<PAGE>
First Eagle SoGen
Overseas Variable Fund
[GRAPHIC]
Annual Report
December 31, 1999
<PAGE>
First Eagle SoGen Overseas Variable Fund
THE PRESIDENT'S LETTER
Dear Shareholder:
From February 3, 1997 (commencement of operations) through December 31, 1999,
the value of an investment in your Fund increased at a compounded average
annual rate of 13.56%. Over the past twelve months, the rate was 42.15%.*
As of December 31, 1999 your Fund's net assets, on an economic basis, were
invested as follows:
<TABLE>
<S> <C>
Foreign stocks (/1/) 94.5%
U.S. dollar bonds 1.5
Foreign currency bonds 0.8
U.S. dollar cash and equivalents 3.2
-----
100.0%
=====
</TABLE>
- --------
(/1/Includes)convertible bonds with moderate premia.
About 43% of the foreign stock portfolio were invested in developed countries
of Continental Europe and 20% in Japan. Other relatively large investments were
in the United Kingdom (7%), Hong Kong (6%) and New Zealand (5%).
Even though most institutional investors continue to focus on "big growth"
stocks, some of our "small value" stocks have done well, such as Sagem ADP in
France and Shaw Brothers Limited in Hong Kong. Yet, quite a few of our holdings
remain vastly undervalued, in our opinion. For example, Buderus AG, a highly
profitable boiler manufacturer in Germany, sells at a discount of close to 40%
to what we believe is its fair value. Not surprisingly, the company has been
buying back its stock.
Sincerely yours,
/s/ Jean-Marie Eveillard
Jean-Marie Eveillard
Co-President
January 26, 2000
- --------
*These figures assume the immediate reinvestment of all dividends and
distributions.
<PAGE>
First Eagle SoGen Overseas Variable Fund
INVESTMENT RESULTS
Comparisons of Change in Value of a $10,000 Investment
in First Eagle SoGen Overseas Variable Fund and Various Indices
Average Annual Rates of Return as of December 31, 1999
Since Commencement
of Operations
(2/3/97) 1 Year
------------ -----------
13.56% 42.15%
------------------------------------------------------------
First Eagle SoGe Consumer Price MSCI EAFE Index
------------------------------------------------------------
2/3/97 $10,000 $10,000 $10,000
3/31/97 $10,010 $10,031 $10,200
6/30/97 $10,760 $10,056 $11,524
9/30/97 $10,590 $10,119 $11,443
12/31/97 $9,770 $10,151 $10,547
3/31/98 $10,610 $10,169 $12,098
6/30/98 $10,510 $10,226 $12,227
9/30/98 $9,310 $10,263 $10,489
12/31/98 $10,182 $10,314 $12,656
3/31/99 $10,839 $10,351 $12,832
6/30/99 $12,618 $10,427 $13,158
9/30/99 $13,286 $10,533 $13,736
12/31/99 $14,473 $10,590 $16,069
-------------------------------------------------------------
Performance is historical and is not indicative of future results.The Fund's
results assume reinvestment of income dividends and capital gains distributions.
The MSCI EAFE Index return assumes reinvestment of dividends.Unlike Fund
returns, the indices do not reflect any fees or expenses.
2
<PAGE>
First Eagle SoGen Overseas Variable Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Prospects for global economic growth improved significantly over the past
few months: stock markets worldwide reflected the positive environment and
performed strongly. European markets were also supported by continued
corporate restructuring as well as unprecedented merger and acquisition
activity. Large growth stocks, particularly in the telecommunications and
technology sectors, rose sharply. While the Fund has limited exposure to those
issues since it is mainly invested in "small value" stocks, some of its
individual holdings did well.
In Asia, the Japanese market gained as evidence of economic stabilization
and corporate restructuring surfaced; while the strength of the Japanese Yen
hurt export oriented stocks in the second half of the year, some of the Funds'
smaller holdings performed well. Stocks in Hong Kong, Singapore and South
Korea continued to rise as local economies experienced a surprisingly strong
recovery. In fact, most emerging markets worldwide rebounded sharply from
their lows: even though the Fund has few investments in such markets, the
portfolio benefited from these developments.
