UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number			811-09092
First Eagle Variable Funds
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas New York, NY								10105
(Address of principal executive offices)								(Zip code)
Suzan Afifi First Eagle Variable Funds 1345 Avenue of the Americas New York, NY 10105
(Name and address of agent for service)
Registrant’s telephone number, including area code:					1-212-632-2700
Date of fiscal year end:	December 31
Date of reporting period:		June 30, 2017

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

Item 1.                                 Reports to Stockholders.

 

Semi-Annual Report

June 30, 2017

Overseas Variable Fund

Advised by First Eagle Investment Management, LLC

Forward-Looking Statement Disclosure

One of our most important responsibilities as mutual fund managers is to communicate with shareholders in an open and direct manner. Some of our comments in our letters to shareholders are based on current management expectations and are considered "forward-looking statements." Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as "may," "will," "believe," "attempt," "seem," "think," "ought," "try" and other similar terms. We cannot promise future returns. Our opinions are a reflection of our best judgment at the time this report is compiled, and we disclaim any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise.

Table of Contents

Letter from the President					4
Management's Discussion of Fund Performance					6
Fund Overview					8
Schedule of Investments					10
Statement of Assets and Liabilities					20
Statement of Operations					21
Statements of Changes in Net Assets					22
Financial Highlights					24
Notes to Financial Statements					26
Fund Expenses					36
General Information					40

Letter from the President

John P. Arnhold

Dear Fellow Shareholders,

For the period from January 1, 2017 through June 30, 2017, the S&P 500 Index was up 9.34%, the MSCI World Index rose 10.66% and the MSCI EAFE Index increased 13.81%. France's CAC 40 Index was up 16.81%, Germany's DAX Index climbed 16.62% and Japan's Nikkei 225 Index rose 10.17% during the period. The price of WTI crude oil fell from $53.75 a barrel on January 1 to $46.02 a barrel on June 30. During this same period, the dollar weakened 8.13% versus the euro and weakened 3.80% versus the yen. The price of gold rose from $1,150.90 an ounce on January 1 to $1,241.20 an ounce on June 30.

In the six months since my last letter, stocks generally advanced strongly around the globe. The economic backdrop was generally favorable, and growth resumed in many parts of the world. The CBOE Volatility Index (VIX), which is sometimes called the uncertainty index, was low through most of the period. In short, the financial markets behaved as if there were little risk on the horizon.

We do not share this sanguine view. Markets are said to like certainty, but as we survey the world, certainty is hard to find. In the U.S. equity market, the Trump rally seems to be driven by a widespread belief that tax reform and infrastructure spending will spur growth at U.S. companies. While this is, indeed, possible, we think the fate of these initiatives in Congress is far from certain. In China, the world's second largest economy, high levels of debt are a long-term concern. In Europe, extreme populist candidates were defeated in French and Dutch national elections, which reduced the immediate threat to the EU's survival. Nonetheless, the region still has large hurdles to overcome, including the need to recapitalize major banks.

Meanwhile, on the geopolitical front, North Korea, Russia and China all present challenges, and peace in the Middle East remains elusive.

Despite these conditions, money continued to pour into equity ETFs and index funds, generally driving up the share prices of companies that are included in major indexes. Investors appeared to be more interested in gaining broad exposure to

Letter from the President

equity assets than they were in discriminating among individual companies. In this environment, momentum can beget more momentum, and valuation may play little role in determining the price of a company's shares.

At First Eagle, we strive to preserve the purchasing power of our investors' capital. While we aim to be prudent in all market environments, we believe that present conditions call for an added measure of caution.

In the period from January through June 2017, the Global Value team did not share the apparent enthusiasm of other equity investors. Strengthening stock markets took overall valuation levels to territory that made it difficult to find exciting new opportunities. The portfolio managers trimmed or eliminated positions where prices had approached their estimates of intrinsic value. As a result, levels of cash and cash equivalents in the portfolios were at the higher end of their range.

