<PAGE>
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SoGen Overseas Variable Fund
[GRAPHIC]
Semi-Annual Report
June 30, 1998
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<PAGE>
SoGen Overseas Variable Fund
THE PRESIDENT'S LETTER
Dear Shareholder:
From February 3, 1997 (commencement of operations) through June 30, 1998, the
value of an investment in your Fund increased at a compounded average annual
rate of 3.61%. Over the past twelve months, the rate was 0.96%.
As of June 30, 1998 your Fund's net assets, on an economic basis, were
invested as follows:
<TABLE>
<S> <C>
Foreign stocks(/1/) 72.2%
U.S. dollar bonds 1.9
Foreign currency bonds 5.7
Cash and equivalents 20.2
-----
100.0%
=====
</TABLE>
- --------
(/1/) Includes convertible bonds with moderate premia.
The geographical breakdown of the invested portfolio was approximately 30% in
developed countries in Continental Europe and 25% in Japan. Other relatively
large investments were in Latin America (6%), New Zealand (7%), Hong Kong (4%)
and Canada (3%).
In the past eighteen months, smaller foreign stocks have done poorly.
Although the Fund owns several big stocks--Fuji Photo is one--our emphasis
tends to be on smaller and medium-size securities. That's where the values have
been and continue to be, we believe.
For example, Buderus--one of the large holdings--is a German manufacturer of
heating systems (residential boilers). The company is quite profitable and has
managed to increase profits in spite of a difficult environment for consumption
and construction. The stock sells at about half the valuation of a similar
American company.
We expect to reduce the cash position over time as my associates and I come
up with investment ideas that appear to provide genuine long-term value.
Sincerely yours,
/s/ Jean-Marie Eveillard
Jean-Marie Eveillard
President
August 13, 1998
<PAGE>
SoGen Overseas Variable Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Over the past twelve months ended June 30, 1998, European stock markets
advanced sharply in local currency terms. Local economies generally experienced
steady growth, supported by declining interest rates, low inflation and a
stronger dollar, while substantial progress was achieved toward the
establishment of the European economic and monetary union ("EMU"). Ongoing
corporate restructuring also helped generate significant earnings growth. As a
result, local equity markets recorded large gains, with particular strength in
large capitalization stocks. Yet, the Fund owns few large capitalization
stocks. Most of its investments are concentrated in smaller stocks, which
lagged the performance of the local stock market indices.
In Asia, Japanese equities continued to perform poorly: the Japanese
financial sector remained under significant pressure and the economy continued
to slow. Stock market price declines were particularly steep for small stocks,
while the stock of large, export-oriented companies fared better in a difficult
market. As prices weakened further, the Fund selectively added to its Japanese
holdings. In the rest of Asia, several markets collapsed and experienced sharp
volatility throughout the year as currency devaluations and financial turmoil
spread throughout the rest of the Southeast Asian region. The Fund's
investments remained limited in that area as few opportunities were found in
recent months.
The U.S. dollar continued to rise over the period, which hurt overall returns
despite partial hedges in place throughout the year. We maintained a
significant portion of the assets of the Fund in cash: at the end of the fiscal
year, cash equivalents accounted for 20% of net assets. The portfolio remained
widely diversified at all times.
SUMMARY OF FUND DATA
The table below covers the period from February 3, 1997 (commencement of
operations) to June 30, 1998.
<TABLE>
<CAPTION>
NET ASSET
VALUE OF
INVESTMENT
INVESTMENT WITH DIVIDENDS
NUMBER NET ASSET CAPITAL GAINS INCOME AND DISTRIBUTIONS
OF SHARES TOTAL NET VALUE DISTRIBUTIONS DIVIDENDS REINVESTED
OUTSTANDING ASSETS PER SHARE PER SHARE PER SHARE (CUMULATIVE)*
----------- ---------- --------- ------------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
February 3, 1997
(commencement of
operations)............ 10,000 $ 100,000 $10.00 -- -- $10.00
December 31, 1997....... 142,378 $1,390,537 $ 9.77 -- -- $ 9.77
June 30, 1998........... 405,834 $4,267,192 $10.51 -- -- $10.51
</TABLE>
- ----------------
* The calculation is based on an assumed investment in one share.