On the currency front, the U.S. Dollar declined steeply against the Japanese
Yen but strengthened materially against the Euro. The portfolio remained
partially hedged throughout the period which somewhat mitigated the impact of
abrupt currency movements.
SUMMARY OF FUND DATA
The table below covers the period from February 3, 1997 (commencement of
operations) to December 31, 1999.
<TABLE>
<CAPTION>
Net Asset
Value of
Investment
With
Dividends
Investment And
Number Net Asset Capital Gains Income 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
December 31, 1998............. 418,376 4,212,629 10.07 -- $0.11 10.18
December 31, 1999............. 646,522 9,155,742 14.16 $0.15 -- 14.47
</TABLE>
- --------
* The calculation is based on an assumed investment in one share with income
dividends and capital gains distributions reinvested in additional shares.
(No adjustment has been made for any income taxes payable by shareholders on
such dividends and distributions.)
3
<PAGE>
First Eagle SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number Cost Value
of Shares (Note 1) (Note 1)
--------- -------- --------
<C> <S> <C> <C>
Common and Preferred Stocks
United Kingdom (8.60%)
75,000 IMI plc (5)................................. $ 310,931 $ 342,228
25,000 Antofagasta plc (17)........................ 79,897 175,362
70,000 Royal Doulton plc (a)(9).................... 96,213 137,619
100,000 Aggregate Industries plc (4)................ 107,580 107,604
50,000 Lonrho Africa plc (17)...................... 58,435 25,081
---------- ----------
653,056 787,894
---------- ----------
Sweden (2.39%)
20,000 IRO AB (5).................................. 210,585 218,569
---------- ----------
Denmark (1.03%)
2,500 Carlsberg International A/S "B' (9)......... 114,645 94,700
---------- ----------
Netherlands (8.48%)
20,000 Koninklijke Ahrend NV (9)................... 265,998 281,093
12,000 Holdingmaatschappij de Telegraaf NV (12).... 240,763 265,980
10,500 Apothekers Cooperatie OPG U.A. (11)......... 251,879 229,559
---------- ----------
758,640 776,632
---------- ----------
Belgium (0.86%)
350 Deceuninck Plastics Industries SA (4)....... 84,934 78,671
---------- ----------
Germany (8.82%)
25,000 Buderus AG (5).............................. 397,747 420,631
5,000 Hornbach Holding AG Pfd. (10)............... 228,220 241,800
700 Bertelsmann AG D.R.C. (12).................. 83,569 74,426
5,000 Sudzucker AG Pfd. (9)....................... 78,422 70,273
---------- ----------
787,958 807,130
---------- ----------
France (11.52%)
1,000 Sagem ADP (8)............................... 135,558 372,775
70 Societe Immobiliere Marseillaise (16)....... 113,324 192,110
1,150 Legrand ADP (5)............................. 140,951 163,366
250 Societe Sucriere de Pithiviers-le-Vieil (3). 106,362 86,015
500 Robertet SA (9)............................. 77,460 84,630
1,500 Crometal (5)................................ 77,307 68,006
1,000 Aventis SA (11)............................. 49,745 58,133
476 Didot-Bottin (16)........................... 32,545 29,350
---------- ----------
733,252 1,054,385
---------- ----------
Switzerland (3.67%)
400 Edipresse SA (12)........................... 104,978 221,286
150 Kuehne & Nagel International AG (7)......... 102,325 114,572
---------- ----------
207,303 335,858
---------- ----------
Spain and Portugal (4.65%)
35,000 Energia e Industrias Aragonesas SA (6)...... 192,195 161,855
8,500 Espirito Santo Financial Group SA ADR (14).. 136,662 133,875
10,000 Companhia de Celulose do Caima SA (2)....... 107,987 130,371
---------- ----------
436,844 426,101
---------- ----------
<CAPTION>
Turkey (1.00%)
<C> <S> <C> <C>
55,000 Usas Ucak Servisi A.S. (13) 55,569 91,261
---------- ----------
</TABLE>
4
<PAGE>
