UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number | 811-21682 |
Sterling Capital Variable Insurance Funds | ||
(Exact name of registrant as specified in charter) | ||
434 Fayetteville Street, 5th Floor | ||
Raleigh, NC 27601-0575 | ||
(Address of principal executive offices) (Zip code) | ||
James T. Gillespie, President | ||
Sterling Capital Variable Insurance Funds | ||
434 Fayetteville Street, 5th Floor | ||
Raleigh, NC 27601-0575 | ||
(Name and address of agent for service) | ||
Registrant’s telephone number, including area code: (800) 228-1872 | ||
Date of fiscal year end: December 31 | ||
Date of reporting period: June 30, 2013 |
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
Sterling Capital Variable Insurance Funds |
Summary of Portfolio Holdings | 2 | |||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
12 | ||||
18 | ||||
23 |
Sterling Capital Variable Insurance Funds |
Summary of Portfolio Holdings (Unaudited)
June 30, 2013
Each Sterling Capital Variable Insurance Fund’s portfolio composition at June 30, 2013 was as follows :
Sterling Capital Equity Income VIF (formerly known as Sterling Capital Select Equity VIF) | Percentage of net assets | |||
Consumer Discretionary | 17.1 | % | ||
Consumer Staples | 12.0 | % | ||
Energy | 18.6 | % | ||
Financials | 8.9 | % | ||
Health Care | 16.7 | % | ||
Industrials | 6.6 | % | ||
Information Technology | 13.1 | % | ||
Materials | 2.3 | % | ||
Cash Equivalents | 4.7 | % | ||
|
| |||
100.0 | % | |||
|
| |||
Sterling Capital Special Opportunities VIF | ||||
Consumer Discretionary | 16.2 | % | ||
Consumer Staples | 2.5 | % | ||
Energy | 10.6 | % | ||
Financials | 3.2 | % | ||
Health Care | 19.2 | % | ||
Industrials | 8.1 | % | ||
Information Technology | 31.3 | % | ||
Materials | 4.4 | % | ||
Cash Equivalents | 3.9 | % | ||
|
| |||
99.4 | % | |||
|
| |||
Sterling Capital Total Return Bond VIF | ||||
Asset Backed Securities | 5.4 | % | ||
Collateralized Mortgage Obligations | 9.5 | % | ||
Commercial Mortgage-Backed Securities | 19.1 | % | ||
Corporate Bonds | 40.8 | % | ||
Mortgage-Backed Securities | 10.2 | % | ||
Municipal Bonds | 7.0 | % | ||
Preferred Stocks | 2.9 | % | ||
U.S. Government Agencies | 3.8 | % | ||
U.S. Treasury Bonds | 1.7 | % | ||
Cash Equivalents | 0.2 | % | ||
|
| |||
100.6 | % | |||
|
|
2
Sterling Capital Variable Insurance Funds |
June 30, 2013
As a shareholder of the Sterling Capital Variable Insurance Funds, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses.
These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Sterling Capital Variable Insurance Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2013 through June 30, 2013.
Actual Example
The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Beginning Account Value 1/1/13 | Ending Account Value 6/30/13 | Expenses Paid During Period 1/1/13 - 6/30/13* | Expense Ratio During Period 1/1/13 - 6/30/13 | |||||
Sterling Capital Equity Income VIF | $1,000.00 | $1,075.90 | $5.97 | 1.16% | ||||
Sterling Capital Special Opportunities VIF | 1,000.00 | 1,104.90 | 6.99 | 1.34% | ||||
Sterling Capital Total Return Bond VIF | 1,000.00 | 972.30 | 6.06 | 1.24% |
* | Expenses are equal to the average account value times the Fund’s annualized expense ratio multiplied by 181 (the number of days in the most recent fiscal half-year) divided by 365 (the number of days in the fiscal year). Expenses shown do not include annuity contract fees. |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on each Sterling Capital Variable Insurance Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 1/1/13 | Ending Account Value 6/30/13 | Expenses Paid During Period 1/1/13 - 6/30/13* | Expense Ratio During Period 1/1/13 - 6/30/13 | |||||
Sterling Capital Equity Income VIF | $1,000.00 | $1,019.04 | $5.81 | 1.16% | ||||
Sterling Capital Special Opportunities VIF | 1,000.00 | 1,018.15 | 6.71 | 1.34% | ||||
Sterling Capital Total Return Bond VIF | 1,000.00 | 1,018.65 | 6.21 | 1.24% |
* | Expenses are equal to the average account value times the Fund’s annualized expense ratio multiplied by 181 (the number of days in the most recent fiscal half-year) divided by 365 (the number of days in the fiscal year). Expenses shown do not include annuity contract fees. |
3
Sterling Capital Equity Income VIF |
Schedule of Portfolio Investments
June 30, 2013 (Unaudited)
Shares | Fair Value | |||||
COMMON STOCKS (95.3%) | ||||||
Consumer Discretionary (17.1%) |
| |||||
6,130 | McDonald’s Corp. | $ | 606,870 | |||
8,955 | Omnicom Group, Inc. | 563,001 | ||||
24,220 | Pearson PLC, ADR | 433,780 | ||||
8,860 | Target Corp. | 610,100 | ||||
7,309 | Time Warner Cable, Inc. | 822,116 | ||||
|
| |||||
3,035,867 | ||||||
|
| |||||
Consumer Staples (12.0%) | ||||||
10,595 | General Mills, Inc. | 514,175 | ||||
7,570 | PepsiCo, Inc. | 619,150 | ||||
4,635 | Philip Morris International, Inc. | 401,484 | ||||
14,385 | Unilever PLC, ADR | 581,873 | ||||
|
| |||||
2,116,682 | ||||||
|
| |||||
Energy (18.6%) | ||||||
5,155 | Chevron Corp. | 610,043 | ||||
11,440 | Ensco PLC, Class A | 664,893 | ||||
17,090 | Kinder Morgan, Inc. | 651,984 | ||||
7,560 | Occidental Petroleum Corp. | 674,579 | ||||
20,105 | Spectra Energy Corp. | 692,818 | ||||
|
| |||||
3,294,317 | ||||||
|
| |||||
Financials (8.9%) | ||||||
1,270 | BlackRock, Inc. | 326,199 | ||||
16,220 | MetLife, Inc. | 742,227 | ||||
6,445 | Travelers Cos., Inc. (The) | 515,084 | ||||
|
| |||||
1,583,510 | ||||||
|
| |||||
Health Care (16.7%) | ||||||
9,635 | Abbott Laboratories | 336,069 | ||||
6,630 | AbbVie, Inc. | 274,084 | ||||
8,980 | Baxter International, Inc. | 622,045 | ||||
8,500 | Novartis AG, ADR | 601,035 | ||||
18,260 | Pfizer, Inc. | 511,463 | ||||
7,405 | WellPoint, Inc. | 606,025 | ||||
|
| |||||
2,950,721 | ||||||
|
|
Shares | Fair Value | |||||
COMMON STOCKS — (continued) | ||||||
Industrials (6.6%) |
| |||||
11,370 | Emerson Electric Co. | $ | 620,120 | |||
6,275 | United Parcel Service, Inc., Class B | 542,662 | ||||
|
| |||||
1,162,782 | ||||||
|
| |||||
Information Technology (13.1%) |
| |||||
26,085 | Intel Corp. | 631,779 | ||||
18,000 | Maxim Integrated Products, Inc. | 500,040 | ||||
15,895 | Microsoft Corp. | 548,854 | ||||
10,445 | QUALCOMM, Inc. | 637,981 | ||||
|
| |||||
2,318,654 | ||||||
|
| |||||
Materials (2.3%) |
| |||||
10,680 | Potash Corp. of Saskatchewan, Inc. | 407,228 | ||||
|
| |||||
Total Common Stocks | 16,869,761 | |||||
|
| |||||
INVESTMENT COMPANY (4.7%) | ||||||
824,228 | Federated Treasury Obligations Fund, Institutional Shares | 824,228 | ||||
|
| |||||
Total Investment Company | 824,228 | |||||
|
| |||||
Total Investments — 100.0% | 17,693,989 | |||||
Net Other Assets (Liabilities) — 0.0% | 4,413 | |||||
|
| |||||
NET ASSETS — 100.0% | $ | 17,698,402 | ||||
|
|
ADR — American Depositary Receipt
See accompanying notes to the financial statements.
