 16027 14970 12/02 14931 16304 15228 15168 16572 15461 15581 17156 15885 15494 17069 15860 12/03 15455 17065 15929 15943 17590 16321 15385 17033 15921 15907 17639 16396 12/04 16098 17780 16562 16016 17661 16469 16521 18269 16904 16335 18093 16804 12/31/05 16449 18202 16873
This chart assumes an initial hypothetical investment of $10,000 made on 12/31/95. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the Lehman Brothers U.S. Government/Credit Index, an unmanaged index composed of all bonds that are investment grade rated Baa or higher by Moody's or BBB or higher by S&P, if unrated by Moody's. Issues must have at least one year to maturity. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. The Lipper Mutual Funds Average is an equally weighted average of the mutual funds within their respective investment objectives, adjusted for the reinvestment of capital gains distributions and income dividends. AVERAGE ANNUAL TOTAL RETURNS(1) (As of December 31, 2005)
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS - -------- ----------- ---------- --------- 2.18% 3.28% 5.26% 5.10%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* [PIE CHART] U.S. Treasury Obligations 38.5% Short-Term Investment 28.3% U.S. Government Agencies 13.2% Corporate Bonds 12.6% Asset Backed Securities 6.4% Money Market Funds 0.6% Collateralized Mortgage Obligations 0.4% 8 LARGE CAP RELATIVE VALUE FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. MANAGEMENT DISCUSSION & ANALYSIS Q: HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: For the year ended December 31, 2005, the Fund had a total return of 9.03%. This compares to the S&P 500/BARRA Value Index return of 6.33%, 4.91% for the S&P 500 Index and 7.05% for the Russell 1000(R) Value Index for the same period. (The S&P 500/BARRA Value Index became the S&P 500/Citi Value Index in December 2005. Because of changes in the S&P style indices, the Fund will be giving greater emphasis to the Russell 1000(R) Value Index in the future.) The Fund's holdings of Energy and Financial stocks were beneficial to performance, as well as an overweighting in Technology stocks. The Fund was underweighted in Consumer Discretionary names, which was a positive, but the stocks that the Fund did own in that sector performed very well. The market has favored small- and mid-cap stocks for some time, but in the large-cap category, value stocks have offered better performance. Q: WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund benefited from good stock selection, good sector weightings, and from an overall tilt in the stock market towards value-oriented stocks. In particular, technology, energy and utility stocks offered the best performance in the index, and the Fund benefited from its holdings in each of these sectors. Higher oil and gas prices drove energy share performance, and a general recovery in industry conditions helped utility and technology shares. Some utility companies also benefited from having energy exposure in their portfolio of businesses. The Fund was also underweighted in consumer discretionary stocks, but had very good performance in the consumer discretionary stocks that it owned.* Individual stocks that helped the Fund's performance included Advance Auto Parts, Burlington Resources, Genworth, Express Scripts, Agilent Technologies, and Baker Hughes. Stocks that hindered the Fund's performance included Vodafone, Sara Lee, Boston Scientific, Abbott Laboratories, and Wal-Mart.* Q: HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: We will continue to emphasize better quality companies, as well as those with sustainability of earnings, reasonable valuations, and balance sheet flexibility. We will search out company-specific catalysts and reduce our emphasis on macroeconomic catalysts, reducing the pro-cyclical bias in the portfolio. Large-cap companies are generally undervalued in comparison to mid- and small-cap ones, so that will also be our focus, as well. A probable slowdown in real estate activity leads us to de-emphasize companies that depend on consumer spending. The Fund should remain fully-invested.* 9 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. LARGE CAP RELATIVE VALUE FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Large Cap Relative Value Fund
Large Cap Relative Value Fund Russell 1000(R)Value Index S&P 500/BARRA Value Index S&P 500 Index 12/31/99 10000 10000 10000 10000 10724 10048 10023 10229 10682 9577 9593 9957 11152 10330 10438 9861 12/00 10932 10701 10608 9090 10157 10075 9916 8013 10720 10567 10353 8481 9490 9409 8675 7237 12/01 10323 10103 9366 8010 10483 10517 9490 8032 9360 9621 8480 6957 7616 7815 6745 5756 12/02 8197 8535 7413 6241 7786 8120 7005 6044 8933 9522 8324 6974 9093 9719 8536 7159 12/03 10369 11098 9770 8030 10668 11434 10096 8166 10861 11535 10177 8306 10778 11713 10283 8151 12/04 11852 12929 11304 8903 12039 12940 11029 8712 12181 13157 11314 8831 12598 13668 11704 9149 12/31/05 12921 13840 12020 9340
This chart assumes an initial hypothetical investment of $10,000 made on 12/31/99. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the S&P 500/BARRA Value Index, the S&P 500 Index and the Russell 1000(R) Value Index. The S&P 500 Index consists of index of 500 selected common stocks, most of which are listed on the New York Stock Exchange, and is a measure of the U.S. Stock market as a whole. The S&P 500/BARRA Value Index consists of approximately half of the S&P 500 Index on a market capitalization basis. The Russell 1000(R) Value Index is comprised of the 1000 securities found in the Russell universe with a less-than-average growth orientation. Companies in the Russell index generally have low price-to-book and price-to-earning ratios, higher dividend yields, and lower forecasted growth values. The indices are unmanaged and do not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for those value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. AVERAGE ANNUAL TOTAL RETURNS(1) (As of December 31, 2005)
ANNUALIZED INCEPTION TO DATE ONE YEAR THREE YEARS FIVE YEARS (12/31/99) - -------- ----------- ---------- ----------------- 9.03% 16.38% 3.40% 4.36%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* Financials 22.6% Information Technology 13.0% Health Care 10.8% Industrials 9.5% Energy 9.4% Consumer Staples 9.1% Consumer Discretionary 8.2% Short-Term Investment 6.5% Utilities 3.7% Telecommunication Services 3.6% Materials 2.9% Money Market Funds 0.7% 10 LARGE CAP VALUE EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. MANAGEMENT DISCUSSION & ANALYSIS Q: HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund returned 3.75% for the year versus 7.05% and 6.33% for the benchmarks, the Russell 1000(R) Value Index and the S&P 500/ BARRA Value Index. (The S&P 500/BARRA Value Index became the S&P 500/Citi Value Index in December 2005. Because of changes in the S&P style indices, the Fund will be giving greater emphasis to the Russell 1000(R) Value Index in the future.) The primary reason for underperformance was due to the Fund's underweighting in Energy and Utilities which were the two best performing sectors for the year. The year started with oil at $43 per barrel and fed funds rate at 2.25%. The year finished with oil at $58 per barrel and fed funds at 4.25%. Gross Domestic Product(1) and profits were strong throughout the year as well, but counter intuitively bond yields did not move higher, they actually remained very flat. Against this backdrop the Fund was underweight in the Energy sector where we felt normalized oil did not support valuations and underweight in the Utilities sector where we were concerned about the prospects of higher bond yields and the attendant valuation problems they usually cause.* Q: WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund did in fact benefit from some solid stock picks within the Energy and Utilities sectors as well as other sectors, some of these select stocks were Bear Stearns, Rockwell Automation, May Dept Stores and Wyeth to name a few. Additionally the Fund's performance was hurt by such stocks as Mattel, Leggett & Platt and Kimberly-Clark which suffered heavily from raw material margin pressure caused by higher energy prices. Also, the Fund is still experiencing a negative quality bias that started in 2003 as lower quality stocks continue to outperform their higher quality counterparts. The Fund has roughly two-thirds of its positions in B+ or higher rated companies.* Despite what we believe will likely be a double digit increase in operating profits for the year the market was only able to squeeze out a single digit return. The main culprit for the implied multiple erosion is obviously the restrictive Fed policy. There are however emerging signs such as the cooling housing market that could suggest the economy may indeed be slowing which may allow the Fed to stop raising rates possibly within the first quarter. At this stage it seems the market direction is inextricably tied to the Fed. Q: HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: The Fund is underweight in Consumer Discretionary because we are concerned about potentially significant forces conspiring against the consumer over the next several months namely, more restrictive mortgage lending and high gasoline and heating oil. The Fund has established a position in Federated Dept. Stores where there are ample other positive catalysts, as previously noted, to pique our interest. The Fund is overweight in Consumer Staples with positions like Colgate and PepsiCo that exhibit not only strong financial characteristics but solid fundamentals as well. The Fund is underweight in Energy but we are reassessing our normalized oil price forecast in light of ongoing market dynamics and are prepared to add positions on a significant pullback. Currently the Fund owns integrated oil companies with significant refining assets such as Marathon Oil. We feel that the refining space has more upside given the very tight capacity outlook for the industry. The Fund is overweight in Materials but has been trimming back some positions as they rally off their third quarter lows. We prefer stocks such as DuPont that have huge free cash flows, some pricing power and tremendous balance sheet flexibility to raise dividends and buyback stock. The Fund is underweight in Financials were we have sold most of the insurance stocks due to price appreciation but hold significant positions in large banks like Bank of America that sport hefty dividends and trade at roughly ten times next years earnings. The Fund is overweight in Industrials while maintaining an equal weight in Technology. Industrials we prefer exhibit strong balance sheets and good operating leverage like Honeywell. The Fund is slightly overweight Healthcare. The pharmaceutical companies were attractive from a valuation standpoint for quite some time but we are now more constructive and are adding more exposure to the sector. The Fund is equal weight in Telecommunications and underweight in Utilities but will look for utility stock opportunities on price pullbacks. Given our ongoing reassessment of normalized oil and gas we would like to be more involved with companies that have good exposure to cheap sources of merchant generation if valuations make sense. We believe profit growth will continue to slow but stay positive. In this low growth environment higher quality companies with well defined dividend policies should do well since dividend yield will become a more important source of total return. Also the valuation case for high quality stocks is quite compelling and has historically performed well when the profit cycle is decelerating like that of today's market. These are the very stocks that are well represented in the Fund.* 11 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. LARGE CAP VALUE EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Large Cap Value Equity Fund
Large Cap Value Equity Fund Lipper Equity Income Funds Average S&P 500/BARRA Value Index Russell 1000(R)Value Index 12/31/95 10000 10000 10000 10000 10498 10393 10639 10566 10869 10693 10857 10748 11210 10925 11144 11061 12/96 11864 11716 12199 12164 12219 11905 12414 12476 13739 13349 14211 14315 14969 14323 15513 15741 12/97 15046 14846 15857 16444 16811 16258 17689 18361 16182 16113 17781 18443 14599 14815 15485 16307 12/98 16504 16709 18184 19014 16290 16585 18702 19286 18648 18178 20722 21461 16428 16718 18810 19359 12/99 16009 17407 20498 20411 15388 17475 20546 20508 14975 17246 19663 19547 15947 18517 21396 21085 12/00 17679 19185 21745 21843 16876 18190 20325 20564 17865 18858 21221 21568 16100 17171 17782 19206 12/01 17479 18245 19199 20622 18230 18846 19453 21466 16639 17138 17382 19637 13111 14271 13826 15951 12/02 14510 15370 15195 17421 13452 14608 14358 16573 15443 16906 17063 19436 15864 17221 17497 19838 12/03 17865 19428 20026 22652 18417 19864 20696 23339 18846 20054 20860 23544 18960 20133 21077 23907 12/04 20597 21970 23171 26389 20608 21935 22608 26412 20455 22206 23192 26854 20850 23018 23990 27897 12/31/05 21369 23301 24638 28250
This chart assumes an initial hypothetical investment of $10,000 made on 12/31/95. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the S&P 500/BARRA Value Index and the Russell 1000(R) Value Index. The S&P 500/BARRA Value Index is a market capitalization-weighted index of the stocks in the Standard & Poor's 500 Index having the lowest price to book ratios. The BARRA Value index consists of approximately half of the S&P 500 Index on a market capitalization basis. The Russell 1000(R) Value is comprised of the 1000 securities found in the Russell universe with a less-than-average growth orientation. Companies in this index generally have low price-to-book and price-to-earning ratios, higher dividend yields, and lower forecasted growth values. The indices are unmanaged and do not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. The Lipper Mutual Funds Average is an equally weighted average of the mutual funds within their respective investment objectives, adjusted for the reinvestment of capital gains distributions and income dividends. AVERAGE ANNUAL TOTAL RETURNS (2) (As of December 31, 2005)
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS - -------- ----------- ---------- --------- 3.75% 13.77% 3.86% 7.89%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) The Gross Domestic Product is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. (2) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* Financials 24.0% Industrials 15.8% Energy 8.7% Health Care 8.5% Materials 8.3% Consumer Staples 7.4% Consumer Discretionary 7.1% Short-Term Investment 6.0% Utilities 5.0% Telecommunication Services 4.7% Information Technology 4.4% Money Market Funds 0.1%
12 MID-CAP EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. MANAGEMENT DISCUSSION & ANALYSIS Q: HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: Over the course of 2005, mid cap stocks were the best performing major equity asset class. The Fund's benchmark, the Russell Midcap(R) Index returned 12.65% for the year. The Fund returned 14.32%, outpacing the benchmark by 167 basis points (1.67%). The majority of the Fund's out performance was due to stock selection; many of the stocks the owned by the Fund outperformed the stocks in our benchmark's portfolio. The sectors in the Fund's portfolio which benefited the most from stock selection were Energy, Financials, and Healthcare.* Q: WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund's outperformance was driven almost entirely by stock selection. The Fund's returns in seven out of its ten sectors were superior to the returns of the benchmark. The sectors with the most dramatic differences were Energy, Healthcare, and Materials.* Q: HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: We believe superior stock selection shall provide the Fund with the best source for continued outperformance. We believe each stock in the Fund is one of the best investment opportunities in its sector and that the stocks in the Fund possess a superior combination of growth and valuation characteristics versus the benchmark. While we do not make extreme sector allocations relative to the benchmark, we believe the sectors that offer the best return potential for the year are Information Technology, Healthcare, and Energy.* 13 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. MID-CAP EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Mid-Cap Equity Fund
