SEMI-ANNUAL
FINANCIAL REPORT
STI CLASSIC VARIABLE TRUST
[graphic of columns omitted]
JUNE 30, 1997
[STI Classic Variable Trust logo omitted]
<PAGE>
Dear STI Classic Variable Trust Shareholders:
The following 1997 Semi-Annual Financial Report provides you a detailed summary
of each of the STI Classic Variable Trust Funds. The STI Classic Funds and the
STI Classic Variable Trust have presented investors exposure to a variety of
investment opportunities since 1992. The five STI Classic Variable Trust Funds
were developed 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
complement one another, providing access to different segments of the stock and
bond markets. The combination of these funds is intended to offer the ideal
investment program for almost any investor.
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST FUNDS (UNAUDITED)
NET OF FEES PERFORMANCE AS OF JUNE 30, 1997
- --------------------------------------------------------------------------------
SINCE INCEPTION INCEPTION
SIX MONTHS ONE YEAR (ANNUALIZED) DATE
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
INTERNATIONAL EQUITY FUND 17.13% N/A 31.22% 11/7/96
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
MID CAP EQUITY FUND 8.18% 18.11% 15.99% 10/2/95
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
CAPITAL GROWTH FUND 21.87% 35.43% 31.51% 10/2/95
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
VALUE INCOME STOCK FUND 15.81% 26.40% 24.91% 10/2/95
- --------------------------------------------------------------------------------
STI CLASSIC VARIABLE TRUST
INVESTMENT GRADE BOND FUND 2.64% 6.80% 4.98% 10/2/95
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RETURNS.
The STI Classic Variable Trust is a well-established family of mutual funds,
nationally recognized for the diversity and quality of investment options that
they provide. As the advisor to the STI Classic Variable Trust, STI Capital
Management is committed to providing you quality investment products which will
aid you in achieving your investment objectives.
I hope you will find the information on the following pages useful. 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. 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>
STATEMENT OF NET ASSETS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
VALUE INCOME STOCK FUND
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK (90.3%)
BASIC MATERIALS (13.3%)
Consolidated Papers 6,600 $ 356
Cyprus AMAX Minerals 21,700 532
Eastman Chemical 3,300 210
Ethyl 40,300 373
Georgia Pacific 7,100 606
Hercules 16,700 799
Imperial Chemical Industries 6,800 387
International Flavors & Fragrances 13,400 677
International Paper 15,200 738
Nalco Chemical 11,100 429
Olin 15,000 586
Reynolds Metals 6,300 449
Union Camp 9,500 475
Witco Chemical 14,500 550
------
7,167
------
CAPITAL GOODS (14.3%)
AMP 26,200 1,094
Cooper Industries 9,400 468
Federal Signal 16,300 410
Foster Wheeler 13,800 559
General Signal 14,700 641
National Service Industries 8,400 409
Pall 29,100 677
Rockwell International 9,300 549
Tenneco 21,900 990
Thomas & Betts 9,800 515
Tomkins 20,600 368
Trinity Industries 9,100 289
Waste Management 22,000 707
------
7,676
------
COMMUNICATIONS SERVICES (7.0%)
Alltel 20,000 669
BellSouth 11,500 533
Frontier 27,600 550
GTE 25,800 1,132
Southern New England
Telecommunications 16,300 634
Sprint 5,300 279
------
3,797
------
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
CONSUMER CYCLICALS (13.7%)
American Greetings, Cl A 14,200 $ 527
Dana 15,100 574
Echlin 16,600 598
H & R Block 14,500 468
ITT Industries 36,300 935
J.C. Penney 22,400 1,169
Masco 12,700 530
May Department Stores 15,000 709
Maytag 11,100 290
McGraw-Hill 9,200 541
Mercantile Stores 7,600 478
Reader's Digest, Cl A 5,600 161
Shaw Industries 37,900 403
------
7,383
------
CONSUMER STAPLES (11.3%)
Anheuser Busch 12,900 541
Cadbury Schweppes ADR 13,700 502
CPC International 8,700 803
Deluxe 7,300 249
Food Lion, Cl A 50,100 358
Kelly Services, Cl A 8,200 257
Kimberly-Clark 11,300 562
McCormick 17,400 439
R.R. Donnelley & Sons 16,900 619
Rubbermaid 22,200 660
UST 19,200 533
Whitman 21,900 554
------
6,077
------
ENERGY (7.6%)
Amoco 8,300 722
Chevron 10,600 784
Dresser Industries 14,700 548
Kerr-McGee 10,800 684
Mobil 10,200 713
Phillips Petroleum 14,400 630
------
4,081
------
2
<PAGE>
================================================================================
UNAUDITED
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
FINANCIALS (8.0%)
American Financial Group 13,300 $ 564