4
Sterling Capital Special Opportunities VIF |
Schedule of Portfolio Investments
June 30, 2013 (Unaudited)
Shares | Fair Value | |||||
COMMON STOCKS (95.5%) | ||||||
Consumer Discretionary (16.2%) |
| |||||
42,000 | Comcast Corp., Class A | $ | 1,758,960 | |||
24,000 | DIRECTV(a) | 1,478,880 | ||||
93,000 | Ford Motor Co. | 1,438,710 | ||||
|
| |||||
4,676,550 | ||||||
|
| |||||
Consumer Staples (2.5%) | ||||||
26,000 | Mondelez International, Inc., Class A | 741,780 | ||||
|
| |||||
Energy (10.6%) | ||||||
15,000 | Apache Corp. | 1,257,450 | ||||
10,000 | EOG Resources, Inc. | 1,316,800 | ||||
10,000 | Halliburton Co. | 417,200 | ||||
2,000 | Williams Cos., Inc. (The) | 64,940 | ||||
|
| |||||
3,056,390 | ||||||
|
| |||||
Financials (3.2%) | ||||||
12,300 | Capital One Financial Corp. | 772,563 | ||||
15,500 | Och-Ziff Capital Management Group, LLC, Class A | 161,820 | ||||
|
| |||||
934,383 | ||||||
|
| |||||
Health Care (19.2%) | ||||||
24,000 | Agilent Technologies, Inc. | 1,026,240 | ||||
19,066 | Merck & Co., Inc. | 885,615 | ||||
30,000 | Myriad Genetics, Inc.(a) | 806,100 | ||||
34,000 | Teva Pharmaceutical Industries, Ltd., ADR | 1,332,800 | ||||
23,000 | UnitedHealth Group, Inc. | 1,506,040 | ||||
|
| |||||
5,556,795 | ||||||
|
| |||||
Industrials (8.1%) | ||||||
20,000 | ADT Corp. (The)(a) | 797,000 | ||||
6,000 | FedEx Corp. | 591,480 | ||||
17,493 | Nielsen Holdings NV | 587,590 | ||||
6,000 | Ryder System, Inc. | 364,740 | ||||
|
| |||||
2,340,810 | ||||||
|
| |||||
Information Technology (31.3%) |
| |||||
20,000 | Akamai Technologies, Inc.(a) | 851,000 |
Shares | Fair Value | |||||
COMMON STOCKS — (continued) | ||||||
Information Technology — (continued) |
| |||||
2,800 | Apple, Inc. | $ | 1,109,024 | |||
20,000 | Check Point Software Technologies, Ltd.(a) | 993,600 | ||||
65,000 | Cisco Systems, Inc. | 1,580,150 | ||||
70,000 | Corning, Inc. | 996,100 | ||||
30,000 | eBay, Inc.(a) | 1,551,600 | ||||
19,000 | Intuit, Inc. | 1,159,570 | ||||
44,000 | Nuance Communications, Inc.(a) | 808,720 | ||||
|
| |||||
9,049,764 | ||||||
|
| |||||
Materials (4.4%) | ||||||
26,000 | Newmont Mining Corp. | 778,700 | ||||
53,000 | Yamana Gold, Inc. | 504,030 | ||||
|
| |||||
1,282,730 | ||||||
|
| |||||
Total Common Stocks | 27,639,202 | |||||
|
| |||||
INVESTMENT COMPANY (3.9%) | ||||||
1,127,258 | Federated Treasury Obligations Fund, Institutional Shares | 1,127,258 | ||||
|
| |||||
Total Investment Company | 1,127,258 | |||||
|
| |||||
Total Investments — 99.4% | 28,766,460 | |||||
Net Other Assets (Liabilities) — 0.6% | 161,675 | |||||
|
| |||||
NET ASSETS — 100.0% | $ | 28,928,135 | ||||
|
|
(a) | Represents non-income producing security. |
ADR — American Depositary Receipt
See accompanying notes to the financial statements.
5
Sterling Capital Total Return Bond VIF |
Schedule of Portfolio Investments
June 30, 2013 (Unaudited)
Principal Amount | Fair Value | |||||
ASSET BACKED SECURITIES (5.4%) | ||||||
$ 88,099 | Argent Securities, Inc. Pass Through Certificates, Series 2005-W3, Class A2D, | $ | 80,709 | |||
246,000 | Avis Budget Rental Car Funding AESOP, LLC, Series 2012-3A, Class A, | 241,620 | ||||
174,000 | Chase Issuance Trust, Series 2008-A8, | 177,136 | ||||
92,889 | Long Beach Mortgage Loan Trust, | 83,620 | ||||
84,523 | Park Place Securities, Inc. Pass Through Certificates, Series 2005-WHQ1, | 84,094 | ||||
181,894 | Securitized Asset Backed Receivables, LLC Trust, Series 2005-OP2, Class A2C, 0.513%, 10/25/35(a) | 167,780 | ||||
|
| |||||
Total Asset Backed Securities | 834,959 | |||||
|
| |||||
COLLATERALIZED MORTGAGE | ||||||
73,739 | Adjustable Rate Mortgage Trust, Series 2004-5, Class 4A1, 5.106%, 4/25/35(a) | 72,411 | ||||
50,360 | Banc of America Alternative Loan Trust, Series 2004-10, Class 1CB1, 6.000%, 11/25/34 | 52,108 | ||||
98,281 | Banc of America Funding Trust, Series 2006-2, Class 3A1, 6.000%, 3/25/36 | 97,526 | ||||
56,148 | Countrywide Alternative Loan Trust, | 58,208 | ||||
38,307 | Countrywide Home Loan Mortgage Pass Through Trust, Series 2002-38, Class A3, 5.000%, 2/25/18 | 38,342 | ||||
42,997 | Fannie Mae, Series 2003-33, Class A, | 44,365 | ||||
40,847 | Fannie Mae, Series 2003-33, Class AQ, | 42,147 | ||||
66,668 | Freddie Mac, Series 3768, Class V, | 71,051 | ||||
163,159 | Freddie Mac, Series 4077, Class PJ, | 172,065 | ||||
58,167 | MASTR Alternative Loan Trust, | 59,021 | ||||
89,627 | PHHMC Trust, Series 2007-6, Class A1, 5.733%, 12/18/37(a) | 92,617 | ||||
27,024 | RAAC Trust, Series 2004-SP3, Class AI5, 4.890%, 12/25/32(a) | 27,238 | ||||
69,069 | RALI Trust, Series 2005-QR1, Class A, 6.000%, 10/25/34 | 71,410 | ||||
45,833 | Residential Asset Securitization Trust, Series 2004-IP2, Class 4A, 2.703%, 12/25/34(a) | 44,745 | ||||
86,478 | Specialty Underwriting & Residential Finance Trust, Series 2004-AA1, Class 1A1, 5.000%, 10/25/34 | 87,573 | ||||
115,164 | Structured Adjustable Rate Mortgage Loan Trust, Series 2004-6, Class 4A1, | 116,579 | ||||
52,909 | Structured Asset Securities Corp. Mortgage Pass Through Certificates, Series 2003-10, | 56,101 | ||||
23,105 | Structured Asset Securities Corp. Trust, Series 2005-6, Class 5A1, 5.000%, 5/25/35 | 23,671 |
Principal Amount | Fair Value | |||||
COLLATERALIZED MORTGAGE | ||||||
$101,665 | Wells Fargo Mortgage Backed Securities Trust, Series 2004-BB, Class A2, | $ | 98,218 | |||
104,325 | Wells Fargo Mortgage Backed Securities Trust, Series 2005-AR16, Class 6A3, | 101,307 | ||||
28,792 | Wells Fargo Mortgage Backed Securities Trust, Series 2007-16, Class 1A1, | 29,959 | ||||
|
| |||||
Total Collateralized Mortgage Obligations | 1,456,662 | |||||
|
| |||||
COMMERCIAL MORTGAGE-BACKED | ||||||
150,000 | Banc of America Commercial Mortgage Trust, Series 2006-3, Class A4, | 166,366 | ||||
153,000 | Banc of America Commercial Mortgage Trust, Series 2006-5, Class A4, 5.414%, 9/10/47 | 168,408 | ||||
8,151 | Banc of America Commercial Mortgage Trust, Series 2007-2, Class A2, | 8,241 | ||||
73,000 | Banc of America Merrill Lynch Commercial Mortgage, Inc., Series 2005-1, Class AJ, 5.403%, 11/10/42(a) | 76,747 | ||||
40,000 | Banc of America Merrill Lynch Commercial Mortgage, Inc., Series 2005-3, Class AM, 4.727%, 7/10/43 | 41,751 | ||||
50,000 | Bear Stearns Commercial Mortgage Securities Trust, Series 2005-PWR9, Class A4B, 4.943%, 9/11/42 | 52,791 | ||||
95,000 | CD Commercial Mortgage Trust, | 101,273 | ||||
150,000 | CD Commercial Mortgage Trust, | 165,125 | ||||
95,000 | CD Mortgage Trust, Series 2006-CD3, Class A5, 5.617%, 10/15/48 | 104,870 | ||||
100,000 | COMM Mortgage Trust, Series 2005-LP5, Class AJ, 5.046%, 5/10/43(a) | 104,889 | ||||
155,000 | COMM Mortgage Trust, Series 2006-C7, Class A4, 5.940%, 6/10/46(a) | 170,371 | ||||
117,000 | Commercial Mortgage Trust, Series 2005-GG5, Class AM, 5.277%, 4/10/37(a) | 124,334 | ||||
139,000 | Credit Suisse First Boston Mortgage Securities Corp., Series 2005-C1, Class AJ, | 143,407 | ||||
101,000 | DBUBS Mortgage Trust, Series 2011-LC2A, Class A4, 4.537%, 7/10/44(b) | 107,604 | ||||
