<PAGE>
SOGEN OVERSEAS VARIABLE FUND
-------------------------
LOGO
-------------------------
Annual Report
December 31, 1997
<PAGE>
SoGen Overseas Variable Fund
THE PRESIDENT'S LETTER
Dear Shareholder:
From February 3, 1997 (commencement of operations) through December 31, 1997,
the net asset value of your Fund declined 2.30%.
As of December 31, 1997 your Fund's net assets, on an economic basis, were
invested as follows:
<TABLE>
<S> <C>
Foreign stocks(/1/) 70.0%
U.S. dollar bonds 2.1
Foreign currency bonds 3.7
Cash and equivalents 24.2
-----
100.0%
=====
</TABLE>
- --------
(/1/) Includes convertible bonds with moderate premia.
About 42% of the foreign stock portfolio was invested in developed countries
in continental Europe and 25% in Japan. Other relatively large investments were
in Latin America (7%), New Zealand (7%), Hong Kong (5%) and Canada (5%).
The year 1997 was disappointing: smaller foreign stocks did poorly in
general, both in absolute terms and by comparison with large stocks. Although
the Fund owns a few sizable companies, such as Canadian Pacific and Fuji Photo,
our permanent focus tends to be on smaller securities.
The cash position will be reduced if and as we find specific securities that
appear to provide long-term value.
Sincerely yours,
/s/Jean-Marie Eveillard
Jean-Marie Eveillard
President
January 30, 1998
<PAGE>
SoGen Overseas Variable Fund
INVESTMENT RESULTS
Comparisons of Change in Value of a $10,000 Investment
in SoGen Overseas Variable Fund and Various Indices
---------------------------------------------------
LINE GRAPH
SoGen Overseas Variable Fund MSCI EAFE Index Consumer Price Index
Jan 31, 97 10000 10000 10000
Feb 28, 97 9990 10164 10025
Mar 31, 97 10010 10200 10031
Apr 30, 97 9950 10255 10038
May 31, 97 10410 10922 10044
Jun 30, 97 10760 11524 10056
Jul 31, 97 10790 11711 10075
Aug 31, 97 10440 10836 10094
Sep 30, 97 10590 11443 10119
Oct 31, 97 10050 10564 10138
Nov 30, 97 9880 10456 10151
Dec 31, 97 9770 10547 10157
Rate of return from February 3, 1997 (commencement of operations) through
December 31, 1997: (2.30%)
Performance is historical and is not indicative of future results. The MSCI
EAFE Index return assumes reinvestment of dividends. Unlike Fund returns, the
indices do not reflect any fees or expenses.
2
<PAGE>
SoGen Overseas Variable Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
From commencement of operations on February 3, 1997 through December 31,
1997, the Fund generated disappointing returns in a year characterized by major
financial and economic turmoil in Asia and highly volatile world markets.
European holdings rose along with local markets; however, the portfolio is
overweighed in smaller capitalization stocks which lagged major indices. In
Asia, stocks fell sharply in the wake of the severe crisis that developed in
Southeast Asia over the summer. Japanese equities were poor performers,
particularly in the case of smaller capitalization stocks. Although sharp price
declines occurred in the Southeast Asian markets, the Fund's direct exposure to
such markets was limited. Despite partial foreign exchange hedges, the stronger
dollar further compounded the negative impact of lower stock prices on the
Fund's net assets. Finally, holdings in other emerging markets were negatively
affected by the consequences of the crisis. Throughout the period, the
portfolio maintained a defensive posture with net large cash holdings and
assets diversified across many different countries.
SUMMARY OF FUND DATA
The table below covers the period from February 3, 1997 (commencement of
operations) to December 31, 1997.
<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> <C>
February 3, 1997 10,000 $ 100,000 $10.00 -- -- $10.00
(commencement of
operations)
December 31, 1997 142,378 $1,390,537 $ 9.77 -- -- $ 9.77
</TABLE>
- ----------------
* The calculation is based on an assumed investment in one share.