Acknowledging that they did not know whether global stock markets would rise or fall over the next quarter or year, portfolio managers on the Global Value team remained true to their value investment philosophy and their active, disciplined, bottom-up approach. They focused on buying and holding stocks they believed offered a "margin of safety"—a discount to their estimates of intrinsic value. They sought to avoid companies with higher than average leverage or with leaders who did not appear to allocate capital effectively. They found opportunities in energy stocks driven lower by the decline in oil prices, in the sovereign debt of some peripheral issuers, and in a company with new management. On weakness in the gold price, they also made a small addition to their position in gold.

This is my last letter to you as president of First Eagle Funds, and as I transition from this role, I want to thank you for your confidence and support over the years. Mehdi Mahmud, CEO of First Eagle Investment Management, has been elected as the new president of First Eagle Funds, effective June 30, 2017. I am confident that under his stewardship, you will continue to benefit from the careful and disciplined management of your assets.

Sincerely,

John P. Arnhold
President

June 2017

Management's Discussion of Fund Performance

First Eagle Overseas Variable Fund

The net asset value ("NAV") of the Fund's shares increased 9.40% for the six months ended June 30, 2017 while the MSCI EAFE Index increased 13.81%. The Fund's cash and cash equivalents position was 16.9% as of June 30, 2017.

The five largest contributors to the performance of First Eagle Overseas Variable Fund over the period were gold bullion, SMC Corporation (machinery, Japan), Fanuc Corporation (machinery, Japan), Keyence Corporation (electronic equipment, instruments & components, Japan) and Nestle (food products, Switzerland), which collectively accounted for 2.07% of this period's performance.

The five largest detractors were Cenovus Energy (oil, gas & consumable fuels, Canada), TechnipFMC (energy equipment & services, UK), Mitsubishi Estate Company (real estate management & development, Japan), Imperial Oil (oil, gas & consumable fuels, Canada) and Astellas Pharma (pharmaceuticals, Japan). Their combined negative performance over the six-month period subtracted 0.90% points from performance.

Matthew McLennan Head of the Global Value Team Portfolio Manager				T. Kimball Brooker, Jr. Portfolio Manager

August 2017

The performance data quoted herein represents past performance and does not guarantee future results. Market volatility can dramatically impact the fund's short-term performance. Current performance may be lower or higher than figures shown. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Past performance data through the most recent month end is available at feim.com or by calling 800.334.2143.

Performance data quoted herein does not reflect charges imposed by variable annuity contracts and variable life insurance policies issued by the life insurance companies through which the Fund is offered. If those account-level fees and expenses were reflected, performance would be lower.

The commentary represents the opinion of John Arnhold and the Global Value Team as of June 2017 and is subject to change based on market and other conditions. These materials are provided for informational

Management's Discussion of Fund Performance

purposes only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. The views expressed herein may change at any time subsequent of the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.

There are risks associated with investing in funds that invest in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates. These risks may be more pronounced with respect to investments in emerging markets. Funds whose investments are concentrated in a specific industry or sector may be subject to a higher degree of risk than funds whose investments are diversified and may not be suitable for all investors.

All securities may be subject to adverse market trends. The value of the Fund's portfolio holdings may fluctuate in response to events specific to the companies or stock or bond markets in which the Fund invests, as well as economic, political, or social events in the United States or abroad. This may cause the Fund's portfolio to be worth less than the price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer or the market as a whole. As a result, a portfolio of such securities may underperform the market as a whole.

In addition to investments in larger companies, the Fund may invest in smaller and medium-size companies, which historically have been more volatile in price than larger company securities, especially over the short term. Positions in smaller companies, especially when the Fund is a large holder of a small company's securities, also may be more difficult or expensive to trade. Among the reasons for the greater price volatility are the less certain growth prospects of smaller companies, the lower degree of liquidity in the markets for such securities and the greater sensitivity of smaller companies to changing economic conditions. In addition, smaller companies may lack depth of management, they may be unable to generate funds necessary for growth or development, or they may be developing or marketing new products or services for which markets are not yet established and may never become established. The Fund considers small companies to be companies with market capitalizations of less than $1 billion and medium-size companies to have market capitalizations of less than $10 billion.