100,000 | GMAC Commercial Mortgage Securities, Inc., Series 2005-C1, Class AM, | 104,864 | ||||
158,000 | GMAC Commercial Mortgage Securities, Inc., Series 2006-C1, Class A4, | 168,902 | ||||
100,000 | GS Mortgage Securities Corp. II, | 98,933 | ||||
148,549 | JPMorgan Chase Commercial Mortgage Securities Trust, Series 2006-CB16, Class A4, 5.552%, 5/12/45 | 163,776 | ||||
100,000 | JPMorgan Chase Commercial Mortgage Series Trust, Series 2013-FL3, Class A2, | 99,658 | ||||
150,000 | LB-UBS Commercial Mortgage Trust, Series 2007-C1, Class A4, 5.424%, 2/15/40 | 166,667 |
Continued
6
Sterling Capital Total Return Bond VIF |
Schedule of Portfolio Investments — (continued)
June 30, 2013 (Unaudited)
Principal | Fair Value | |||||
COMMERCIAL MORTGAGE-BACKED | ||||||
$28,000 | ML-CFC Commercial Mortgage Trust, | $ | 27,878 | |||
80,000 | Morgan Stanley Capital I Trust, | 86,867 | ||||
119,000 | Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class AMFX, | 126,738 | ||||
44,373 | Wachovia Bank Commercial Mortgage Trust, Series 2007-C30, Class A3, | 45,500 | ||||
74,263 | Wachovia Bank Commercial Mortgage Trust, Series 2006-C27, Class A3, | 80,228 | ||||
61,000 | Wachovia Commercial Mortgage Securities, Inc. Pass Through Certificates, Series 2003-C8, Class E, 5.495%, 11/15/35(a) | 61,704 | ||||
150,000 | WF-RBS Commercial Mortgage Trust, | 159,945 | ||||
|
| |||||
Total Commercial Mortgage-Backed Securities (Cost $2,929,769) | 2,927,837 | |||||
|
| |||||
CORPORATE BONDS (40.8%) | ||||||
Consumer Discretionary (3.9%) | ||||||
24,000 | Brinker International, Inc., 2.600%, 5/15/18 | 23,490 | ||||
33,000 | CBS Corp., 8.875%, 5/15/19(c) | 42,529 | ||||
26,000 | Comcast Cable Communications Holdings, Inc., 9.455%, 11/15/22(c) | 36,791 | ||||
37,000 | Delphi Corp., 5.875%, 5/15/19 | 39,313 | ||||
45,000 | Ford Motor Co., 7.450%, 7/16/31 | 53,875 | ||||
65,000 | George Washington University (The), | 63,627 | ||||
34,000 | Interpublic Group of Cos., Inc. (The), | 31,575 | ||||
50,000 | Mohawk Industries, Inc., 3.850%, 2/1/23 | 47,984 | ||||
27,000 | NBCUniversal Media, LLC, 5.950%, 4/1/41 | 30,837 | ||||
29,500 | Nielsen Finance, LLC/Nielsen Finance Co., 4.500%, 10/1/20(b) | 28,320 | ||||
19,000 | Nordstrom, Inc., 6.250%, 1/15/18 | 22,086 | ||||
26,000 | Royal Caribbean Cruises, Ltd., | 30,160 | ||||
48,000 | Service Corp. International, 7.000%, 5/15/19 | 50,760 | ||||
40,000 | Toll Brothers Finance Corp., 6.750%, 11/1/19 | 45,200 | ||||
33,000 | Wyndham Worldwide Corp., 5.625%, 3/1/21 | 35,363 | ||||
24,000 | Wyndham Worldwide Corp., 4.250%, 3/1/22 | 23,374 | ||||
|
| |||||
605,284 | ||||||
|
| |||||
Consumer Staples (0.9%) | ||||||
25,000 | Altria Group, Inc., 9.950%, 11/10/38 | 37,000 | ||||
26,000 | CVS Caremark Corp., 6.125%, 9/15/39 | 30,383 | ||||
58,000 | Lorillard Tobacco Co., 6.875%, 5/1/20(c) | 66,647 | ||||
|
| |||||
134,030 | ||||||
|
| |||||
Energy (4.8%) | ||||||
55,000 | Atlas Pipeline Partners LP/Atlas Pipeline Finance Corp., 5.875%, 8/1/23(b) | 52,250 | ||||
70,000 | Boardwalk Pipelines LP, 3.375%, 2/1/23 | 64,447 | ||||
28,000 | BP Capital Markets PLC, 1.375%, 11/6/17 | 27,261 | ||||
30,000 | Buckeye Partners LP, 4.150%, 7/1/23 | 29,188 | ||||
34,000 | Cameron International Corp., 6.375%, 7/15/18 | 39,874 | ||||
42,000 | Chesapeake Energy Corp., 3.250%, 3/15/16 | 41,790 |
Principal | Fair Value | |||||
CORPORATE BONDS — (continued) | ||||||
Energy — (continued) | ||||||
$14,000 | Concho Resources, Inc., 5.500%, 4/1/23 | $ | 13,790 | |||
10,000 | Continental Resources, Inc., 4.500%, 4/15/23(b) | 9,725 | ||||
34,000 | Denbury Resources, Inc., 8.250%, 2/15/20 | 36,720 | ||||
37,000 | Energy Transfer Partners LP, | 47,072 | ||||
40,000 | Enterprise Products Operating, LLC, | 43,578 | ||||
32,000 | Hess Corp., 5.600%, 2/15/41 | 32,832 | ||||
43,000 | Kinder Morgan Energy Partners LP, | 42,418 | ||||
32,000 | NuStar Logistics LP, 8.150%, 4/15/18(c) | 35,644 | ||||
27,000 | Petrobras Global Finance BV, 2.000%, 5/20/16 | 26,439 | ||||
33,000 | Petrobras International Finance Co. - PifCo, 3.500%, 2/6/17(c) | 32,853 | ||||
30,000 | Petrohawk Energy Corp., 6.250%, 6/1/19 | 32,925 | ||||
30,000 | Plains Exploration & Production Co., | 31,806 | ||||
26,000 | Regency Energy Partners LP/Regency Energy Finance Corp., 6.500%, 7/15/21 | 27,170 | ||||
41,000 | Schlumberger Investment SA, | 41,209 | ||||
30,000 | Western Gas Partners LP, 4.000%, 7/1/22 | 29,121 | ||||
|
| |||||
738,112 | ||||||
|
| |||||
Financials (24.2%) | ||||||
31,000 | Aflac, Inc., 8.500%, 5/15/19 | 39,622 | ||||
33,000 | Alexandria Real Estate Equities, Inc., REIT, 4.600%, 4/1/22 | 33,631 | ||||
94,000 | American International Group, Inc., | 98,542 | ||||
54,000 | American Tower Corp., REIT, | 49,446 | ||||
39,000 | Associates Corp. of North America, | 46,188 | ||||
35,000 | Bank of America Corp., MTN, 5.875%, 2/7/42 | 39,130 | ||||
31,000 | Bank of America Corp., Series K, | 34,526 | ||||
40,000 | Bank of New York Mellon Corp. (The), STEP, 1.969%, 6/20/17 | 40,238 | ||||
79,000 | Bear Stearns Cos., LLC (The), | 86,542 | ||||
33,000 | Blackstone Holdings Finance Co., LLC, | 38,607 | ||||
40,000 | BNP Paribas SA, MTN, 3.250%, 3/3/23 | 36,770 | ||||
32,000 | Carlyle Holdings Finance, LLC, | 30,969 | ||||
51,000 | CBRE Services, Inc., 6.625%, 10/15/20 | 53,805 | ||||
41,000 | CIT Group, Inc., 4.750%, 2/15/15(b) | 41,666 | ||||
26,000 | Citigroup, Inc., 5.875%, 1/30/42(c) | 28,608 | ||||
40,000 | CNA Financial Corp., 7.350%, 11/15/19(c) | 48,432 | ||||
36,000 | CNH Capital, LLC, 3.875%, 11/1/15 | 36,180 | ||||
49,000 | Colonial Realty LP, 6.250%, 6/15/14(c) | 51,262 | ||||
39,000 | Cooperatieve Centrale Raiffeisen- Boerenleenbank BA, 3.875%, 2/8/22 | 39,274 | ||||
46,000 | Corrections Corp. of America, REIT, | 44,965 | ||||
45,000 | CubeSmart LP, REIT, 4.800%, 7/15/22 | 46,705 | ||||
30,000 | Duke Realty LP, REIT, 7.375%, 2/15/15 | 32,742 | ||||
7,000 | Federal Realty Investment Trust, 2.750%, 6/1/23 | 6,344 | ||||
40,000 | Fifth Third Bancorp, 3.625%, 1/25/16(c) | 42,227 | ||||
20,000 | First American Financial Corp., | 19,241 |
Continued
7
Sterling Capital Total Return Bond VIF |
Schedule of Portfolio Investments — (continued)
June 30, 2013 (Unaudited)
Principal | Fair Value | |||||
CORPORATE BONDS — (continued) | ||||||
Financials — (continued) | ||||||
$123,000 | General Electric Capital Corp., 5.300%, 2/11/21(c) | $ | 134,927 | |||
24,000 | General Electric Capital Corp., GMTN, | 29,578 | ||||
47,000 | General Motors Financial Co., Inc., | 46,236 | ||||
41,000 | Goldman Sachs Group, Inc. (The), 6.250%, 2/1/41 | 46,370 | ||||
43,000 | HCP, Inc., REIT, 6.000%, 1/30/17 | 48,237 | ||||
61,000 | Health Care REIT, Inc., 4.125%, 4/1/19(c) | 63,805 | ||||
40,000 | Healthcare Realty Trust, Inc., REIT, | 37,258 | ||||
75,000 | Healthcare Trust of America Holdings LP, REIT, 3.700%, 4/15/23(b) | 70,412 | ||||
30,000 | Host Hotels & Resorts LP, REIT, Series D, 3.750%, 10/15/23 | 27,514 | ||||
77,000 | HSBC Finance Corp., 6.676%, 1/15/21 | 85,127 | ||||
55,000 | ING Bank NV, 4.000%, 3/15/16(b) | 58,016 | ||||