First Eagle SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number Cost Value
of Shares (Note 1) (Note 1)
--------- -------- --------
<C> <S> <C> <C>
Common and Preferred Stocks (continued)
Japan (20.05%)
12,000 Shimano Inc. (9)............................ $ 252,078 $ 211,226
50,000 The Dai-Tokyo Fire & Marine Insurance Co.,
Ltd. (14).................................. 177,815 203,892
30,000 Mitsui Marine and Fire Insurance Company,
Limited (14)............................... 200,109 177,782
45,000 Aida Engineering, Ltd. (5).................. 175,838 147,418
35,000 Tachi-S Co., Ltd. (5)....................... 181,756 147,174
7,000 T. Hasegawa Co., Ltd. (9)................... 137,837 136,906
40,000 Okumura Corporation (13).................... 152,050 134,950
3,000 Fuji Photo Film Co., Ltd. ADR (9)........... 100,881 114,750
25,000 Nisshinbo Industries, Inc. (9).............. 105,742 112,947
12,000 Makita Corporation (9)...................... 116,474 107,960
10,000 Shoei Co., Ltd. (16)........................ 60,948 75,201
500 Toho Co., Ltd. (12)......................... 53,535 73,049
10,000 The Nichido Fire & Marine Insurance Co.,
Ltd. (14).................................. 50,162 57,501
12,000 Sotoh Co., Ltd. (9)......................... 74,846 55,975
3,000 Chofu Seisakusho Co., Ltd. (9).............. 44,358 46,352
5,000 Yomeishu Seizo Co., Ltd. (9)................ 27,457 32,760
---------- ----------
1,911,886 1,835,843
---------- ----------
Hong Kong (6.44%)
998,178 CDL Hotels International Limited (15)....... 318,627 398,064
100,000 Shaw Brothers (Hong Kong) Limited (12)...... 45,018 116,421
150,000 Jardine International Motors Holdings
Limited (7)................................ 67,459 75,256
---------- ----------
431,104 589,741
---------- ----------
Singapore and Malaysia (1.02%)
45,000 Clipsal Industries Ltd. (4)................. 29,110 49,715
20,000 Times Publishing Limited (12)............... 26,114 43,470
---------- ----------
55,224 93,185
---------- ----------
Thailand (0.19%)
3,500 The Oriental Hotel Public Company Limited
(15)....................................... 18,321 17,080
---------- ----------
Australia and New Zealand (5.01%)
29,200 Wilson & Horton Limited 5% exchangeable
preference shares (12)..................... 134,380 141,451
115,000 Spotless Services Limited (13).............. 89,325 109,496
70,000 Carter Holt Harvey Limited (2).............. 69,284 91,647
175,000 Tasman Agriculture Limited (3).............. 76,003 73,318
105,000 Capital Properties New Zealand Limited 8.5%
exchangeable preference shares (15)........ 38,968 42,502
---------- ----------
407,960 458,414
---------- ----------
Canada (2.41%)
7,000 Canadian Pacific Limited (17)............... 172,432 150,938
6,000 Fletcher Challenge Limited, Class "A' (2)... 65,704 69,550
---------- ----------
238,136 220,488
---------- ----------
Mexico (2.35%)
75,000 Industrias Penoles, S.A. de C.V. (1)........ 243,865 215,424
---------- ----------
Chile (1.21%)
10,000 Quinenco S.A. ADR (16)...................... 93,333 111,250
---------- ----------
Miscellaneous (4.02%)
10,500 Freeport McMoRan Copper & Gold Inc.,
Preferred Series "B' (b)(18)............... 193,564 207,375
25,000 Harmony Gold Mining Company Ltd. (18)....... 120,606 160,634
---------- ----------
314,170 368,009
---------- ----------
<CAPTION>
Total Common and Preferred Stocks 7,756,785 8,580,635
<C> <S> <C> <C>
---------- ----------
</TABLE>
5
<PAGE>
First Eagle SoGen Overseas Variable Fund
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Cost Value
Amount (Note 1) (Note 1)
--------- -------- --------
<C> <S> <C> <C>
Bonds and Convertible Bonds
U.S. Dollar Convertible Bonds (1.47%)
$125,000 International Container Terminal Services, Inc.