3
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER COST VALUE
OF SHARES (NOTE 1) (NOTE 1)
--------- -------- --------
<C> <S> <C> <C>
COMMON AND PREFERRED STOCKS
UNITED KINGDOM (4.82%)
6,000 Royal Doulton plc (8)....................... $ 23,489 $ 21,158
12,000 Lonrho plc (15)............................. 25,867 18,433
3,000 Antofagasta Holdings plc (15)............... 19,761 16,352
1,000 Scottish Media Group plc (11)............... 11,625 11,066
---------- ----------
80,742 67,009
---------- ----------
GERMANY (5.26%)
65 Buderus AG (5).............................. 30,277 29,167
150 Bertlesmann AG D.R.C. (11).................. 17,626 17,849
200 Hornbach Holding AG Pfd. (9)................ 13,872 13,790
25 Suedzucker AG Pfd. (8)...................... 12,520 12,302
---------- ----------
74,295 73,108
---------- ----------
FRANCE (9.03%)
20 Societe Immobiliere Marseillaise (14)....... 28,570 25,929
100 Europe 1 Communication (11)................. 21,470 21,923
50 Compagnie Generale d'Industrie et de
Participations ("C.G.I.P") (14)............ 14,015 17,951
125 Legrand ADP (5)............................. 14,633 15,769
50 Taittinger C.I. (8)......................... 12,294 14,951
250 Emin Leydier (2)............................ 17,103 14,751
65 Sagem ADP (7)............................... 17,813 14,261
---------- ----------
125,898 125,535
---------- ----------
BELGIUM (1.41%)
100 Deceuninck Plastics Industries SA (4)....... 19,368 19,652
---------- ----------
AUSTRIA (1.58%)
250 VAE AG (6).................................. 24,785 21,969
---------- ----------
SWITZERLAND (5.58%)
35 Kuhne & Nagel International AG Bearer (6)... 19,714 22,575
70 Sika Finanz AG Bearer (4)................... 17,603 22,216
50 Societe Generale d'Affichage D.R.C. (11).... 19,463 18,297
50 Edipresse SA Bearer (11).................... 11,082 14,501
---------- ----------
67,862 77,589
---------- ----------
NETHERLANDS (2.73%)
500 Apothekers Cooperatie OPG U.A. (10)......... 15,825 14,927
700 Holdingmaatschappij de Telegraaf NV (11).... 14,758 13,195
728 European City Estates (13).................. 9,882 9,879
---------- ----------
40,465 38,001
---------- ----------
SWEDEN (1.18%)
700 Tidnings AB Marieberg (11).................. 19,160 16,410
---------- ----------
ITALY (1.47%)
3,000 Industrias Macchine Automatiche SpA (5)..... 11,060 12,634
1,000 Arnoldo Mondadori Editore SpA (11).......... 5,969 7,857
---------- ----------
17,029 20,491
---------- ----------
HONG KONG (3.50%)
111,618 CDL Hotels International Limited (13)....... 44,317 33,857
20,000 Shaw Brothers (Hong Kong) Limited (11)...... 19,516 14,844
---------- ----------
63,833 48,701
---------- ----------
</TABLE>
4
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER COST VALUE
OF SHARES (NOTE 1) (NOTE 1)
--------- -------- --------
<C> <S> <C> <C>
COMMON AND PREFERRED STOCKS (continued)
JAPAN (17.21%)
700 Fuji Photo Film Co., Ltd. (8)............... $ 23,750 $ 26,731
5,000 The Nichido Fire & Marine Insurance Co.,
Ltd. (12).................................. 26,418 26,071
1,000 T. Hasegawa Co., Ltd. (8)................... 19,801 22,850
200 Toho Co., Ltd. (11)......................... 22,600 21,317
6,000 The Dai-Tokyo Fire & Marine Insurance Co.,
Ltd. (12).................................. 25,422 20,611
1,000 Shimano Inc. (8)............................ 16,647 18,403
5,000 Aida Engineering, Ltd. (5).................. 27,858 16,524
3,000 Yomeishu Seizo Co., Ltd. (8)................ 15,077 15,527
1,000 Shiseido Company, Ltd. (8).................. 11,476 13,649
3,000 Nisshinbo Industries, Inc. (8).............. 18,093 12,652
2,000 Sotoh Co., Ltd. (8)......................... 16,967 11,732
1,000 Makita Corp. (8)............................ 7,923 9,585
3,000 The Tokio Marine & Fire Insurance Co., Ltd.