Mid-Cap Equity Fund Russell Midcap(R)Index 12/31/95 10000 10000 10430 10602 10630 10901 10958 11242 12/96 11605 11900 11260 11802 12554 13403 14378 15183 12/97 14185 15352 15505 17010 15190 16754 12219 14270 12/98 15201 16901 14696 16822 16143 18648 14467 17046 12/99 17328 19983 19278 21998 19096 21005 19387 22436 12/00 16820 21631 14721 19361 17389 21207 13944 17419 12/01 17278 20415 16171 21282 14162 19250 12222 15855 12/02 12362 17111 11863 16706 13578 19757 14157 21028 12/03 16036 23965 16607 25198 16606 25563 16605 25348 12/04 18733 28810 18973 28737 19924 29938 21102 31711 12/31/05 21416 32455
This chart assumes an initial hypothetical investment of $10,000 made on 12/31/95. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the Russell Midcap(R) Index a capitalization weighted index that tracks the performance of the smallest 800 securities as ranked by total market capitalization, in the medium-sized securities universe. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. AVERAGE ANNUAL TOTAL RETURNS (1) (As of December 31, 2005)
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS - -------- ----------- ---------- --------- 14.32% 20.10% 4.95% 7.91%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* [PIE CHART] Financials 20.2% Information Technology 15.0% Consumer Discretionary 14.9% Health Care 11.6% Industrials 10.1% Energy 8.0% Short-Term Investment 5.7% Utilities 5.4% Consumer Staples 4.2% Materials 4.1% REITS 0.5% Money Market Funds 0.3%
14 SMALL CAP VALUE EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 INVESTMENT CONCERNS Small capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. MANAGEMENT DISCUSSION & ANALYSIS Q. HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The Fund continued its outperformance versus the Russell 2000(R) Value Index by returning 11.90% compared to 4.71% return for the the index for the 12 month period ending December 31, 2005. The Fund also managed to outpace the 6.14% return for the Lipper Small Cap Value Average over the same time period. Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE FOR THE PERIOD ENDED DECEMBER 31, 2005? A: The outperformance of the Fund was due to superior stock selection in the Industrials, Information Technology, Materials and Consumer Discretionary sectors. In the Industrials sector, the Fund's investment in GOL Linhas Aereas (GOL), a low cost, low fares airline operating in Brazil and LSI Industries (LYTS), a provider of image solutions, coupled with an overweight weighting aided in besting the Index. Within the Information Technology sector, Harris Corp. (HRS), an international communication company equipment company, and Fair Isaac (FIC), a company that provides services to companies in automate and improving decision making contributed to the excess return versus the Index. In review of the Materials sector, the Fund benefited from the investment in Airgas Inc. (ARG), a distributor of industrial, medical and specialty gases and Allegheny Technologies (ATI), a provider of specialized industrial products. In the Consumer Discretionary sector, the Fund profited from the investment in Makita Corp. (MKTAY), a manufacturer and retailer of power tools for the professional user worldwide and United Auto Group (UAG), a large automotive retailer. The Fund also received positive benefit for its underweight of Financials and overweight of the Materials sector.* Q. HOW DO YOU PLAN TO POSITION THE FUND, BASED ON MARKET CONDITIONS? A: The Fund continues to utilize its bottom-up approach to stock selection. This approach seeks dividend paying stocks that are trading at the lower end of historical trading ranges, display characteristics of financial strength and possess an identifiable catalyst that will assist in realizing true value. The Fund does not make active sector allocations but allows the process to define sector weights. The Fund will rely on the process for direction when making alterations to sector positions. The Fund continues to be cautious on valuations in the small cap value equity arena. Large inflows of capital by non-traditional small cap value investors are skewing valuations to the upside for most securities in the universe. This phenomenon has in turn caused lower quality names to increase in price, therefore making stock selection critical for outperformance. These non-traditional investors may also place undue downside pressure on valuations when they decide to exit the small cap realm. The Fund also recognizes the impact of higher interest rates on security valuation. In our opnion, if the shift to a higher interest rate environment continues, revaluation of equities should occur. The Fund remains very cognizant of the effects of high commodity prices on company feedstock and input costs. These effects could have negative impact on operating margins, which could cause revaluation of securities. Those equities with the highest valuations should see the most erosion in terms of price. 15 PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. SMALL CAP VALUE EQUITY FUND STI CLASSIC VARIABLE TRUST December 31, 2005 GROWTH OF $10,000 INVESTMENT (As of December 31, 2005) Small Cap Value Equity Fund
Small Cap Value Equity Fund Russell 2000(R)Value Index 10/21/97 10000 10000 12/97 9795 10452 10683 11325 9791 10916 7738 8965 12/98 8602 9778 7447 8830 8888 10292 8113 9487 12/99 8191 9632 7826 10001 8232 10196 8758 10944 12/00 9531 11831 10059 11946 11071 13336 10081 11558 12/01 11578 13490 12774 14782 12571 14469 11004 11389 12/02 11440 11949 10748 11342 12580 13919 13606 14995 12/03 15837 17449 16740 18656 17324 18814 17332 18842 12/04 19667 21330 19299 20482 19523 21521 21291 22187 12/31/05 22008 22335
This chart assumes an initial hypothetical investment of $10,000 made on 10/21/97. Total return is based on net change in N.A.V. (net asset value) assuming reinvestment of distributions. Returns shown on this page include reinvestment of all dividends and other distributions. The Fund is measured against the Russell 2000(R) Value Index, an unmanaged index which is is comprised of the securities in the Russell 2000(R) Index with a less-than-average growth orientation. Companies in the Russell index generally have low price-to-book and price-to-earnings ratios. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment adviser and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. AVERAGE ANNUAL TOTAL RETURNS (1) (As of December 31, 2005)
ANNUALIZED INCEPTION TO DATE ONE YEAR THREE YEARS FIVE YEARS (10/21/97) - -------- ----------- ---------- ----------------- 11.90% 24.37% 18.22% 10.10%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT OUR WEBSITE AT WWW. STICLASSICFUNDS.COM. (1) Earnings from a variable annuity investment compound tax-free until withdrawal, so no adjustments were made for income taxes. During the period shown, the Investment Adviser waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. *Portfolio composition is subject to change. PORTFOLIO INVESTMENTS (as a percentage of total investments)* [PIE CHART] Industrials 26.2% Consumer Discretionary 16.9% Financials 16.3% Materials 10.8% Information Technology 9.6% Short-Term Investment 6.7% Health Care 4.2% Consumer Staples 3.5% Energy 3.1% Money Market Funds 1.5% Utilities 1.2%
16 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) CAPITAL APPRECIATION FUND
Shares or Principal Amount($) Value($) --------- -------- COMMON STOCKS (99.6%) CONSUMER DISCRETIONARY (15.1%) Advance Auto Parts, Inc. * 11,000 478 Bed Bath & Beyond, Inc. * 16,100 582 Harley-Davidson, Inc. (b) 15,900 819 Home Depot, Inc. (The) 16,600 672 Kohl's Corp. * 6,800 330 Lowe's Cos., Inc. 11,000 733 Marriott International, Inc., Cl A 5,300 355 NIKE, Inc., Cl B (b) 5,500 477 Omnicom Group, Inc. 10,000 851 Time Warner, Inc 47,600 830 Univision Communications, Inc., Cl A * 15,500 456 Walt Disney Co. (The) 17,800 427 ------- 7,010 ------- CONSUMER STAPLES (4.6%) Colgate-Palmolive Co. 7,400 406 Estee Lauder Cos., Inc. (The), Cl A 10,800 362 Wal-Mart Stores, Inc. 18,800 880 Walgreen Co. 10,400 460 ------- 2,108 ------- ENERGY (3.8%) Anadarko Petroleum Corp. 5,300 502 Exxon Mobil Corp. 22,600 1,270 ------- 1,772 ------- FINANCIALS (15.8%) American Express Co. 20,500 1,055 Chubb Corp. (The) 13,400 1,309 Goldman Sachs Group, Inc. (The) 4,300 549 JPMorgan Chase & Co. 27,600 1,095 MGIC Investment Corp. 16,000 1,053 SLM Corp. (b) 12,700 700 Washington Mutual, Inc. 17,300 753 Wells Fargo & Co. 12,500 785 ------- 7,299 ------- HEALTH CARE (11.7%) Amgen, Inc. * 9,300 733 Baxter International, Inc. 33,400 1,258 Becton, Dickinson & Co. 16,200 973 Health Management Associates, Inc., Cl A 24,800 545 Johnson & Johnson 7,900 475 Quest Diagnostics, Inc. (b) 9,400 484 Schering-Plough Corp. 32,700 682 Tenet Healthcare Corp. * 37,900 290 ------- 5,440 ------- INDUSTRIALS (20.0%) 3M Co. 6,000 465 Cintas Corp. 8,800 362 Danaher Corp. 14,400 803 Emerson Electric Co. 10,900 814 Fastenal Co. (b) 18,000 705 General Electric Co. 33,400 1,172 Honeywell International, Inc. 28,100 1,047 Illinois Tool Works, Inc. 5,600 493 Lockheed Martin Corp. 7,800 496 Raytheon Co. 27,700 1,112 Southwest Airlines Co. 28,800 473 Union Pacific Corp. 7,700 620 United Parcel Service, Inc., Cl B 9,100 684 ------- 9,246 ------- INFORMATION TECHNOLOGY (26.4%) Affiliated Computer Services, Inc., Cl A * (b) 10,800 639 Amdocs Ltd. * 14,800 407 Automatic Data Processing, Inc. 20,500 941 CDW Corp. 5,800 334 CheckFree Corp. * (b) 29,700 1,362 Cisco Systems, Inc. * 24,800 425 Electronic Data Systems Corp. 16,000 385 EMC Corp. * 30,000 409 First Data Corp. 10,500 452 LSI Logic Corp. * 45,600 365 Maxim Integrated Products, Inc. 19,500 707 Microsoft Corp. 55,200 1,442 NCR Corp. * 12,000 407 Nokia Corp. ADR (b) 59,000 1,079 Oracle Corp. * 62,000 757 Paychex, Inc. 26,800 1,021 Texas Instruments, Inc. 13,300 427 VeriSign, Inc. * 30,500 669 ------- 12,228 ------- MATERIALS (1.1%) Rohm & Haas Co. 10,700 518 ------- TELECOMMUNICATION SERVICES (1.1%) AT&T, Inc. 20,300 497 ------- Total Common Stocks (Cost $41,822) 46,118 ------- SHORT-TERM INVESTMENT (13.2%) CSFB Enhanced Liquidity Portfolio (c) 6,101,901 6,102 ------- Total Short-Term Investment (Cost $6,102) 6,102 -------
17 See Notes to Financial Statements SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) CAPITAL APPRECIATION FUND-CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- MONEY MARKET FUNDS (0.4%) Federated Prime Value Obligations Fund, Cl I 186,099 186 ------- Total Money Market Funds (Cost $186) 186 ------- Total Investments (Cost $48,110) (a)--113.2% 52,406 ------- Liabilities in excess of other assets--(13.2)% (6,099) ------- Net Assets--100.0% $46,307 =======
*Non-income producing security. (a) Cost for federal income tax purposes is $48,124 (amount in thousands).Unrealized appreciation/ (depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 5,512 Unrealized Depreciation (1,230) ------- Unrealized Appreciation (Depreciation) $ 4,282 ======= (b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $5,899. (c) This security was purchased with cash collateral held from securities lending. ADR - American Depository Receipt. Cl - Class. See Notes to Financial Statements. 18 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) INTERNATIONAL EQUITY FUND
Shares or Principal Amount($) Value($) --------- -------- FOREIGN COMMON STOCKS (96.6%) AUSTRALIA (3.8%) Australia & New Zealand Banking Group Ltd. 1,801 31 BlueScope Steel Ltd. 3,340 17 Downer EDI Ltd. 2,400 13 Investa Property Group 7,325 11 Promina Group Ltd. 6,481 23 Qantas Airways Ltd. 6,435 19 Rio Tinto Group Ltd. 614 31 St. George Bank Ltd. 1,315 29 Westpac Banking Corp. 1,818 30 --- 204 --- BELGIUM (0.5%) Fortis 200 6 Fortis SA 611 20 --- 26 --- DENMARK (0.8%) Danske Bank A/S 882 32 TDC A/S 225 13 --- 45 --- FINLAND (1.7%) Fortum Corp. 1,240 23 Nokia Corp., Cl A 2,955 54 Tietoenator Oyj 360 13 --- 90 --- FRANCE (10.3%) Atos Origin SA * 269 18 AXA 1,610 52 BNP Paribas 755 60 Bouygues SA 304 15 Compagnie de Saint-Gobain 365 22 France Telecom SA 1,490 37 Lafarge SA 352 32 Pernod Ricard 108 19 PSA Peugeot Citroen SA 228 13 Sanofi-Aventis 407 36 Schneider Electric SA 283 25 Societe Generale 363 45 SUEZ SA 1,136 35 TOTAL SA 228 57 VINCI SA 403 35 Vivendi Universal SA 1,513 47 --- 548 --- GERMANY (7.3%) Adidas-Salomon AG 154 29 Allianz AG 315 48 BASF AG 572 44 Bayer AG 242 10 Continental AG 351 31 DaimlerChrysler AG 300 15 Deutsche Bank AG 280 27 GERMANY-CONTINUED Deutsche Post AG 444 11 Deutsche Telekom AG 1,473 25 E.ON AG 489 50 MAN AG 524 28 METRO AG 179 9 SAP AG 116 21 Schering AG 440 29 Siemens AG 115 10 --- 387 --- HONG KONG (2.2%) Cheung Kong (Holdings) Ltd. 2,700 27 China Mobile Ltd. 4,000 19 China Resources Power Holdings Co. Ltd. 12,000 7 CNOOC Ltd. 21,800 15 Hutchison Whampoa Ltd. 3,107 29 Prosperity REIT * (b) 84 0 Wing Hang Bank Ltd. 3,000 22 --- 119 --- IRELAND (0.6%) CRH PLC 1,106 33 --- ITALY (2.0%) Banca Intesa SpA 6,269 33 Eni SpA 1,818 50 Mediaset SpA 522 6 UniCredito Italiano SpA 2,135 15 --- 104 --- JAPAN (25.7%) AEON Co. Ltd. 800 20 Aisin Seiki Co. Ltd. 400 15 Amano Corp. 600 11 Astellas Pharma, Inc. 500 20 Canon, Inc. 500 29 Central Japan Railway Co. 2 19 Daicel Chemical Industries Ltd. 5,000 36 Daiichi Sankyo Co. Ltd. * 400 8 Daiwa Securities Group, Inc. 3,000 34 East Japan Railway Co. 3 21 Electric Power Development Co. Ltd. 600 21 FANCL Corp. 300 16 FANUC Ltd. 200 17 Fujikura Ltd. 3,000 24 Fujitsu Ltd. 3,000 23 Hitachi Chemical Co. Ltd. 500 13 Honda Motor Co. Ltd. 402 23 Ibiden Co. Ltd. 200 11 ITOCHU Corp. 1,000 8 Japan Tobacco, Inc. 1 15 KDDI Corp. 3 17 Keisei Electric Railway Co. Ltd. 1,000 7
See Notes to Financial Statements. 19 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) INTERNATIONAL EQUITY FUND-CONTINUED
Shares or Principal Amount($) Value($) ---------- -------- JAPAN-CONTINUED Komatsu Ltd. 2,000 33 Kubota Corp. 3,000 25 Makita Corp. 400 10 Matsushita Electric Industrial Co. Ltd. 2,000 39 Mazda Motor Corp. 4,000 18 Mitsubishi Corp. 1,600 35 Mitsubishi Electric Corp. 4,000 28 Mitsubishi Tokyo Financial Group, Inc. 4 54 Mitsui Fudosan Co. Ltd. 1,000 20 Mitsui O.S.K. Lines Ltd. 3,000 26 Mitsui Sumitomo Insurance Co. Ltd. 2,000 24 Mitsui Trust Holdings, Inc. 2,000 24 Mizuho Financial Group, Inc. 7 56 Morinaga & Co. Ltd. 4,000 12 Namco Bandai Holdings, Inc.* 600 9 Nidec Corp. 100 9 Nikko Cordial Corp. 1,100 17 Nippon Steel Corp. 4,000 14 Nippon Telegraph & Telephone Corp. 5 23 NSK Ltd. 3,000 21 Okinawa Electric Power Co., Inc. (The) 300 17 ORIX Corp. 100 25 Ricoh Co. Ltd. 1,000 18 Ryohin Keikaku Co. Ltd. 200 17 Sankyo Co. Ltd. 300 17 Sanyo Shinpan Finance Co. Ltd. 260 19 Sega Sammy Holdings, Inc. 600 20 Shin-Etsu Chemical Co. Ltd. 400 21 Sompo Japan Insurance, Inc. 1,000 14 Sumitomo Corp. 2,000 26 Sumitomo Electric Industries Ltd. 700 11 Sumitomo Metal Industries Ltd. 6,000 23 Sumitomo Mitsui Financial Group, Inc. 3 32 Takeda Pharmaceutical Co. Ltd. 700 38 Tokyo Ohka Kogyo Co. Ltd. 600 17 Toyoda Machine Works Ltd. (c) 1,000 14 Toyota Motor Corp. 1,613 84 Trans Cosmos, Inc. 100 8 Tsubakimoto Chain Co. 1,000 7 Yamada Denki Co. Ltd. 100 13 Yamaha Motor Co. Ltd. 400 10 Yamatake Corp. 300 7 ----- 1,363 ----- NETHERLANDS (3.8%) ABN AMRO Holding NV 1,659 43 Akzo Nobel NV 548 25 NETHERLANDS-CONTINUED ING Groep NV 1,543 54 Royal KPN NV 3,177 32 Royal Philips Electronics NV 1,574 49 ----- 203 ----- NEW ZEALAND (0.7%) Fletcher Building Ltd. 4,927 26 Warehouse Group Ltd. (The) 4,300 10 ----- 36 ----- NORWAY (1.9%) DNB NOR ASA 700 7 Norsk Hydro ASA 130 13 Orkla ASA 890 38 Statoil ASA 1,020 23 Telenor ASA 2,050 20 ----- 101 ----- PORTUGAL (0.3%) Energias de Portugal SA 5,629 17 ----- SINGAPORE (1.0%) Jurong Technologies Industrial Corp. Ltd. 11,000 12 SembCorp Industries Ltd. 9,000 15 United Overseas Bank Ltd. 3,000 26 ----- 53 ----- SPAIN (2.5%) Banco Santander Central Hispano SA 3,635 48 Endesa SA 313 8 Repsol YPF SA 1,334 39 Telefonica SA 1,864 28 Union Fenosa SA 297 11 ----- 134 ----- SWEDEN (2.5%) Autoliv, Inc. 261 12 Nordea Bank AB 2,310 24 Sandvik AB 383 18 Svenska Handelsbanken AB, Cl A 780 19 Telefonaktiebolaget LM Ericsson 12,220 42 Volvo AB, Cl B 350 17 ----- 132 ----- SWITZERLAND (6.3%) Credit Suisse Group 1,065 54 Nestle SA 244 73 Novartis AG 1,478 78 Roche Holding Ltd. 306 46 UBS AG 453 43 Zurich Financial Services 202 43 ----- 337 ----- UNITED KINGDOM (22.7%) Alliance UniChem PLC 1,516 21 Anglo American PLC 1,088 37