49,000 | ING US, Inc., 2.900%, 2/15/18(b) | 49,247 | ||||
28,000 | Invesco Finance PLC, 3.125%, 11/30/22 | 26,119 | ||||
35,000 | Jefferies Group, LLC, 8.500%, 7/15/19 | 42,175 | ||||
42,000 | Jones Lang LaSalle, Inc., 4.400%, 11/15/22 | 41,213 | ||||
62,000 | JPMorgan Chase & Co., 4.350%, 8/15/21(c) | 64,588 | ||||
54,000 | JPMorgan Chase & Co., Series Q, | 51,435 | ||||
47,000 | KeyCorp, MTN, 5.100%, 3/24/21(c) | 52,291 | ||||
38,000 | Kilroy Realty LP, REIT, 3.800%, 1/15/23 | 35,596 | ||||
25,000 | Kimco Realty Corp., REIT, MTN, | 27,616 | ||||
40,000 | Lexington Realty Trust, REIT, 4.250%, 6/15/23(b) | 38,341 | ||||
30,000 | Macquarie Bank, Ltd., 5.000%, 2/22/17(b) | 32,145 | ||||
29,000 | Macquarie Bank, Ltd., 6.625%, 4/7/21(b) | 30,685 | ||||
34,000 | Markel Corp., 7.125%, 9/30/19 | 40,346 | ||||
28,000 | Massachusetts Mutual Life Insurance Co., 8.875%, 6/1/39(b) | 41,034 | ||||
84,000 | Merrill Lynch & Co., Inc., MTN, | 96,678 | ||||
32,000 | MetLife, Inc., 7.717%, 2/15/19 | 40,194 | ||||
128,000 | Morgan Stanley, 5.375%, 10/15/15 | 137,021 | ||||
62,000 | Morgan Stanley, GMTN, 6.625%, 4/1/18(c) | 70,274 | ||||
138,000 | Murray Street Investment Trust I, STEP, 4.647%, 3/9/17(c) | 146,106 | ||||
53,000 | National City Corp., 6.875%, 5/15/19 | 63,395 | ||||
33,000 | National Rural Utilities Cooperative Finance Corp., 4.750%, 4/30/43(a) | 32,093 | ||||
45,000 | Nationwide Financial Services, Inc., | 48,987 | ||||
10,000 | Nationwide Mutual Insurance Co., | 13,531 | ||||
42,000 | OneBeacon US Holdings, Inc., 4.600%, 11/9/22(c) | 41,783 | ||||
36,000 | Pacific LifeCorp, 5.125%, 1/30/43(b) | 32,642 | ||||
42,000 | Principal Financial Group, Inc., 1.850%, 11/15/17 | 41,248 | ||||
40,000 | Prudential Financial, Inc., 8.875%, 6/15/38(a) | 48,000 | ||||
27,000 | Prudential Financial, Inc., MTN, Series D, 7.375%, 6/15/19 | 32,993 | ||||
32,000 | Reinsurance Group of America, Inc., | 35,199 |
Principal | Fair Value | |||||
CORPORATE BONDS — (continued) | ||||||
Financials — (continued) | ||||||
$30,000 | Royal Bank of Scotland Group PLC, | $ | 30,674 | |||
28,000 | Royal Bank of Scotland PLC (The), | 30,370 | ||||
45,000 | Simon Property Group LP, REIT, | 62,322 | ||||
30,000 | Sirius International Group, Ltd., | 32,799 | ||||
30,000 | State Street Corp., 3.100%, 5/15/23 | 28,100 | ||||
38,000 | SunTrust Banks, Inc., 3.500%, 1/20/17 | 39,766 | ||||
26,000 | Swiss Re Solutions Holding Corp., | 32,843 | ||||
43,000 | Transatlantic Holdings, Inc., 8.000%, 11/30/39 . | 56,078 | ||||
25,000 | Validus Holdings, Ltd., 8.875%, 1/26/40 | 31,567 | ||||
49,000 | Ventas Realty LP/Ventas Capital Corp., REIT, 2.000%, 2/15/18 | 47,431 | ||||
70,000 | Wachovia Corp., 5.625%, 10/15/16 | 78,678 | ||||
37,000 | Wachovia Corp., 5.500%, 8/1/35 | 38,115 | ||||
33,000 | WR Berkley Corp., 4.625%, 3/15/22 | 33,991 | ||||
|
| |||||
3,708,851 | ||||||
|
| |||||
Health Care (1.9%) | ||||||
26,000 | Cigna Corp., 5.375%, 2/15/42 | 27,720 | ||||
36,000 | DaVita HealthCare Partners, Inc., | 38,160 | ||||
42,000 | DENTSPLY International, Inc., | 43,121 | ||||
28,000 | Fresenius US Finance II, Inc., | 30,940 | ||||
24,000 | HCA, Inc., 8.500%, 4/15/19 | 25,755 | ||||
28,000 | Mylan, Inc., 7.875%, 7/15/20(b) | 32,311 | ||||
47,000 | Teva Pharmaceutical Finance IV BV, | 47,004 | ||||
44,000 | Valeant Pharmaceuticals International, | 45,320 | ||||
|
| |||||
290,331 | ||||||
|
| |||||
Industrials (2.1%) | ||||||
35,000 | Bombardier, Inc., 6.125%, 1/15/23(b) | 34,737 | ||||
29,000 | Burlington Northern Santa Fe, LLC, | 28,923 | ||||
23,000 | Equifax, Inc., 3.300%, 12/15/22 | 21,590 | ||||
11,000 | Ingersoll-Rand Global Holding Co., Ltd., | 10,851 | ||||
34,000 | Iron Mountain, Inc., 5.750%, 8/15/24 | 31,875 | ||||
44,000 | Penske Truck Leasing Co. LP/PTL Finance Corp., 3.125%, 5/11/15(b) | 45,465 | ||||
39,000 | Ryder System, Inc., MTN, 2.350%, 2/26/19 | 37,726 | ||||
36,000 | Textron, Inc., 4.625%, 9/21/16 | 38,947 | ||||
29,000 | United Rentals North America, Inc., | 32,480 | ||||
35,000 | Verisk Analytics, Inc., 5.800%, 5/1/21(c) | 38,631 | ||||
|
| |||||
321,225 | ||||||
|
| |||||
Materials (1.1%) | ||||||
35,000 | Freeport-McMoRan Copper & Gold, Inc., 5.450%, 3/15/43(b) | 30,865 | ||||
20,000 | Glencore Funding, LLC, 2.500%, 1/15/19(b) | 18,094 | ||||
31,000 | Lubrizol Corp., 8.875%, 2/1/19 | 40,750 | ||||
23,000 | Newmont Mining Corp., 4.875%, 3/15/42 | 17,733 | ||||
8,000 | Rio Tinto Finance USA PLC, 3.500%, 3/22/22 | 7,714 | ||||
29,000 | Rock Tenn Co., 4.900%, 3/1/22 | 29,889 |
Continued
8
Sterling Capital Total Return Bond VIF |
Schedule of Portfolio Investments — (continued)
June 30, 2013 (Unaudited)
Principal | Fair Value | |||||
CORPORATE BONDS — (continued) | ||||||
Materials — (continued) | ||||||
$ 29,000 | Sealed Air Corp., 6.875%, 7/15/33(b)(c) | $ | 27,550 | |||
|
| |||||
172,595 | ||||||
|
| |||||
Telecommunication Services (0.8%) | ||||||
21,000 | British Telecommunications PLC, | 31,614 | ||||
34,000 | CC Holdings GS V, LLC/Crown Castle GS III Corp., 2.381%, 12/15/17 | 33,460 | ||||
36,000 | SBA Telecommunications, Inc., | 36,090 | ||||
27,000 | Telefonica Emisiones SAU, 5.134%, 4/27/20(c) | 27,678 | ||||
|
| |||||
128,842 | ||||||
|
| |||||
Utilities (1.1%) | ||||||
33,000 | CMS Energy Corp., 8.750%, 6/15/19 | 42,576 | ||||
33,000 | Progress Energy, Inc., 3.150%, 4/1/22 | 31,610 | ||||
15,000 | PSEG Power, LLC, 5.500%, 12/1/15 | 16,505 | ||||
22,000 | PSEG Power, LLC, 2.750%, 9/15/16 | 22,685 | ||||
54,000 | Puget Energy, Inc., 5.625%, 7/15/22 | 57,251 | ||||
|
| |||||
170,627 | ||||||
|
| |||||
Total Corporate Bonds | 6,269,897 | |||||
|
| |||||
MORTGAGE-BACKED SECURITIES (10.2%) | ||||||
Fannie Mae (7.3%) | ||||||
6,627 | 4.500%, 10/1/18, Pool #752030 | 7,040 | ||||
11,005 | 5.000%, 10/1/25, Pool #255894 | 11,966 | ||||
198,000 | 2.500%, 7/15/28(d) | 199,145 | ||||
148,456 | 4.000%, 6/1/32, Pool #MA1089 | 155,464 | ||||
3,247 | 7.000%, 6/1/35, Pool #255820 | 3,712 | ||||
18,310 | 5.000%, 11/1/35, Pool #842402 | 19,714 | ||||
20,878 | 6.000%, 12/1/36, Pool #902054 | 22,719 | ||||
142,400 | 5.500%, 8/1/37, Pool #995082 | 156,128 | ||||
54,319 | 5.000%, 6/1/40, Pool #AD4927 | 58,949 | ||||
52,731 | 5.000%, 6/1/40, Pool #AD7860 | 57,234 | ||||
106,435 | 4.500%, 5/1/41, Pool #AI1023 | 112,853 | ||||
140,514 | 4.000%, 1/1/42, Pool #AK0685 | 147,573 | ||||
164,000 | 3.500%, 7/15/43(d) | 166,486 | ||||
|
| |||||
1,118,983 | ||||||
|
| |||||
Freddie Mac (2.6%) | ||||||
10,496 | 6.000%, 10/1/19, Pool #G11679 | 11,198 | ||||
5,809 | 5.500%, 10/1/21, Pool #G12425 | 6,290 | ||||
1,803 | 6.000%, 7/1/35, Pool #A36304 | 1,976 | ||||
32,733 | 6.500%, 12/1/37, Pool #A69955 | 36,810 | ||||
81,571 | 4.500%, 1/1/40, Pool #A90764 | 85,885 | ||||
77,353 | 3.803%, 7/1/40, Pool #1B4948(a) | 80,987 | ||||
164,006 | 5.000%, 7/1/40, Pool #A93070 | 176,616 | ||||
|
| |||||
399,762 | ||||||
|
| |||||
Ginnie Mae (0.3%) | ||||||
47,776 | 5.000%, 2/15/40, Pool #737037 | 52,101 | ||||
|
| |||||
Total Mortgage-Backed Securities (Cost $1,553,930) | 1,570,846 | |||||
|
|
Principal | Fair Value | |||||