Holding illiquid securities restricts or otherwise limits the ability for the Fund to freely dispose of its investments for specific periods of time. A Fund might not be able to sell illiquid securities at its desired price or time. Changes in the markets or in regulations governing the trading of illiquid instruments can cause rapid changes in the price or ability to sell an illiquid security.

Investment in gold and gold related investments present certain risks, including political and economic risks affecting the price of gold and other precious metals like changes in U.S. or foreign regulatory policies, tax, currency or mining laws, increased environmental costs, international monetary and political policies, economic conditions within an individual country, trade imbalances, and trade or currency restrictions between countries. The price of gold, in turn, is likely to affect the market prices of securities of companies mining or processing gold, and accordingly, the value of investments in such securities may also be affected. Gold related investments as a group have not performed as well as the stock market in general during periods when the U.S. dollar is strong, inflation is low and general economic conditions are stable. In addition, returns on gold related investments have traditionally been more volatile than investments in broader equity or debt markets.

Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner, or that negative perception of the issuer's ability to make such payments may cause the price of that bond to decline.

An investment made at a perceived "margin of safety" or "discount to intrinsic or fundamental value" can trade at prices substantially lower than when an investment is made, so that any perceived "margin or safety" or "discount to value" is no guarantee against loss.

All investments involve the risk of loss.

First Eagle Overseas Variable Fund

Fund Overview

Data as of June 30, 2017 (unaudited)

Investment Objective

First Eagle Overseas Variable Fund seeks long-term growth of capital by investing primarily in equities, including common and preferred stocks, warrants or other similar rights, and convertible securities, issued by non-U.S. companies.

Average Annual Returns (%)				One-Year				Five-Years				Ten-Years
First Eagle Overseas Variable Fund					8.99				7.66				4.98
MSCI EAFE Index					20.27				8.69				1.03
Consumer Price Index					1.63				1.32				1.63

Asset Allocation* (%)

Countries** (%)

Japan					22.8
France					9.9
United States					8.0
United Kingdom					6.5
Hong Kong					5.3
Canada					5.2
Switzerland					3.6
Mexico					3.6
South Korea					3.2
Germany					3.2
Singapore					2.4
Sweden					1.4
Belgium					1.1
Thailand					1.0
Chile					0.8
Australia					0.8
Norway					0.7
Brazil					0.6
Greece					0.5
Denmark					0.5
Ireland					0.4
Poland					0.3
Russia					0.3
Israel					0.3
Turkey					0.2
Italy					0.2
Indonesia					0.1
Africa					0.1
Malaysia					0.0	***

*  Asset Allocation and Countries percentages are based on total investments in the portfolio.

**  Country allocations reflect country of risk (not currency of issue) and exclude short term investments. Bonds of non-U.S. issuers may be U.S. dollar denominated.

***Less than 0.05%

The Fund's portfolio composition is subject to change at any time.

First Eagle Overseas Variable Fund | Fund Overview (unaudited)

Growth of a $10,000 Initial Investment

Performance data quoted herein represents past performance and should not be considered indicative of future results. Performance data quoted herein does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the sale of Fund shares. Performance data quoted herein does not reflect charges imposed by variable annuity contracts and variable life insurance policies issued by the life insurance companies through which the Fund is offered. If those account-level fees and expenses were reflected, performance would be lower.

The average annual returns shown above are historical and reflect changes in share price, reinvested dividends and are net of expenses.

The MSCI EAFE Index is an unmanaged total return index, reported in U.S. Dollars, based on share prices and reinvested net dividends of approximately 1,100 companies from 21 developed market countries. The Consumer Price Index (CPI) represents the change in price of all goods and services purchased for consumption by urban households. One cannot invest directly in an index.