American General 12,000 573
AmSouth Bancorp 6,600 250
Central Fidelity Banks 8,150 289
Crestar Financial 7,100 276
First American Bank 5,400 247
First American of Tennessee 7,300 280
Hibernia, Cl A 18,500 258
Magna Group 7,700 268
Mercantile Bancorp 4,200 255
Signet Banking 7,300 263
Summit Bancorp 5,170 259
TIG Holdings 17,500 547
-------
4,329
-------
HEALTH CARE (5.8%)
American Home Products 9,800 750
Baxter International 14,100 737
C.R. Bard 14,800 537
Pharmacia Upjohn ADR 31,800 1,105
-------
3,129
-------
TECHNOLOGY (1.0%)
Eastman Kodak 7,300 560
-------
TRANSPORTATION (1.8%)
KLM Royal Dutch Air 18,700 577
Illinois Central 10,800 377
-------
954
-------
UTILITIES (6.5%)
Central & South West 12,900 274
Duke Power 11,500 551
Enron 22,800 930
Pacificorp 25,000 550
Questar 12,900 521
Southern 31,700 693
-------
3,519
-------
TOTAL COMMON STOCK
(Cost $43,936) 48,672
-------
- --------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
REPURCHASE AGREEMENT (9.4%)
Morgan Stanley
6.05%, dated 06/30/97,
matures 07/01/97, repurchase
price $5,100,931 (collateralized
by various FNMA obligations,
total par value $5,135,000,
7.146%-7.800%, 12/01/24-
08/25/26: total market
value $5,212,014) $5,100 $ 5,100
-------
Total Repurchase Agreement
(Cost $5,100) 5,100
-------
Total Investments (99.7%)
(Cost $49,036) 53,772
-------
OTHER ASSETS AND LIABILITIES, NET (0.3%) 149
-------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par
value) based on 3,792,141
outstanding shares of
beneficial interest 45,471
Accumulated net realized gain
on investments 3,716
Net unrealized appreciation
on investments 4,736
Overdistribution of net investment income (2)
-------
Total Net Assets (100.0%) $53,921
=======
Net Asset Value, Offering Price and
Redemption Price Per Share $14.22
=======
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
*NON-INCOME PRODUCING SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<PAGE>
STATEMENT OF NET ASSETS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
MID-CAP EQUITY FUND
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK (92.3%)
BASIC MATERIALS (3.3%)
IMC Fertilizer Group 8,600 $ 301
Potash of Saskatchewan 4,200 315
------
616
------
CAPITAL GOODS (13.9%)
Fisher Scientific International 5,200 247
Foster Wheeler 3,400 138
Hubbell, Cl B 3,800 167
Philip Services* 24,100 383
Solectron* 6,400 448
Sundstrand 4,000 223
U.S. Filter* 17,300 471
United Waste Systems* 6,300 258
York International 4,800 221
------
2,556
------
CONSUMER CYCLICALS (19.4%)
Bed Bath and Beyond* 8,000 243
Boston Chicken* 21,000 294
Cracker Barrel Old Country Stores 10,800 286
Dollar General 10,537 395
Harley-Davidson 7,700 369
International Speedway 9,900 194
Men's Wearhouse* 1,500 47
Nine West Group* 6,500 248
Ralph Lauren* 6,600 181
Saks Holdings* 13,500 337
Stanley Works 4,100 164
Staples* 19,600 456
West Marine* 13,700 353
------
3,567
------
CONSUMER STAPLES (6.1%)
Dial 18,000 281
Hannaford Brothers 8,200 292
JP Foodservice* 8,600 247
Nabisco Holdings, Cl A 7,500 299
------
1,119
------
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
ENERGY (6.0%)
Anadarko Petroleum 4,400 $ 264
Santa Fe International 5,600 190
Tosco 7,100 213
Western Atlas* 6,000 440
------
1,107
------
FINANCIALS (13.5%)
Crestar Financial 9,200 358
First Security 8,625 236
First Virginia Banks 2,600 157
Hartford Life, Cl A* 5,100 191
North Fork Bancorporation 7,200 154
PMI Group 3,100 193
Regions Financial 7,200 228
SouthTrust 2,900 120
Summit Bancorp 6,000 301
Trustmark 11,300 316
Union Planters 4,500 233
------
2,487
------
HEALTH CARE (12.0%)
Allergan 5,050 161
Biogen* 11,300 383
DePuy* 8,000 184
McKesson 4,300 333
Medpartners* 12,100 262
Pacificare Health Systems, Cl B* 4,600 294
Teva Pharmaceuticals ADR 3,300 214
Watson Pharmaceuticals* 8,700 368
------
2,199
------
4
<PAGE>
================================================================================
UNAUDITED
- ---------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------
TECHNOLOGY (15.5%)
ADC Telecommunications* 10,700 $ 357
Analog Devices* 16,733 444
Atmel* 8,300 232
Ceridian* 7,500 317
Flextronics International* 15,900 429
Micron Electronics* 12,500 223
Network General* 16,300 242
Sawtek 1,000 33
Teradyne* 14,700 577
-------
2,854
-------
TRANSPORTATION (1.1%)
ASA Holdings 6,800 195
-------
UTILITIES (1.5%)
Wisconsin Energy 11,200 277
-------
Total Common Stock
(Cost $15,536) 16,977
-------
REPURCHASE AGREEMENT (7.8%)
Morgan Stanley
5.70%, dated 06/30/97,
matures 07/01/97, repurchase