1 3/4% due 3/13/2004 (7)...................... $ 117,406 $ 130,625
20,000 P.T. Inti Indorayon Utama 7% due 5/02/2006
(c)(2)........................................ 14,721 4,000
---------- ----------
132,127 134,625
---------- ----------
Non U.S. Dollar Convertible Bond (0.47%)
GBP 20,000 Berisford plc 5% due 1/31/2015 (9)............. 26,806 43,446
---------- ----------
Non U.S. Dollar Bond (1.36%)
NZD 212,100 Evergreen Forest Limited 0% due 3/19/2009
(a)(2)........................................ 119,275 124,406
---------- ----------
Total Bonds and Convertible Bonds.............. 278,208 302,477
---------- ----------
Total Investments (97.02%)..................... $8,034,993* 8,883,112**
==========
Other assets in excess of liabilities (2.98%) . 272,630
----------
Net assets (100.00%) .......................... $9,155,742
==========
</TABLE>
- --------
(a) Non-income producing security.
(b) Commodity-linked security whereby the coupon, dividend and/or redemption
amount is linked to the price of an underlying commodity.
(c) In default as to principal and interest.
* At December 31, 1999 cost is substantially identical for both book and
federal income tax purposes.
** Gross unrealized appreciation and depreciation of securities at December
31, 1999 were $1,249,442 and $401,323, respectively. (Net appreciation was
$848,119.)
<TABLE>
<CAPTION>
Industry Classifications
Foreign Currencies (unaudited)
- ------------------ ------------------------
<S> <C> <C>
GBP-- Pound Sterling (1) Metals and Minerals (10) Distribution
NZD-- New Zealand Dollar (2) Forest Products (11) Health Care
(3) Agriculture (12) Media
(4) Building Materials (13) Services
(5) Capital Goods (14) Financial Services
(6) Chemicals (15) Real Estate
(7) Transportation (16) Holding Companies
(8) Electronics (17) Conglomerates
(9) Consumer Products (18) Gold Related
</TABLE>
- --------
See Notes to Financial Statements.
6
<PAGE>
First Eagle SoGen Overseas Variable Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
Assets:
Investments, at value (Note 1):
Common and preferred stock (identified cost, $7,756,785)....... $8,580,635
Bonds, notes, and convertible bonds (identified cost,
$278,208)..................................................... 302,477
----------
Total investments (cost $8,034,993).......................... 8,883,112
Cash............................................................. 206,753
Receivable for investment securities sold........................ 95,800
Receivable for forward currency contracts held, at value (Notes 1
and 6).......................................................... 58,731
Accrued interest and dividends receivable........................ 18,866
Deferred organization costs (Note 1)............................. 36,605
Receivable from SGAM Corp. (Note 2).............................. 65,375
Prepaid expenses (Note 1)........................................ 323
----------
Total Assets................................................. 9,365,565
----------
Liabilities:
Payable for Fund shares redeemed................................. 21,703
Payable for investment securities purchased...................... 81,770
Payable for forward currency contracts held, at value (Notes 1
and 6).......................................................... 47,883
Distribution fees payable (Note 3)............................... 25,867
Accrued expenses and other liabilities........................... 32,600
----------
Total Liabilities............................................ 209,823
----------
Net Assets:
Capital stock (par value, $0.001 per share)...................... 647
Capital surplus.................................................. 7,236,716
Net unrealized appreciation (depreciation) on:
Investments.................................................... 848,119
Forward currency contracts..................................... 10,848
Foreign currency related transactions.......................... (1,064)
Undistributed net realized gains on investments.................. 888,446
Undistributed net investment income.............................. 172,030
----------
Net Assets (Note 1).......................................... $9,155,742
==========
Net Asset Value per Share (NAV) (based on 646,522 shares
outstanding; 1,000,000,000 shares authorized) (Note 5).......... $ 14.16
==========
Maximum Offering Price per Share................................... $ 14.16
==========
</TABLE>
- --------
See Notes to Financial Statements.