Top 10 Holdings* (%)

Gold Bullion (precious metal)					7.0
FANUC Corp. (Machinery, Japan)					2.5
KDDI Corp. (Wireless Telecommunication Services, Japan)					2.4
Sompo Holdings, Inc. (Insurance, Japan)					1.9
HeidelbergCement AG (Construction Materials, Germany)					1.9
Secom Co. Ltd. (Commercial Services & Supplies, Japan)					1.8
SMC Corp. (Machinery, Japan)					1.8
Pargesa Holding SA (Diversified Financial Services, Switzerland)					1.8
Nestle SA (Registered) (Food Products, Switzerland)					1.7
Danone SA (Food Products, France)					1.6
Total					24.4

*  Holdings in cash, commercial paper and other short term cash equivalents have been excluded. Percentages are based on total net assets.

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
Common Stocks — 73.4%
Africa — 0.1%
Randgold Resources Ltd., ADR					3,736				330,487
Australia — 0.8%
Newcrest Mining Ltd.					221,045				3,430,565
Belgium — 1.1%
Groupe Bruxelles Lambert SA					39,582				3,809,893
Sofina SA					6,987				1,003,510
									4,813,403
Brazil — 0.6%
Cielo SA					345,940				2,568,784
Canada — 5.0%
Agnico Eagle Mines Ltd.					55,705				2,512,051
Barrick Gold Corp.					139,734				2,223,168
Canadian Natural Resources Ltd.					28,568				824,348
Cenovus Energy, Inc.					283,576				2,089,955
Encana Corp.					34,506				303,653
Franco-Nevada Corp.					29,827				2,152,153
Goldcorp, Inc.					210,916				2,722,926
Imperial Oil Ltd.					66,592				1,941,068
Potash Corp. of Saskatchewan, Inc.					329,207				5,366,074
Suncor Energy, Inc.					66,864				1,953,637
Wheaton Precious Metals Corp.					10,209				203,057
									22,292,090
Chile — 0.8%
Cia Cervecerias Unidas SA, ADR					134,025				3,516,816
Denmark — 0.5%
ISS A/S					55,432				2,177,433
France — 9.9%
Bouygues SA					100,952				4,253,132
Carrefour SA					147,060				3,717,962
Cie de Saint-Gobain					90,292				4,822,049
Danone SA					95,485				7,166,876
Gaumont SA					8,737				873,159
Laurent-Perrier					22,658				1,992,670

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
France — 9.9% (continued)
Legrand SA					19,102				1,334,875
Neopost SA					7,980				370,584
Rexel SA					191,634				3,131,744
Robertet SA					5,831				2,690,590
Sabeton SA*					8,088				203,230
Sanofi					47,880				4,587,861
Sodexo SA					27,253				3,522,243
TOTAL SA					59,509				2,954,445
Wendel SA					13,353				1,975,037
									43,596,457
Germany — 3.2%
Hamburger Hafen und Logistik AG					77,460				1,695,770
HeidelbergCement AG					85,952				8,332,089
Linde AG					12,090				2,301,370
Telefonica Deutschland Holding AG					327,944				1,640,046
									13,969,275
Greece — 0.6%
JUMBO SA					131,238				2,398,296
Hong Kong — 5.4%
Great Eagle Holdings Ltd.					650,014				3,305,248
Guoco Group Ltd.					254,670				2,920,174
Hang Lung Properties Ltd.					2,194,751				5,485,005
Hopewell Holdings Ltd.					916,347				3,490,233
Hysan Development Co. Ltd.					433,760				2,070,073
Jardine Matheson Holdings Ltd.					82,180				5,275,626
Jardine Strategic Holdings Ltd.					7,800				325,162
Swire Properties Ltd.					159,924				527,176
									23,398,697
Ireland — 0.4%
CRH plc					55,113				1,961,940
Israel — 0.3%
Israel Chemicals Ltd.					233,203				1,100,073
Italy — 0.2%
Italmobiliare SpA					28,871				789,061