(12)....................................... 8,471 8,948
5,000 Iino Kaiun Kaisha, Ltd. (a)(6).............. 12,351 7,399
1,000 Shoei Co., Ltd. (14)........................ 10,258 7,277
---------- ----------
263,112 239,276
---------- ----------
SINGAPORE (1.49%)
7,000 Times Publishing Ltd. (11).................. 15,080 12,190
7,000 Delgro Co., Ltd. (11)....................... 11,774 8,571
---------- ----------
26,854 20,761
---------- ----------
INDONESIA (0.78%)
70,000 PT Rigs Tenders (17)........................ 7,144 10,818
---------- ----------
AUSTRALIA AND NEW ZEALAND (5.01%)
5,000 Independent Press Communications Limited 5%
exchangeable preference shares due
11/30/2003 (11)............................ 27,684 23,220
15,000 Carter Holt Harvey Limited (2).............. 31,413 23,162
25,000 Shortland Properties Limited (13)........... 13,898 12,771
20,000 Tasman Agriculture Limited (3).............. 10,358 10,565
---------- ----------
83,353 69,718
---------- ----------
CANADA (2.53%)
500 Canadian Pacific Limited (15)............... 13,155 13,625
700 Noranda, Inc. (15).......................... 16,989 12,050
200 Canadian National Railway Company (6)....... 7,563 9,450
---------- ----------
37,707 35,125
---------- ----------
MEXICO (2.24%)
7,000 Industrias Penoles S.A. de C.V. (1)......... 31,026 31,171
---------- ----------
PANAMA (1.49%)
500 Banco Latinoamericano de Exportaciones S.A.
(12)....................................... 23,893 20,688
---------- ----------
TOTAL COMMON AND PREFERRED STOCKS........... 1,006,526 936,022
---------- ----------
</TABLE>
5
<PAGE>
SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL COST VALUE
AMOUNT (NOTE 1) (NOTE 1)
---------- -------- --------
<C> <S> <C> <C>
BONDS, NOTES AND CONVERTIBLE BONDS
U.S. DOLLAR CONVERTIBLE BONDS (3.20%)
$ 15,000 International Container Terminal
Services, Inc. 1 3/4% due 3/13/2004
(6).................................... $ 13,298 $ 11,138
15,000 Scandinavian Broadcasting Systems SA 7
1/4% due 8/01/2005 (11)................ 15,500 15,075
20,000 P.T Inti Indorayon Utma 7% due 5/02/2006
(2).................................... 13,835 11,200
10,000 Samsung Electronics Co. Ltd. 0% due
12/31/2007 (a)(b)(10).................. 8,571 7,038
---------- ----------
51,204 44,451
---------- ----------
NON U.S. DOLLAR CONVERTIBLE BONDS
(4.49%)
CAD 15,000 InterTAN, Inc. 9% due 8/30/2000 (9)..... 10,931 11,336
NZD 25,000 Trans Power Finance Limited 8% due
3/15/2002 (16)......................... 16,416 14,509
AUD 50,000 Queensland Treasury Corporation 8% due
9/14/2007 (18)......................... 38,289 36,539
---------- ----------
65,636 62,384
---------- ----------
TOTAL BONDS, NOTES AND CONVERTIBLE
BONDS.................................. 116,840 106,835
---------- ----------
TOTAL INVESTMENTS (75.00%) ............. $1,123,366* 1,042,857**
==========
Other assets in excess of liabilities
(25.00%)............................... 347,680
----------
Net assets (100.00%).................... $1,390,537
==========
</TABLE>
- --------
(a) Non-income producing security.