MUNICIPAL BONDS (7.0%) | ||||||
California (2.2%) | ||||||
$220,000 | Metropolitan Water District of Southern California, Build America Bonds, Water Utility Improvements Revenue, Callable 7/1/19 @ 100, 6.538%, 7/1/39 | $ | 247,559 | |||
65,000 | State of California, Build America Bonds, School Improvements G.O., 7.625%, 3/1/40 | 87,249 | ||||
|
| |||||
334,808 | ||||||
|
| |||||
Colorado (0.4%) | ||||||
55,000 | Colorado Housing & Finance Authority, Unemployment/Welfare Funding Revenue, Taxable, Series B, 1.600%, 5/15/16 | 55,272 | ||||
|
| |||||
Connecticut (0.4%) | ||||||
60,000 | State of Connecticut, Public Improvements G.O., Taxable, Series B, 2.551%, 10/15/22 | 56,842 | ||||
|
| |||||
Illinois (0.8%) | ||||||
130,000 | State of Illinois, Public Improvements Revenue, Taxable, 2.931%, 6/15/22 | 126,368 | ||||
|
| |||||
New Jersey (0.3%) | ||||||
40,000 | New Jersey Economic Development Authority, School Facilities Construction, Refunding Revenue, Series 00, 1.648%, 3/1/18 | 38,734 | ||||
|
| |||||
New York (1.7%) | ||||||
100,000 | New York State Environmental Facilities Corp., State Revolving Funds, Refunding Revenue, Taxable, Series C, 2.745%, 6/15/22 | 94,159 | ||||
155,000 | New York, NY, Build America Bonds, Public Improvements G.O., 4.774%, 3/1/20 | 172,906 | ||||
|
| |||||
267,065 | ||||||
|
| |||||
Pennsylvania (0.4%) | ||||||
70,000 | Philadelphia Authority for Industrial Development, Refunding Revenue, Taxable, 3.664%, 4/15/22 | 65,657 | ||||
|
| |||||
Washington (0.3%) | ||||||
45,000 | Port of Vancouver, WA, Refunding G.O., Limited Tax, Taxable, Series B, 2.714%, 12/1/21 | 42,187 | ||||
|
| |||||
Wisconsin (0.5%) | ||||||
90,000 | Milwaukee County, WI, Pension Promissory Notes, Refunding G.O., Taxable, Callable 12/1/22 @ 100, 3.862%, 12/1/30 | 84,566 | ||||
|
| |||||
Total Municipal Bonds | 1,071,499 | |||||
|
| |||||
U.S. GOVERNMENT AGENCIES (3.8%) | ||||||
Fannie Mae (3.8%) | ||||||
410,000 | 7.125%, 1/15/30 | 577,597 | ||||
|
| |||||
Total U.S. Government Agencies | 577,597 | |||||
|
| |||||
U.S. TREASURY BONDS (1.7%) | ||||||
273,000 | 3.125%, 2/15/43 | 254,829 | ||||
|
| |||||
Total U.S. Treasury Bonds | 254,829 | |||||
|
|
Continued
9
Sterling Capital Total Return Bond VIF |
Schedule of Portfolio Investments — (continued)
June 30, 2013 (Unaudited)
Shares | Fair Value | |||||
PREFERRED STOCKS (2.9%) |
| |||||
Consumer Staples (0.7%) | ||||||
1 | HJ Heinz Finance Co., Series B, | $ | 101,281 | |||
|
| |||||
Financials (1.8%) | ||||||
2,059 | Citigroup Capital XIII, 7.875% | 57,343 | ||||
295 | DDR Corp., Series H, REIT, 7.375% | 7,405 | ||||
1,150 | DDR Corp., Series K, REIT, 6.250% | 27,267 | ||||
2,080 | HSBC USA, Inc., Series H, 6.500% | 52,104 | ||||
1,592 | Merrill Lynch Preferred Capital Trust V, Series F, 7.280% | 40,023 | ||||
1,345 | National Retail Properties, Inc., REIT, Series D, 6.625% | 34,150 | ||||
2,286 | US Bancorp, Series F, 6.500% | 64,237 | ||||
|
| |||||
282,529 | ||||||
|
| |||||
Telecommunication Services (0.2%) | ||||||
960 | Qwest Corp., 7.000% | 24,893 | ||||
|
| |||||
Utilities (0.2%) | ||||||
1,375 | Dominion Resources, Inc., Series A, 8.375% | 36,149 | ||||
|
| |||||
Total Preferred Stocks | 444,852 | |||||
|
| |||||
INVESTMENT COMPANY (0.2%) |
| |||||
30,673 | Federated Treasury Obligations Fund, Institutional Shares | 30,673 | ||||
|
| |||||
Total Investment Company | 30,673 | |||||
|
|
Fair Value | ||||
Total Investments — 100.6% | $ | 15,439,651 | ||
Net Other Assets (Liabilities) — (0.6)% | (88,867 | ) | ||
|
| |||
NET ASSETS — 100.0% | $ | 15,350,784 | ||
|
|
(a) | The interest rate for this variable rate note, which will change periodically, is based either on the prime rate or an index of market rates. The reflected rate is in effect as of June 30, 2013. The maturity date reflected is the final maturity date. |
(b) | Rule 144A, Section 4(2) or other security which is restricted as to resale to qualified institutional investors. The Advisor, using Board approved procedures, has deemed these securities or a portion of these securities to be liquid. |
(c) | Represents that all or a portion of the security was pledged as collateral for securities purchased on a when-issued basis. |
(d) | Represents securities purchased on a when-issued basis. At June 30, 2013, total cost of investments purchased on a when-issued basis was $369,726. |
G.O. — General Obligation
GMTN — Global Medium Term Note
MTN — Medium Term Note
REIT — Real Estate Investment Trust
STEP — Step Coupon Bond
See accompanying notes to the financial statements.
10
(This page has been left blank intentionally.)
Sterling Capital Variable Insurance Funds |
Statements of Assets and Liabilities
June 30, 2013 (Unaudited)
Sterling Capital Income VIF | Sterling Capital Special Opportunities VIF | Sterling Capital Total Return Bond VIF | ||||||||||
|
|
|
|
|
| |||||||
Assets: | ||||||||||||
Investments at fair value (a) | $ | 17,693,989 | $ | 28,766,460 | $ | 15,439,651 | ||||||
Interest and dividends receivable | 16,768 | 18,298 | 144,486 | |||||||||
Receivable for investments sold | — | 342,854 | 427,914 | |||||||||
Receivable for capital shares issued | 1,406 | — | 141,526 | |||||||||
Prepaid and other expenses | 11,131 | 19,376 | 7,786 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 17,723,294 | 29,146,988 | 16,161,363 | |||||||||
|
|
|
|
|
| |||||||
Liabilities: | ||||||||||||
Cash overdraft | — | — | 1,618 | |||||||||
Payable for investments purchased | — | — | 786,520 | |||||||||
Payable for capital shares redeemed | 2,243 | 173,943 | 466 | |||||||||
Accrued expenses and other payables: | ||||||||||||
Investment advisory fees | 8,394 | 19,759 | 5,907 | |||||||||
Administration fees | 1,413 | 2,411 | 1,253 | |||||||||
Audit fees | 8,041 | 13,925 | 7,399 | |||||||||
Compliance service fees | 23 | 41 | 22 | |||||||||
Trustee fees | 42 | 67 | 33 | |||||||||
Printing fees | 4,736 | 8,707 | 5,027 | |||||||||
Other fees | — | — | 2,334 | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 24,892 | 218,853 | 810,579 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 17,698,402 | $ | 28,928,135 | $ | 15,350,784 | ||||||
|
|
|
|
|
| |||||||
Net Assets Consist of: | ||||||||||||
Capital | $ | 33,981,869 | $ | 17,235,470 | $ | 14,539,206 | ||||||
Undistributed (distributions in excess of) net investment income | (2,801 | ) | 75,123 | 431,144 | ||||||||
Accumulated realized gain (loss) | (17,072,691 | ) | 6,149,549 | 369,182 | ||||||||
Net unrealized appreciation (depreciation) | 792,025 | 5,467,993 | 11,252 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 17,698,402 | $ | 28,928,135 | $ | 15,350,784 | ||||||
|
|
|
|
|
| |||||||
Shares of Beneficial Interest Outstanding (Unlimited number of shares authorized, no par value) | 1,829,269 | 1,560,039 | 1,508,690 | |||||||||
|
|
|
|
|
| |||||||
Net Asset Value — offering and redemption price per share | $ | 9.68 | $ | 18.54 | $ | 10.17 | ||||||
|
|
|
|
|
| |||||||
(a) Investments at cost | $ | 16,901,964 | $ | 23,298,467 | $ | 15,428,399 |
See accompanying notes to the financial statements.