See Notes to Financial Statements. 20 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) INTERNATIONAL EQUITY FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- UNITED KINGDOM-CONTINUED Anglo Irish Bank Corp. PLC 1,570 24 AstraZeneca PLC 1,453 71 Aviva PLC 2,867 35 AWG PLC 1,243 23 Balfour Beatty PLC 3,381 21 BHP Billiton PLC 2,740 45 BP PLC 11,340 120 Bradford & Bingley PLC 2,924 21 British Airways PLC * 5,434 31 British American Tobacco PLC 1,977 44 British Energy Group PLC * 3,600 32 BT Group PLC 5,397 21 CRH PLC (b) 9 0 First Choice Holidays PLC 8,044 35 George Wimpey PLC 2,169 18 GlaxoSmithKline PLC 2,422 61 HBOS PLC 3,456 59 HSBC Holdings PLC 6,314 101 Old Mutual PLC 6,134 17 Pilkington PLC 2,723 7 Royal & Sun Alliance Insurance Group PLC 8,200 18 Royal Bank of Scotland Group PLC (The) 2,655 80 Royal Dutch Shell PLC, Cl A 2,919 89 Royal Dutch Shell PLC, Cl B 802 26 SABMiller PLC 897 16 Tesco PLC 5,491 31 Vodafone Group PLC 41,973 91 WH Smith PLC 1,600 12 ------- 1,207 ------- Total Foreign Common Stocks (Cost $3,642) 5,139 ------- SHORT-TERM INVESTMENTS (1.3%) Brown Brothers Harriman & Co., Cayman Islands Cash Sweep 66,938 67 ------- Total Short-Term Investments (Cost $67) 67 ------- Total Investments (Cost $3,709) (a)--97.9% 5,206 ------- Other assets in excess of liabilities--2.1% 114 ------- Net Assets--100.0% $ 5,320 =======
*Non-income producing security. (a) Cost for federal income tax purposes is $3,836 (amount in thousands). Unrealized appreciation/ (depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 1,377 Unrealized Depreciation (7) ------- Unrealized Appreciation (Depreciation) $ 1,370 ======= (b) Market value is less than one thousand dollars. (c) Fair Valued at December 31, 2005 according to procedures approved by the Board of Trustees. C1 - Class. REIT - Real Estate Investment Trust. The investment concentrations for the International Equity Fund as a percentage of net assets, by industry, as of December 31, 2005, were as follows (unaudited): Consumer Discretionary 10.3% Consumer Staples 5.6 Energy 9.0 Financials 29.0 Health Care 7.6 Industrials 11.8 Information Technology 5.0 Materials 7.9 Short-Term Investments 1.3 Telecommunication Services 6.5 Utilities 3.9 See Notes to Financial Statements. 21 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) INVESTMENT GRADE BOND FUND
Shares or Principal Amount($) Value($) --------- -------- ASSET BACKED SECURITIES (8.9%) AUTOMOBILE ABS (5.2%) Americredit Automobile Receivables Trust, Ser 2002-D, Cl A4, 3.400%, 04/13/09 200 198 Daimler Chrysler Auto Trust, Ser 2004-B, Cl A3, 3.180%, 09/08/08 250 248 Onyx Acceptance Auto Trust, Ser 2003-D, Cl A4, 3.200%, 03/15/10 250 246 ----- 692 ----- CREDIT CARD ABS (3.7%) American Express Credit Account Master Trust, Ser 2002-3, Cl A, 5.530%, 10/15/08 250 250 Fleet Credit Card Master Trust II, Ser 2003, Cl A, 2.400%, 07/15/08 250 250 ----- 500 ----- Total Asset Backed Securities (Cost $1,195) 1,192 ----- COLLATERALIZED MORTGAGE OBLIGATIONS (0.6%) Citigroup/Deutsche Bank Commercial Mortgage Trust, Ser 2005-CD1, Cl A4, 5.225%, 07/15/44 (e) 75 76 ----- Total Collateralized Mortgage Obligations (Cost $76) 76 ----- CORPORATE BONDS (17.4%) AEROSPACE/DEFENSE (0.5%) United Technologies Corp., 4.875%, 05/01/15 65 64 ----- AIRLINES (0.2%) Southwest Airlines Co., 5.125%, 03/01/17 35 33 ----- BANKS (0.7%) Bank of America Corp., 7.400%, 01/15/11 80 88 ----- COMMERCIAL SERVICES (0.2%) ERAC USA Finance Co., 5.600%, 05/01/15 (d) 30 30 ----- DIVERSIFIED FINANCIAL SERVICES (5.6%) CIT Group, Inc., 5.125%, 09/30/14 65 64 Citigroup, Inc., 5.125%, 05/05/14 20 20 Citigroup, Inc., 5.850%, 12/11/34 35 36 Fund American Cos., Inc., 5.875%, 05/15/13 85 86 Goldman Sachs Group, Inc. (The), 4.750%, 07/15/13 90 87 HSBC Holdings PLC, 7.625%, 05/17/32 35 44 DIVERSIFIED FINANCIAL SERVICES-CONTINUED John Deere Capital Corp., 3.900%, 01/15/08 15 15 JPMorgan Chase & Co., 6.625%, 03/15/12 100 108 Lazard Group LLC, 7.125%, 05/15/15 165 173 Morgan Stanley, 5.300%, 03/01/13 115 115 ----- 748 ----- ELECTRIC (1.2%) Exelon Corp., 5.625%, 06/15/35 100 95 Pacific Gas & Electric Co., 6.050%, 03/01/34 65 67 ----- 162 ----- ENTERTAINMENT (0.2%) GTECH Holdings Corp., 4.750%, 10/15/10 30 27 ----- FOOD (1.1%) Woolworths Ltd., 5.550%, 11/15/15 (d) 145 147 ----- INSURANCE (0.1%) Metlife, Inc., 5.700%, 06/15/35 15 15 ----- INVESTMENT COMPANIES (0.2%) Credit Suisse First Boston USA, Inc., 6.500%, 01/15/12 30 32 ----- MEDIA (1.0%) Cox Communications, Inc., 4.625%, 06/01/13 35 33 News America Holdings, Inc., 9.250%, 02/01/13 30 36 News America Holdings, Inc., 6.200%, 12/15/34 20 20 Time Warner, Inc., 7.625%, 04/15/31 35 39 ----- 128 ----- MINING (0.6%) Alcan, Inc., 5.750%, 06/01/35 30 29 Codelco, Inc., 5.500%, 10/15/13 (d) 45 46 ----- 75 ----- MISCELLANEOUS MANUFACTURER (1.2%) General Electric Co., 5.000%, 02/01/13 165 165 ----- OIL & GAS (1.0%) Devon Financing Corp. ULC, 7.875%, 09/30/31 45 58 Enterprise Products Operating LP, Ser B, 6.875%, 03/01/33 30 32
See Notes to Financial Statements. 22 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) INVESTMENT GRADE BOND FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- OIL & GAS-CONTINUED Motiva Enterprises LLC, 5.200%, 09/15/12 (d) 15 15 Valero Energy Corp., 7.500%, 04/15/32 30 36 -------- 141 -------- PIPELINES (1.0%) Centerpoint Energy Resources Corp., Ser B, 7.875%, 04/01/13 50 57 K N Capital Trust III, 7.630%, 04/15/28 55 61 Kinder Morgan, Inc., 7.250%, 03/01/28 15 17 -------- 135 -------- REITS (0.1%) Simon Property Group LP, 6.375%, 11/15/07 15 15 -------- RETAIL (0.1%) Federated Department Stores, Inc., 6.900%, 04/01/29 15 16 -------- TELECOMMUNICATIONS (2.2%) Bellsouth Corp., 6.550%, 06/15/34 55 59 SBC Communications, Inc., 6.450%, 06/15/34 80 83 Telecom Italia Capital SA, 5.250%, 10/01/15 80 78 Verizon Global Funding Corp., 7.750%, 12/01/30 60 71 -------- 291 -------- TRANSPORTATION (0.2%) BNSF Funding Trust 1, 6.613%, 12/15/55, Callable 01/15/26 @ 100 25 26 -------- Total Corporate Bonds (Cost $2,328) 2,338 -------- U.S. GOVERNMENT AGENCIES (18.3%) FANNIE MAE (5.9%) 4.500%, 10/15/08 800 796 -------- FREDDIE MAC (12.4%) 3.625%, 02/15/08 1,700 1,662 -------- Total U.S. Government Agencies (Cost $2,459) 2,458 -------- U.S. TREASURY OBLIGATIONS (53.4%) U.S. TREASURY BONDS (10.3%) 6.250%, 08/15/23 (b) 605 722 6.125%, 11/15/27 240 290 5.375%, 02/15/31 (b) 335 376 -------- 1,388 -------- U.S. TREASURY INFLATION PROTECTED NOTES/BONDS (5.3%) 1.625%, 01/15/15 710 714 -------- U.S. TREASURY NOTES (37.8%) 1.875%, 01/31/06 145 145 4.250%, 11/30/07 (b) 1,090 1,087 4.375%, 11/15/08 55 55 3.125%, 04/15/09 (b) 125 120 6.000%, 08/15/09 (b) 835 880 4.250%, 10/15/10 (b) 830 826 4.500%, 11/15/10 (b) 815 819 4.250%, 08/15/13 (b) 870 862 4.500%, 11/15/15 (b) 280 282 -------- 5,076 -------- Total U.S. Treasury Obligations (Cost $7,172) 7,178 -------- SHORT-TERM INVESTMENTS (39.2%) CSFB Enhanced Liquidity Portfolio (c) 5,269,823 5,270 -------- Total Short-Term Investments (Cost $5,270) 5,270 -------- MONEY MARKET FUNDS (0.8%) Federated Prime Value Money Market Fund 104,082 104 -------- Total Money Market Funds (Cost $104) 104 -------- Total Investments (Cost $18,604) (a)--138.6% 18,616 -------- Liabilities in excess of other assets--(38.6)% (5,186) -------- Net Assets--100.0% $ 13,430 ========
(a) Cost for federal income tax purposes is $18,622 (amount in thousands). Unrealized appreciation/ (depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 74 Unrealized Depreciation (80) ----- Unrealized Appreciation (Depreciation) $ (6) ===== (b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $5,096. (c) This security was purchased with cash collateral held from securities lending. (d) Rule 144A, Section 4(2) or other security which is restricted as to resale to institutional investors. The Fund's advisor has deemed this security to be liquid based upon procedures approved by the Board of Trustees. (e) Variable rate security. Rate presented represents rate in effect at December 31, 2005. Maturity date represents actual maturity date. C1 - Class. LLC - Limited Liability Company. LP - Limited Partnership. REIT - Real Estate Investment Trust. Ser - Series. See Notes to Financial Statements. 23 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) LARGE CAP RELATIVE VALUE FUND
Shares or Principal Amount($) Value($) --------- -------- COMMON STOCKS (99.6%) CONSUMER DISCRETIONARY (8.7%) Advance Auto Parts, Inc. * 5,000 217 Gannett Co., Inc. 1,000 61 Kohl's Corp. * 1,000 49 Lowe's Cos., Inc. 2,500 167 Meredith Corp. 2,000 105 Target Corp. 1,500 82 Viacom, Inc., Cl B (b) 7,000 227 Walt Disney Co. (The) 6,000 144 ----- 1,052 ----- CONSUMER STAPLES (9.8%) Anheuser-Busch Cos., Inc. 1,400 60 Archer Daniels Midland Co. 5,000 123 Diageo PLC ADR 3,500 205 Estee Lauder Cos., Inc. (The), Cl A 3,000 100 PepsiCo, Inc. 2,000 118 Procter & Gamble Co. (The) 1,200 69 SYSCO Corp. 2,700 84 Unilever PLC ADR 5,000 202 Wal-Mart Stores, Inc. 3,100 145 Wm. Wrigley Jr. Co. 1,300 86 ----- 1,192 ----- ENERGY (10.1%) Anadarko Petroleum Corp. 1,000 95 Baker Hughes, Inc. 3,500 212 Burlington Resources, Inc. 2,000 172 Chevron Corp. 3,000 170 ConocoPhillips 2,400 140 Exxon Mobil Corp. 3,000 169 Royal Dutch Shell PLC ADR, Cl A 3,000 184 Transocean, Inc. * 1,300 91 ----- 1,233 ----- FINANCIALS (24.2%) American International Group, Inc. 3,000 205 Ameriprise Financial Inc 4,000 164 Bank of America Corp. 3,800 175 Berkshire Hathaway, Inc., Cl B * 75 221 Cincinnati Financial Corp. 4,200 188 CIT Group, Inc. 4,100 212 Citigroup, Inc. 5,300 258 Fifth Third Bancorp 3,000 113 Genworth Financial, Inc., Cl A (b) 6,000 207 Goldman Sachs Group, Inc. (The) 750 96 Morgan Stanley 3,000 170 New York Community Bancorp, Inc. (b) 12,000 198 Principal Financial Group, Inc. 3,500 166 State Street Corp. 2,000 111 FINANCIALS-CONTINUED U.S. Bancorp 4,400 132 Wachovia Corp. 4,000 211 Wells Fargo & Co. 1,825 115 ----- 2,942 ----- HEALTH CARE (11.6%) Abbott Laboratories 4,000 158 Amgen, Inc. * 1,675 132 Boston Scientific Corp. * 10,000 245 Bristol-Myers Squibb Co. 9,000 207 Eli Lilly & Co. 3,500 198 Johnson & Johnson 2,700 162 Pfizer, Inc. 10,000 233 WellPoint, Inc. * 1,000 80 ----- 1,415 ----- INDUSTRIALS (10.2%) 3M Co. 2,000 155 Cendant Corp. 7,000 121 Dover Corp. 3,000 121 Emerson Electric Co. 1,500 112 General Electric Co. 4,000 140 Goodrich Corp. 5,000 207 Honeywell International, Inc. 2,500 93 Norfolk Southern Corp. 2,500 112 Rockwell Automation, Inc. 1,000 59 Textron, Inc. 1,500 115 ----- 1,235 ----- INFORMATION TECHNOLOGY (14.0%) Accenture Ltd., Cl A (b) 7,000 202 Agilent Technologies, Inc. * 4,500 150 Applied Materials, Inc. 12,000 215 Cisco Systems, Inc. * 8,000 137 First Data Corp. 4,850 209 Intel Corp. 6,000 150 International Business Machines Corp. 1,800 148 Microsoft Corp. 7,500 196 Nokia Corp. ADR 13,000 237 Texas Instruments, Inc. 1,900 61 ----- 1,705 ----- MATERIALS (3.1%) E.I. du Pont de Nemours & Co. 2,500 106 Praxair, Inc. 2,700 143 Sigma-Aldrich Corp. 2,000 127 ----- 376 ----- TELECOMMUNICATION SERVICES (3.9%) ALLTEL Corp. 1,800 114 BellSouth Corp. 2,200 60 Verizon Communications, Inc. 5,000 150 Vodafone Group PLC ADR 7,000 150 ----- 474 -----
See Notes to Financial Statements. 24 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) LARGE CAP RELATIVE VALUE FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- UTILITIES (4.0%) American Electric Power Co., Inc. 3,000 111 Edison International 4,000 176 Exelon Corp. 2,000 106 SCANA Corp. 2,500 98 -------- 491 -------- Total Common Stocks (Cost $10,391) 12,114 -------- SHORT-TERM INVESTMENT (7.0%) CSFB Enhanced Liquidity Portfolio (c) 846,170 846 -------- Total Short-Term Investment (Cost $846) 846 -------- MONEY MARKET FUNDS (0.7%) Federated Prime Value Obligations Fund, Cl I 83,065 83 -------- Total Money Market Funds (Cost $83) 83 -------- Total Investments (Cost $11,320) (a)--107.3% 13,043 -------- Liabilities in excess of other assets--(7.3)% (891) -------- Net Assets--100.0% $ 12,152 ========
- --------------- *Non-income producing security. (a) Cost for federal income tax purposes is $11,342 (amount in thousands) Unrealized appreciation/ (depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 2,023 Unrealized Depreciation (322) ------- Unrealized Appreciation (Depreciation) $ 1,701 ======= (b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $824. (c) This security was purchased with cash collateral held from securities lending. ADR - American Depository Receipt. C1 - Class. See Notes to Financial Statements. 25 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) LARGE CAP VALUE EQUITY FUND
Shares or Principal Amount($) Value($) --------- -------- COMMON STOCKS (99.6%) CONSUMER DISCRETIONARY (7.5%) Dow Jones & Co., Inc. (b) 16,800 596 Federated Department Stores, Inc. 11,988 796 Leggett & Platt, Inc. 24,491 562 OfficeMax, Inc. 7,736 196 Stanley Works (The) 8,734 420 Time Warner, Inc. 16,000 279 ----- 2,849 ----- CONSUMER STAPLES (7.9%) Colgate-Palmolive Co. 15,000 822 Estee Lauder Cos., Inc. (The), Cl A (b) 8,250 276 H.J. Heinz Co. 13,050 440 J.M. Smucker Co. (The) 6,788 299 Kimberly-Clark Corp. 9,900 591 PepsiCo, Inc. 9,700 573 ----- 3,001 ----- ENERGY (9.2%) Amerada Hess Corp. 3,000 380 Chevron Corp. 13,350 758 ConocoPhillips 13,300 774 Exxon Mobil Corp. 13,650 767 Marathon Oil Corp. 13,450 820 ----- 3,499 ----- FINANCIALS (25.4%) A.G. Edwards, Inc. 7,250 340 Aspen Insurance Holdings Ltd. 4,100 97 Astoria Financial Corp. 13,650 401 Bank of America Corp. 17,750 820 Bank of New York Co., Inc. (The) 19,400 618 Bear Stearns & Co., Inc. 5,850 676 Citigroup, Inc. 8,441 410 Colonial BancGroup, Inc. (The) 12,850 306 Comerica, Inc. 5,234 297 Compass Bancshares, Inc. 6,610 319 Endurance Specialty Holdings Ltd. 2,900 104 JPMorgan Chase & Co. 15,395 611 KeyCorp. 12,000 395 Lincoln National Corp. 7,700 408 Merrill Lynch & Co., Inc. 5,200 352 Morgan Stanley 5,850 332 Northern Trust Corp. 6,750 350 Provident Financial Services, Inc. 19,100 354 Regions Financial Corp. 9,203 314 South Financial Group, Inc. (The) 7,207 198 Torchmark Corp. 7,294 406 Wachovia Corp. (b) 12,000 634 Washington Mutual, Inc. 15,250 663 XL Capital Ltd., Cl A (b) 4,350 293 ----- 9,698 ----- HEALTH CARE (9.0%) Abbott Laboratories 19,600 773 Becton, Dickinson & Co. 6,947 417 Cooper Cos., Inc. (The) 6,150 315 PerkinElmer, Inc. 14,696 346 Pfizer, Inc. 35,450 828 Wyeth 16,050 739 ----- 3,418 ----- INDUSTRIALS (16.8%) Emerson Electric Co. 5,477 409 General Electric Co. 20,800 729 Honeywell International, Inc. 20,800 774 Hubbell, Inc., Cl B 4,333 196 Illinois Tool Works, Inc. 7,200 634 ITT Industries, Inc. 3,900 401 MSC Industrial Direct Co., Inc., Cl A 7,550 304 Pall Corp. 13,784 370 Parker Hannifin Corp. 4,550 300 Pentair, Inc. 6,650 230 Pitney Bowes, Inc. 7,133 301 Rockwell Automation, Inc. 8,750 518 Ryder System, Inc. 5,850 240 United Parcel Service, Inc., Cl B 8,700 654 Waste Management, Inc. 11,350 344 ----- 6,404 ----- INFORMATION TECHNOLOGY (4.7%) Automatic Data Processing, Inc. 11,900 545 First Data Corp. 7,050 303 Harris Corp. 7,247 312 Jack Henry & Associates, Inc. 15,866 303 Tektronix, Inc. 11,400 322 ----- 1,785 ----- MATERIALS (8.8%) Alcoa, Inc. 14,350 424 Ashland, Inc. 3,934 228 Bemis Co., Inc. (b) 10,550 294 Cytec Industries, Inc. 4,950 236 E.I. du Pont de Nemours & Co. 13,450 572 Engelhard Corp. 10,954 330 International Paper Co. 11,850 398 MeadWestvaco Corp. 10,450 293 Sigma-Aldrich Corp. 4,406 279 Valspar Corp. (The) 11,400 281 ----- 3,335 ----- TELECOMMUNICATION SERVICES (5.0%) AT&T, Inc. (b) 15,700 384 BellSouth Corp. 27,900 756 Verizon Communications, Inc. 25,390 765 ----- 1,905 -----