(b) Can be sold only to qualified institutional buyers.
* At December 31, 1997 cost is identical for both book and federal income tax
purposes.
** Gross unrealized appreciation and depreciation of securities at December 31,
1997 were $42,380 and $122,889, respectively. (Net depreciation was
$80,509.)
<TABLE>
<CAPTION>
FOREIGN CURRENCIES INDUSTRY CLASSIFICATIONS
- ------------------ ------------------------
<S> <C> <C>
CAD--Canadian Dollar (1) Metals and Minerals (10) Health Care
NZD--New Zealand Dollar (2) Paper and Forest Products (11) Media
AUD--Australian Dollar (3) Agriculture (12) Financial Services
(4) Building Materials (13) Real Estate
(5) Capital Goods (14) Holding Companies
(6) Transportation (15) Conglomerates
(7) Electronics (16) Utilities
(8) Consumer Products (17) Energy
(9) Distribution (18) Government Issues
</TABLE>
- --------
See Notes to Financial Statements.
6
<PAGE>
SoGen Overseas Variable Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
ASSETS:
<S> <C>
Investments, at value (Note 1):
Common and preferred stock (identified cost, $1,006,526).......... $ 936,022
Convertible bonds (identified cost, $116,840)..................... 106,835
Cash.............................................................. 318,478
Deferred organization costs (Note 1).............................. 71,747
Receivable for forward currency contracts held, at value (Notes 1
and 6)........................................................... 16,013
Receivable for Fund shares sold................................... 15,258
Receivable for investment securities sold......................... 9,031
Accrued interest and dividends receivable......................... 4,973
Prepaid expenses (Note 1)......................................... 1,536
----------
TOTAL ASSETS................................................... 1,479,893
----------
LIABILITIES:
Organization and offering costs payable (Note 1).................. 77,212
Payable for forward currency contracts held, at value (Notes 1 and
6)............................................................... 2,500
Payable for Fund shares redeemed.................................. 942
Distribution fees payable (Note 3)................................ 1,914
Directors' fees payable (Note 2).................................. 1,862
Accrued expenses and other liabilities............................ 4,926
----------
TOTAL LIABILITIES.............................................. 89,356
----------
NET ASSETS:
Capital stock (par value, $0.001 per share)....................... 142
Capital surplus................................................... 1,440,168
Net unrealized appreciation (depreciation) on:
Investments....................................................... (80,509)
Forward currency contracts........................................ 13,513
Foreign currency related transactions............................. (272)
Undistributed net realized gains on investments................... 8,015
Undistributed net investment income............................... 9,480
----------
NET ASSETS (Note 1)............................................ $1,390,537
==========
NET ASSET VALUE PER SHARE (NAV) (based on 142,378 shares
outstanding; 1,000,000,000 shares authorized) (Note 5)............ $ 9.77
==========
MAXIMUM OFFERING PRICE PER SHARE................................... $ 9.77
==========
</TABLE>
- --------
See Notes to Financial Statements.