7
<PAGE>
First Eagle SoGen Overseas Variable Fund
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Investment Income:
Income:
Dividends (net of $12,731 foreign taxes withheld)............. $ 157,125
Interest...................................................... 28,176
----------
Total income from operations................................ 185,301
----------
Expenses:
Investment advisory fees (Note 2)............................. 46,058
Directors' fees (Note 2)...................................... 43,000
Custodian fees................................................ 42,168
Printing...................................................... 19,200
Amortization of deferred organization costs (Note 1).......... 17,571
Distribution fees (Note 3).................................... 15,413
Audit fees.................................................... 14,200
Legal fees.................................................... 4,500
Registration and filing fees.................................. 1,000
Insurance..................................................... 815
Miscellaneous................................................. 1,050
----------
Total expenses from operations.............................. 204,975
Advisory fees waived (Note 2)................................... (46,058)
Expense reimbursement (Note 2).................................. (65,375)
Expense reduction due to earnings credits (Note 1).............. (968)
----------
Net expenses from operations................................ 92,574
----------
Net investment income (Note 1).................................. 92,727
----------
Realized and Unrealized Gains on Investments and Foreign Currency
Related Transactions (Notes 1 and 6):
Net realized gains from:
Investment transactions....................................... 928,392
Foreign currency related transactions......................... 32,081
----------
960,473
----------
Change in unrealized appreciation of:
Investments................................................... 1,010,299
Foreign currency related transactions......................... 66,645
----------
1,076,944
----------
Net gain on investments and foreign currency related
transactions................................................... 2,037,417
----------
Net Increase in Net Assets Resulting from Operations.............. $2,130,144
==========
</TABLE>
- --------
See Notes to Financial Statements.
8
<PAGE>
First Eagle SoGen Overseas Variable Fund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Operations:
Net investment income.................... $ 92,727 $ 69,719
Net realized gains from investments and
foreign currency related transactions... 960,473 34,863
Increase (decrease) in unrealized
appreciation (depreciation) of
investments and foreign currency related
transactions............................ 1,076,944 (151,773)
----------- -----------
Net increase (decrease) in assets
resulting from operations.............. 2,130,144 (47,191)
----------- -----------
Distributions to Shareholders:
Dividends paid from net investment
income.................................. -- (45,275)
Distributions paid from net realized
gains from investment transactions...... (95,465) --
----------- -----------
Decrease in net assets resulting from
distributions.......................... (95,465) (45,275)
----------- -----------
Fund Share Transactions (Note 5):
Net proceeds from shares sold............ 8,783,013 4,199,368
Net asset value of shares issued for
reinvested dividends and distributions.. 95,465 45,275
Cost of shares redeemed.................. (5,970,044) (1,330,085)
----------- -----------
Increase in net assets from Fund share
transactions........................... 2,908,434 2,914,558
----------- -----------
Net increase in net assets.............. 4,943,113 2,822,092
Net Assets (Note 1):
Beginning of year........................ 4,212,629 1,390,537
----------- -----------
End of year (including undistributed net
investment income of $172,030 and
$36,075, respectively.)................. $ 9,155,742 $ 4,212,629
=========== ===========
</TABLE>
- --------
See Notes to Financial Statements.
9
<PAGE>
First Eagle SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS
Note 1--Significant Accounting Policies
First Eagle 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, First
Eagle SoGen Overseas Variable Fund (the "Fund"). The Fund, formerly SoGen
Overseas Variable Fund, changed its' name to First Eagle SoGen Overseas
Variable Fund effective December 31, 1999. 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--Costs incurred in connection with the
organization of the Fund were amortized on a straight-line basis over a sixty-
month period from the date the Fund commenced investment 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 balances with such service providers.
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.
g) United States 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.
10
<PAGE>
First Eagle SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS--(continued)
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 decrease undistributed net realized gains on
investments by $38,677, decrease paid in capital by $4,551 and increase
undistributed net investment income by $43,228.