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
Japan — 22.7%
As One Corp.					36,580				1,711,656
Astellas Pharma, Inc.					203,100				2,489,336
Chofu Seisakusho Co. Ltd.					68,748				1,640,978
Daiichikosho Co. Ltd.					65,430				3,073,336
FANUC Corp.					56,480				10,931,463
Hirose Electric Co. Ltd.					33,000				4,722,448
Hoya Corp.					133,460				6,948,111
Kansai Paint Co. Ltd.					96,480				2,227,356
KDDI Corp.					395,300				10,454,747
Keyence Corp.					14,400				6,339,281
Komatsu Ltd.					15,100				387,579
Mitsubishi Estate Co. Ltd.					379,160				7,087,562
MS&AD Insurance Group Holdings, Inc.					130,000				4,384,731
Nagaileben Co. Ltd.					47,310				1,100,602
Nissin Foods Holdings Co. Ltd.					28,400				1,775,841
NTT DOCOMO, Inc.					155,200				3,670,586
Secom Co. Ltd.					106,260				8,084,794
Secom Joshinetsu Co. Ltd.					20,594				641,760
Shimano, Inc.					24,260				3,851,968
SK Kaken Co. Ltd.					12,194				1,133,481
SMC Corp.					25,260				7,721,788
Sompo Holdings, Inc.					219,000				8,500,456
T Hasegawa Co. Ltd.					59,300				1,255,695
									100,135,555
Mexico — 2.7%
Fresnillo plc					175,367				3,399,445
Grupo Televisa SAB, ADR					278,627				6,790,140
Industrias Penoles SAB de CV					66,388				1,501,570
									11,691,155
Norway — 0.7%
Orkla ASA					310,143				3,152,297
Russia — 0.2%
Gazprom PJSC, ADR					278,172				1,101,749

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
Singapore — 1.5%
ComfortDelGro Corp. Ltd.					882,110				1,473,393
Haw Par Corp. Ltd.					668,913				5,438,263
									6,911,656
South Korea — 3.2%
Fursys, Inc.					39,863				1,127,097
Hyundai Mobis Co. Ltd.					2,283				499,091
Kia Motors Corp.					123,430				4,122,028
KT&G Corp.					47,658				4,875,018
Lotte Confectionery Co. Ltd.					10,120				1,754,162
NongShim Co. Ltd.					6,209				1,832,182
									14,209,578
Sweden — 1.5%
Investor AB, Class A					117,187				5,524,623
Investor AB, Class B					16,963				818,406
									6,343,029
Switzerland — 3.5%
Cie Financiere Richemont SA (Registered)					7,380				610,686
Nestle SA (Registered)					86,564				7,549,911
Pargesa Holding SA					101,265				7,715,924
									15,876,521
Thailand — 1.0%
Bangkok Bank PCL, NVDR					655,005				3,564,385
Bangkok Bank PCL					600				3,477
Thai Beverage PCL					1,357,592				887,470
									4,455,332
Turkey — 0.2%
Yazicilar Holding A/S, Class A					159,971				1,036,400
United Kingdom — 6.3%
Berkeley Group Holdings plc					103,273				4,342,583
British American Tobacco plc					61,648				4,200,875
Diageo plc					104,737				3,095,165
GlaxoSmithKline plc					155,359				3,307,168
Hiscox Ltd.					159,131				2,625,986