See Notes to Financial Statements. 26 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) LARGE CAP VALUE EQUITY FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- UTILITIES (5.3%) Cinergy Corp. 10,050 427 Constellation Energy Group, Inc. 5,750 331 Dominion Resources, Inc. 5,339 412 Entergy Corp. 6,300 432 PPL Corp. 13,591 400 -------- 2,002 -------- Total Common Stocks (Cost $34,639) 37,896 -------- SHORT-TERM INVESTMENT (6.4%) CSFB Enhanced Liquidity Portfolio (c) 2,424,514 2,425 -------- Total Short-Term Investment (Cost $2,425) 2,425 -------- MONEY MARKET FUNDS (0.1%) Federated Prime Value Obligations Fund, Cl I 37,336 37 -------- Total Money Market Funds (Cost $37) 37 -------- Total Investments (Cost $37,100) (a)--106.1% 40,358 -------- Liabilities in excess of other assets--(6.1)% (2,330) -------- Net Assets--100.0% $ 38,028 ========
(a) Cost for federal income tax purposes is $37,121 (amount in thousands). Unrealized appreciation/(depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 3,857 Unrealized Depreciation (620) -------- Unrealized Appreciation (Depreciation) $ 3,237 ======== (b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $2,346. (c) This security was purchased with cash collateral held from securities lending. C1 - Class. See Notes to Financial Statements. 27 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) MID-CAP EQUITY FUND
Shares or Principal Amount($) Value($) --------- -------- COMMON STOCKS (98.3%) CONSUMER DISCRETIONARY (15.5%) Abercrombie & Fitch Co., Cl A 2,133 139 American Eagle Outfitters, Inc. 3,019 69 Black & Decker Corp. (The) 1,728 150 Claire's Stores, Inc. 2,829 83 Darden Restaurants, Inc. 3,431 133 Dex Media, Inc. 2,574 70 Federated Department Stores, Inc. 1,447 96 Hilton Hotels Corp. 6,691 160 J.C. Penney Co., Inc. 2,267 126 Johnson Controls, Inc. 1,092 80 KB Home 897 65 Lennar Corp., Cl A 2,467 151 Liz Claiborne, Inc. 2,036 73 McGraw-Hill Cos., Inc. (The) 4,697 242 Meritage Homes Corp. * 1,292 81 Nordstrom, Inc. 3,911 146 Pacific Sunwear of California, Inc. * 2,722 68 Polo Ralph Lauren Corp. 2,005 113 Scholastic Corp. * 2,340 67 Sherwin-Williams Co. (The) 2,328 106 Starwood Hotels & Resorts Worldwide, Inc. 932 60 Tiffany & Co. 1,557 60 ----- 2,338 ----- CONSUMER STAPLES (4.4%) Archer Daniels Midland Co. 3,399 84 Pepsi Bottling Group, Inc. (The) 4,408 126 Pilgrim's Pride Corp. 5,165 171 Reynolds American, Inc. 1,152 110 Smithfield Foods, Inc. * 5,511 169 ----- 660 ----- ENERGY (8.4%) Amerada Hess Corp. 1,135 144 Cooper Cameron Corp.* 2,861 118 Devon Energy Corp. 2,499 157 Marathon Oil Corp. 2,292 140 Murphy Oil Corp. 2,342 126 Noble Energy, Inc. 3,374 136 Pride International, Inc.* 2,846 88 Tesoro Corp.* 2,125 131 Valero Energy Corp. 2,703 139 Weatherford International Ltd.* 2,235 81 ----- 1,260 ----- FINANCIALS (21.1%) American Capital Strategies Ltd. 3,368 122 Arch Capital Group Ltd.* 1,672 92 Bear Stearns & Co., Inc. 2,088 241 Brandywine Realty Trust 2,805 78 CBL & Associates Properties, Inc. 2,532 100 FINANCIALS-CONTINUED CIT Group, Inc. 3,727 193 Comerica, Inc. 1,785 101 Conseco, Inc.* 2,418 56 E*TRADE Financial Corp.* 4,937 103 Fiserv, Inc.* 1,176 51 General Growth Properties, Inc. 3,180 149 Genworth Financial, Inc., Cl A 1,988 69 IndyMac Bancorp, Inc. 2,723 106 KeyCorp. 4,170 137 Lexington Corp. Properties Trust 5,692 121 Lincoln National Corp. 3,361 178 MBIA, Inc. 1,923 116 MGIC Investment Corp. 1,662 109 New Century Financial Corp. 2,037 73 North Fork Bancorporation, Inc. 2,629 72 Old Republic International Corp. 2,732 72 PMI Group, Inc. (The) 2,562 105 Radian Group, Inc. 1,550 91 Sovereign Bancorp, Inc. 3,209 69 St. Paul Travelers Cos., Inc. (The) 3,151 141 Student Loan Corp. (The) 180 38 TD Banknorth, Inc. 2,600 76 UnumProvident Corp. 2,906 66 Ventas, Inc. 4,733 152 Zions Bancorp 1,271 96 ----- 3,173 ----- HEALTH CARE (12.1%) Allergan, Inc. 1,382 149 Becton, Dickinson & Co. 1,725 104 Biogen Idec, Inc.* 1,977 90 CIGNA Corp. 1,292 144 Coventry Health Care, Inc.* 3,305 189 Dade Behring Holdings, Inc. 2,180 89 Edwards Lifesciences Corp.* 1,999 83 Express Scripts, Inc.* 1,424 119 Genzyme Corp.* 2,168 153 Hospira, Inc.* 3,163 135 Humana, Inc.* (b) 1,299 71 Laboratory Corp. of America Holdings* (b) 2,570 138 McKesson Corp. 1,910 99 Protein Design Labs, Inc.* 3,505 100 UnitedHealth Group, Inc. 1,274 79 Watson Pharmaceuticals, Inc.* 2,587 84 ----- 1,826 ----- INDUSTRIALS (10.6%) American Standard Cos., Inc. 1,948 78 Arrow Electronics, Inc.* 3,817 122 CSX Corp. 2,077 105 Cummins, Inc. 1,258 113 Eaton Corp. 2,110 142 Goodrich Corp. 2,023 83 Granite Construction, Inc. 1,760 63
See Notes to Financial Statements. 28 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) MID-CAP EQUITY FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- INDUSTRIALS-CONTINUED Harsco Corp. 1,421 96 Herman Miller, Inc. 2,052 58 Hughes Supply, Inc. 3,404 122 PACCAR, Inc. 2,077 144 R.R. Donnelley & Sons Co. 2,744 94 Ryder System, Inc. 2,279 93 Southwest Airlines Co. 7,416 122 Timken Co. (The) (b) 5,145 165 -------- 1,600 -------- INFORMATION TECHNOLOGY (15.7%) Accenture Ltd., Cl A 3,441 99 ADTRAN, Inc. 2,642 79 Alliance Data Systems Corp.* 2,617 93 Amphenol Corp., Cl A 2,940 130 Autodesk, Inc. 2,064 89 Broadcom Corp., Cl A* 1,960 92 Check Point Software Technologies Ltd.* 4,103 82 Citrix Systems, Inc.* (b) 4,001 115 Compuware Corp.* 7,360 66 Corning, Inc.* 3,565 70 Fair Isaac Corp. 2,192 97 Freescale Semiconductor, Inc., Cl B * 3,962 100 Global Payments, Inc. (b) 3,216 150 Harris Corp. 2,279 98 Lam Research Corp.* (b) 3,053 109 Linear Technology Corp. 2,342 84 McAfee, Inc.* 4,529 123 MEMC Electronic Materials, Inc.* 3,313 73 National Semiconductor Corp. 5,109 133 NCR Corp.* 3,576 121 NVIDIA Corp.* 2,564 94 QLogic Corp.* 2,019 66 SanDisk Corp.* 1,058 66 Western Digital Corp.* 7,364 137 -------- 2,366 -------- MATERIALS (4.3%) FMC Corp.* 2,063 110 Louisiana-Pacific Corp. 4,267 117 Lubrizol Corp. (The) 3,072 133 Lyondell Chemical Co. 5,188 124 Phelps Dodge Corp. 1,124 162 -------- 646 -------- REITS (0.5%) Simon Property Group, Inc. 888 68 -------- UTILITIES (5.7%) Allegheny Energy, Inc.* 1,170 37 Alliant Energy Corp 4,199 118 American Electric Power Co., Inc. 5,568 206 CenterPoint Energy, Inc. (b) 7,740 99 Edison International 3,962 173 FirstEnergy Corp. 1,564 77 Sempra Energy (b) 3,302 148 -------- 858 -------- Total Common Stocks (Cost $12,859) 14,795 -------- SHORT-TERM INVESTMENT (6.0%) CSFB Enhanced Liquidity Portfolio (c) 897,706 898 -------- Total Short-Term Investment (Cost $898) 898 -------- MONEY MARKET FUNDS (0.3%) Federated Prime Value Obligations Fund, Cl I 39,001 39 -------- Total Money Market Funds (Cost $39) 39 -------- Total Investments (Cost $13,796) (a)--104.6% 15,732 -------- Liabilities in excess of other assets--(4.6)% (696) -------- Net Assets--100.0% $ 15,036 ========
*Non-income producing security. (a) Cost for federal income tax purposes is $13,811 (amount in thousands). Unrealized appreciation/(depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 2,145 Unrealized Depreciation (224) ---------- Unrealized Appreciation (Depreciation) $ 1,921 ==========
(b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $868. (c) This security was purchased with cash collateral held from securities lending. C1 - Class. REIT - Real Estate Investment Trust. 29 See Notes to Financial Statements. SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) SMALL CAP VALUE EQUITY FUND
Shares or Principal Amount($) Value($) --------- -------- COMMON STOCKS (98.4%) CONSUMER DISCRETIONARY (18.0%) ADESA, Inc. 7,646 187 ArvinMeritor, Inc. 9,000 130 Bassett Furniture Industries, Inc. 5,100 94 Benetton Group SpA ADR 5,400 124 BorgWarner, Inc. (b) 2,500 152 Brown Shoe Co., Inc. 3,500 149 CBRL Group, Inc. 3,600 127 CKE Restaurants, Inc. 33,700 454 Dow Jones & Co., Inc. (b) 5,100 181 Intrawest Corp. 11,000 318 Lithia Motors, Inc. (b) 11,400 358 Makita Corp. ADR 11,352 274 Meredith Corp. 4,100 215 Movado Group, Inc. 16,000 293 Natuzzi SpA ADR 10,000 70 Stanley Furniture Co., Inc. 1,900 44 United Auto Group, Inc. 7,200 275 Winnebago Industries, Inc. (b) 6,100 203 ----- 3,648 ----- CONSUMER STAPLES (3.8%) Church & Dwight Co., Inc. 9,550 315 Corn Products International, Inc. 9,400 225 J.M. Smucker Co. (The) 5,275 233 ----- 773 ----- ENERGY (3.3%) CHC Helicopter Corp. 19,900 466 Tidewater, Inc. (b) 4,400 196 ----- 662 ----- FINANCIALS (17.5%) American Financial Group, Inc. 4,400 169 BankAtlantic Bancorp, Inc. 11,600 162 Banner Corp. 2,500 78 City National Corp. 2,100 152 Cohen & Steers, Inc. 11,300 211 Colonial BancGroup, Inc. (The) 6,100 145 Federal Agricultural Mortgage Corp., Cl C 1,911 57 Glacier Bancorp, Inc. 6,022 181 HCC Insurance Holdings, Inc. 9,800 291 Horizon Financial Corp. 6,056 132 Hub International Ltd. 15,400 398 International Bancshares Corp. 3,300 97 Investors Financial Services Corp. (b) 6,000 221 Jefferies Group, Inc. 3,400 153 National Interstate Corp. 3,105 59 PXRE Group Ltd. 4,000 52 Scottish Re Group Ltd. 4,200 103 Seacoast Banking Corp. of Florida 5,510 126 South Financial Group, Inc. (The) (b) 7,200 198 FINANCIALS-CONTINUED StanCorp Financial Group, Inc. 5,000 250 Washington Federal, Inc. 6,565 151 West Coast Bancorp 5,876 155 ----- 3,541 ----- HEALTH CARE (4.5%) Cooper Cos., Inc. (The) 8,600 441 Invacare Corp. 1,100 35 PerkinElmer, Inc. 9,300 219 Perrigo Co. 15,000 224 ----- 919 ----- INDUSTRIALS (28.1%) ABM Industries, Inc. 5,200 102 Apogee Enterprises, Inc. 4,500 73 Baldor Electric Co. 7,900 203 Briggs & Stratton Corp. 6,800 264 Brink's Co. (The) 7,000 335 Cummins, Inc. 2,100 188 ElkCorp 4,197 141 Engineered Support Systems, Inc. 2,650 110 Forward Air Corp. 5,902 216 Freightcar America, Inc. 3,800 183 GOL Linhas Aereas Inteligentes SA ADR (b) 8,656 244 Graco, Inc. 18,200 665 Granite Construction, Inc. 7,600 273 Greenbrier Cos., Inc. (b) 4,600 131 Heartland Express, Inc. 10,600 215 Lan Airlines SA ADR 3,900 146 Lennox International, Inc. 10,114 285 LSI Industries, Inc. 13,962 219 Mine Safety Appliances Co. 5,100 185 MSC Industrial Direct Co., Inc., Cl A 5,800 233 Oshkosh Truck Corp. (b) 3,300 147 Portec Rail Products, Inc. 3,886 51 Quixote Corp. 10,800 214 Ryder System, Inc. 5,300 217 Supreme Industries, Inc., Cl A 2,400 19 Valmont Industries, Inc. 7,500 251 Wabtec Corp. 14,100 379 ----- 5,689 ----- INFORMATION TECHNOLOGY (10.3%) Factset Research Systems, Inc. 7,800 321 Fair Isaac Corp. 8,700 384 Harris Corp. 8,854 381 Jack Henry & Associates, Inc. 14,600 279 Keithley Instruments, Inc. 6,500 91 Lowrance Electronics, Inc. (b) 4,965 130 Nam Tai Electronics, Inc. 11,000 248 Reynolds & Reynolds Co. (The), Cl A 9,101 255 ----- 2,089 -----
See Notes to Financial Statements 30 SCHEDULES OF PORTFOLIO INVESTMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands, except shares) SMALL CAP VALUE EQUITY FUND--CONCLUDED
Shares or Principal Amount($) Value($) --------- -------- MATERIALS (11.6%) Agnico-Eagle Mines Ltd. 12,700 251 Airgas, Inc. 19,000 625 Allegheny Technologies, Inc. 4,700 170 Cambrex Corp. 9,800 184 Foundation Coal Holdings, Inc. 6,400 243 RPM International, Inc. 12,100 210 Sappi Ltd. ADR 20,500 232 Scotts Miracle-Gro Co. (The), Cl A 4,600 208 Valspar Corp. (The) 9,400 232 -------- 2,355 -------- UTILITIES (1.3%) Companhia de Saneamento Basico ADR 15,500 261 -------- Total Common Stocks (Cost $14,319) 19,937 -------- SHORT-TERM INVESTMENT (7.2%) CSFB Enhanced Liquidity Portfolio (c) 1,458,125 1,458 -------- Total Short-Term Investment (Cost $1,458) 1,458 -------- MONEY MARKET FUNDS (1.6%) Federated Prime Value Obligations Fund, Cl I 327,113 327 -------- Total Money Market Funds (Cost $327) 327 -------- Total Investments (Cost $16,104) (a)--107.2% 21,721 -------- Liabilities in excess of other assets--(7.2)% (1,452) -------- Net Assets--100.0% $ 20,270 ========
(a) Cost for federal income tax purposes is $16,234 (amount in thousands). Unrealized appreciation/ (depreciation) on a tax basis is as follows (amounts in thousands): Unrealized Appreciation $ 5,736 Unrealized Depreciation (248) --------- Unrealized Appreciation (Depreciation) $ 5,488 =========
(b) This security or a partial position of the security was on loan at December 31, 2005. The total value of securities on loan at December 31, 2005 in thousands was $1,401. (c) This security was purchased with cash collateral held from securities lending. ADR - American Depository Receipt. C1 - Class. 31 See Notes to Financial Statements. STATEMENTS OF ASSETS AND LIABILITIES STI CLASSIC VARIABLE TRUST December 31, 2005 (Amounts in thousands)
Capital Investment Large Cap Large Cap Mid-Cap Small Cap Appreciation International Grade Relative Value Equity Value Fund Equity Fund Bond Fund Value Fund Equity Fund Fund Equity Fund ------------ -------------- ----------- ---------- ----------- -------- ----------- Assets: Investments, at Cost....................... $ 48,110 $ 3,709 $ 18,604 $ 11,320 $ 37,100 $ 13,796 $ 16,104 ============ ============= ========== ========== =========== ======== ========== Investments, at Value...................... $ 52,406 $ 5,206 $ 18,616 $ 13,043 $ 40,358 $ 15,732 $ 21,721 Foreign currency, at value (cost $90)...... - 90 - - - - - Accrued Income............................. 69 12 150 17 50 27 49 Receivable for Investment Securities Sold.. - 8 - 86 96 333 - Receivable from Investment Adviser......... - 39 - - - - - ------------ ------------- ---------- ---------- ----------- -------- ---------- Total Assets............................... 52,475 5,355 18,766 13,146 40,504 16,092 21,770 ------------ ------------- ---------- ---------- ----------- -------- ---------- Liabilities: Income Distributions payable............... - - 48 - - - - Payable for Investment Securities Purchased ............................. - 6 - 130 - 134 - Payable Upon Return of Securities Loaned... 6,102 - 5,270 846 2,425 898 1,458 Investment Advisory Fees Payable........... 37 - 6 9 26 9 22 Administration Fees Payable................ 1 - - - 1 - 1 Custodian Fees Payable..................... 2 22 2 1 3 4 3 Accrued Expenses........................... 26 7 10 8 21 11 16 ------------ ------------- ---------- ---------- ----------- -------- ---------- Total Liabilities.......................... 6,168 35 5,336 994 2,476 1,056 1,500 ------------ ------------- ---------- ---------- ----------- -------- ---------- Total Net Assets........................... $ 46,307 $ 5,320 $ 13,430 $ 12,152 $ 38,028 $ 15,036 $ 20,270 ============ ============= ========== ========== =========== ======== ========== Net Assets: Capital.................................... $ 39,597 $ 5,928 $ 13,727 $ 9,570 $ 42,024 $ 12,087 $ 9,718 Accumulated Net Investment Income (Loss) 6 (18) 1 4 - 8 14 Accumulated Net Realized Gains (Losses) on Investment Transactions and Foreign Currency Transactions.................. 2,408 (2,087) (310) 855 (7,254) 1,005 4,921 Net Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Transactions.................. 4,296 1,497 12 1,723 3,258 1,936 5,617 ------------ ------------- ---------- ---------- ----------- -------- ---------- Total Net Assets........................... $ 46,307 $ 5,320 $ 13,430 $ 12,152 $ 38,028 $ 15,036 $ 20,270 ============ ============= ========== ========== =========== ======== ========== Shares Outstanding......................... 2,850 436 1,321 983 2,601 1,113 1,111 Net Asset Value, Offering, and Redemption Price Per Share........................ $ 16.25 $ 12.19 $ 10.16 $ 12.37 $ 14.62 $ 13.51 $ 18.24