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 Societe Generale Asset Management Corp. ("SGAM Corp.") an
advisory fee for advisory services and facilities furnished, at an annual rate
of 0.75% of the average daily net assets of the Fund. SGAM Corp. has agreed to
waive its advisory fee and, if necessary, reimburse the Fund through April 30,
2000 to the extent that the Fund's aggregate expenses exceed 1.50% of the
Fund's average daily net assets. For the year ended December 31, 1999, the
Fund's investment advisory fees of $46,058 were waived in their entirety by
SGAM Corp. Additionally, SGAM Corp. voluntarily reimbursed the Fund for
expenses in the amount of $65,375. Effective January 1, 2000, Arnhold and S.
Bleichroeder Advisers, Inc. ("ASB Advisers") succeeded SGAM Corp. as investment
adviser to the Fund. The terms of the new agreement are substantially the same
as those of the old agreement between the Fund and SGAM Corp.
For the six months ended June 30, 1999, SG Cowen Securities Corporation
("SGCS"), the principal underwriter or its affiliates received $1,001 in
broker's commissions for portfolio transactions executed on behalf of the Fund.
Effective July 1, 1999 Funds Distributor, Inc. ("FDI") succeeded SGCS as
principal underwriter to the Fund. In acting as a selected broker after June
30, 1999, SGCS or its affiliates received $2,191 in broker's commissions for
portfolio transactions executed on behalf of the Fund. Effective March 1, 2000,
Arnhold and S. Bleichroeder, Inc. ("ASB") will become the principal underwriter
to the Fund.
Each director who is not an officer of the Company or an employee of SGAM
Corp., SGCS or its corporate affiliates is paid an annual fee of $6,000 plus
$1,000 for each meeting attended. For the year ended December 31, 1999 such
fees amounted to $43,000.
Note 3--Distribution Plan and Agreement
Under the terms of the Distribution Plans and Agreements (the "Plans"), with
SGCS through June 30, 1999 and with FDI thereafter, pursuant to the provisions
of Rule 12b-1 under the Investment Company Act of 1940, the Fund may pay
quarterly, a distribution related fee at an annual rate of up to 0.25% of the
Fund's average daily net assets. Under the Plans, the principal underwriter
will use amounts payable by the Fund 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 year ended December 31, 1999, the
distribution fees paid or payable to the principal underwriter by the Fund were
$15,413. Effective March 1, 2000, ASB will assume FDI's obligations under the
Plan, pursuant to a new Rule 12b-1 Distribution Plan and Agreement, which
contains substantially similar terms and conditions as the Plan.
Note 4--Purchases and Sales of Securities
During the year ended December 31, 1999, the aggregate cost of purchases of
investments and proceeds from sales of investments totaled $6,867,963 and
$3,818,467, respectively.
11
<PAGE>
First Eagle SoGen Overseas Variable Fund
NOTES TO FINANCIAL STATEMENTS--(continued)
Note 5--Capital Stock
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Shares sold................................ 708,435 403,890
Shares issued for reinvested dividends and
distributions............................. 6,948 4,602
Shares redeemed............................ (487,237) (132,494)
-------- --------
Net increase............................. 228,146 275,998
======== ========
</TABLE>
Note 6--Commitments
As of December 31, 1999, the Fund had entered into forward currency
contracts, as summarized below, resulting in net unrealized appreciation of
$10,848.