7
<PAGE>
SoGen Overseas Variable Fund
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 3, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest (net of $22 foreign taxes withheld)........................ $ 2,025
Dividends (net of $1,335 foreign taxes withheld).................... 12,350
--------
Total income from operations....................................... 14,375
--------
Expenses:
Investment advisory fees (Note 2)................................... 5,742
Directors' fees (Note 2)............................................ 46,000
Printing............................................................ 17,027
Amortization of deferred organization costs (Note 1)................ 16,106
Audit fees.......................................................... 10,000
Custodian fees...................................................... 9,481
Legal fees.......................................................... 6,189
Distribution fees (Note 3).......................................... 1,914
Insurance........................................................... 897
Miscellaneous....................................................... 10,553
--------
Total expenses from operations before waivers, reimbursements and
earnings credits.................................................. 123,909
--------
Advisory fees waived (Note 2)....................................... (5,742)
Expense reimbursement (Note 2)...................................... (95,654)
Expense reduction due to earnings credits (Note 1).................. (7,081)
--------
Net expenses from operations....................................... 15,432
--------
Net investment loss (Note 1)........................................ (1,057)
--------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS
(NOTES 1 AND 6):
Net realized gains from:
Investment transactions............................................. 8,015
Foreign currency related transactions............................... 10,537
--------
18,552
--------
Change in unrealized appreciation (depreciation) of:
Investments......................................................... (80,509)
Foreign currency related transactions............................... 13,241
--------
(67,268)
--------
Net loss on investments and foreign currency related transactions... (48,716)
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $(49,773)
========
</TABLE>
- --------
See Notes to Financial Statements.
8
<PAGE>
SoGen Overseas Variable Fund
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 3, 1997 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss............................................... $ (1,057)
Net realized gain from investments and foreign currency related
transactions..................................................... 18,552
Unrealized depreciation of investments and foreign currency
related transactions............................................. (67,268)
----------
Net decrease in assets resulting from operations.................. (49,773)
----------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from shares sold..................................... 1,587,377
Cost of shares redeemed........................................... (247,067)
----------
Increase in net assets from Fund share transactions............... 1,340,310
----------
Net increase in net assets....................................... 1,290,537
NET ASSETS (NOTE 1):
Beginning of period............................................... 100,000
----------
End of period (including undistributed net investment income of
$9,480).......................................................... $1,390,537
==========
</TABLE>
- --------
See Notes to Financial Statements.
9
<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 was incorporated under Maryland law on September
1, 1995 and currently consists of one portfolio, SoGen Overseas Variable Fund
(the "Fund"), which commenced operations on February 3, 1997. 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 PREPAID EXPENSES--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
associated with the formation of the Fund have been paid initially by SGAM
Corp. Such prepaid expenses are amortized over the period of benefit, not to
exceed twelve months from the date the Fund commences operations.
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 year. 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 its foreign currency denominated investments. These
contracts are carried at current market value, 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.
10
<PAGE>
SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES (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 statement 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
$10,537.
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 period from February 3, 1997 to December 31, 1997,
the Fund's investment advisory fee of $5,742 was waived in its entirety by SGAM
Corp. In addition, SGAM Corp. voluntarily reimbursed the Fund for expenses in
the amount of $95,654.
For the period from February 3, 1997 to December 31, 1997, Societe Generale
or its affiliates received $329 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., Societe Generale Securities Corp. ("SGSC") or its corporate affiliates
is paid an annual fee of $6,000 plus $1,000 for each meeting attended. For the
period from February 3, 1997 to December 31, 1997 such fees amounted to
$46,000.
NOTE 3--DISTRIBUTION PLAN AND AGREEMENT
The Company has entered into a Distribution Plan and Agreement (the "Plan")
with SGSC, 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 SGSC at an annual rate of up to 0.25% of the Fund's average daily net
assets. The Plan provides that SGSC 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 period from February 3, 1997 to December 31, 1997, the distribution fees
paid or payable to SGSC by the Fund were $1,914.
NOTE 4--PURCHASES AND SALES OF SECURITIES
During the period from February 3, 1997 to December 31, 1997, the aggregate
cost of purchases of investments and proceeds from sales of investments,
excluding short-term securities, totaled $1,173,462 and $58,078, respectively.