2
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER COST VALUE
OF SHARES (NOTE 1) (NOTE 1)
--------- -------- --------
<C> <S> <C> <C>
COMMON AND PREFERRED STOCKS
UNITED KINGDOM AND IRELAND (4.55%)
15,000 Antofagasta Holdings plc (15)............... $ 79,247 $ 63,153
3,000 Scottish Media Group plc (11)............... 34,476 40,218
10,000 Royal Doulton plc (8)....................... 36,583 36,516
25,000 Lonrho Africa plc (a)(15)................... 34,586 30,638
5,000 Lonrho plc (15)............................. 30,380 23,510
---------- ----------
215,272 194,035
---------- ----------
NORWAY (1.38%)
3,500 Schibsted ASA (11).......................... 60,860 58,896
---------- ----------
NETHERLANDS (2.40%)
2,000 Holdingmaatschappij de Telegraaf NV (11).... 42,778 48,080
1,250 Apothekers Cooperatie OPG U.A. (10)......... 39,599 42,009
1,000 European City Estates NV (13)............... 13,598 12,511
---------- ----------
95,975 102,600
---------- ----------
BELGIUM (0.79%)
100 Deceuninck Plastics Industries SA (4)....... 19,368 33,791
---------- ----------
GERMANY (8.46%)
200 Buderus AG (5).............................. 92,874 99,558
500 Bertelsmann AG D.R.C. (11).................. 61,503 64,298
85 Axel Springer Verlag AG (11)................ 66,528 62,528
100 Sudzucker AG Pfd. (8)....................... 42,975 51,574
500 Hornbach Holding AG Pfd. (9)................ 35,290 45,769
2,500 Gerresheimer Glas AG (5).................... 37,400 37,472
---------- ----------
336,570 361,199
---------- ----------
FRANCE (9.03%)
50 Societe Immobiliere Marseillaise (14)....... 79,178 98,995
250 Europe 1 Communication (11)................. 55,254 56,922
100 Societe Sucriere de Pithiviers-le-Vieil (3). 49,909 52,748
100 Sagem ADP (7)............................... 27,432 41,380
500 Emin Leydier (2)............................ 32,547 36,711
50 Taittinger C.I. (8)......................... 12,294 28,131
125 Robertet SA (8)............................. 25,781 25,161
100 Legrand ADP (5)............................. 11,707 17,159
100 Didot-Bottin (14)........................... 15,171 14,750
25 Compagnie Generale d'Industrie et de
Participation (C.G.I.P.) (14).............. 7,008 13,179
---------- ----------
316,281 385,136
---------- ----------
SWITZERLAND (4.27%)
125 Kuhne & Nagel International AG Bearer (6)... 85,464 94,603
100 Societe Generale d'Affichage D.R.C. (11).... 38,400 39,158
70 Sika Finanz AG Bearer (4)................... 17,603 27,687
75 Edipresse SA Bearer (11).................... 17,613 20,582
---------- ----------
159,080 182,030
---------- ----------
SPAIN AND PORTUGAL (0.51%)
200 Corporacion Financiera Alba SA (14)......... 23,711 21,957
---------- ----------
SINGAPORE (1.83%)
18,000 Times Publishing Limited (11)............... 32,211 29,849
30,000 Clipsal Industries Ltd. (4)................. 39,171 26,850
30,000 Delgro Corporation Ltd. (14)................ 33,393 21,498
---------- ----------
104,775 78,197
---------- ----------
HONG KONG (2.89%)
241,618 CDL Hotels International Limited (13)....... 86,898 71,734
85,000 Shaw Brothers (Hong Kong) Limited (11)...... 59,602 51,568
---------- ----------
146,500 123,302
---------- ----------
</TABLE>
3
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER COST VALUE
OF SHARES (NOTE 1) (NOTE 1)
--------- -------- --------
<C> <S> <C> <C>
COMMON AND PREFERRED STOCKS (continued)
JAPAN (17.30%)
2,000 Secom Co., Ltd. (19)........................ $ 121,223 $ 115,123