Transaction Hedges:
Foreign Currency Purchases
<TABLE>
<CAPTION>
Unrealized Unrealized
Settlement U.S. $ Value at Appreciation at Depreciation at
Dates Foreign Currency December 31, U.S. $ To Be December 31, December 31,
Through To Be Received 1999 Delivered 1999 1999
- ---------- ------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1/05/00 52,038 Euro $ 52,428 $ 52,296 $ 132 --
1/06/00 56,029 New Zealand Dollar 29,342 29,010 332 --
---------- ---------- ------- --------
81,770 81,306 464 --
---------- ---------- ------- --------
Foreign Currency Sales
<CAPTION>
Unrealized Unrealized
Settlement U.S. $ Value at Appreciation at Depreciation at
Dates Foreign Currency U.S. $ To Be December 31, December 31, December 31,
Through To Be Delivered Received 1999 1999 1999
- ---------- ------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1/31/00 95,087 Euro 95,834 95,800 34 --
---------- ---------- ------- --------
Portfolio Hedges:
<CAPTION>
Unrealized Unrealized
Settlement U.S. $ Value at Appreciation at Depreciation at
Dates Net Foreign Currency U.S. $ To Be December 31, December 31, December 31,
Through To Be Delivered Received 1999 1999 1999
- ---------- ------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1/12/00 40,000 Australian Dollar 69,832 68,974 858 --
4/05/00 142,000 Swiss Franc 181,763 173,232 8,531 --
5/03/00 793,000 Euro 1,002,411 953,567 48,844 --
5/10/00 112,438,000 Japanese Yen 1,078,346 1,121,892 -- $(43,546)
10/05/01 441,500 New Zealand Dollar 226,810 231,147 -- (4,337)
---------- ---------- ------- --------
2,559,162 2,548,812 58,233 (47,883)
---------- ---------- ------- --------
$2,736,766 $2,725,918 $58,731 $(47,883)
========== ========== ======= ========
</TABLE>
12
<PAGE>
First Eagle SoGen Overseas Variable Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Period
Year Ended Year Ended February 3, 1997++ to
December 31, 1999 December 31, 1998 December 31, 1997
----------------- ----------------- ---------------------
<S> <C> <C> <C>
Selected Per Share Data
Net asset value,
beginning of period.... $10.07 $ 9.77 $10.00
------ ------ ------
Income from investment
operations:
Net investment income
(loss)............... 0.16 0.12 (0.01)
Net realized and
unrealized gains
(losses) on
investments.......... 4.08 0.29 (0.22)
------ ------ ------
Total from
investment
operations......... 4.24 0.41 (0.23)
------ ------ ------
Less distributions:
Dividends from net
investment income.... -- (0.11) --
Dividends from capital
gains................ (0.15) -- --
------ ------ ------
Total distributions. (0.15) (0.11) --
------ ------ ------
Net asset value, end of
period................. $14.16 $10.07 $ 9.77
====== ====== ======
Total Return............ 42.15% 4.21% (2.30%)**
Ratios and Supplemental
Data
Net assets, end of
period (000's)......... $9,156 $4,213 $1,391
Ratio of operating
expenses to average net
assets................. 1.50%+ 1.50%+ 2.00%*+
Ratio of net investment
income to average net
assets................. 1.50%# 2.04%# (0.14%)*#
Portfolio turnover rate. 65.38% 21.35% 8.88%
</TABLE>
- --------
++ Commencement of operations.
* Annualized.
** Total return is not annualized, as it may not be representative of the total
return for the year.
+ The annualized ratios of operating expenses to average net assets for the
years ended December 31, 1999, 1998 and the period from February 3, 1997 to
December 31, 1997 would have been 3.32%, 4.98% and 16.07% respectively,
without the effect of the earnings credits, and the investment advisory fee
waiver and expense reimbursement provided by SGAM Corp.
# The annualized ratios of net investment income to average net assets for the
years ended December 31, 1999, 1998 and the period from February 3, 1997 to
December 31, 1997 would have been (0.32%), (1.44%) and (14.20%)
respectively, without the effect of earnings credits, and the investment
advisory fee waiver and expense reimbursement provided by SGAM Corp.
- ---------
See Notes to Financial Statements.
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
First Eagle SoGen Variable Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of First Eagle SoGen Overseas Variable Fund, a
portfolio of First Eagle SoGen Variable Funds, Inc., as of December 31, 1999,
the related statement of operations for the year then ended, and statements of
changes in net assets for each of the years in the two year period then ended,
and the financial highlights for each of the years in the two year period then
ended and for the period from 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
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodians. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of First
Eagle SoGen Overseas Variable Fund, a portfolio of First Eagle SoGen Variable
Funds, Inc. as of December 31, 1999, and the results of its operations for the
year then ended, and the changes in its net assets for each of the years in the
two year period then ended and the financial highlights for each of the years
in the two year period then ended and for the period from February 3, 1997 to
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 18, 2000
14
<PAGE>
First Eagle SoGen Overseas Variable Fund
TAX INFORMATION
FISCAL YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
The following tax information represents the designation of a tax benefit
relating to the fiscal year ended December 31,1999:
CAPITAL GAINS DISTRIBUTIONS
Capital gains distributions paid to shareholders by the Fund during the
fiscal year ended December 31, 1999, whether taken in shares or in cash
amounted to $31,822.