price $1,442,386 (collateralized
by U.S. Treasury Note, par
value $1,475,000, 6.25%,
06/30/98: market
value $1,482,091) $1,442 1,442
-------
Total Repurchase Agreement
(Cost $1,442) 1,442
-------
Total Investments (100.1%)
(Cost $16,978) 18,419
-------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (23)
-------
- ---------------------------------------------------------------
VALUE (000)
- ---------------------------------------------------------------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par
value) based on 1,435,214
outstanding shares of
beneficial interest $15,600
Accumulated net realized gain
on investments 1,356
Net unrealized appreciation
on investments 1,441
Overdistribution of net investment income (1)
-------
Total Net Assets (100.0%) $18,396
=======
Net Asset Value, Offering Price and
Redemption Price Per Share $12.82
=======
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
*NON-INCOME PRODUCING SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
STATEMENT OF NET ASSETS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
CAPITAL GROWTH FUND
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK (88.4%)
BASIC MATERIALS (4.1%)
Aluminum Company of America 4,400 $ 332
Hercules 10,200 488
Monsanto 11,600 500
Morton International* 4,300 130
Potash of Saskatchewan 1,600 120
Praxair 3,500 196
W.R. Grace* 1,600 88
------
1,854
------
CAPITAL GOODS (13.7%)
Allied Signal 11,600 974
Crown Cork & Seal 5,000 267
Deere 3,800 209
Emerson Electric 9,200 507
Fluor 2,100 116
General Electric 17,600 1,151
General Signal 8,100 353
Keystone International 7,000 243
Lockheed Martin 2,700 280
McDonnell Douglas 2,700 185
Molten Metal Technology* 5,600 28
Rockwell International 5,200 307
Thomas & Betts 4,806 253
Tyco International 8,600 598
United Technologies 5,600 465
USA Waste Services* 3,200 124
Wheelabrator Technologies 9,400 145
------
6,205
------
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
COMMUNICATION SERVICES (1.1%)
Airtouch Communications* 1,700 $ 47
BellSouth 4,000 185
Ericsson Telephone ADR 2,700 106
GTE 4,100 180
------
518
------
CONSUMER CYCLICALS (10.5%)
American Standard* 7,500 336
Borders Group* 6,000 145
Carnival 11,600 478
Costco * 5,900 194
CUC International* 12,900 333
Federated Department Stores* 7,300 254
Gannett 2,800 276
Hasbro 10,000 284
Home Depot 7,900 545
Intimate Brands 4,100 86
Lear* 3,800 169
Marriott 2,900 178
Mattel 5,000 169
McGraw-Hill 5,000 294
Office Depot* 9,700 189
Rite Aid 4,000 200
Staples* 7,000 163
TJX 6,000 158
Tribune 6,000 288
------
4,739
------
6
<PAGE>
================================================================================
UNAUDITED
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
CONSUMER STAPLES (13.1%)
American Stores 3,400 $ 168
Avon Products 11,200 790
Colgate-Palmolive 4,000 261
CPC International 1,000 92
CVS 6,700 343
Dial 6,100 95
Fort Howard* 4,200 213
Gillette 7,992 757
Kimberly Clark 1,600 80
Nabisco Holdings, Cl A 5,500 219
Philip Morris 17,300 768
Ralston Purina Group 2,900 238
RJR Nabisco 5,800 191
Safeway* 8,400 387
Sara Lee 6,300 262
Sysco 2,900 106
Unilever ADR 1,200 257
Viacom, Cl B* 3,000 90
Walt Disney 4,719 379
Wendy's International 8,000 207
------
5,903
------
ENERGY (6.6%)
Amoco 1,700 148
British Petroleum ADR 4,000 299
Dresser Industries 5,000 186
Halliburton 4,400 349
Kerr-McGee 3,500 222
Mobil 8,800 615
Royal Dutch Petroleum ADR 11,000 598
Schlumberger 2,900 362
Union Pacific Resources Group 7,901 197
------
2,976
------
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
FINANCIALS (12.8%)
American International Group 1,900 $ 284
BankAmerica 7,500 484
Banc One 9,560 463
BB&T 800 36
Chase Manhattan Bank 11,700 1,136
Citicorp 2,000 241
Conseco 5,000 185
FHLMC 9,700 333
First Union 3,500 324
FNMA 5,100 222
General Re 1,800 328
Great Western Financial 3,800 204
Hartford Financial Services Group 4,400 364
Nationsbank 3,000 193
Nationwide Financial Services* 8,000 213
PMI Group 6,000 374
Travelers 3,733 235
U.S. Bancorp 300 19
Washington National 4,700 134
------
5,772
------
HEALTHCARE (13.8%)
Alza* 400 12
American Home Products 5,900 451
Amgen* 3,500 203
Baxter International 6,300 329
Boston Scientific* 6,347 390
Bristol-Myers Squibb 10,300 834
Columbia/HCA Healthcare 8,900 350
Eli Lilly 3,400 372
Healthsouth* 19,890 496
Johnson & Johnson 14,050 904
Medpartners* 15,300 331
7
<PAGE>
STATEMENT OF NET ASSETS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
CAPITAL GROWTH FUND -- CONCLUDED
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