12
Sterling Capital Variable Insurance Funds |
Statements of Operations
For the Six Months Ended June 30, 2013 (Unaudited)
Sterling Capital Equity Income VIF | Sterling Capital Special Opportunities VIF | Sterling Capital Total Return Bond VIF | ||||||||||
|
|
|
|
|
| |||||||
Investment Income: | ||||||||||||
Interest income | $ | — | $ | — | $ | 287,126 | ||||||
Dividend income | 201,313 | 247,969 | 15,475 | |||||||||
Foreign taxes withheld | (761 | ) | (4,244 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total investment income | 200,552 | 243,725 | 302,601 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Investment advisory fees (See Note 4) | 62,594 | 123,061 | 40,766 | |||||||||
Administration fees (See Note 4) | 8,889 | 15,297 | 8,125 | |||||||||
Accounting out-of-pocket fees | 3,139 | 3,171 | 17,853 | |||||||||
Audit fees | 8,237 | 14,366 | 7,700 | |||||||||
Compliance service fees (See Note 4) | 111 | 195 | 104 | |||||||||
Custodian fees | 895 | 1,229 | 873 | |||||||||
Fund accounting fees (See Note 4) | 671 | 1,154 | 611 | |||||||||
Insurance fees | 9,975 | 17,079 | 9,153 | |||||||||
Legal fees | 7,965 | 13,921 | 7,431 | |||||||||
Printing fees | 5,770 | 8,420 | 4,932 | |||||||||
Transfer agent fees (See Note 4) | 2,881 | 5,047 | 2,747 | |||||||||
Trustee fees | 938 | 1,623 | 871 | |||||||||
Other fees | 1,224 | 1,936 | 1,179 | |||||||||
|
|
|
|
|
| |||||||
Total expenses before waivers | 113,289 | 206,499 | 102,345 | |||||||||
Less expenses waived by the Investment Advisor (See Note 4) | (9,606 | ) | — | (1,191 | ) | |||||||
|
|
|
|
|
| |||||||
Net expenses | 103,683 | 206,499 | 101,154 | |||||||||
|
|
|
|
|
| |||||||
Net investment income | 96,869 | 37,226 | 201,447 | |||||||||
|
|
|
|
|
| |||||||
Realized and Unrealized Gain (Loss): | ||||||||||||
Net realized gain from investments | 3,899,992 | 2,861,287 | 65,706 | |||||||||
Change in unrealized appreciation/depreciation on investments | (2,677,394 | ) | 201,797 | (701,471 | ) | |||||||
|
|
|
|
|
| |||||||
Net realized and unrealized gain (loss) | 1,222,598 | 3,063,084 | (635,765 | ) | ||||||||
|
|
|
|
|
| |||||||
Change in net assets from operations | $ | 1,319,467 | $ | 3,100,310 | $ | (434,318 | ) | |||||
|
|
|
|
|
|
See accompanying notes to the financial statements.
13
Sterling Capital Variable Insurance Funds |
Statements of Changes in Net Assets
Sterling Capital Equity Income VIF | ||||||||
|
| |||||||
For the Six Months Ended June 30, 2013 (Unaudited) | For the Year Ended | |||||||
|
|
|
| |||||
From Investment Activities: | ||||||||
Operations: | ||||||||
Net investment income | $ | 96,869 | $ | 207,550 | ||||
Net realized gain | 3,899,992 | 1,532,467 | ||||||
Change in unrealized appreciation/depreciation | (2,677,394 | ) | 1,115,741 | |||||
|
|
|
| |||||
Change in net assets from operations | 1,319,467 | 2,855,758 | ||||||
|
|
|
| |||||
Distributions to Shareholders From: | ||||||||
Net investment income | (105,417 | ) | (192,318 | ) | ||||
Net realized gains | — | — | ||||||
|
|
|
| |||||
Change in net assets from shareholders distributions | (105,417 | ) | (192,318 | ) | ||||
|
|
|
| |||||
Capital Transactions: | ||||||||
Proceeds from shares issued | 582,392 | 95,460 | ||||||
Distributions reinvested | 105,417 | 192,318 | ||||||
Value of shares redeemed | (2,008,538 | ) | (6,429,972 | ) | ||||
|
|
|
| |||||
Change in net assets from capital transactions | (1,320,729 | ) | (6,142,194 | ) | ||||
|
|
|
| |||||
Change in net assets | (106,679 | ) | (3,478,754 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 17,805,081 | 21,283,835 | ||||||
|
|
|
| |||||
End of period | $ | 17,698,402 | $ | 17,805,081 | ||||
|
|
|
| |||||
Undistributed (distributions in excess of) net investment income | $ | (2,801 | ) | $ | 5,747 | |||
|
|
|
| |||||
Share Transactions: | ||||||||
Issued | 60,314 | 10,701 | ||||||
Reinvested | 10,884 | 21,560 | ||||||
Redeemed | (208,980 | ) | (733,268 | ) | ||||
|
|
|
| |||||
Change in Shares | (137,782 | ) | (701,007 | ) | ||||
|
|
|
|
See accompanying notes to the financial statements.
14
Sterling Capital Special Opportunities VIF | Sterling Capital Total Return Bond VIF | |||||||||||||
|
|
|
| |||||||||||
For the Six Months Ended June 30, 2013 (Unaudited) | For the Year Ended December 31, 2012 | For the Six Months Ended June 30, 2013 (Unaudited) | For the Year Ended December 31, 2012 | |||||||||||
|
|
|
|
|
|
|
| |||||||
$ | 37,226 | $ | 116,720 | $ | 201,447 | $ | 436,970 | |||||||
2,861,287 | 3,344,125 | 65,706 | 490,488 | |||||||||||
201,797 | 1,217,194 | (701,471 | ) | 180,859 | ||||||||||
|
|
|
|
|
|
|
| |||||||
3,100,310 | 4,678,039 | (434,318 | ) | 1,108,317 | ||||||||||
|
|
|
|
|
|
|
| |||||||
— | (85,547 | ) | (248,274 | ) | (521,025 | ) | ||||||||
— | (1,422,090 | ) | — | (518,065 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||
— | (1,507,637 | ) | (248,274 | ) | (1,039,090 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||
150,761 | 637,311 | 535,933 | 1,212,865 | |||||||||||
— | 1,507,637 | 248,273 | 1,039,090 | |||||||||||
(5,251,648 | ) | (9,953,282 | ) | (2,199,448 | ) | (4,350,979 | ) | |||||||
|
|
|
|
|
|
|
| |||||||
(5,100,887 | ) | (7,808,334 | ) | (1,415,242 | ) | (2,099,024 | ) | |||||||
|
|
|
|
|
|
|
| |||||||
(2,000,577 | ) | (4,637,932 | ) | (2,097,834 | ) | (2,029,797 | ) | |||||||
30,928,712 | 35,566,644 | 17,448,618 | 19,478,415 | |||||||||||
|
|
|
|
|
|
|
| |||||||
$ | 28,928,135 | $ | 30,928,712 | $ | 15,350,784 | $ | 17,448,618 | |||||||
|
|
|
|
|
|
|
| |||||||
$ | 75,123 | $ | 37,897 | $ | 431,144 | $ | 477,971 | |||||||
|
|
|
|
|
|
|
| |||||||
8,615 | 38,231 | 51,243 | 113,176 | |||||||||||
— | 90,840 | 23,668 | 97,428 | |||||||||||
(291,546 | ) | (601,876 | ) | (208,845 | ) | (404,427 | ) | |||||||
|
|
|
|
|
|
|
| |||||||
(282,931 | ) | (472,805 | ) | (133,934 | ) | (193,823 | ) | |||||||
|
|
|
|
|
|
|
|
15
Sterling Capital Variable Insurance Funds |
Financial Highlights
The financial highlights table is intended to help you understand the Funds’ financial performance for the past 5 years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
Investment Activities | Distributions | |||||||||||||
Net Asset Value, Beginning of Period | Net investments income (loss)(a) | Net realized/ unrealized gains (losses) on investment | Total from Investment Activities | Net investment income | Net realized gains on investments | Total Distributions | ||||||||
Sterling Capital Equity Income VIF | ||||||||||||||
Six Months Ended June 30, 2013 (Unaudited) | $ 9.05 | 0.05 | 0.64 | 0.69 | (0.06) | — | (0.06) | |||||||
Year Ended December 31, 2012 | $ 7.98 | 0.09 | 1.07 | 1.16 | (0.09) | — | (0.09) | |||||||
Year Ended December 31, 2011 | $ 8.41 | 0.09 | (0.43) | (0.34) | (0.09) | — | (0.09) | |||||||
Year Ended December 31, 2010 | $ 7.61 | 0.09 | 0.81 | 0.90 | (0.10) | — | (0.10) | |||||||
Year Ended December 31, 2009 | $ 6.49 | 0.07 | 1.12 | 1.19 | (0.07) | — | (0.07) | |||||||
Year Ended December 31, 2008 | $13.69 | 0.16 | (4.63) | (4.47) | (0.16) | (2.57) | (2.73) | |||||||
Sterling Capital Special Opportunities VIF | ||||||||||||||
Six Months Ended June 30, 2013 (Unaudited) | $16.78 | 0.02 | 1.74 | 1.76 | — | — | — | |||||||
Year Ended December 31, 2012 | $15.36 | 0.06(e) | 2.13 | 2.19 | (0.05) | (0.72) | (0.77) | |||||||
Year Ended December 31, 2011 | $16.60 | (0.01) | (0.61) | (0.62) | — | (0.62) | (0.62) | |||||||
Year Ended December 31, 2010 | $14.29 | (0.04) | 2.36 | 2.32 | (0.01) | — | (0.01) | |||||||
Year Ended December 31, 2009 | $10.27 | (0.03) | 4.47 | 4.44 | — | (0.42) | (0.42) | |||||||
Year Ended December 31, 2008 | $16.03 | 0.02 | (5.28) | (5.26) | (0.02) | (0.48) | (0.50) | |||||||
Sterling Capital Total Return Bond VIF | ||||||||||||||
Six Months Ended June 30, 2013 (Unaudited) | $10.62 | 0.13 | (0.42) | (0.29) | (0.16) | — | (0.16) | |||||||
Year Ended December 31, 2012 | $10.61 | 0.26 | 0.38 | 0.64 | (0.31) | (0.32) | (0.63) | |||||||
Year Ended December 31, 2011 | $10.73 | 0.36 | 0.28 | 0.64 | (0.39) | (0.37) | (0.76) | |||||||
Year Ended December 31, 2010 | $10.37 | 0.40 | 0.39 | 0.79 | (0.41) | (0.02) | (0.43) | |||||||
Year Ended December 31, 2009 | $ 9.94 | 0.41 | 0.42 | 0.83 | (0.40) | — | (0.40) | |||||||
Year Ended December 31, 2008 | $10.02 | 0.41 | (0.08) | 0.33 | (0.41) | — | (0.41) |
* | During the periods certain fees were voluntarily waived (See Note 4 in the Notes to the Financial Statements). If such reductions had not occurred, the ratios would have been as indicated. |
(a) | Per share net investment income (loss) has been calculated using the average daily shares method. |
(b) | Not annualized for periods less than one year. |
(c) | Total return ratios assume reinvestment of distributions at net asset value. Total return ratios do not reflect charges pursuant to the terms of the insurance contracts funded by separate accounts that invest in the Fund’s shares. |
(d) | Annualized for periods less than one year. |
(e) | For the year ended December 31, 2012, net investment income per share reflects a special dividend which amounted to $0.02 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been 0.25% per share. |
See accompanying notes to the financial statements.