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
United Kingdom — 6.3% (continued)
Liberty Global plc, Series C*					114,926				3,583,393
TechnipFMC plc*					230,847				6,279,038
									27,434,208
United States — 1.0%
Royal Gold, Inc.					16,673				1,303,328
Willis Towers Watson plc					20,801				3,025,714
									4,329,042
Total Common Stocks (Cost $221,569,703)									323,019,899
				Ounces
Commodity — 7.0%
Gold bullion* (Cost $23,919,225)					24,848				30,848,075
				Principal Amount ($)
Foreign Government Securities — 2.6%
Canadian Government Bond 1.25%, 8/1/2017				CAD	998,000				769,956
Indonesia Treasury Bond 8.25%, 7/15/2021				IDR	5,297,000,000				418,514
Malaysia Government Bond 3.66%, 10/15/2020				MYR	648,000				151,088
Mexican Bonos 4.75%, 6/14/2018				MXN	39,260,000				2,119,991
5.00%, 12/11/2019				MXN	12,564,600				667,154
6.50%, 6/10/2021				MXN	24,710,000				1,356,230
Poland Government Bond 3.25%, 7/25/2019				PLN	4,348,000				1,204,906
Singapore Government Bond 0.50%, 4/1/2018				SGD	3,329,000				2,407,858
3.25%, 9/1/2020				SGD	1,882,000				1,446,272
United Kingdom Gilt 1.00%, 9/7/2017 (a)				GBP	824,000				1,074,803
Total Foreign Government Securities (Cost $12,552,453)									11,616,772

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Principal Amount ($)				Value ($)
Short-Term Investments — 16.9%
Commercial Paper — 16.9%
American Honda Finance Corp. 1.04%, 7/18/2017 (b)					5,981,000				5,977,674
BAT International Finance plc 1.35%, 7/3/2017 (b)(c)					1,636,000				1,635,808
Eni Finance USA, Inc. 1.38%, 7/3/2017 (b)					5,892,000				5,891,330
Essilor International SA 1.05%, 7/13/2017 (b)					5,889,000				5,886,537
GlaxoSmithKline LLC 1.08%, 7/6/2017 (b)					1,892,000				1,891,638
1.08%, 7/7/2017 (b)					2,027,000				2,026,547
1.08%, 7/11/2017 (b)(c)					2,027,000				2,026,284
Henkel of America, Inc. 1.08%, 8/2/2017 (b)					5,978,000				5,971,523
Hitachi Capital America Corp. 1.36%, 7/3/2017 (b)(c)					6,545,000				6,544,234
Johnson Controls International plc 1.35%, 7/3/2017 (b)(c)					8,263,000				8,262,033
Kreditanstalt fuer Wiederaufbau 1.03%, 8/14/2017 (b)(c)					3,010,000				3,005,831
Nestle Capital Corp. 0.95%, 7/14/2017 (b)(c)					1,684,000				1,683,282
0.95%, 7/19/2017 (b)					6,752,000				6,748,055
Province of Quebec Canada 0.97%, 9/5/2017 (b)(c)					5,455,000				5,443,660
PSP Capital, Inc. 1.02%, 8/8/2017 (b)(c)					2,328,000				2,325,085
Total Capital Canada Ltd. 1.02%, 7/11/2017 (b)(c)					6,689,000				6,686,639
Western Union Co. (The) 1.38%, 7/3/2017 (b)					2,454,000				2,453,713
Total Commercial Paper (Cost $74,466,452)									74,459,873

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Investments				Shares				Value ($)
Investment Company — 0.0% (d)
JP Morgan U.S. Government Money Market Fund, Agency Shares, 0.78% (e) (Cost $8,934)					8,934				8,934
Total Short-Term Investments (Cost $74,475,386)									74,468,807
Total Investments — 99.9% (Cost $332,516,767)									439,953,553
Other Assets Less Liabilities — 0.1%									364,632
Net Assets — 100.0%									440,318,185

*  Non-income producing security.

(a)  Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale. At June 30, 2017, the value of these securities amounted to $1,074,803 or 0.2% of net assets of the Fund.

(b)  The rate shown was the current yield as of June 30, 2017.

(c)  Securities exempt from registration under Rule 144A or section 4(2), of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the investment adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of all such securities at June 30, 2017 amounts to $37,612,856, which represents approximately 8.54% of net assets of the Fund.

(d)  Represents less than 0.05% of net assets.

(e)  Represents 7-day effective yield as of June 30, 2017.