HEALTHCARE (CONTINUED)
Merck 5,400 $ 559
Schering Plough 6,500 311
SmithKline Beecham 4,100 376
Tenet Healthcare* 9,900 293
------
6,211
------
TECHNOLOGY (11.4%)
Automatic Data Processing 2,300 108
Cadence Design Systems* 400 13
Ceridian* 6,200 262
Cisco Systems* 7,000 470
Eastman Kodak 4,400 338
First Data 12,600 554
Hewlett Packard 2,000 112
IBM 3,000 271
Intel 6,000 851
Lucent Technologies 3,193 230
Microsoft* 6,000 758
Motorola 1,300 99
Oracle* 4,300 217
Scientific-Atlanta 6,600 144
Tandem Computers 4,500 91
Xerox 8,200 647
------
5,165
------
TRANSPORTATION (0.8%)
Burlington Northern Santa Fe 1,200 108
Delta Air Lines 1,500 123
Union Pacific 1,700 120
------
351
------
- ---------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
- ---------------------------------------------------------------
UTILITIES (0.5%)
Enron 1,600 $ 65
Sonat 3,500 179
-------
244
-------
Total Common Stock
(Cost $34,917) 39,938
-------
PREFERRED STOCKS (1.3%)
FINANCIALS (0.5%)
National Australia Bank,
CV to 0.3273 Shares* 8,000 224
TECHNOLOGY (0.8%)
Microsoft, Ser A,
CV to 1 Share 4,000 348
-------
Total Preferred Stocks
(Cost $520) 572
-------
CONVERTIBLE BONDS (2.1%)
Alza, CV to 12.987 Shares, (A)
0.000%, 07/14/14 $400 178
Office Depot, CV to 29.2635 Shares, (A)
0.000%, 12/11/07 300 201
USA Waste Services,
CV to 22.9594 Shares,
Callable 02/01/00 @ 101.6
4.000%, 02/01/02 200 215
WMX Technologies,
CV to 26.078 Shares
2.000%, 01/24/05 400 372
-------
Total Convertible Bonds
(Cost $910) 966
-------
8
<PAGE>
================================================================================
UNAUDITED
- --------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
REPURCHASE AGREEMENT (7.4%)
Morgan Stanley
6.05%, dated 06/30/97,
matures 07/01/97, repurchase
price $3,324,828 (collateralized
by various FNMA obligations,
total par value $3,498,000,
7.146%-8.004%, 12/01/24-
10/01/32: total market
value $3,393,214) $3,325 $ 3,325
-------
Total Repurchase Agreement
(Cost $3,325) 3,325
-------
Total Investments (99.2%)
(Cost $39,672) 44,801
-------
OTHER ASSETS AND LIABILITIES, NET (0.8%) 340
-------
- -------------------------------------------------------------
VALUE (000)
- -------------------------------------------------------------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par
value) based on 2,845,350
outstanding shares of
beneficial interest $35,359
Accumulated net realized gain
on investments 4,655
Net unrealized appreciation
on investments 5,129
Overdistribution net investment income (2)
-------
Total Net Assets (100.0%) $45,141
-------
Net Asset Value, Offering Price and
Redemption Price Per Share $15.86
=======
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
CV -- CONVERTIBLE SECURITY
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATIONs
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SER -- SERIES
*NON-INCOME PRODUCING SECURITY
(A)ZERO COUPON BOND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<PAGE>
STATEMENT OF NET ASSETS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
INVESTMENT GRADE BOND FUND
- -------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (58.3%)
American General Finance
6.875%, 07/01/99 $150 $151
Aristar
6.750%, 05/15/99 500 503
Associates of North America, MTN
6.650%, 08/30/99 100 100
AT&T Capital, MTN
6.920%, 04/29/99 250 252
Bear Stearns
7.000%, 03/01/07 300 295
General Electric Capital
6.660%, 05/01/18 150 151
General Motors Acceptance
7.125%, 05/01/01 300 303
General Motors Acceptance, MTN
6.750%, 11/04/04 200 196
Homeside Lending, MTN
6.875%, 05/15/00 250 250
Ikon Capital, MTN
6.730%, 06/15/01 150 149
International Lease Finance
6.700%, 04/30/99 300 302
Lockheed Martin
6.550%, 05/15/99 50 50
Morgan Stanley Group
6.875%, 03/01/07 200 197
Philip Morris
7.250%, 09/15/01 300 302
7.500%, 04/01/04 150 152
RHG Finance
8.875%, 10/01/05 200 218
- -------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Salomon
6.500%, 03/01/00 $ 350 $ 348
6.750%, 02/15/03 200 195
Service International
7.375%, 04/15/04 250 255
Sunamerica
6.200%, 10/31/99 250 249
US West Capital Funding
7.300%, 01/15/07 150 151
------
Total Corporate Obligations
(Cost $4,758) 4,769
------
U.S. TREASURY OBLIGATIONS (24.1%)
U.S. Treasury Bonds
7.500%, 11/15/16 450 481
8.125%, 08/15/19 1,050 1,198
6.625%, 02/15/27 250 245
U.S. Treasury Note
6.500%, 05/31/02 50 50
------
Total U.S. Treasury Obligations
(Cost $1,925) 1,974
------
U.S. GOVERNMENT AGENCY (11.4%)
FHLMC
7.500%, 09/01/03 274 280
FNMA
7.000%, 10/01/03 650 652
------
Total U.S. Government Agency