16
Ratios/Supplemental Data | ||||||||||||
Net Asset Value, End of Period | Total Return(b)(c) | Net Assets, End of Period (000) | Ratio of net expenses to average net assets(d) | Ratio of net investment income (loss) to average net assets(d) | Ratio of expenses to average net assets*(d) | Portfolio turnover rate(b) | ||||||
$ 9.68 | 7.59% | $17,698 | 1.16% | 1.08% | 1.27% | 107.40% | ||||||
$ 9.05 | 14.53% | $17,805 | 1.06% | 1.04% | 1.22% | 64.31% | ||||||
$ 7.98 | (4.04)% | $21,284 | 0.97% | 1.11% | 1.21% | 69.66% | ||||||
$ 8.41 | 11.93% | $28,318 | 0.94% | 1.22% | 1.21% | 63.34% | ||||||
$ 7.61 | 18.50% | $32,124 | 1.00% | 1.01% | 1.24% | 137.52% | ||||||
$ 6.49 | (37.43)% | $35,978 | 0.81% | 1.52% | 1.16% | 49.73% | ||||||
$18.54 | 10.49% | $28,928 | 1.34% | 0.24% | 1.34% | 22.10% | ||||||
$16.78 | 14.33% | $30,929 | 1.28% | 0.34%(e) | 1.28% | 18.13% | ||||||
$15.36 | (3.53)% | $35,567 | 1.25% | (0.05)% | 1.25% | 26.68% | ||||||
$16.60 | 16.24% | $43,344 | 1.24% | (0.28)% | 1.27% | 39.24% | ||||||
$14.29 | 43.53% | $40,162 | 1.26% | (0.28)% | 1.29% | 32.57% | ||||||
$10.27 | (33.71)% | $26,684 | 1.10% | 0.14% | 1.18% | 35.80% | ||||||
$10.17 | (2.77)% | $15,351 | 1.24% | 2.47% | 1.26% | 74.63% | ||||||
$10.62 | 6.10% | $17,449 | 1.16% | 2.39% | 1.20% | 144.71% | ||||||
$10.61 | 6.10% | $19,478 | 1.07% | 3.32% | 1.17% | 131.16% | ||||||
$10.73 | 7.73% | $21,397 | 1.07% | 3.70% | 1.20% | 140.32% | ||||||
$10.37 | 8.57% | $22,062 | 0.94% | 4.09% | 1.24% | 109.12% | ||||||
$ 9.94 | 3.38% | $20,996 | 0.81% | 4.11% | 1.03% | 152.74% |
17
Sterling Capital Variable Insurance Funds |
June 30, 2013 (Unaudited)
1. | Organization: |
Sterling Capital Variable Insurance Funds (the “Trust”) was organized on November 8, 2004, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end investment company established as a Massachusetts business trust. The Trust commenced operations on May 1, 2005 and presently offers shares of Sterling Capital Equity Income VIF, Sterling Capital Special Opportunities VIF, and Sterling Capital Total Return Bond VIF (referred to individually as a “Fund” and collectively as the “Funds”). The Trust is authorized to issue an unlimited number of shares of beneficial interest without par value. Shares of the Funds are offered through variable annuity contracts offered through the separate accounts of participating insurance companies. All Funds are “diversified” funds.
Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Funds may enter into contracts with their vendors and others that provide for general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote.
2. | Significant Accounting Policies: |
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. The policies are in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates.
Recent Accounting Standards — In June 2013, the Financial Accounting Standards Board issued Accounting Standard Update No. 2013-08 (“ASU No. 2013-08”) that creates a two-tiered approach to assess whether an entity is an investment company. ASU No. 2013-08 will also require an investment company to measure noncontrolling ownership interests in other investment companies at fair value and will require additional disclosures relating to investment company status, any changes thereto and information about financial support provided or contractually required to be provided to any of the investment company’s investees. ASU No. 2013-08 is effective for financial statements with fiscal years beginning after December 15, 2013 and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.
Securities Valuation — Investments in securities, the principal market for which is a securities exchange or an over-the-counter market, are valued at their latest available sale price (except for those securities that are traded on NASDAQ, which will be valued at the NASDAQ official closing price) or in the absence of such a price, by reference to the latest available bid price in the principal market in which such securities are normally traded. The Funds may also use an independent pricing service approved by the Board of Trustees (the “Board”) to value certain securities, including the use of electronic and matrix techniques. Short-term obligations without significant credit risk that mature in 60 days or less are valued at either amortized cost or original cost plus interest, which approximates fair value. Investments in open-end investment companies are valued at their respective net asset values as reported by such companies. Investments in closed-end investment companies and exchange traded funds are valued at their market values based upon the latest available sale price or, absent such a price, by reference to the latest available bid prices in the principal market in which such securities are normally traded. The differences between cost and fair value of investments are reflected as either unrealized appreciation or depreciation. Securities for which market quotations are not readily available or deemed unreliable (e.g., an approved pricing service does not provide a price, a furnished price is in error, certain stale prices, or an event occurs that materially affects the furnished price) will be fair valued in accordance with procedures established in good faith under the general supervision of the Board. No securities were valued in accordance with these procedures as of June 30, 2013.
18
Sterling Capital Variable Insurance Funds |
Notes to Financial Statements — (continued)
June 30, 2013 (Unaudited)
Fair Value Measurements — The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:
• Level 1 – quoted prices in active markets for identical securities
• Level 2 – based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 – based on significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. During the period ended June 30, 2013 there were no significant changes to the valuation policies and procedures.
The summary of inputs used to determine the fair value of each Fund’s investments as of June 30, 2013 is as follows:
Investments in Securities | Level 1– Quoted Prices | Level 2– Other Significant Observable Inputs | Level 3– Significant Unobservable Inputs | Total | ||||||||||
Sterling Capital Equity Income VIF | $ | 17,693,989(a) | $ | — | $— | $ | 17,693,989 | |||||||
Sterling Capital Special Opportunities VIF | 28,766,460(a) | — | — | 28,766,460 | ||||||||||
Sterling Capital Total Return Bond VIF | 374,241(b) | 15,065,409(a) | — | 15,439,650 |
(a) | Industries or security types are disclosed in the Schedules of Portfolio Investments. |
(b) | Represents investment companies and/or certain preferred stocks. |
The Funds’ policy is to recognize transfers in and transfers out as of the beginning of the reporting period. There were no transfers between Level 1 and Level 2 during the period ended June 30, 2013.
Security Transactions and Related Income — During the period, security transactions are accounted for no later than one business day after the trade date. For financial reporting purposes, however, security transactions as of the last business day of the reporting period are accounted for on the trade date. Interest income is recognized on the accrual basis and includes, where applicable, the amortization/accretion of premium or discount. Dividend income is recorded on the ex-dividend date. Gains or losses realized from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.
When-Issued and Forward Commitments — The Funds may purchase securities on a “when-issued” basis. The Funds record when-issued securities on the trade date and pledge assets with a value at least equal to the purchase commitment for payment of the securities purchased. The value of the securities underlying when-issued or forward commitments to purchase securities, and any subsequent fluctuation in their value, is taken into account when determining the net asset value of the Funds commencing with the date the Funds agree to purchase the securities. The Funds do not accrue interest or dividends on “when-issued” securities until the underlying securities are received.
Mortgage Dollar Rolls — Sterling Capital Total Return Bond VIF may sell mortgage-backed securities for delivery in the current month and simultaneously contract to repurchase substantially similar (same type, coupon and maturity) securities on a specific future date at an agreed-upon price. The market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. Pools of mortgages collateralizing those securities may have different prepayment histories than those sold. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in additional instruments for the Fund, and the income from these investments will generate income for the Fund. If such income does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what the performance would have been without the use of dollar rolls. The Funds account for mortgage dollar roll transactions as purchases and sales.
Expenses and Allocation Methodology — Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributable to a Fund are allocated proportionately among all Funds daily in relation to the net assets of each Fund or on another reasonable basis. Expenses which are attributable to both the Funds and Sterling Capital Funds are allocated across the Funds and Sterling Capital Funds, based upon relative net assets or on another reasonable basis.
19
Sterling Capital Variable Insurance Funds |
Notes to Financial Statements — (continued)
June 30, 2013 (Unaudited)
Distributions to Shareholders — Dividends from net investment income are declared and paid quarterly for the Funds, with the exception of Sterling Capital Total Return Bond VIF, in which case dividends from net investment income are declared daily and paid monthly. Distributable net realized gains, if any, are declared and distributed at least annually. Distributions to shareholders which exceed net investment income and net realized gains for tax purposes are reported as distributions of capital.
Federal Income Taxes — It is the policy of each Fund to continue to qualify as a Regulated Investment Company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code of 1986, as amended, and to make distributions of net investment income and net realized capital gains sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income tax is required in the Funds’ financial statements.