Amounts designated as "--" are $0 or have been rounded to $0. See Notes to Financial Statements. 32 STATEMENTS OF OPERATIONS STI CLASSIC VARIABLE TRUST For the Year Ended December 31, 2005 (Amounts in thousands)
Capital Investment Large Cap Large Cap Small Cap Appreciation International Grade Relative Value Mid-Cap Value Equity Fund Equity Fund Bond Fund Value Fund Equity Fund Equity Fund Fund ------------ -------------- ----------- ---------- ----------- ----------- ------------ Investment Income: Dividend Income.......................... $ 623 $ 161 $ 4 $ 235 $ 1,047 $ 236 $ 445 Interest Income.......................... - 2 644 - - - - Income from Securities Lending........... 6 - 24 1 3 11 4 Less: Foreign Taxes Withheld............. - (9) - - - - - ------------ -------------- ----------- ---------- ----------- ----------- ---------- Total Investment Income.................. 629 154 672 236 1,050 247 449 ------------ -------------- ----------- ---------- ----------- ----------- ---------- Expenses: Investment Advisory Fees................. 535 68 99 102 334 168 309 Administration and Fund Accounting Fees....................... 13 1 4 3 11 4 7 Custodian Fees........................... 5 158 6 4 9 13 9 Professional Fees........................ 29 3 9 8 24 9 19 Transfer Agent Fees...................... (10) (1) (3) (2) (9) (3) (5) Printing Fees............................ 30 11 15 12 25 15 17 Trustee Fees............................. 1 - - - 1 - 1 Other Expenses........................... 2 37 5 2 4 3 3 ------------ -------------- ----------- ---------- ----------- ----------- ---------- Total Expenses 605 277 135 129 399 209 360 Less: Investment Advisory Fees Waived or Fees Reimbursed.................... (44) (195) (28) (6) (10) (32) (37) ------------ -------------- ----------- ---------- ----------- ----------- ---------- Net Expenses............................. 561 82 107 123 389 177 323 ------------ -------------- ----------- ---------- ----------- ----------- ---------- Net Investment Income (Loss)............. 68 72 565 113 661 70 126 ------------ -------------- ----------- ---------- ----------- ----------- ---------- Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: Net Realized Gain (Loss) on Investments Sold and Foreign Currency Transactions: 2,488 835 6 1,129 4,556 3,519 4,925 Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Transactions......... (3,188) (257) (233) (214) (3,746) (1,540) (1,854) ------------ -------------- ----------- ---------- ----------- ----------- ---------- Total Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions................. (700) 578 (227) 915 810 1,979 3,071 ------------ -------------- ----------- ---------- ----------- ----------- ---------- Net Change in Net Assets from Operations $ (632) $ 650 $ 338 $ 1,028 $ 1,471 $ 2,049 $ 3,197 ============ ============= =========== ========== =========== =========== ==========
Amounts designated as "--" are $0 or have been rounded to $0. 33 See Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS STI CLASSIC VARIABLE TRUST For the Years Ended December 31, (Amounts in thousands)
Capital Appreciation International Investment Grade Fund Equity Fund Bond Fund ------------------- ----------------- ----------------- 2005 2004 2005 2004 2005 2004 -------- --------- -------- -------- -------- -------- Operations: Net Investment Income (Loss)........................................ $ 68 $ 108 $ 72 $ 49 $ 565 $ 648 Net Realized Gain (Loss) on Investments Sold and Foreign Currency Transactions..................................................... 2,488 6,819 835 776 6 236 Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Transactions............................... (3,188) (3,419) (257) 287 (233) (156) -------- --------- -------- -------- -------- -------- Change in Net Assets from Operations................................ (632) 3,508 650 1,112 338 728 -------- --------- -------- -------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income............................................... (68) (102) (133) (105) (592) (629) -------- --------- -------- -------- -------- -------- Capital Transactions: Proceeds from Shares Issued......................................... 6,219 5,856 330 347 933 1,401 Dividends Reinvested................................................ 68 102 133 105 596 640 Cost of Shares Redeemed............................................. (14,142) (13,869) (1,903) (2,136) (4,892) (5,409) -------- --------- -------- -------- -------- -------- Change in Net Assets from Capital Transactions...................... (7,855) (7,911) (1,440) (1,684) (3,363) (3,368) -------- --------- -------- -------- -------- -------- Change in Net Assets................................................ (8,555) (4,505) (923) (677) (3,617) (3,269) -------- --------- -------- -------- -------- -------- Net Assets: Beginning of Period................................................. 54,862 59,367 6,243 6,920 17,047 20,316 -------- --------- -------- -------- -------- -------- End of Period....................................................... $ 46,307 $ 54,862 $ 5,320 $ 6,243 $ 13,430 $ 17,047 ======== ========= ======== ======== ======== ======== Accumulated Net Investment Income (Loss), End of Period................. $ 6 $ 6 $ (18)$ 53 $ 1 $ 23 ======== ========= ======== ======== ======== ======== Share Transactions: Issued.............................................................. 391 376 30 37 91 137 Reinvested.......................................................... 4 6 12 11 58 62 Redeemed............................................................ (887) (893) (170) (218) (477) (527) -------- --------- -------- -------- -------- -------- Change in Share Transactions........................................ (492) (511) (128) (170) (328) (328) ======== ========= ======== ======== ======== ========
See Notes to Financial Statements. 34 STATEMENTS OF CHANGES IN NET ASSETS STI CLASSIC VARIABLE TRUST For the Years Ended December 31, (Amounts in thousands)
Large Cap Relative Large Cap Value Mid-Cap Small Cap Value Value Fund Equity Fund Equity Fund Equity Fund ------------------ ------------------ ------------------- ------------------ 2005 2004 2005 2004 2005 2004 2005 2004 -------- -------- -------- -------- --------- -------- -------- -------- Operations: Net Investment Income (Loss)................... $ 113 $ 91 $ 661 $ 639 $ 70 $ 113 $ 126 $ 73 Net Realized Gain (Loss) on Investments Sold... 1,129 606 4,556 5,423 3,519 1,584 4,925 3,468 Net Change in Unrealized Appreciation (Depreciation) on Investments............... (214) 705 (3,746) 279 (1,540) 733 (1,854) 1,457 -------- -------- -------- -------- --------- -------- -------- -------- Change in Net Assets from Operations........... 1,028 1,402 1,471 6,341 2,049 2,430 3,197 4,998 -------- -------- -------- -------- --------- -------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income.......................... (110) (90) (662) (646) (68) (107) (125) (60) Net Realized Gains............................. - - - - - - (3,009) - -------- -------- -------- -------- --------- -------- -------- -------- Total Dividends and Distributions.............. (110) (90) (662) (646) (68) (107) (3,134) (60) -------- -------- -------- -------- --------- -------- -------- -------- Capital Transactions: Proceeds from Shares Issued.................... 1,769 2,801 2,872 7,126 1,034 1,914 5,765 3,370 Dividends Reinvested........................... 110 90 662 646 68 107 3,134 60 Cost of Shares Redeemed........................ (2,089) (1,957) (13,328) (11,938) (4,429) (4,144) (14,652) (2,789) -------- -------- -------- -------- --------- -------- -------- -------- Change in Net Assets from Capital Transactions. (210) 934 (9,794) (4,166) (3,327) (2,123) (5,753) 641 -------- -------- -------- -------- --------- -------- -------- -------- Change in Net Assets........................... 708 2,246 (8,985) 1,529 (1,346) 200 (5,690) 5,579 -------- -------- -------- -------- --------- -------- -------- -------- Net Assets: Beginning of Period............................ 11,444 9,198 47,013 45,484 16,382 16,182 25,960 20,381 -------- -------- -------- -------- --------- -------- -------- -------- End of Period.................................. $ 12,152 $ 11,444 $ 38,028 $ 47,013 $ 15,036 $ 16,382 $ 20,270 $ 25,960 ======== ======== ======== ======== ========= ======== ======== ======== Accumulated Net Investment Income (Loss), End of Period................................... $ 4 $ 1 $ - $ - $ 8 $ 6 $ 14 $ 13 ======== ======== ======== ======== ========= ======== ======== ======== Share Transactions: Issued......................................... 151 269 201 533 82 182 321 210 Reinvested..................................... 9 8 46 48 5 10 179 4 Redeemed....................................... (177) (188) (930) (908) (354) (393) (805) (175) -------- -------- -------- -------- --------- -------- -------- -------- Change in Share Transactions................... (17) 89 (683) (327) (267) (201) (305) 39 -------- -------- -------- -------- --------- -------- -------- --------
Amounts designated as "--" are either $0 or have been rounded to $0. 35 See Notes to Financial Statements. This page is intentionally left blank. 36 FINANCIAL HIGHLIGHTS STI CLASSIC VARIABLE TRUST For a Share Outstanding Throughout Each Year
Net Net Realized and Dividends Investment Unrealized Gains from Net Net Asset Value, Income (Losses) on Total From Investment Beginning of Year (Loss) Investments Operations Income ----------------- ----------- ---------------- ---------- ------------ CAPITAL APPRECIATION FUND Year ended December 31, 2005 $ 16.42 $ 0.02 $ (0.17) $ (0.15) $ (0.02) Year ended December 31, 2004 15.41 0.03 1.01 1.04 (0.03) Year ended December 31, 2003 13.01 (0.03)(a) 2.43 2.40 - Year ended December 31, 2002 17.48 (0.07) (3.74) (3.81) - Year ended December 31, 2001 20.02 (0.05) (1.27) (1.32) - INTERNATIONAL EQUITY FUND Year ended December 31, 2005 11.06 0.15 (a) 1.27 1.42 (0.29) Year ended December 31, 2004 9.43 0.11 1.69 1.80 (0.17) Year ended December 31, 2003 6.92 0.07 (a) 2.50 2.57 (0.06) Year ended December 31, 2002 8.55 0.02 (1.61) (1.59) - Year ended December 31, 2001 10.36 - (1.80) (1.80) - INVESTMENT GRADE BOND FUND Year ended December 31, 2005 10.34 0.39 (0.17) 0.22 (0.40) Year ended December 31, 2004 (b) 10.27 0.36 0.06 0.42 (0.35) Year ended December 31, 2003 10.29 0.34 (a) 0.02 0.36 (0.38) Year ended December 31, 2002 10.05 0.44 0.28 0.72 (0.48) Year ended December 31, 2001 9.69 0.52 0.36 0.88 (0.52) LARGE CAP RELATIVE VALUE FUND Year ended December 31, 2005 11.45 0.11 0.92 1.03 (0.11) Year ended December 31, 2004 10.10 0.09 (a) 1.35 1.44 (0.09) Year ended December 31, 2003 8.05 0.08 (a) 2.04 2.12 (0.07) Year ended December 31, 2002 10.21 0.06 (2.16) (2.10) (0.06) Year ended December 31, 2001 10.86 0.04 (0.65) (0.61) (0.04) LARGE CAP VALUE EQUITY FUND Year ended December 31, 2005 14.32 0.23 0.30 0.53 (0.23) Year ended December 31, 2004 12.60 0.19 1.72 1.91 (0.19) Year ended December 31, 2003 10.39 0.17 (a) 2.21 2.38 (0.17) Year ended December 31, 2002 12.70 0.16 (2.31) (2.15) (0.16)** Year ended December 31, 2001 13.06 0.16 (0.32) (0.16) (0.20) MID-CAP EQUITY FUND Year ended December 31, 2005 11.87 0.07 1.63 1.70 (0.06) Year ended December 31, 2004 10.23 0.08 1.63 1.71 (0.07) Year ended December 31, 2003 7.93 0.05 (a) 2.30 2.35 (0.05) Year ended December 31, 2002 11.09 (0.04) (3.11) (3.15) - Year ended December 31, 2001 13.30 - (0.19) (0.19) - SMALL CAP VALUE EQUITY FUND Year ended December 31, 2005 18.33 0.08 2.00 2.08 (0.08) Year ended December 31, 2004 14.80 0.05 (a) 3.52 3.57 (0.04) Year ended December 31, 2003 10.75 0.07 (a) 4.05 4.12 (0.07) Year ended December 31, 2002 10.94 0.06 (0.19) (0.13) (0.06) Year ended December 31, 2001 9.12 0.12 1.82 1.94 (0.12) Total Distributions Dividends Net Asset from Realized and Distri- Value, End Capital Gains butions of Year ------------- ----------- ---------- CAPITAL APPRECIATION FUND Year ended December 31, 2005 $ - $ (0.02) $ 16.25 Year ended December 31, 2004 - (0.03) 16.42 Year ended December 31, 2003 - - 15.41 Year ended December 31, 2002 (0.66) (0.66) 13.01 Year ended December 31, 2001 (1.22) (1.22) 17.48 INTERNATIONAL EQUITY FUND Year ended December 31, 2005 - (0.29) 12.19 Year ended December 31, 2004 - (0.17) 11.06 Year ended December 31, 2003 - (0.06) 9.43 Year ended December 31, 2002 (0.04) (0.04) 6.92 Year ended December 31, 2001 (0.01) (0.01) 8.55 INVESTMENT GRADE BOND FUND Year ended December 31, 2005 - (0.40) 10.16 Year ended December 31, 2004 (b) - (0.35) 10.34 Year ended December 31, 2003 - (0.38) 10.27 Year ended December 31, 2002 - (0.48) 10.29 Year ended December 31, 2001 - (0.52) 10.05 LARGE CAP RELATIVE VALUE FUND Year ended December 31, 2005 - (0.11) 12.37 Year ended December 31, 2004 - (0.09) 11.45 Year ended December 31, 2003 - (0.07) 10.10 Year ended December 31, 2002 - (0.06) 8.05 Year ended December 31, 2001 - (0.04) 10.21 LARGE CAP VALUE EQUITY FUND Year ended December 31, 2005 - (0.23) 14.62 Year ended December 31, 2004 - (0.19) 14.32 Year ended December 31, 2003 - (0.17) 12.60 Year ended December 31, 2002 - (0.160** 10.39 Year ended December 31, 2001 - (0.20) 12.70 MID-CAP EQUITY FUND Year ended December 31, 2005 - (0.06) 13.51 Year ended December 31, 2004 - (0.07) 11.87 Year ended December 31, 2003 - (0.05) 10.23 Year ended December 31, 2002 (0.01) (0.01) 7.93 Year ended December 31, 2001 (2.02) (2.02) 11.09 SMALL CAP VALUE EQUITY FUND Year ended December 31, 2005 (2.09) (2.17) 18.24 Year ended December 31, 2004 - (0.04) 18.33 Year ended December 31, 2003 - (0.07) 14.80 Year ended December 31, 2002 - (0.06) 10.75 Year ended December 31, 2001 - (0.12) 10.94
* Total return would have been (18.70)% without the payment by affiliate. During the fiscal year ended December 31, 2002, the International Equity Fund was reimbursed by the Adviser for losses incurred of $5,807 due to the sale of shares in several registered investment companies which were inadvertently purchased in excess of the amount permitted under applicable Securities and Exchange Commission rules. ** Includes Return of Capital of $0.0049 per share. (a) Per share data was calculated using the average shares method. (b) Effective January 1, 2004, the Investment Grade Bond Fund adopted a change in the amortization and accretion methodology on fixed income securities. The cumulative effect of this change in methodology on December 31, 2004 was to increase net investment income to average net assets from 3.40% to 3.52%; to increase net investment income per share from $0.35 to $0.36; and, to decrease net realized and unrealized gains (losses) per share from $0.07 to $0.06. Per share ratios and supplemental data for prior periods have not been restated to reflect this change. 37 See Notes to Financial Statements.