(Cost $936) 932
------
10
<PAGE>
================================================================================
UNAUDITED
- --------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
REPURCHASE AGREEMENT (5.4%)
Lehman Brothers
5.38%, dated 06/30/97,
matures 07/01/97, repurchase
price $443,830 (collateralized
by U.S. Treasury Note, par
value $431,660, 7.00%,
07/15/06: market
value $459,808) $444 $ 444
------
Total Repurchase Agreement
(Cost $444) 444
------
Total Investments (99.2%)
(Cost $8,063) 8,119
------
OTHER ASSETS AND LIABILITIES, NET (0.8%) 67
------
- -------------------------------------------------------------
VALUE (000)
- -------------------------------------------------------------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par
value) based on 827,761
outstanding shares of
beneficial interest $8,204
Accumulated net realized loss
on investments (74)
Net unrealized appreciation
on investments 56
------
Total Net Assets (100.0%) $8,186
======
Net Asset Value, Offering Price and
Redemption Price Per Share $9.89
======
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (92.0%)
ARGENTINA (1.7%)
YPF Sociedad Anonima, Cl D, ADR 4,300 $132
----
AUSTRALIA (2.6%)
Australian & New Zealand
Banking Group 9,600 72
QBE Insurance 22,000 133
----
205
----
AUSTRIA (0.9%)
VAE 700 69
----
BRAZIL (1.7%)
Telebras ADR* 900 137
----
CANADA (3.2%)
Bombardier, Cl B 3,300 75
CAE 8,115 65
Suncor 4,000 107
----
247
----
CZECH REPUBLIC (0.7%)
SPT Telecom* 500 53
----
DENMARK (0.7%)
Sophus Berendsen, Cl B 400 58
----
FINLAND (5.6%)
Cultor, Series 2 2,000 105
Finnlines 1,400 43
Metra, Cl B 1,700 51
Nokia ADR 1,800 133
UPM-Kymmene 4,500 104
----
436
----
FRANCE (7.6%)
Accor 720 108
Christian Dior 620 102
Credit Local de France 700 68
Lafarge 1,200 75
SGS -Thomson Microelectronics* 1,000 80
Technip 1,400 162
----
595
----
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
GERMANY (3.5%)
Siemens 900 $ 54
Veba 1,200 68
Volkswagen 200 152
----
274
----
GREECE (2.2%)
Greek Telecom 7,260 170
Greek Telecom Rights* 185 --
----
170
----
HONG KONG (1.2%)
HSBC Holdings 3,235 97
----
INDONESIA (1.6%)
Modern Photo Film, F 24,000 85
United Tractors, F 10,000 37
----
122
----
ISRAEL (3.4%)
ECI Telecom 4,200 125
Technomatrix Technologies Limited* 4,300 140
----
265
----
ITALY (3.7%)
Banca Popolare di Milano 6,300 38
ENI 24,600 139
Istituto Bancario san
Paolo di Torino 4,000 29
Saipem 16,500 84
----
290
----
JAPAN (7.9%)
Canon 3,000 82
FCC 3,000 76
Fuji Photo Film 2,000 80
Honda Motor 3,000 90
Sony ADR 1,200 106
TDK 1,000 73
Terumo 6,000 115
----
622
----
MALAYSIA (1.0%)
UMW Holdings 16,000 75
----
12
<PAGE>
================================================================================
UNAUDITED
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
NETHERLANDS (4.9%)
Akzo 500 $ 68
Hollandsche Beton Groep 411 94
Ing Groep 2,639 122
KPN 900 35
Phillips Electronics 900 64
----
383
----
NEW ZEALAND (0.5%)
Fletcher Challenge Building 14,000 42
----
PANAMA (1.4%)
Banco Latinamericano de
Exportaciones 2,500 108
----
PERU (1.8%)
CPT Telefoncia del Peru 3,600 94
Credicorp 2,300 51
----
145
----
PORTUGAL (1.1%)
Portugal Telecom ADR 2,200 88
----
SINGAPORE (1.2%)
Elec & Eltek International 17,000 95
----
SOUTH AFRICA (4.2%)
De Beers Consolidated Mines ADR 2,200 81
First National Bank 11,800 102
Gencor 15,000 69
Sasol 6,000 79
----
331
----
SPAIN (3.2%)
Financiera Alba 800 102
Telefonica de Espana 5,200 150
----
252
----
SWEDEN (2.6%)
Castellum AB* 10,100 76
Ericsson Telephone, Series B 1,800 71
Skandia Forsakrings 1,500 55
----
202
----
- -------------------------------------------------------------
SHARES VALUE (000)
- -------------------------------------------------------------
SWITZERLAND (5.9%)
ABB 85 $ 129
Nestle 75 99
Novartis, Registered 150 239
------
467
------
TURKEY (0.5%)
Sabanci 4,800 43
------
UNITED KINGDOM (15.0%)
Avis Europe* 38,000 86
Bank of Ireland 8,200 90
Bass 8,600 105
BOC Group 4,800 84
Compass Group 1,600 18
Granada Group 4,800 63
Halma 11,500 31
London Forfaiting 16,200 107
Morgan Crucible 9,400 70
Powerscreen International 5,000 55
Reckit & Colman 8,200 122
Reuters Holdings 7,000 74
Select Appointments 9,400 73
SmithKline Beecham 1,300 119
Vodafone Group 17,200 84
------
1,181
------
UNITED STATES (0.5%)
Rhone-Poulenc Rorer 400 36
------
Total Foreign Common Stocks
(Cost $6,439) 7,220
------
Total Investments (92.0% of Net Assets)
(Cost $6,439) $7,220
======
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
F -- FOREIGN REGISTRY SHARES
