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