Net Assets, Ratio of Ratio of Net Invest- Ratio of Expenses to Average Net Portfolio Total End of Net Expenses to ment Income (Loss) to Assets (Excluding Waivers, Reim- Turnover Return Year (000) Average Net Assets Average Net Assets bursements and Expense Offset) Rate - --------- ----------- ------------------ --------------------- -------------------------------- -------- (0.90)% $46,307 1.13% 0.14% 1.22% 80% 6.75 54,862 1.15 0.19 1.43 79 18.45 59,367 1.15 (0.21) 1.50 91 (21.89) 56,718 1.15 (0.41) 1.46 67 (5.34) 86,499 1.15 (0.30) 1.44 88 12.96 5,320 1.47 1.30 4.97 57 19.35 6,243 1.60 0.74 3.89 65 37.31 6,920 1.60 0.99 3.91 75 (18.58)* 6,230 1.60 0.27 2.59 115 (17.40) 9,544 1.60 0.25 2.32 92 2.18 13,430 0.70 3.70 0.88 223 4.16 17,047 0.75 3.52 1.19 197 3.51 20,316 0.75 3.66 1.25 147 7.40 23,126 0.75 4.33 1.28 144 9.20 19,559 0.75 5.15 1.32 139 9.03 12,152 1.06 0.97 1.11 47 14.30 11,444 1.18 0.87 1.53 44 26.49 9,198 1.20 0.92 2.20 22 (20.59) 4,354 1.20 6.80 2.56 51 (5.57) 4,278 1.20 0.47 3.22 27 3.75 38,028 0.93 1.58 0.95 100 15.29 47,013 0.95 1.43 1.11 85 23.12 45,484 0.95 1.52 1.19 54 (16.98) 43,899 0.95 1.37 1.13 50 (1.14) 63,102 0.95 1.20 1.12 73 14.32 15,036 1.15 0.50 1.36 115 16.82 16,382 1.15 0.71 1.65 79 29.72 16,182 1.15 0.60 1.84 182 (28.45) 13,962 1.15 (0.32) 1.72 90 2.72 21,938 1.15 0.04 1.66 93 11.90 20,270 1.20 0.47 1.34 57 24.19 25,960 1.20 0.33 1.57 52 38.44 20,381 1.20 0.56 1.79 27 (1.20) 15,286 1.20 0.55 1.79 17 21.48 13,775 1.20 1.05 1.91 55
38 See Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS STI CLASSIC VARIABLE TRUST December 31, 2005 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 Company Act of 1940, as amended, as an open-end management investment company offering seven funds as of December 31, 2005. The financial statements presented herein are those of the Capital Appreciation Fund, the International Equity Fund, the Investment Grade Bond Fund, the Large Cap Relative Value Fund (formerly, Growth and Income Fund), the Large Cap Value Equity Fund (formerly, Value Income Stock Fund), the Mid-Cap Equity Fund, and the Small Cap Value Equity Fund (each a "Fund" and collectively the "Funds"). The Trust is authorized to issue an unlimited number of shares without par value. Shareholders have no preemptive rights. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. Sales of shares of the Funds may only be made to separate accounts of various life insurance companies and certain qualified benefit plans. The Funds' prospectus provides a description of each Fund's investment objectives, policies and strategies. 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 Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust. However, based on experience, the Trust expects that risk of loss to be remote. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount 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 expense during the reporting period. The actual results could differ from these estimates. Security Valuation -- Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on valuation date (or at approximately 4:00 p.m. Eastern Time if a security's primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sale price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. The prices for foreign securities are reported in local currency and converted to U.S. dollars at the exchange rate of such currencies against the U.S. dollar, as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Time), as provided by an independent pricing service approved by the Funds' Board of Trustees (the "Board"). If a security price cannot be obtained from an independent, third-party pricing agent, the Funds' accounting agent shall seek to obtain a bid price from at least one independent broker. Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Board. The Funds' Fair Value Procedures are performed and monitored by a Fair Value Committee (the "Committee") designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include, but are not limited to: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at 39 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 a time when under normal conditions it would be open; or the security's primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee determines the value after taking into consideration relevant information reasonably available to the Committee. For securities that principally trade on a foreign market or exchange, a significant gap in time can exist between the time of a particular security's last trade and the time at which a Fund calculates its net asset value. The closing prices of such securities may no longer reflect their market value at the time the Fund calculates net asset value if an event that could materially affect the value of those securities (a "Significant Event") has occurred between the time of the security's last close and the time that the Fund calculates net asset value. A Significant Event may relate to a single issuer or to an entire market sector. If the adviser of a Fund becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Fund calculates net asset value, it shall immediately notify the Funds' accounting agent and may preauthorize the Funds' accounting agent to utilize a pricing service authorized by the Board (a "Fair Value Pricing Service") that has been designed to determine a fair value. On a day when a Fair Value Pricing Service is so utilized pursuant to a preauthorization, the Committee need not meet. If the adviser does not preauthorize the Funds' accounting agent to utilize a Fair Value Pricing Service, the adviser will request that a Committee meeting be called. In addition, the Funds' accounting agent monitors price movements among certain selected indices, securities and/or baskets of securities that may be an indicator that the closing prices received earlier from foreign exchanges or markets may not reflect market value at the time the Fund calculates net asset value. If price movements in a monitored index exceed levels established by the Funds ("Trigger Points"), the Funds may use a systematic valuation model provided by an independent third party to fair value their international equity securities. Security Transactions and Investment Income -- Security transactions are accounted for no later than one business day after trade date. However, for financial reporting purposes, securities transactions are reported on trade date. Interest income is recognized on an accrual basis. Cost used in determining net realized gains and losses on the sales of investment securities are those of the specific securities sold, adjusted for the accretion or amortization of purchase discounts or premiums during the respective holding period. Dividend income is recorded on the ex-dividend date. Forward Foreign Currency Contracts -- The International Equity Fund may enter into forward foreign currency contracts as hedges against either specific transactions, fund positions or anticipated fund positions. All commitments are "marked-to-market" daily at the applicable foreign exchange rate, and any resulting unrealized gains or losses are recorded currently. The Fund realizes gains and losses at the time forward contracts are extinguished. Unrealized gains or losses on outstanding positions in forward foreign currency contracts held at the close of the year are recognized as ordinary income or loss for Federal income tax purposes. As of December 31, 2005, there were no open forward foreign currency contracts. Foreign Currency Translation -- The books and records of the International Equity Fund are maintained in U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities at the current rate of exchange; and (ii) purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions. The International Equity Fund does not isolate the portion of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. Expenses -- Expenses that are directly 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 or another appropriate basis. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid each calendar quarter for all Funds except for the International Equity Fund, which distributes income annually, and the Investment Grade Bond 40 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 Fund, which distributes daily and pays monthly. Any net realized capital gains on sales of securities are distributed to shareholders at least annually. However, to the extent that net realized capital gains can be offset by capital loss carryovers, such gains will not be distributed. The amounts of dividends from net investment income and of distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (i.e. foreign currency transactions), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Compensating Balances -- If a Fund has a cash overdraft in excess of $100,000 it is required to leave 110% in compensating balance with SunTrust Bank, a wholly owned subsidiary of SunTrust Banks, Inc., on the following day. If a Fund has a positive cash balance in excess of $100,000 it is allowed to overdraw 90% of the balance with SunTrust Bank on the following business day. This does not apply to the International Equity Fund. 3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Investment Advisory Agreement -- The Trust and Trusco Capital Management, Inc. (the "Investment Adviser"), a wholly owned subsidiary of SunTrust Banks, Inc., have entered into advisory agreements. Under revised terms of the agreements dated August 1, 2005, the Funds are charged the following annual fees which are computed daily and paid monthly based upon average daily net assets. Net fees paid for the period August 1, 2005 through December 31, 2005 were as follows:
Maximum Annual Net Annual Advisory Fee Fees Paid -------------- ---------- Capital Appreciation Fund ................ 0.97% 0.96% International Equity Fund ................ 1.15 - Investment Grade Bond Fund ............... 0.50 0.40 Large Cap Relative Value Fund ............ 0.85 0.74 Large Cap Value Equity Fund .............. 0.80 0.78 Mid-Cap Equity Fund ...................... 1.00 0.85 Small Cap Value Equity Fund .............. 1.15 0.99
Breakpoints are used in computing the advisory fee. The full fee is charged on average daily net assets of each Fund up to $500 million, a discount of 5% on the next $500 million and a discount of 10% over $1 billion. Prior to August 1, 2005, the Funds charged the following annual fees which were computed daily and paid monthly based upon average daily net assets. Net fees paid for the period January 1, 2005 through July 31, 2005 were as follows:
Maximum Annual Net Annual Advisory Fee Fees Paid -------------- ---------- Capital Appreciation Fund ................ 1.15% 1.01% International Equity Fund ................ 1.25 - Investment Grade Bond Fund ............... 0.74 0.50 Large Cap Relative Value Fund ............ 0.90 0.90 Large Cap Value Equity Fund .............. 0.80 0.78 Mid-Cap Equity Fund ...................... 1.15 0.90 Small Cap Value Equity Fund .............. 1.15 1.03
41 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 The Investment Adviser has contractually agreed, until August 1, 2007, to waive fees, and/or reimburse each Fund to the extent necessary to maintain each Fund's Total Operating Expenses as noted below:
Total Operating Expense --------------- Capital Appreciation Fund ................ 1.12% International Equity Fund ................ 1.30 Investment Grade Bond Fund ............... 0.65 Large Cap Relative Value Fund ............ 1.00 Large Cap Value Equity Fund .............. 0.95 Mid-Cap Equity Fund ...................... 1.15 Small Cap Value Equity Fund .............. 1.20
Administration, Fund Accounting and Transfer Agency Agreement -- The Trust and BISYS Fund Services Ohio, Inc. (the "Administrator") are parties to a Master Services Agreement, under which the Administrator provides administrative, fund accounting, and transfer agent services for an annual fee (expressed as a percentage of the combined average daily net assets of the Trust and STI Classic Funds) of: 0.0275% up to $25 billion, 0.0225% on the next $5 billion and 0.0175% for over $30 billion plus an additional class fee of $2,593 per class annum, applicable to each additional class of shares over 145 classes of shares. Per the Master Services Agreement, the Administrator has agreed to pay a total of $325,000 per annum towards the insurance premiums payable annually by the Trust and the STI Classic Funds. $300,000 will be paid towards the premium for the Directors and Officers Liability/Errors and Omissions Insurance Policy, and $25,000 will be paid towards the premium for the Fidelity Bond Policy. Distribution Services Agreement -- The Trust and BISYS Fund Services Limited Partnership (the "Distributor") are parties to a Distribution Services Agreement. The Distributor will receive no fees for its distribution services under this agreement. Custodian Agreements -- SunTrust Bank acts as Custodian for all the Funds except the International Equity Fund, which has appointed Brown Brothers Harriman & Co. as Custodian. Custodians are paid on the basis of the net assets and transaction costs of the Funds. The Custodians play no role in determining the investment policies of the Trust or which securities are to be purchased or sold in the Funds. Other -- Certain officers of the Trust are also officers of the Adviser, Administrator, and/or the Distributor. Such officers receive no fees from the Trust for serving as officers of the Trust. Each of the nine trustees are compensated $64,000 annually ($576,000 total) and the Chairman of the Board receives $80,000 annually in regular meeting and retainer fees, plus the reimbursement for certain expenses incurred. For attendance at a special meeting, the Chairman receives $3,750 and each trustee receives $3,000. Several trustees are also members of the Audit Committee and/ or the Governance and Nominating Committee. Each trustee that is a member of one of these committees receives a fee of $2,500 per meeting attended and the Chairman of each committee receives $4,500. Trusco Capital Management, Inc. provides an employee to serve as Chief Compliance Officer for the Trust and provide certain related services, and receives an annual fee for this service of $120,000. In addition, the Administrator provides an employee and staff to assist the Chief Compliance Officer for the Trust, including providing certain related services, and will receive a fee for these services of $150,000. The fees above are allocated across the assets of the Trust and the STI Classic Funds. For the year ended December 31, 2005, the total related amounts paid by the Trust were $4,795. The Trust has entered into an agreement with SunTrust Robinson Humphrey, a division of SunTrust Capital Markets, Inc. which is a direct non-bank subsidiary of SunTrust Banks, Inc., to act as an agent in placing repurchase agreements for the Trust. For the year ended December 31, 2005, the Investment Grade Bond Fund paid SunTrust Robinson Humphrey fees totalling $82, through a reduction in the yield earned by the Fund on those repurchase agreements. 42 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 4. INVESTMENT TRANSACTIONS The cost of purchases and the proceeds from sales and maturities of securities, excluding short-term investments and U.S. Government securities, for the year ended December 31, 2005, were as follows (in thousands):
Sales and Purchases Maturities --------- ---------- Capital Appreciation Fund ................ $39,181 $46,279 International Equity Fund ................ 3,022 4,601 Investment Grade Bond Fund ............... 32,030 35,067 Large Cap Relative Value Fund ............ 5,403 5,613 Large Cap Value Equity Fund .............. 40,858 49,344 Mid-Cap Equity Fund ...................... 17,366 20,823 Small Cap Value Equity Fund .............. 14,470 22,189