* NON-INCOME PRODUCING SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000)
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997 UNAUDITED
-------------
INTERNATIONAL
EQUITY
FUND
-------------
Assets:
Investments at Market Value (Cost $6,439) ........................ $7,220
Cash and Foreign Currency ........................................ 739
Receivables for Investment Securities Sold ....................... 45
Receivables for Portfolio Shares Sold ............................ 21
Other Assets ..................................................... 30
------
Total Assets ..................................................... 8,055
------
Liabilities:
Payables for Investment Securities Purchased ..................... 189
Accrued Expenses ................................................. 16
------
Total Liabilities ................................................ 205
------
Net Assets:
Portfolio Shares (Unlimited Authorization -- No Par Value)
Based on 659,471 Outstanding Shares of Beneficial Interest ..... 7,068
Undistributed Net Investment Income .............................. 34
Accumulated Net Realized Loss on Investments ..................... (29)
Accumulated Net Realized Loss on Foreign Currency Transactions ... (4)
Net Unrealized Appreciation on Investments ....................... 781
------
Total Net Assets ................................................. $7,850
======
Net Asset Value, Offering and Redemption Price Per Share ............ $11.90
======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF OPERATIONS (000)
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS FOR THE SIX MONTH PERIOD
ENDED JUNE 30, 1997 UNAUDITED
<TABLE>
<CAPTION>
VALUE
INCOME MID-CAP CAPITAL INVESTMENT INTERNATIONAL
STOCK EQUITY GROWTH GRADE EQUITY
FUND FUND FUND BOND FUND FUND
---------- -------- -------- ---------- ------------
Investment Income:
<S> <C> <C> <C> <C> <C>
Interest Income .............................................. $ 75 $ 45 $ 234 $278 $ 13
Dividend Income .............................................. 615 61 100 -- 64
Less: Foreign Taxes Withheld ................................. -- -- -- -- (8)
------ ------ ------ ---- ----
Total Investment Income .................................. 690 106 334 278 69
------ ------ ------ ---- ----
Expenses:
Investment Advisory Fees ..................................... 167 94 199 31 27
Less: Investment Advisory Fees Waived ........................ (64) (63) (81) (31) (27)
Less: Reimbursement from Advisor ............................. -- -- -- (21) (33)
Administrator Fees ........................................... 31 31 31 31 37
Custody Fees ................................................. 16 8 13 6 6
Transfer Agent Fees .......................................... 13 9 8 5 9
Professional Fees ............................................ 14 6 11 3 2
Trustee Fees ................................................. 4 2 3 2 --
Registration Fees ............................................ 4 1 4 -- 2
Printing Expenses ............................................ 6 3 5 3 1
Pricing Fees ................................................. 1 1 1 -- 9
Insurance and Other Fees ..................................... 6 1 4 1 1
Amortization of Deferred Organization Costs .................. 1 1 1 1 1
------ ------ ------ ---- ----
Total Expenses ........................................... 199 94 199 31 35
------ ------ ------ ---- ----
Net Investment Income .................................. 491 12 135 247 34
------ ------ ------ ---- ----
Net Realized Gain (Loss) on Securities Sold .................. 2,589 645 3,311 (34) (29)
Net Realized Loss on Foreign Currency Transactions -- -- -- -- (5)
Net Unrealized Appreciation on Investments ................... 3,406 738 3,734 20 767
------ ------ ------ ---- ----
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency ..................... 5,995 1,383 7,045 (14) 733
------ ------ ------ ---- ----
Increase in Net Assets from Operations .......................... $6,486 $1,395 $7,180 $233 $767
====== ====== ====== ==== ====
<FN>
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.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS UNAUDITED
<TABLE>
<CAPTION>
VALUE INCOME STOCK
FUND MID-CAP EQUITY FUND CAPITAL GROWTH FUND
-------------------- ---------------------- --------------------
01/01/97- 01/01/96- 01/01/97- 01/01/96- 01/01/97- 01/01/96-
06/30/97 12/31/96 06/30/97 12/31/96 06/30/97 12/31/96
--------- --------- ---------- ---------- --------- ---------