SPECIAL SHAREHOLDERS' MEETING
(UNAUDITED)
A Special Meeting of Shareholders of First Eagle SoGen Overseas Variable Fund
(the "Fund"), a series of First Eagle SoGen Variable Funds, Inc. (the
"Company") was held on December 22, 1999. The shareholders were asked to vote
on three separate proposals:
1. To approve a new advisory agreement;
2. To elect Directors; and
3. To ratify or reject the selection of KPMG LLP as the independent
accountants for the Fund for the Fund's current fiscal year.
The following are the results for each proposal listed separately:
1. To approve or disapprove an Investment Advisory Agreement between the
Company on behalf of the Fund and Arnhold and S. Bleichroeder
Advisers, Inc.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
541,049 1,366 19,397
</TABLE>
2. To elect certain individuals to serve as Directors on the Board of
Directors of the Company.
<TABLE>
<CAPTION>
For Withheld
------- --------
<S> <C> <C>
John P. Arnhold 550,360 11,452
Candace K. Beinecke 550,360 11,452
Edwin J. Ehrlich 550,360 11,452
Robert J. Gellert 550,360 11,452
James E. Jordan 550,360 11,452
William M. Kelly 550,360 11,452
Fred J. Meyer 550,360 11,452
Dominique Raillard 550,360 11,452
Nathan Snyder 550,360 11,452
Stanford S. Warshawsky 550,360 11,452
</TABLE>
3. To ratify or reject the selection of KPMG LLP as the independent
accountants for the Fund for the Fund's current fiscal year.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
542,501 0 19,311
</TABLE>
15
<PAGE>
First Eagle SoGen Overseas Variable Fund
1345 Avenue of the Americas
New York, NY 10105
DIRECTORS AND OFFICERS
Directors
John P. Arnhold Donald G. McCouch
Candace K. Beinecke Fred J. Meyer
Edwin J. Ehrlich Dominique Raillard
Robert J. Gellert Nathan Snyder
James E. Jordan Stanford S. Warshawsky
William M. Kelly
Officers
Stanford S. Warshawsky................................... Chairman of the Board
John P. Arnhold................................................... Co-President
Jean-Marie Eveillard.............................................. Co-President
Charles de Vaulx......................................... Senior Vice President
Robert Bruno.......................... Vice President, Secretary, and Treasurer
Edwin S. Olsen.................................................. Vice President
Elizabeth Tobin................................................. Vice President
Tracy LaPointe Saltwick.................. Vice President and Compliance Officer
Warren Chan................................................ Assistant Treasurer
Cari Levine................................................ Assistant Treasurer
Suzan J. Afifi............................................. Assistant Secretary
INVESTMENT ADVISER UNDERWRITER
Arnhold and S. Bleichroeder Arnhold and S. Bleichroeder, Inc.
Advisers, Inc. 1345 Avenue of the Americas
1345 Avenue of the Americas New York, NY 10105
New York, NY 10105
INDEPENDENT AUDITORS
LEGAL COUNSEL KPMG LLP
Shearman & Sterling 757 Third Avenue
599 Lexington Avenue New York, NY 10017
New York, NY 10022
GLOBAL CUSTODIAN
DOMESTIC CUSTODIAN The Chase Manhattan Bank
State Street 4 Chase MetroTech Center
801 Pennsylvania Brooklyn, NY 11245
Kansas City, MO 64105
SHAREHOLDER SERVICING AGENT
State Street
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 First Eagle
SoGen Variable Funds, Inc.
16