The cost of purchases and proceeds from sales and maturities of long-term U.S. Government securities for the Investment Grade Bond Fund during the year ended December 31, 2005, in thousands, was $27,937 and $30,267, respectively. 5. FEDERAL TAX POLICIES AND INFORMATION It is the policy of each Fund 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, and to make distributions from net investment income and from net realized gains sufficient to relieve it from all, or substantially all, federal income taxes. Withholding taxes on foreign dividends have been paid or provided for in accordance with applicable country's tax rules and rates. At December 31, 2005, the total cost of securities and the net realized gains or losses on securities sold for Federal income tax purposes were different from amounts reported for financial reporting purposes generally due to wash sales which cannot be used for Federal income tax purposes in the current year and have been deferred for use in future years. The Federal tax cost and aggregate gross unrealized appreciation and depreciation for securities held by the Funds at December 31, 2005, are presented on each Fund's Schedule of Portfolio Investments. The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2005 was as follows (in thousands):
Distributions paid from ---------------------------------------- Net Total Investment Net Long Term Distributions Income Capital Gains Paid* ---------- ------------- ------------- Capital Appreciation Fund ................ $ 68 $ - $ 68 International Equity Fund ................ 133 - 133 Investment Grade Bond Fund ............... 592 - 592 Large Cap Relative Value Fund ............ 110 - 110 Large Cap Value Equity Fund .............. 662 - 662 Mid-Cap Equity Fund ...................... 68 - 68 Small Cap Value Equity Fund .............. 591 2,543 3,134
43 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2004 was as follows (in thousands):
Distribution Paid from ----------------------------- Net Investment Net Long Term Total Distributions Income Capital Gains Paid* -------------- ------------- ------------------- Capital Appreciation Fund ................ $102 - $102 International Equity Fund ................ 105 - 105 Investment Grade Bond Fund ............... 640 - 640 Large Cap Relative Value Fund ............ 90 - 90 Large Cap Value Equity Fund .............. 646 - 646 Mid-Cap Equity Fund ...................... 107 - 107 Small Cap Value Equity Fund .............. 60 - 60
*Total distributions paid may differ from the Statement of Changes in Net Assets because for tax purposes dividends are recognized when paid. As of December 31, 2005 the components of accumulated earnings (deficit) on a tax basis were as follows (in thousands):
Accumulated Total Undistributed Undistributed Capital and Unrealized Accumulated Ordinary Long Term Accumulated Distributions Other Appreciation Earnings Income Capital Gains Earnings Payable Losses** (Depreciation)*** (Deficit) ------------- ------------- ----------- ------------- ----------- ----------------- ---------- Capital Appreciation Fund $531 $1,897 $2,428 $ - $ - $4,282 $ 6,710 International Equity Fund 3 - 3 - (1,981) 1,370 (608) Investment Grade Bond Fund - - - - (291) (6) (297) Large Cap Relative Value Fund 3 878 881 - - 1,701 2,582 Large Cap Value Equity Fund - - - - (7,234) 3,237 (3,997) Mid-Cap Equity Fund 15 1,013 1,028 - - 1,921 2,949 Small Cap Value Equity Fund 686 4,378 5,064 - - 5,488 10,552
** As of the latest tax year end of December 31, 2005, the following Funds had net capital loss carryovers to offset future net capital gains, if any, to the extent provided by the Treasury regulations (in thousands). To the extent that these carryovers are used to offset future gains, it is probable that the gains so offset will not be distributed to shareholders.
Expires ----------------------------- 2008 2009 2010 2011 ------ ---- ------ ------ International Equity Fund $ - $14 $1,470 $ 497 Investment Grade Bond Fund - 29 189 - Large Cap Value Equity Fund 1,755 - 3,047 2,432
During the year ended December 31, 2005, the Capital Appreciation Fund, International Equity Fund, Investment Grade Bond Fund, Large Cap Relative Value Fund, Large Cap Value Equity Fund and Mid-Cap Equity Fund utilized $66, $830, $66, $250, $4,554 and $2,515 in capital loss carryforwards, respectively, in thousands. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Funds' next taxable year. The Investment Grade Bond Fund has incurred and will elect to defer $73, in thousands, in capital losses. *** The differences between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to: tax deferral of losses on wash sales, the difference between book and tax amortization methods for premium and market discount, and the return of capital adjustments from real estate investment trusts. Amounts designated as " -- " are either $0 or have been rounded to $0. 44 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 6. RISKS The International Equity Fund invests in securities of foreign issuers in various countries. These investments may involve certain considerations and risks not typically associated with investments in the United States as a result of, among other factors, the possibility of future political and economic developments and the level of governmental supervision and regulation of securities markets in the respective countries. 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. 7. SECURITIES LENDING Each Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Trust's Board. These loans may not exceed either (i) 50% of the sum of the market value of all securities of the Fund and the market value of the loan collateral or (ii) 33.33% of the total market value of all securities of the Fund. No Fund will lend portfolio securities to its investment adviser or its affiliates unless it has applied for and received specific authority to do so from the Securities and Exchange Commission. Loans of portfolio securities will be fully collateralized by cash. The value of the collateral, is at least 100% of the market value of the securities loaned, or in the case of the Investment Grade Bond Fund, the initial value of the collateral is at least 102% of the market value of the securities loaned and 100% thereafter. However, due to market fluctuations during the day, the value of securities loaned on a particular day may, during the course of the day, exceed the value of collateral. On each business day, the amount of collateral is adjusted based on the prior day's market fluctuations and the current day's lending activity. Income from lending activity is determined by the amount of interest earned on collateral, less any amounts payable to the borrowers of the securities and the lending agent. Lending securities involves certain risks, including the risk that the Fund may be delayed or prevented from recovering the collateral if the borrower fails to return the securities. Cash collateral received in connection with securities lending is invested in the CSFB Enhanced Liquidity Portfolio (the "Portfolio"). This investment consists of money market instruments including money market mutual funds registered under the Investment Company Act of 1940, commercial paper, repurchase agreements, U.S. Treasury Bills and U.S. agency obligations. At December 31, 2005, the Portfolio was invested in money market mutual funds, certificates of deposit, commercial paper, repurchase agreements, U.S. agency obligations and corporate bonds (with interest rates ranging from 4.12% to 4.65% and maturity dates ranging from 01/03/06 to 11/25/15). The Funds paid fees for security lending for the year ended December 31, 2005, which have been netted against the Security Lending Income on the Statements of Operations. These fees are presented below:
Fees ------ Capital Appreciation Fund .................... $1,136 International Equity Fund .................... 56 Investment Grade Bond Fund ................... 4,112 Large Cap Relative Value Fund ................ 202 Large Cap Value Equity Fund .................. 603 Mid-Cap Equity Fund .......................... 1,953 Small Cap Value Equity Fund .................. 692
45 NOTES TO FINANCIAL STATEMENTS (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 8. OTHER FEDERAL TAX INFORMATION (UNAUDITED) For corporate shareholders, the following percentage of the total ordinary income distributions paid during the fiscal year ended December 31, 2005 qualify for the corporate dividends received deductions for the following Funds:
Dividend Received Deduction ----------------- Capital Appreciation Fund .................... 100% Large Cap Relative Value Fund ................ 100% Large Cap Value Equity Fund .................. 100% Mid-Cap Equity Fund .......................... 100% Small Cap Value Equity Fund .................. 59%
46 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM STI CLASSIC VARIABLE TRUST December 31, 2005 To the Shareholders and Board of Trustees of STI Classic Variable Trust In our opinion, the accompanying statements of assets and liabilities, including the schedules of portfolio investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Capital Appreciation Fund, International Equity Fund, Investment Grade Bond Fund, Large Cap Relative Value Fund (formerly, Growth and Income Fund), Large Cap Value Equity Fund (formerly, Value Income Stock Fund), Mid-Cap Equity Fund, and Small Cap Value Equity Fund (constituting STI Classic Variable Trust, hereafter referred to as the "Trust") at December 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2005 by correspondence with the custodians, provide a reasonable basis for our opinion. The financial highlights for the year ended December 31, 2001 were audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those financial statements in their report dated February 7, 2002. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania February 17, 2006 47 TRUSTEES AND OFFICERS OF THE STI CLASSIC VARIABLE TRUST STI CLASSIC VARIABLE TRUST December 31, 2005 (Unaudited) Information pertaining to the trustees of the Trust is set forth below. Trustees who are not deemed to be "interested persons" of the Trust as defined in the 1940 Act are referred to as "Independent Trustees." Trustees who are deemed to be "interested persons" of the Trust are referred to as "Interested Trustees." Messrs. Courts and Ridley are trustees who may be deemed to be "interested persons" of the Trust.
NUMBER OF TERM OF PRINCIPAL PORTFOLIOS IN THE POSITION(s) OFFICE AND OCCUPATION(s) STI FUND COMPLEX OTHER NAME, ADDRESS, HELD WITH LENGTH OF DURING THE OVERSEEN BY DIRECTORSHIPS DATE OF BIRTH THE GROUP TIME SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - -------------------- ------------ ------------- ----------------------------- ----------------- --------------------------------- INTERESTED TRUSTEES*: Cousins Properties, Inc.; Genuine Parts Company; Richard W. Courts, II Indefinite; Piedmont Medical Center; 3435 Stelzer Road since SunTrust Bank; Courts Columbus, OH 43219 November Chairman, Atlantic Foundation; J. Bulow Campbell DOB 01/18/36 Trustee 2001 Investment Company 59 Foundation Clarence H. Ridley Indefinite; Chairman, Haverty Furniture 3435 Stelzer Road since Companies; Partner, King Columbus, OH 43219 November and Spaulding LLP (law firm) DOB 06/03/42 Trustee 2001 (1977 to 2000) 59 Crawford & Co. INDEPENDENT TRUSTEES: Thomas Gallagher NAPA; Genuine Parts 3435 Stelzer Road Indefinite; Company; Stone Mountain Columbus, OH 43219 since May President, CEO, Genuine Parts Industrial Park; The Lovett DOB 11/25/47 Trustee 2000 Company 59 School; Oxford Industries, Inc. F. Wendell Gooch 3435 Stelzer Road Indefinite; Columbus, OH 43219 since May DOB 12/03/32 Trustee 1992 Retired SEI Family of Funds 59 Professor (since 2004) and Sidney E. Harris Indefinite; Dean (1997-2004), ServiceMaster Company; 3435 Stelzer Road since J. Mack Robinson College Total System Services, Inc.; Columbus, OH 43219 November of Business, Georgia State Transamerica Investors, Inc. DOB 07/21/49 Trustee 2004 University 59 (13 Mutual Funds) Warren Y. Jobe Indefinite; Retired. EVP, Georgia Power 3435 Stelzer Road since Company and Columbus, OH 43219 November SVP, Southern Company WellPoint, Inc.; UniSource DOB 11/12/40 Trustee 2004 (1998-2001) 59 Energy Corp.; HomeBanc Corp. Connie D. McDaniel 3435 Stelzer Road Indefinite; Columbus, OH 43219 since May Vice President and Controller, DOB 04/10/58 Trustee 2005 The Coca-Cola Company None 59 Cox Communications; Cox Enterprises; National Cable and Telecommunications James O. Robbins Association; Discovery Channel; 3435 Stelzer Road Indefinite; Retired. President, CEO, Cable Labs; C-SPAN; Humana, Columbus, OH 43219 since Cox Communications, Inc. 59 Inc.; Bessemer Securities Corp.; DOB 07/04/42 Trustee May 2000 (1985-2005) St. Paul's School Charles D. Winslow Indefinite; 3435 Stelzer Road since Columbus, OH 43219 November Retired. Formerly Partner, DOB 07/13/35 Trustee 2004 Accenture (consulting) 59 None
- ---------- * Mr. Courts may be deemed an Interested Trustee because of his directorships with affiliates of the Adviser. Mr. Ridley may be deemed an Interested Trustee because of a material business relationship with the parent of the Adviser. 48 TRUSTEES AND OFFICERS OF THE STI CLASSIC VARIABLE TRUST (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 (Unaudited)
POSITION(s) TERM OF NAME, ADDRESS, HELD WITH OFFICE AND LENGTH PRINCIPAL OCCUPATION(s) DATE OF BIRTH THE GROUP OF TIME SERVED DURING THE PAST 5 YEARS - -------------------- ------------------ --------------------- ---------------------------------------------------------- OFFICERS: R. Jeffrey Young 3435 Stelzer Road Senior Vice President, Relationship Management, BISYS Columbus, OH 43219 One-year; Fund Services (since 2002); Vice President, Client DOB 08/22/64 President since July 2004 Services, BISYS Fund Services; (1997-2002) Executive One-year; Chief Complaince Officer and Executive Vice President, Deborah A. Lamb Vice President, since September 2004; STI Classic Funds and Variable Trust (2004-present); 50 Hurt Plaza Assistant since November 2003; Managing Director, Trusco Capital Management, Inc. (since Atlanta, GA 30303 Secretary; Chief since August 2004 2003); President, Investment Industry Consultants, LLC DOB 10/02/52 Compliance Officer (respectively) (since 2000); Director of Compliance, INVESCO, Inc. (1995-2000) David L. Hughes 3435 Stelzer Road Treasurer, Chief Vice President, Fund Administration, BISYS Fund Services Columbus, OH 43219 Financial One-year; (since 2005); Assistant Vice President, Evergreen DOB 01/25/63 Officer since May 2005 Investments (2000-2004); Fund Accounting Manager, Fidelity Investments (1998-2000) Cynthia J. Surprise 3435 Stelzer Road Senior Counsel, Legal Services, BISYS Fund Services Columbus, OH 43219 Secretary and One-year; (since 2004); Director and Counsel, Investors Bank & DOB 07/08/46 Chief Legal Officer since February 2005 Trust Company (1999-2004) Alaina V. Metz 3435 Stelzer Road Vice President, Blue Sky Compliance, BISYS Fund Services Columbus, OH 43219 Assistant One-year; (since 2002); Chief Administrative Officer, Blue Sky DOB 04/07/67 Secretary Since July 2004 Compliance, BISYS Fund Services (1995-2002) Jennifer English 3435 Stelzer Road Assistant Counsel, Legal Services, BISYS Fund Services Columbus, OH 43219 Assistant One-year; (since 2005); Assistant Counsel, PFPC, Inc. (2002-2005); DOB 03/05/72 Secretary Since November 2005 Associate Legal Product Manager, Fidelity Investments (2001)
The Trust's Statement of Additional Information includes additional information about the Trust's trustees and officers. To request your free copy of the Statement of Additional Information, call toll free 1-888-STI-FUND. 49 ADDITIONAL INFORMATION STI CLASSIC VARIABLE TRUST December 31, 2005 (Unaudited) EXPENSE EXAMPLES As a Fund shareholder, 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 a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note that separate account and contract expenses, fees and charges are not reflected. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2005 through December 31, 2005. Actual Expenses 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.