Investment Activities:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income ....................................... $ 491 $ 361 $ 12 $ 47 $ 135 $ 139
Net Realized Gain (Loss) on Investments and Foreign
Currency Transactions ..................................... 2,589 1,122 645 702 3,311 1,357
Net Unrealized Appreciation (Depreciation) on Investments ... 3,406 1,133 738 637 3,734 1,199
------- ------- ------- ------- ------- -------
Increase in Net Assets Resulting from Operations ............... 6,486 2,616 1,395 1,386 7,180 2,695
------- ------- ------- ------- ------- -------
Distributions to Shareholders:
Net Investment Income ....................................... (499) (355) (13) (47) (138) (138)
Capital Gains -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions ..................................... (499) (355) (13) (47) (138) (138)
------- ------- ------- ------- ------- -------
Capital Transactions:
Proceeds from Shares Issued ................................. 17,682 24,660 4,210 9,578 14,109 18,759
Reinvestment of Cash Distributions .......................... 232 355 10 47 61 139
Cost of Shares Repurchased .................................. (1,196) (75) (1,500) (79) (1,260) (44)
------- ------- ------- ------- ------- -------
Increase in Net Assets from Capital Transactions ............ 16,718 24,940 2,720 9,546 12,910 18,854
------- ------- ------- ------- ------- -------
Total Increase in Net Assets ............................ 22,705 27,201 4,102 10,885 19,952 21,411
------- ------- ------- ------- ------- -------
Net Assets:
Beginning of Period ......................................... 31,216 4,015 14,294 3,409 25,189 3,778
------- ------- ------- ------- ------- -------
End of Period ............................................... $53,921 $31,216 $18,396 $14,294 $45,141 $25,189
======= ======= ======= ======= ======= =======
Shares Issued and Redeemed:
Shares Issued ............................................... 1,343 2,116 349 877 994 1,567
Shares Issued in Lieu of Cash Distributions ................. 18 30 1 4 5 11
Shares Redeemed ............................................. (85) (6) (120) (7) (82) (4)
------- ------- ------- ------- ------- -------
Net Share Transactions .................................... 1,276 2,140 230 874 917 1,574
======= ======= ======= ======= ======= =======
INVESTMENT GRADE BOND INTERNATIONAL
FUND EQUITY FUND
------------------------ ------------------------
01/01/97- 01/01/96- 01/01/97- 11/07/96*-
06/30/97 12/31/96 06/30/97 12/31/96
----------- ----------- ------------ ----------
Investment Activities:
<S> <C> <C> <C> <C>
Net Investment Income ....................................... $ 247 $ 325 $ 34 $ 1
Net Realized Gain (Loss) on Investments and Foreign
Currency Transactions ..................................... (34) (40) (34) 1
Net Unrealized Appreciation (Depreciation) on Investments ... 20 (34) 767 14
------- ------- ------- ------
Increase in Net Assets Resulting from Operations ............... 233 251 767 16
------- ------- ------- ------
Distributions to Shareholders:
Net Investment Income ....................................... (247) (325) -- (1)
Capital Gains -- -- -- --
------- ------- ------- ------
Total Distributions ..................................... (247) (325) -- (1)
------- ------- ------- ------
Capital Transactions:
Proceeds from Shares Issued ................................. 1,656 5,002 6,344 979
Reinvestment of Cash Distributions .......................... 206 325 -- 1
Cost of Shares Repurchased .................................. (1,701) (329) (256) --
------- ------- ------- ------
Increase in Net Assets from Capital Transactions ............ 161 4,998 6,088 980
------- ------- ------- ------
Total Increase in Net Assets ............................ 147 4,924 6,855 995
------- ------- ------- ------
Net Assets:
Beginning of Period ......................................... 8,039 3,115 995 --
------- ------- ------- ------
End of Period ............................................... $ 8,186 $ 8,039 $ 7,850 $ 995
======= ======= ======= ======
Shares Issued and Redeemed:
Shares Issued ............................................... 168 506 584 98
Shares Issued in Lieu of Cash Distributions ................. 21 33 -- --
Shares Redeemed ............................................. (172) (33) (22) --
------- ------- ------- ------
Net Share Transactions .................................... 17 506 562 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.