18,000 The Nichido Fire & Marine Insurance Co.,
Ltd. (12).................................. 93,809 93,780
700 Toho Co., Ltd. (11)......................... 74,261 73,443
2,000 Fuji Photo Film Co., Ltd. ADR (8)........... 67,800 69,125
7,000 Shoei Co., Ltd. (14)........................ 49,491 41,953
3,000 Makita Corporation (8)...................... 32,869 34,472
700 Hirose Electric Co., Ltd. (7)............... 36,710 34,056
7,000 Nisshinbo Industries, Inc. (8).............. 34,803 27,919
4,000 Sotoh Co., Ltd. (8)......................... 30,714 27,279
7,000 Aida Engineering, Ltd. (5).................. 35,489 27,164
1,000 Shimano Inc. (8)............................ 16,647 25,296
7,000 The Dai-Tokyo Fire & Marine Insurance Co.,
Ltd. (12).................................. 29,174 24,297
1,000 T. Hasegawa Co., Ltd. (8)................... 19,801 22,996
5,000 Tachi-S Co., Ltd. (6)....................... 27,393 22,277
3,000 Yomeishu Seizo Co., Ltd. (8)................ 15,077 17,678
5,000 Okumura Corporation (19).................... 17,533 17,498
500 Benesse Corporation (19).................... 16,804 17,427
5,000 The Dowa Fire & Marine Insurance Co., Ltd.
(12)....................................... 15,034 14,911
1,000 SK Kaken Company Limited (4)................ 13,031 11,211
2,000 Tokyo Tungsten Co., Ltd. (1)................ 10,758 10,779
5,000 Iino Kaiun Kaisha, Ltd. (6)................. 12,351 9,486
---------- ----------
770,772 738,170
---------- ----------
INDONESIA (0.20%)
100,000 PT Rigs Tenders (17)........................ 9,659 8,446
---------- ----------
THAILAND (0.06%)
500 Oriental Hotel PCL (13)..................... 2,698 2,542
---------- ----------
AUSTRALIA AND NEW ZEALAND (5.84%)
80,000 Carter Holt Harvey Limited (2).............. 108,554 69,572
100,000 Spotless Services Limited (19).............. 78,428 68,090
12,000 Independent Press Communications Limited 5%
exchangeable preference shares
due 11/30/2003 (11)........................ 61,901 58,080
65,000 Tasman Agriculture Limited (3).............. 31,355 30,283
10,000 Tab Limited (a)(8).......................... 13,937 14,732
25,000 Shortland Properties Limited (13)........... 13,898 8,412
---------- ----------
308,073 249,169
---------- ----------
CANADA (2.07%)
2,500 Canadian Pacific Limited (15)............... 70,319 70,938
1,000 Noranda, Inc. (15).......................... 22,859 17,298
---------- ----------
93,178 88,236
---------- ----------
MEXICO (1.49%)
20,000 Industrias Penoles, S.A. de C.V. (1)........ 85,211 63,559
---------- ----------
MISCELLANEOUS (2.74%)
1,500 Banco Latinoamericano de Exportaciones S.A.,
Class "E' (BLADEX) (12).................... 60,500 46,125
2,900 Freeport McMoRan Copper & Gold Inc.,
Preferred Series "B' (c)(20)............... 65,762 61,444
10,000 Minas de Arcata S.A. (a)(20)................ 14,830 9,212
---------- ----------
141,092 116,781
---------- ----------
TOTAL COMMON AND PREFERRED STOCKS........... 2,889,075 2,808,046
---------- ----------
</TABLE>
4
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL COST VALUE
AMOUNT (NOTE 1) (NOTE 1)
--------- -------- --------
<C> <S> <C> <C>
BONDS, NOTES AND CONVERTIBLE BONDS
U.S. DOLLAR CONVERTIBLE BONDS (1.56%)
$ 25,000 International Container Terminal
Services, Inc. 1 3/4% due 3/13/2004
(6)................................. $ 21,751 $ 21,438
15,000 Scandinavian Broadcasting System SA 7
1/4% due 8/01/2005 (11)............. 15,500 16,313