3. | Purchases and Sales of Securities: |
Purchases and sales of securities (excluding U.S. Government Securities and securities maturing less than one year from acquisition) for the period ended June 30, 2013 were as follows:
Purchases | Sales | |||||||
Sterling Capital Equity Income VIF | $ | 18,663,259 | $ | 20,641,147 | ||||
Sterling Capital Special Opportunities VIF | 6,468,763 | 11,328,360 | ||||||
Sterling Capital Total Return Bond VIF | 6,032,809 | 5,431,977 |
Purchases and sales of U.S. Government Securities (excluding securities maturing less than one year from acquisition) for the period ended June 30, 2013 for the Sterling Capital Total Return Bond VIF were $6,593,220 and $8,257,086, respectively.
4. | Related Party Transactions: |
Under the terms of the investment advisory agreement, Sterling Capital Management LLC (“Sterling Capital” or the “Advisor”) is entitled to receive fees based on a percentage of the average daily net assets of the Funds. These fees are accrued daily and payable on a monthly basis and are reflected on the Statements of Operations as “Investment advisory fees.” Sterling Capital waived investment advisory fees and reimbursed certain expenses for the Funds referenced below which are not subject to recoupment, except as noted, and are included on the Statements of Operations as “Less expenses waived by the Investment Advisor.” Information regarding these transactions for the period ended June 30, 2013 is as follows:
Contractual Fee Rate | Fee Rate after Voluntary Waivers | |||||||||
Sterling Capital Equity Income VIF | 0.70% | 1,2 | 0.58% | 1,2 | ||||||
Sterling Capital Special Opportunities VIF | 0.80% | 0.80% | ||||||||
Sterling Capital Total Return Bond VIF | 0.50% | 2,3 | 0.46% | 2,3 |
1 | The contractual fee rate was 0.70% and the fee rate after voluntary waivers was 0.60% prior to April 24, 2013. |
2 | For a portion of the period ended June 30, 2013, Sterling Capital voluntarily reimbursed certain expenses of the Funds. Voluntary reimbursements of expenses are not subject to recoupment in subsequent fiscal periods, and may be discontinued at any time. |
3 | The contractual fee rate was 0.50% and the fee rate after voluntary waivers was 0.50% prior to April 24, 2013. |
Sterling Capital serves as the administrator to the Funds pursuant to an administration agreement. The Funds pay their portion of a fee to Sterling Capital for providing administration services based on the aggregate assets of the Funds and the Sterling Capital Funds, excluding the assets of Sterling Capital StrategicAllocation Conservative Fund, Sterling Capital StrategicAllocation Balanced Fund, Sterling Capital Strategic Allocation Growth Fund, at a rate of 0.1075% on the first $3.5 billion of average net assets, 0.075% on the next $1 billion of average net assets; 0.06% on the next $1.5 billion of average net assets; and 0.04% of average net assets over $6 billion. Expenses incurred are reflected on the Statements of Operations as “Administration fees.” Pursuant to a sub-administration agreement with Sterling Capital, BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon” or the “Sub-Administrator”), serves as the sub-administrator to the Funds subject to the general supervision of the Board and Sterling Capital. For these services, BNY Mellon is entitled to a fee payable by Sterling Capital.
BNY Mellon serves as the Funds’ fund accountant and transfer agent and receives compensation by the Funds for these services. Expenses incurred are reflected on the Statements of Operations as “Fund accounting fees” and “Transfer agent fees.”
Sterling Capital’s Chief Compliance Officer (“CCO”) serves as the Funds’ CCO. The CCO’s compensation is reviewed and approved by the Funds’ Board and paid by Sterling Capital. However, the Funds reimburse Sterling Capital for their allocable portion of the CCO’s salary. Expenses incurred for the Funds are reflected on the Statements of Operations as “Compliance service fees.”
20
Sterling Capital Variable Insurance Funds |
Notes to Financial Statements — (continued)
June 30, 2013 (Unaudited)
The Trust has adopted a Variable Contract Owner Servicing Plan (the “service plan”) under which the Funds may pay a fee computed daily and paid monthly, at an annual rate of up to 0.25% of the average daily net assets of the Funds. A servicing agent may periodically waive all or a portion of its servicing fees. For the period ended June 30, 2013 the Funds did not participate in any service plan.
Certain Officers and a Trustee of the Funds are affiliated with Sterling Capital or the Sub-Administrator. Such Officers and Trustee receive no compensation from the Funds for serving in their respective roles. Each of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust who serve on the Board are compensated at the annual rate of $44,000 plus $5,000 for each regularly scheduled quarterly meeting attended, $4,000 for each special meeting attended in person and $1,500 for each special meeting attended by telephone, plus reimbursement for certain out of pocket expenses. The Trustee who is an interested person, as defined in the 1940 Act, of the Trust, but not affiliated with Sterling Capital is compensated at the annual rate of $44,000 plus $4,000 for each regularly scheduled quarterly meeting attended, $3,200 for each special meeting attended in person and $1,200 for each special meeting attended by telephone, plus reimbursement for certain out of pocket expenses. Each Trustee serving on a Committee of the Board receives a fee of $4,000 for each Committee meeting attended in person and $3,000 for each Committee meeting attended by telephone, plus reimbursement for certain out of pocket expenses. Committee meeting fees are only paid when such Committee meetings are not held in conjunction with a regular board meeting. Additionally, the Chairman of the Board and the Audit Committee Chairman each receive an annual retainer of $15,000, and the Chairman of the Nominations Committee receives additional compensation at the rate of $1,000 for each meeting over which he or she presides as Chairman. The fees are allocated across the Trust and the Sterling Capital Funds based upon relative net assets.
5. | Line of Credit: |
U.S. Bank, N.A. has made available a credit facility to the Funds, pursuant to a Credit Agreement (the “Agreement”). The primary purpose of the Agreement is to allow the Funds to avoid security liquidations that Sterling Capital believes are unfavorable to shareholders. Under the Agreement, Sterling Capital Equity Income VIF, Sterling Capital Special Opportunities VIF and Sterling Capital Total Return Bond VIF have a commitment amount of $2,800,000, $2,600,000, and $1,500,000, respectively. Outstanding principal amounts under the Agreement bear interest at a rate per annum equal to the Prime Rate minus two percent (2%), but never at a rate of less than one percent (1%) per annum. The Agreement expires on March 31, 2014. During the period ended June 30, 2013 the Funds did not utilize the line of credit.
6. | Federal Tax Information: |
Management evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax liabilities in the financial statements. Recognition of tax benefits of an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. During the period, the Funds did not incur any interest or penalties.
Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (current year and prior three tax years), and has concluded that no provision for federal income tax is required in the Funds’ financial statements. The Funds’ federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Under the Regulated Investment Company Modernization Act of 2010, capital losses originating in taxable years beginning after December 22, 2010 (“post-enactment capital losses”) are carried forward indefinitely. Furthermore, post-enactment capital losses will retain their character as either short-term or long-term capital losses rather than being considered all short-term capital losses as under previous law.
At December 31, 2012, the following Fund had net capital loss carryforwards available to offset future net capital gains, if any, to the extent provided by the Treasury regulations. To the extent that these carryforwards are used to offset future capital gains, it is probable that the gains that are offset will not be distributed to shareholders.
21
Sterling Capital Variable Insurance Funds |
Notes to Financial Statements — (continued)
June 30, 2013 (Unaudited)
Amount | Expires | |||||||
Sterling Capital Equity Income VIF | $ | 17,459,184 | 2016 | |||||
Sterling Capital Equity Income VIF | 3,263,903 | 2017 |
The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2012, were as follows:
Distributions paid from | ||||||||||||
Ordinary Income | Net Long-Term Gains | Total Distributions Paid* | ||||||||||
Sterling Capital Equity Income VIF | $ | 192,318 | $ | — | $ | 192,318 | ||||||
Sterling Capital Special Opportunities VIF | 85,547 | 1,422,090 | 1,507,637 | |||||||||
Sterling Capital Total Return Bond VIF | 542,470 | 496,620 | 1,039,090 |
* | Total Distributions paid may differ from the Statements of Changes in Net Assets because distributions are recognized when actually paid for tax purposes. |
At June 30, 2013, federal income tax cost, gross unrealized appreciation and gross unrealized depreciation on securities were as follows:
Tax Cost | Gross Tax Unrealized Appreciation | Gross Tax Unrealized Depreciation | Net Tax Unrealized Appreciation | |||||||||||||
Sterling Capital Equity Income VIF | $ | 16,901,964 | $ | 1,109,974 | $ | (317,949 | ) | $ | 792,025 | |||||||
Sterling Capital Special Opportunities VIF | 23,354,322 | 6,601,955 | (1,189,817 | ) | 5,412,138 | |||||||||||
Sterling Capital Total Return Bond VIF | 15,430,908 | 300,522 | (291,779 | ) | 8,743 |
7. | Subsequent Events: |
Management has evaluated the need for disclosure and/or adjustments resulting from subsequent events through the date the financial statements were issued, and has noted no events that require recognition or disclosure in the financial statements.
22
Sterling Capital Variable Insurance Funds |
June 30, 2013
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1-800-228-1872; and (ii) on the Securities and Exchange Commission’s (the “Commission”) website at http://www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available (i) without charge, upon request, by calling 1-800-228-1872 and (ii) on the Commission’s website at http://www.sec.gov.
The Funds file complete Schedules of Portfolio Holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q is filed with the Commission within 60 days of the end of the quarter to which it relates, and is available without charge on the Commission’s website at http://www.sec.gov, or may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
23
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by the registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Not applicable. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Sterling Capital Variable Insurance Funds |
By (Signature and Title) | /s/ James T. Gillespie | |||||
James T. Gillespie, President | ||||||
(principal executive officer) |
Date | 08/29/13 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title) | /s/ James T. Gillespie | |||||
James T. Gillespie, President | ||||||
(principal executive officer) |
Date | 08/29/13 |
By (Signature and Title) | /s/ Kenneth R. Cotner | |||||
Kenneth R. Cotner, Treasurer | ||||||
(principal financial officer) |
Date | 08/29/13 |