16 & 17
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS FOR THE PERIODS FROM INCEPTION
THROUGH JUNE 30, 1997 UNAUDITED
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
------------------- ---------- ------------------------- --------------------- ----------------------
VALUE INCOME STOCK FUND
<S> <C> <C> <C> <C> <C> <C>
1997** $12.41 $0.14 $1.81 $(0.14) $ --
1996 10.67 0.23 1.74 (0.23) --
1995 (1) 10.00 0.06 0.67 (0.06) --
MID-CAP EQUITY FUND (A)
1997** $11.86 $0.01 $0.96 $(0.01) $ --
1996 10.27 0.06 1.59 (0.06) --
1995 (1) 10.00 0.05 0.27 (0.05) --
CAPITAL GROWTH FUND
1997** $13.06 $0.05 $2.80 $(0.05) $ --
1996 10.66 0.12 2.40 (0.12) --
1995 (1) 10.00 0.04 0.66 (0.04) --
INVESTMENT GRADE BOND FUND
1997** $ 9.92 $0.29 $(0.03) $(0.29) $ --
1996 10.25 0.54 (0.33) (0.54) --
1995 (1) 10.00 0.13 0.25 (0.13) --
INTERNATIONAL EQUITY FUND
1997** $10.16 $0.05 $1.69 $ -- $ --
1996 (2) 10.00 0.01 0.16 (0.01) --
RATIO OF
RATIO OF EXPENSES TO
NET ASSET NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS
VALUE END TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS
OF PERIOD RETURN PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS)
--------- ------ ------------ ------------------ ------------------ -------------------
VALUE INCOME STOCK FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1997** $14.22 15.81% $53,921 0.95% 2.35% 1.25%
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)
1997** $12.82 8.18% $18,396 1.15% 0.14% 1.92%
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
1997** $15.86 21.87% $45,141 1.15% 0.78% 1.62%
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
1997** $ 9.89 2.64% $ 8,186 0.75% 5.88% 2.00%
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
1997** $11.90 17.13% $7,850 1.60% 1.62% 4.41%
1996 (2) 10.16 1.70* 995 1.60 1.83 31.39
RATIO OF
NET INVESTMENT
INCOME (LOSS) TO
AVERAGE NET ASSETS PORTFOLIO AVERAGE
(EXCLUDING WAIVERS TURNOVER COMMISSION
AND REIMBURSEMENTS) RATE RATE(3)
------------------ --------- ----------
VALUE INCOME STOCK FUND
<S> <C> <C> <C> <C>
1997** 2.05% 47.87% $0.059
1996 1.45 79.80 0.054
1995 (1) (1.79) 7.17 n/a
MID-CAP EQUITY FUND (A)
1997** (.63)% 74.61% $0.055
1996 (1.06) 139.60 0.053
1995 (1) (2.97) 13.29 n/a
CAPITAL GROWTH FUND
1997** 0.31% 94.94% $0.051
1996 (0.13) 148.48 0.053
1995 (1) (3.34) 8.05 n/a
INVESTMENT GRADE BOND FUND
1997** 4.63% 162.45% n/a
1996 3.51 303.30 n/a
1995 (1) (0.26) 108.55 n/a
INTERNATIONAL EQUITY FUND
1997** (1.19)% 38.55% $0.033
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.
** For the six-month period ended June 30, 1997. All ratios for the period except total return have 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.
18 & 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
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 with five funds: the Value Income Stock Fund, the
Mid-Cap Equity 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 that are traded on a
national securities exchange (or reported on the NASDAQ national market
system) are valued 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 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
20
<PAGE>
================================================================================
UNAUDITED
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 August 18, 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 August 18, 1995 under which Federated Services Company
provides transfer agency services to the Trust.
The Trust and SEI Investments Distribution Co. ("the Distributor") are parties
to a Distribution Agreement dated August 18, 1995. The Distributor receives no
fees for its services under this agreement.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded)
================================================================================
STI CLASSIC VARIABLE TRUST FUNDS JUNE 30, 1997
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. 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
Investments Distribution Co. (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 June 30, 1997 were as follows:
U.S. GOVT. U.S. GOVT.
PURCHASES SALES PURCHASES SALES
(000) (000) (000) (000)
--------- -------- --------- ---------
Value Income Stock Fund ...... $31,595 $18,897 $ -- $ --
Mid-Cap Equity Fund .......... 13,677 11,176 -- --
Capital Growth Fund .......... 41,830 30,049 -- --
Investment Grade
Bond Fund ................. 5,445 3,923 7,570 8,984
International Equity Fund .... 7,256 1,498 -- --
At June 30, 1997, 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 June 30, 1997 was as follows:
APPRECIATED DEPRECIATED NET UNREALIZED
SECURITIES SECURITIES APPRECIATION
(000) (000) (000)
----------- ----------- --------------
Value Income Stock Fund ...... $5,343 $(607) $4,736
Mid-Cap Equity Fund .......... 2,133 (692) 1,441
Capital Growth Fund .......... 5,725 (596) 5,129
Investment Grade Bond Fund ... 74 (18) 56
International Equity Fund .... 845 (64) 781
At December 31, 1996 the following Fund had a capital loss carryforward:
AMOUNT EXPIRES
------ -------
Investment Grade Bond Fund $2,212 2004
22
<PAGE>
================================================================================
UNAUDITED
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.
23
<PAGE>
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 Investments Distribution Co.
This information must be preceded or
accompanied by a current prospectus for
each Fund described.