20,000 P.T. Inti Indorayon Utama 7% due
5/02/2006 (2)....................... 14,048 7,900
20,000 LG Electronics Inc. 1/4% due
12/31/2007 (7)...................... 14,313 13,200
10,000 Samsung Electronics Co. Ltd. 0% due
12/31/2007 (a)(b)(7)................ 8,636 7,925
---------- ----------
74,248 66,776
---------- ----------
U.S. DOLLAR BONDS AND NOTES (0.50%)
29,000 Federal Republic of Brazil "C' Bonds
8% due 4/15/2014 (18)............... 24,360 21,388
---------- ----------
NON U.S. DOLLAR CONVERTIBLE BONDS
(3.41%)
CAD 15,000 InterTAN, Inc. 9% due 8/30/2000 (9).. 10,951 10,662
NZD 100,000 Trans Power Finance Limited 8% due
3/15/2002 (16)...................... 55,955 52,364
GBP 10,000 Lonrho Finance plc 6% due 2/27/2004
(15)................................ 14,503 15,361
JPY 3,000,000 Hanshin Electric Railway Co., Ltd. 1
1/2% due 9/30/2005 (6).............. 19,602 20,653
AUD 65,000 Queensland Treasury Corporation 8%
due 9/14/2007 (18).................. 49,778 46,502
---------- ----------
150,789 145,542
---------- ----------
NON U.S. DOLLAR BONDS AND NOTES
(1.39%)
GBP 25,000 Carlsberg Finance A/S 7% due
2/26/2013 (8)....................... 42,642 42,831
GBP 10,000 Berisford plc 5% due 1/31/2015 (8)... 14,394 16,382
---------- ----------
57,036 59,213
---------- ----------
TOTAL BONDS, NOTES AND CONVERTIBLE
BONDS............................... 306,433 292,919
---------- ----------
SHORT-TERM INVESTMENTS (21.97%)
$ 193,000 Ford Motor Credit Company 5.64% due
7/01/1998........................... 193,000 193,000
194,000 Merrill Lynch & Co., Inc. 5.59% due
7/01/1998........................... 194,000 194,000
200,000 American Express Credit Corporation
6.02% due 7/02/1998................. 199,967 199,967
150,000 Pearson, Inc. 5.72% due 7/10/1998.... 149,785 149,785
201,000 Southland Corporation 5.68% due
7/14/1998........................... 200,588 200,588
---------- ----------
TOTAL SHORT-TERM INVESTMENTS......... 937,340 937,340
---------- ----------
TOTAL INVESTMENTS (94.64%)........... $4,132,848* 4,038,305**
==========
Other assets in excess of liabilities
(5.36%)............................. 228,887
----------
Net assets (100.00%)................. $4,267,192
==========
</TABLE>
- --------
(a) Non-income producing security.
(b) Security is exempt from registration under the Securities Act of 1933 and
may only be sold to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933.
(c) Commodity-linked security whereby the coupon, dividend and/or redemption
amount is linked to the price of an underlying commodity.
* At June 30, 1998 cost is identical for both book and federal income tax
purposes.
** Gross unrealized appreciation and depreciation of securities at June 30,
1998 were $173,680 and $268,223, respectively. (Net depreciation was
$94,543.)
<TABLE>
<CAPTION>
FOREIGN CURRENCIES INDUSTRY CLASSIFICATIONS
- ------------------ ------------------------
<S> <C> <C>
CAD--Canadian
Dollar (1) Metals and Minerals (11) Media
NZD--New Zealand
Dollar (2) Paper and Forest Products (12) Financial Institutions
GBP--Pound Sterling (3) Agriculture (13) Real Estate
JPY--Japanese Yen (4) Building Materials (14) Holding Companies
AUD--Australian
Dollar (5) Capital Goods (15) Conglomerates
(6) Transportation (16) Utilities
(7) Electronics (17) Energy
(8) Consumer Products (18) Government Issues
(9) Distribution (19) Services
(10) Health Care (20) Gold Related
</TABLE>
- --------
See Notes to Financial Statements.