11
<PAGE>
SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5--CAPITAL STOCK
Transactions in shares of capital stock for the period from February 3, 1997
to December 31, 1997 were as follows:
<TABLE>
<S> <C>
Shares sold.................................. 156,221
Shares redeemed.............................. (23,843)
-------
Net increase................................. 132,378
=======
</TABLE>
NOTE 6--COMMITMENTS
As of December 31, 1997, the Fund had entered into forward currency
contracts, as summarized below, resulting in net unrealized appreciation of
$13,513.
TRANSACTION HEDGES:
Foreign Currency Sales
<TABLE>
<CAPTION>
SETTLEMENT UNREALIZED UNREALIZED
DATES FOREIGN CURRENCY U.S. $ TO BE U.S. $ VALUE AT APPRECIATION AT DEPRECIATION AT
THROUGH TO BE DELIVERED RECEIVED DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
- ---------- ---------------- ------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
1/05/98 16,051,244 Italian Lira $ 9,192 $ 9,074 $ 118 --
-------- -------- ------- -------
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 DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
- ---------- ---------------- ------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
6/11/98 49,000 Australian Dollar 33,694 31,816 1,878 --
6/10/98 71,000 Swiss Franc 49,423 49,347 76 --
6/17/98 78,000 Deutsche Mark 45,049 43,624 1,425 --
6/03/98 462,000 French Franc 74,893 77,393 -- $(2,500)
6/24/98 17,561,000 Japanese Yen 158,462 149,268 9,194 --
4/03/98 74,500 New Zealand Dollar 46,860 43,538 3,322 --
-------- -------- ------- -------
408,381 394,986 15,895 (2,500)
-------- -------- ------- -------
$417,573 $404,060 $16,013 $(2,500)
======== ======== ======= =======
</TABLE>
12
<PAGE>
SoGen Overseas Variable Fund
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FEBRUARY 3, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1997
<TABLE>
<S> <C>
SELECTED PER SHARE DATA
Net asset value, February 3, 1997.................................. $ 10.00
-------
Income from investment operations:
Net investment income............................................. (0.01)
Net realized and unrealized losses on investments................. (0.22)
-------
Total loss from investment operations............................ (0.23)
-------
Net asset value, December 31, 1997................................. $ 9.77
=======
TOTAL RETURN++..................................................... (2.30)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's).................................. $1,391
Ratio of operating expenses to average net assets.................. 2.00%*+
Ratio of net investment income to average net assets............... (0.14)%*+
Portfolio turnover rate............................................ 8.88%
Average commission rate paid@...................................... $0.0098
</TABLE>
- --------
++ Total return for the period ended December 31, 1997 is not annualized.
* Annualized.
+ The annualized ratios of operating expenses to average net assets and net
investment income to average net assets for the period ended December 31,
1997 would have been 16.07% and (14.20%), respectively, without the effect
of the earnings credits, and the investment advisory fee waiver and expense
reimbursement provided by SGAM Corp.
@ 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.
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
SoGen Variable Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of SoGen Overseas Variable Fund, a
portfolio of SoGen Variable Funds, Inc., as of December 31, 1997, and the
related statement of operations, statement of changes in net assets and
financial highlights for the period February 3, 1997 (commencement of
operations) to December 31, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1997,
by correspondence with custodians. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of SoGen
Overseas Variable Fund, a portfolio of SoGen Variable Funds, Inc., as of
December 31, 1997, and the results of its operations, the changes in its net
assets and the financial highlights for the period February 3, 1997
(commencement of operations) to December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
February 13, 1998
14
<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. Societe Generale Securities
1221 Avenue of the Americas Corporation
New York, NY 10020 1221 Avenue of the Americas
New York, NY 10020
LEGAL COUNSEL
INDEPENDENT AUDITORS
Dechert Price & Rhoads
30 Rockefeller Plaza KPMG Peat Marwick LLP
New York, NY 10112 345 Park Avenue
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
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective prospectus of SoGen Variable
Funds, Inc.