Expense Ratio Beginning Ending Account Expense Paid During During Period** Account Value Value Period* 07/01/05 07/01/05 12/31/05 07/01/05 - 12/31/05 12/31/05 ------------- -------------- ------------------- --------------- Capital Appreciation Fund .................... $1,000.00 $1,037.90 $5.70 1.11% International Equity Fund .................... 1,000.00 1,155.70 7.34 1.35 Investment Grade Bond Fund ................... 1,000.00 995.70 3.27 0.65 Large Cap Relative Value Fund ................ 1,000.00 1,060.80 5.04 0.97 Large Cap Value Equity Fund .................. 1,000.00 1,044.70 4.79 0.93 Mid-Cap Equity Fund .......................... 1,000.00 1,074.90 6.01 1.15 Small Cap Value Equity Fund .................. 1,000.00 1,127.30 6.43 1.20
* Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** Annualized. 50 ADDITIONAL INFORMATION (continued) STI CLASSIC VARIABLE TRUST December 31, 2005 (Unaudited) Hypothetical Example The table below provides information about hypothetical account values and hypothetical expenses based on a Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's 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.
Expense Paid Beginning Ending Account During Period* Expense Ratio Account Value Value 07/01/05 - During Period** 07/01/05 12/31/05 12/31/05 07/01/05 - 12/31/05 ------------- -------------- -------------- ------------------- Capital Appreciation Fund .................... $1,000.00 $1,019.61 $5.65 1.11% International Equity Fund .................... 1,000.00 1,018.40 6.87 1.35 Investment Grade Bond Fund ................... 1,000.00 1,021.93 3.31 0.65 Large Cap Relative Value Fund ................ 1,000.00 1,020.32 4.94 0.97 Large Cap Value Equity Fund .................. 1,000.00 1,020.52 4.74 0.93 Mid-Cap Equity Fund .......................... 1,000.00 1,019.41 5.85 1.15 Small Cap Value Equity Fund .................. 1,000.00 1,019.16 6.11 1.20
* Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** Annualized. PROXY VOTING Information regarding the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-888-STI-FUND. The information also is included in the Funds' Statement of Additional Information, which is available on the Funds' website at www.sticlassicfunds.com and on the Securities and Exchange Commission's website at www.sec.gov. Information relating to how each Fund voted proxies relating to portfolio securities held during the most recent twelve months ended June 30 is available on the Funds' website at www.sticlassicfunds.com and on the Securities and Exchange Commission's website at www.sec.gov. PORTFOLIO HOLDINGS INFORMATION The Funds file a complete list of their portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available free of charge on the Securities and Exchange Commission's website at www.sec.gov. You may also review or, for a fee, copy those documents by visiting the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. 51 INVESTMENT ADVISER: Trusco Capital Management, Inc. This information must be preceded or accompanied by a current prospectus for each Fund described. An investor should consider the Fund's investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about STI Classic Variable Trust can be found in the Fund's prospectus. For additional information please call 1-888-STI-FUND, or visit www.sticlassicfunds.com. Please read the prospectus carefully before investing. DISTRIBUTOR: BISYS Fund Services Limited Partnership NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE [STI CLASSIC VARIABLE TRUST LOGO] STI-AR-VT-1205 2/06 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as an Exhibit. (b) During the period covered by the report, with respect to the registrant's code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. 3(a)(1) The registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee. 3(a)(2) The audit committee financial expert is Warren Y. Jobe, who is "independent" for purposes of this Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees: the aggregate fees billed for each of the last two fiscal years for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Trust's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows: CURRENT YEAR PREVIOUS YEAR ------------ ------------- (a) Audit Fees $100,200 $94,500 (b) Audit-Related Fees $ 11,100 (1) $10,500 (1) (1) Services related to security count examinations under Rule 17f-2 of the Investment Company Act. (c) Tax Fees $0 $0 (d) All Other Fees $0 $0 e(1) Except as permitted by Rule 2-01(c)(7)(i)(C) of Regulation S-X, the Trust's Audit Committee Charter provides that the principal responsibilities of the Committee shall include approving audit and non-audit services an independent accounting firm provides to the Trust (and certain Trust service providers) as required by and in accordance with applicable law. The Committee is authorized to develop policies and procedures, in accordance with applicable law, that provide for the advance pre-approval of some or all audit and non-audit services. The Committee is further authorized to delegate its responsibility to pre-approve audit and non-audit services to one or more members of the Committee, in accordance with applicable law. e(2) None of the services summarized in (b)-(d), above, were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X. (f) Not applicable. (g) CURRENT YEAR PREVIOUS YEAR ------------ ------------- $3,790,463 (1) $3,208,119 (1) (1) Non-audit services relate principally to certain technical accounting advice on financial products of the Bank; Sarbanes-Oxley 404 implementation; review of certain registration statements and regulatory filings; issuance of comfort letters; and, tax compliance services to other entities controlled by SunTrust Banks, Inc. (h) In regards to Item 4 (g), The audit committee has considered that the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. 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. Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a)The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure 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. (b)There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 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) THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2 IS ATTACHED HERETO. (a)(2) CERTIFICATIONS PURSUANT TO RULE 30A-2(A) ARE ATTACHED HERETO. (a)(3) NOT APPLICABLE. (b) CERTIFICATIONS PURSUANT TO RULE 30A-2(B) ARE FURNISHED HEREWITH. 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) STI Classic Variable Trust ------------------------------------------------------------------ By (Signature and Title)* /s/ David Hughes ----------------------------------------------------- Date March 7, 2006 ------------------ 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/ R. Jeffrey Young President ----------------------------------------------------- R. Jeffrey Young Date March 7, 2006 --------------------- By (Signature and Title)* /s/ David Hughes Treasurer ---------------------------------------------------- David Hughes Date March 7, 2006 ------------------ * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 l18856aexv99wcodeeth.txt EXHIBIT 99.CODE ETH Ex-99.Code eth STI CLASSIC FUNDS STI CLASSIC VARIABLE TRUST FINANCIAL OFFICER CODE OF ETHICS I. INTRODUCTION The reputation and integrity of the STI Classic Funds and STI Classic Variable Trust (the "Trusts") are valuable assets that are vital to the Trusts' success. The Trusts' senior financial officers ("SFOs") are responsible for conducting the Trusts' business in a manner that demonstrates a commitment to the highest standards of integrity. The Trusts' SFOs include the principal executive officer, the principal financial officer, comptroller or principal accounting officer, and any person who performs a similar function. The Sarbanes-Oxley Act of 2002 (the "Act") effected sweeping corporate disclosure and financial reporting reform on public companies, including mutual funds, to address corporate malfeasance and assure investors that the companies in which they invest are accurately and completely disclosing financial information. Under the Act, all public companies (including the Trust) must either have a code of ethics for their SFOs, or disclose why it does not. The Act was intended to foster corporate environments which encourage employees to question and report unethical and potentially illegal business practices. The Trusts have chosen to adopt this Financial Officer Code of Ethics (the "Code") to encourage their SFOs to act in a manner consistent with the highest principles of ethical conduct. II. PURPOSES OF THE CODE The purposes of this Code are: o To promote honest and ethical conduct by the Trusts' SFOs, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o To assist the Trusts' SFOs in recognizing and avoiding conflicts of interest, including disclosing to an appropriate person any material transaction or relationship that reasonably could be expected to give rise to such a conflict; o To promote full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trusts file with, or submit to, the SEC and in other public communications made by the Trusts; o To promote compliance with applicable laws, rules and regulations; o To encourage the prompt internal reporting to an appropriate person of violations of this Code; and o To establish accountability for adherence to this Code. 1 III. QUESTIONS ABOUT THIS CODE The Trusts' compliance officer designated to oversee compliance with the Trusts' Code of Ethics adopted pursuant to Rule 17j-1 shall serve as Compliance Officer for the implementation and administration of this Code. You should direct your questions about this Code to the Compliance Officer. IV. CONDUCT GUIDELINES The Trusts have adopted the following guidelines under which the Trusts' SFOs must perform their official duties and conduct the business affairs of the Trusts. 1. ETHICAL AND HONEST CONDUCT IS OF PARAMOUNT IMPORTANCE. The Trusts' SFOs must act with honesty and integrity and avoid violations of this Code, including the avoidance of actual or apparent conflicts of interest with the Trusts in personal and professional relationships. 2. SFOS MUST DISCLOSE MATERIAL TRANSACTIONS OR RELATIONSHIPS. The Trusts' SFOs must disclose to the Compliance Officer any actual or apparent conflicts of interest the SFO may have with the Trusts that reasonably could be expected to give rise to any violations of this Code. Such conflicts of interest may arise as a result of material transactions or business or personal relationships to which the SFO may be a party. If it is not possible to disclose the matter to the Compliance Officer, it should be disclosed to the Trusts' Chief Financial Officer, Chief Executive Officer or another appropriate person. In addition to disclosing any actual or apparent conflicts of interest in which an SFO is personally involved, the Trusts' SFOs have an obligation to report any other actual or apparent conflicts which they discover or of which they otherwise become aware. If you are unsure whether a particular fact pattern gives rise to a conflict of interest, or whether a particular transaction or relationship is "material," you should bring the matter to the attention of the Compliance Officer. 3. STANDARDS FOR QUALITY OF INFORMATION SHARED WITH SERVICE PROVIDERS OF THE TRUSTS. The Trusts' SFOs must at all times seek to provide information to the Trusts' service providers (adviser, administrator, outside auditor, outside counsel, custodian, ETC.) that is accurate, complete, objective, relevant, timely, and understandable. 4. STANDARDS FOR QUALITY OF INFORMATION INCLUDED IN PERIODIC REPORTS. The Trusts' SFOs must at all times endeavor to ensure full, fair, timely, accurate, and understandable disclosure in the Trusts' periodic reports. 5. COMPLIANCE WITH LAWS. The Trusts' SFOs must comply with the federal securities laws and other laws and rules applicable to the Trusts, such as the Internal Revenue Code. 2 6. STANDARD OF CARE. The Trusts' SFOs must at all times act in good faith and with due care, competence and diligence, without misrepresenting material facts or allowing your independent judgment to be subordinated. The Trusts' SFOs must conduct the affairs of the Trusts in a responsible manner, consistent with this Code. 7. CONFIDENTIALITY OF INFORMATION. The Trusts' SFOs must respect and protect the confidentiality of information acquired in the course of their professional duties, except when authorized by the Trusts to disclose it or where disclosure is otherwise legally mandated. You may not use confidential information acquired in the course of your work for personal advantage. 8. SHARING OF INFORMATION AND EDUCATIONAL STANDARDS. The Trusts' SFOs should share information with relevant parties to keep them informed of the business affairs of the Trusts, as appropriate, and maintain skills important and relevant to the Trusts' needs. 9. PROMOTE ETHICAL CONDUCT. The Trusts' SFOs should at all times proactively promote ethical behavior among peers in your work environment. 10. STANDARDS FOR RECORDKEEPING. The Trusts' SFOs must at all times endeavor to ensure that the Trusts' financial books and records are thoroughly and accurately maintained to the best of their knowledge in a manner consistent with applicable laws and this Code. V. WAIVERS OF THIS CODE You may request a waiver of a provision of this Code by submitting your request in writing to the Compliance Officer for appropriate review. For example, if a family member works for a service provider that prepares the Trusts' financial statements, you may have a potential conflict of interest in reviewing those statements and should seek a waiver of this Code to review the work. An executive officer of the Trusts, or another appropriate person (such as a designated Board or Audit Committee member), will decide whether to grant a waiver. All waivers of this code must be disclosed to the Trusts' shareholders to the extent required by SEC rules. VI. AFFIRMATION OF THE CODE Upon adoption of the Code, the Trusts' SFOs must affirm in writing that they have received, read and understand the Code, and annually thereafter must affirm that they have complied with the requirements of the Code. To the extent necessary, the Trusts' Compliance Officer will provide guidance on the conduct required by this Code and the manner in which violations or suspected violations must be reported and waivers must be requested. 3 VII. REPORTING VIOLATIONS In the event that an SFO discovers or, in good faith, suspects a violation of this Code, the SFO MUST immediately report the violation or suspected violation to the Compliance Officer. The Compliance Officer may, in his or her discretion, consult with another member of the Trusts' senior management or the Board in determining how to address the suspected violation. For example, a Code violation may occur when a periodic report or financial statement of the Trusts omits a material fact, or is technically accurate but, in the view of the SFO, is written in a way that obscures its meaning. SFOs who report violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be investigated and addressed promptly and will be treated as confidential to the extent possible. VIII. VIOLATIONS OF THE CODE Dishonest or unethical conduct or conduct that is illegal will constitute a violation of this Code, regardless of whether this Code specifically refers to such particular conduct. A violation of this Code may result in disciplinary action, up to and including removal as an SFO of the Trust. A variety of laws apply to the Trusts and their operations, including the Securities Act of 1933, the Investment Company Act of 1940, state laws relating to duties owed by Trust officers, and criminal laws. The Trusts will report any suspected criminal violations to the appropriate authorities, and will investigate, address and report, as appropriate, non-criminal violations. ADOPTED: NOVEMBER 20, 2003 4 EX-99.CERT 3 l18856aexv99wcert.txt EXHIBIT 99.CERT Ex-99.cert CERTIFICATIONS I, R. Jeffrey Young, certify that: 1. I have reviewed this report on Form N-CSR of STI Classic Variable Trust (the "registrant"); 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. March 8, 2006 /s/ R. Jeffrey Young - ------------------ ------------------------------- Date R. Jeffrey Young President CERTIFICATIONS I, David Hughes, certify that: 1. I have reviewed this report on Form N-CSR of STI Classic Variable Trust (the "registrant"); 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. March 8, 2006 /s/ David Hughes - ------------- ------------------------------ Date David Hughes Treasurer EX-99.906 CERT 4 l18856aexv99w906cert.txt EXHIBIT 99.906 CERT Ex-99.906cert This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, and accompanies the report on Form N-CSR for the period ended December 31, 2005 of STI Classic Variable Trust (the "Registrant"). Each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of the Registrant, hereby certifies that, to such officer's knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. March 8, 2006 - ------------------------- Date /s/ R. Jeffrey Young --------------------------- R. Jeffrey Young President /s/ David Hughes --------------------------- David Hughes Treasurer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----