5
<PAGE>
SoGen Overseas Variable Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Note 1):
Common and preferred stock (identified cost, $2,889,075).......... $2,808,046
Bonds, notes, and convertible bonds (identified cost, $306,433)... 292,919
Short-term investments (amortized cost, $937,340)................. 937,340
----------
Total investments (cost $4,132,848)............................ 4,038,305
Receivable for Fund shares sold................................... 376,794
Receivable for investment securities sold......................... 37,514
Receivable for forward currency contracts held, at value (Notes 1
and 6)........................................................... 24,610
Accrued interest and dividends receivable......................... 12,844
Deferred organization costs (Note 1).............................. 63,102
Prepaid expenses (Note 1)......................................... 1,349
----------
TOTAL ASSETS................................................... 4,554,518
----------
LIABILITIES:
Payable for investment securities purchased....................... 148,288
Payable for forward currency contracts held, at value (Notes 1 and
6)............................................................... 3,986
Organization and offering costs payable (Note 1).................. 77,212
Accrued expenses payable to SGAM Corp. (Note 1)................... 6,773
Distribution fees payable (Note 3)................................ 5,229
Directors' fees payable (Note 2).................................. 2,006
Accrued expenses and other liabilities............................ 43,832
----------
TOTAL LIABILITIES.............................................. 287,326
----------
NET ASSETS:
Capital stock (par value, $0.001 per share)....................... 406
Capital surplus................................................... 4,200,892
Net unrealized appreciation (depreciation) on:
Investments....................................................... (94,543)
Forward currency contracts........................................ 20,624
Foreign currency related transactions............................. (1,230)
Undistributed net realized gains on investments................... 71,284
Undistributed net investment income............................... 69,759
----------
NET ASSETS (Note 1)............................................ $4,267,192
==========
NET ASSET VALUE PER SHARE (NAV) (based on 405,834 shares
outstanding; 1,000,000,000 shares authorized)
(Note 5) ......................................................... $ 10.51
==========
MAXIMUM OFFERING PRICE PER SHARE................................... $ 10.51
==========
</TABLE>
- --------
See Notes to Financial Statements.
6
<PAGE>
SoGen Overseas Variable Fund
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest (net of $155 foreign taxes withheld)....................... $ 20,486
Dividends (net of $3,225 foreign taxes withheld).................... 29,891
--------
Total income from operations....................................... 50,377
--------
Expenses:
Investment advisory fees (Note 2)................................... 9,945
Amortization of deferred organization costs (Note 1)................ 8,645
Custodian fees...................................................... 5,095
Audit fees.......................................................... 3,684
Distribution fees (Note 3).......................................... 3,315
Directors' fees (Note 2)............................................ 15,445
Printing............................................................ 1,983
Registration and filing fees........................................ 495
Insurance........................................................... 340
Legal fees.......................................................... 58
Miscellaneous....................................................... 5,999
--------
Total expenses from operations..................................... 55,004
--------
Advisory fees waived (Note 2)....................................... (9,945)
Expense reimbursement (Note 2)...................................... (14,098)
Expense reduction due to earnings credits (Note 1).................. (4,661)
--------
Net expenses from operations....................................... 26,300
--------
Net investment income (Note 1)...................................... 24,077
--------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS
(NOTES 1 AND 6):
Net realized gains from:
Investment transactions............................................. 63,269
Foreign currency related transactions............................... 36,202
--------
99,471
--------
Change in unrealized appreciation (depreciation) of:
Investments......................................................... (14,034)
Foreign currency related transactions............................... 6,153
--------
(7,881)
--------
Net gain on investments and foreign currency related transactions... 91,590
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $115,667
========
</TABLE>
- --------
See Notes to Financial Statements.
7
<PAGE>
SoGen Overseas Variable Fund
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS PERIOD FROM
ENDED FEBRUARY 3, 1997 TO
JUNE 30, 1998 DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)................ $ 24,077 $ (1,057)
Net realized gains from investments and
foreign currency related transactions...... 99,471 18,552
Change in unrealized appreciation
(depreciation) of investments and foreign
currency related transactions.............. (7,881) (67,268)
---------- ----------
Net increase (decrease) in assets resulting
from operations............................ 115,667 (49,773)
---------- ----------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from shares sold............... 3,432,348 1,587,377
Cost of shares redeemed..................... (671,360) (247,067)
---------- ----------
Increase in net assets from Fund share
transactions............................... 2,760,988 1,340,310
---------- ----------
Net increase in net assets................. 2,876,655 1,290,537
NET ASSETS (NOTE 1):
Beginning of period......................... 1,390,537 100,000
---------- ----------
End of period (including undistributed net
investment income of $69,759 and $9,480,
respectively.)............................. $4,267,192 $1,390,537
========== ==========
</TABLE>
- --------
See Notes to Financial Statements.
8
<PAGE>
SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
SoGen Variable Funds, Inc. (the "Company") is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Company consists of one portfolio, SoGen Overseas
Variable Fund (the "Fund"). The following is a summary of significant
accounting policies adhered to by the Fund.
A) SECURITY VALUATION--Portfolio securities held in the Fund are valued based
on market quotations where available. Short-term investments maturing in sixty
days or less are valued at cost plus interest earned, which approximates value.
Securities for which current market quotations are not readily available and
any restricted securities are valued at fair value as determined in good faith
by the Board of Directors.
B) DEFERRED ORGANIZATION COSTS AND EXPENSES PAYABLE TO SGAM CORP.--Costs
incurred in connection with the organization of the Fund have been paid
initially by Societe Generale Asset Management Corp. ("SGAM Corp."), investment
adviser to the Fund. These costs are amortized on a straight-line basis over a
sixty-month period from the date the Fund commenced investment operations.
Other expenses incurred by the Fund have been initially paid by SGAM Corp. and
remain payable by the Fund to SGAM Corp. at June 30, 1998.
C) SECURITY TRANSACTIONS AND INCOME--Security transactions are accounted for
on a trade date basis. The specific identification method is used in
determining realized gains and losses from security transactions. Dividend
income is recorded on the ex-dividend date. Interest income is recorded daily
on the accrual basis. In computing investment income, the Fund amortizes
discounts on debt obligations; however, premiums are not amortized.
D) EXPENSES--Earnings credits reduce custodian fees by the amount of interest
earned on uninvested cash balances with such service provider.
E) FOREIGN CURRENCY TRANSLATION--The market values of securities which are
not traded in U.S. currency are recorded in the financial statements after
translation to U.S. dollars based on the applicable exchange rates at the end
of the period. The costs of such securities are translated at exchange rates
prevailing when acquired. Related dividends, interest and withholding taxes are
accrued at the rates of exchange prevailing on the respective dates of such
transactions.
The net assets of the Fund are presented at the foreign exchange rates and
market values at the close of the period. The Fund does not isolate that
portion of gains and losses on investments which is due to changes in foreign
exchange rates from that which is due to changes in market prices of the equity
securities. However, for federal income tax purposes the Fund does isolate the
effect of changes in foreign exchange rates from the changes in market prices
for realized gains and losses on debt obligations.
F) FORWARD CURRENCY CONTRACTS--In connection with portfolio purchases and
sales of securities denominated in foreign currencies, the Fund may enter into
forward currency contracts. Additionally, the Fund may enter into such
contracts to hedge certain other foreign currency denominated investments.
These contracts are valued at current market, and the related realized and
unrealized foreign exchange gains and losses are included in the statement of
operations. In the event that counterparties fail to settle these currency
contracts or the related foreign security trades, the Fund could be exposed to
foreign currency fluctuations.
9
<PAGE>
SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS (continued)
G) U.S. INCOME TAXES--No provision has been made for U.S. federal income
taxes since it is the intention of the Fund to distribute to shareholders all
taxable net investment income and net realized gains on investments, if any,
within the allowable time limit, and to comply with the provisions of the
Internal Revenue Code for a regulated investment company. Such income dividends
and capital gains distributions are declared and paid by the Fund on an annual
basis.
H) RECLASSIFICATION OF CAPITAL ACCOUNTS--On the statements of assets and
liabilities, as a result of certain differences in the computation of net
investment income and net realized capital gains under federal income tax rules
and regulations versus generally accepted accounting principles, a
reclassification has been made to increase undistributed net investment income
and decrease undistributed net realized gains on investments in the amount of
$36,202.
I) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2--INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PERSONS
Under the terms of an investment advisory agreement dated August 16, 1996,
the Fund pays SGAM Corp. a monthly advisory fee at an annual rate of 0.75% of
the average daily net assets of the Fund. In return, SGAM Corp. provides the
Fund with advisory services and pays certain Fund expenses, including salaries
and office costs. For the six months ended June 30, 1998 the Fund's investment
advisory fees of $9,945 were waived in their entirety by SGAM Corp.
For the six months ended June 30, 1998 Societe Generale or its affiliates
received $628 in broker's commissions for portfolio transactions executed on
behalf of the Fund.
Each director who is not an officer of the Company or an employee of SGAM
Corp., SG Cowen Securities Corporation ("SGCS") or its corporate affiliates is
paid an annual fee of $6,000 plus $1,000 for each meeting attended. For the six
months ended June 30, 1998 such fees amounted to $15,445.
NOTE 3--DISTRIBUTION PLAN AND AGREEMENT
The Company has entered into a Distribution Plan and Agreement (the "Plan")
with SGCS, pursuant to the provisions of Rule 12b-1 under the Investment
Company Act of 1940, whereby the Fund may pay quarterly, a distribution related
fee to SGCS at an annual rate of up to 0.25% of the Fund's average daily net
assets. The Plan provides that SGCS will use amounts payable by the Fund under
the Plan, in their entirety for payments to insurance companies which are the
issuers of variable contracts invested in shares of the Fund, in order to pay
or reimburse such insurance companies for distribution and shareholder
servicing-related expenses incurred or paid by such insurance companies. For
the six months ended June 30, 1998 the distribution fees paid or payable to
SGCS by the Fund were $3,315.
NOTE 4--PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1998 the aggregate cost of purchases of
investments and proceeds from sales of investments, excluding short-term
securities, totaled $2,025,767 and $210,545, respectively.
10
<PAGE>
SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5--CAPITAL STOCK
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS PERIOD FROM
ENDED FEBRUARY 3, 1997 TO
JUNE 30, 1998 DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
Shares sold................................ 327,979 156,221
Shares redeemed............................ (64,524) (23,843)
------- -------
Net increase............................... 263,455 132,378
======= =======
</TABLE>
NOTE 6--COMMITMENTS
As of June 30, 1998 the Fund had entered into forward currency contracts, as
summarized below, resulting in net unrealized appreciation of $20,624.
TRANSACTION HEDGES:
Foreign Currency Purchases
<TABLE>
<CAPTION>
SETTLEMENT UNREALIZED UNREALIZED
DATES FOREIGN CURRENCY U.S. $ VALUE AT U.S. $ TO BE APPRECIATION AT DEPRECIATION AT
THROUGH TO BE RECEIVED JUNE 30, 1998 DELIVERED JUNE 30, 1998 JUNE 30, 1998
- ---------- ----------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
7/02/98 17,060 Australian Dollar $ 10,560 $ 10,330 $ 230 --
7/01/98 4,394 Swiss Franc 2,892 2,877 15 --
7/03/98 25,010 Deutsche Mark 13,833 13,879 -- $ (46)
7/31/98 70,210 French Franc 11,584 11,636 -- (52)
7/07/98 11,601 Pound Sterling 19,343 19,342 1 --
7/03/98 9,193,545 Japanese Yen 66,067 65,657 410 --
7/01/98 17,363 New Zealand Dollar 8,987 8,991 -- (4)
7/01/98 8,406 Singapore Dollar 4,978 5,094 -- (116)
---------- ---------- ------- -------
138,244 137,806 656 (218)
---------- ---------- ------- -------
PORTFOLIO HEDGES:
<CAPTION>
SETTLEMENT UNREALIZED UNREALIZED
DATES FOREIGN CURRENCY U.S. $ TO BE U.S. $ VALUE AT APPRECIATION AT DEPRECIATION AT
THROUGH TO BE DELIVERED RECEIVED JUNE 30, 1998 JUNE 30, 1998 JUNE 30, 1998
- ---------- ---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
12/21/98 182,000 Australian Dollar 108,995 112,403 -- (3,408)
12/23/98 160,000 Swiss Franc 110,110 106,542 3,568 --
12/17/98 370,000 Deutsche Mark 206,119 205,840 279 --
12/14/98 1,194,000 French Franc 200,005 198,499 1,506 --
10/01/98 12,000 Pound Sterling 19,750 20,110 -- (360)
12/24/98 59,187,000 Japanese Yen 449,874 432,745 17,129 --
10/06/98 132,500 New Zealand Dollar 70,471 68,999 1,472 --
---------- ---------- ------- -------
1,165,324 1,145,138 23,954 (3,768)
---------- ---------- ------- -------
$1,303,568 $1,282,944 $24,610 $(3,986)
========== ========== ======= =======
</TABLE>
11
<PAGE>
SoGen Overseas Variable Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM
JUNE 30, 1998 FEBRUARY 3, 1997 TO
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period........ $ 9.77 $ 10.00
------- -------
Income from investment operations:
Net investment income (loss)............... 0.11 (0.01)
Net realized and unrealized gains (losses)
on investments............................ 0.63 (0.22)
------- -------
Total from investment operations.......... 0.74 (0.23)
------- -------
Net asset value, end of period.............. $ 10.51 $ 9.77
======= =======
TOTAL RETURN................................ 15.14%* (2.30)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's)........... $ 4,267 $ 1,391
Ratio of operating expenses to average net
assets..................................... 2.00%*+ 2.00%*+
Ratio of net investment income to average
net assets................................. 1.83%*++ (0.14)%*++
Portfolio turnover rate..................... 9.13% 8.88%
Average commission rate paid/o/............. $0.0114 $0.0098
</TABLE>
- --------
* Annualized.
+ The ratio of operating expenses to average net assets for the six months
ended June 30, 1998 and the period from February 3, 1997 to December 31,
1997 would have been 4.18% and 16.07%, respectively, without the effect of
earnings credits, and the investment advisory fee waiver and expense
reimbursement provided by SGAM Corp.
++ The ratio of net investment income to average net assets for the six months
ended June 30, 1998 and the period from February 3, 1997 to December 31,
1997 would have been (0.35%) and (14.20%), respectively, without the effect
of the earnings credits, and the investment advisory fee waiver and expense
reimbursement provided by SGAM Corp.
/o/ Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions
expressed as a percentage of transactions may be higher.
- --------
See Notes to Financial Statements.
12
<PAGE>
SoGen Overseas Variable Fund
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
DIRECTORS AND OFFICERS
DIRECTORS Dominique Raillard
Philippe Collas Nathan Snyder
Jean-Marie Eveillard
Fred J. Meyer
OFFICERS
Philippe Collas...........................................Chairman of the Board
Jean-Marie Eveillard..................................................President
Philip J. Bafundo.......................Vice President, Secretary and Treasurer
Ignatius Chithelen...............................................Vice President
Sean J. McKeown..................................................Vice President
Edwin S. Olsen...................................................Vice President
Catherine A. Shaffer.............................................Vice President
Elizabeth Tobin..................................................Vice President
Charles de Vaulx.................................................Vice President
Lynn L. Chin...................Assistant Vice President and Assistant Treasurer
Richard M. Boyer.......................................Assistant Vice President
John L. DeVita.........................................Assistant Vice President
Carol Moreno................................................Assistant Secretary
Warren Chan.................................................Assistant Treasurer
INVESTMENT ADVISER UNDERWRITER
Societe Generale Asset Management Corp. SG Cowen Securities Corporation
1221 Avenue of the Americas 1221 Avenue of the Americas
New York, NY 10020 New York, NY 10020
LEGAL COUNSEL INDEPENDENT AUDITORS
Dechert Price & Rhoads KPMG Peat Marwick LLP
30 Rockefeller Plaza 345 Park Avenue
New York, NY 10112 New York, NY 10154
DOMESTIC CUSTODIAN GLOBAL CUSTODIAN
Investors Fiduciary Trust Company The Chase Manhattan Bank, N.A.
801 Pennsylvania 4 Chase MetroTech Center
Kansas City, MO 64105 Brooklyn, NY 11245
SHAREHOLDER SERVICING AGENT
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, MO 64105
The financial information included herein is taken from the records of the
Fund without examination by the Fund's independent auditors, who do not
express an opinion thereon. This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a currently effective
prospectus of SoGen Variable Funds, Inc.