Abbreviations

ADR  — American Depositary Receipt

NVDR  — Non-Voting Depositary Receipt

PJSC  — Public Joint Stock Company

Currencies

CAD  — Canadian Dollar

GBP  — British Pound

IDR  — Indonesian Rupiah

MXN  — Mexican Peso

MYR  — Malaysian Ringgit

PLN  — Polish Zloty

SGD  — Singapore Dollar

As of June 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for federal income tax purposes was as follows:

Aggregate gross unrealized appreciation				$	124,988,838
Aggregate gross unrealized depreciation					(17,552,052	)
Net unrealized appreciation				$	107,436,786
Federal income tax cost of investments				$	332,516,767

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Forward Foreign Currency Exchange Contracts — Sales

Settlement Dates Through				Foreign Currency To be Delivered								U.S. $ To be Received				U.S. $ Value At June 30, 2017				Unrealized Appreciation At June 30, 2017				Unrealized Depreciation At June 30, 2017
07/19/17					586,000			British Pound				$	755,500			$	763,597			$	—			$	(8,097	)
08/16/17					70,000			British Pound					89,699				91,297				—				(1,598	)
07/19/17					1,093,000			Euro					1,175,500				1,249,319				—				(73,819	)
08/16/17					1,253,000			Euro					1,334,420				1,434,386				—				(99,966	)
09/13/17					1,768,000			Euro					1,888,652				2,026,885				—				(138,233	)
10/18/17					734,000			Euro					807,848				843,142				—				(35,294	)
11/15/17					1,146,000			Euro					1,302,515				1,318,522				—				(16,007	)
12/13/17					900,000			Euro					1,031,027				1,037,152				—				(6,125	)
02/14/18					1,873,000			Euro					2,154,503				2,166,161				—				(11,658	)
07/19/17					415,950,000			Japanese Yen					3,706,707				3,700,488				6,219				—
08/16/17					146,798,000			Japanese Yen					1,346,375				1,307,596				38,779				—
09/13/17					596,527,000			Japanese Yen					5,286,368				5,320,001				—				(33,633	)
												$	20,879,114			$	21,258,546			$	44,998			$	(424,430	)

 

Industry Diversification for Portfolio Holdings				Percent of Net Assets
Auto Components					0.1	%
Automobiles					0.9
Banks					0.8
Beverages					2.2
Building Products					1.1
Capital Markets					0.7
Chemicals					3.7
Commercial Services & Supplies					2.7
Commodity					7.0
Construction & Engineering					1.0
Construction Materials					2.3
Diversified Financial Services					4.7
Diversified Telecommunication Services					0.4
Electrical Equipment					0.3
Electronic Equipment, Instruments & Components					2.5
Energy Equipment & Services					1.4
Food & Staples Retailing					0.9
Food Products					5.3

First Eagle Overseas Variable Fund | Schedule of Investments | June 30, 2017 (unaudited)

Industry Diversification for Portfolio Holdings (continued)				Percent of Net Assets
Foreign Government Security					2.6	%
Health Care Equipment & Supplies					1.8
Health Care Providers & Services					0.4
Hotels, Restaurants & Leisure					0.8
Household Durables					1.4
Industrial Conglomerates					2.5
Insurance					4.2
IT Services					0.6
Leisure Products					0.9
Machinery					4.3
Media					3.3
Metals & Mining					4.5
Oil, Gas & Consumable Fuels					2.5
Pharmaceuticals					3.6
Real Estate Management & Development					4.2
Road & Rail					0.3
Specialty Retail					0.5
Technology Hardware, Storage & Peripherals					0.1
Textiles, Apparel & Luxury Goods					0.1
Tobacco					2.1
Trading Companies & Distributors					0.7
Transportation Infrastructure					0.4
Wireless Telecommunication Services					3.2
Short-Term Investments					16.9
Total Investments					99.9	%

See Accompanying Notes to the Financial Statements.

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Statement of Assets and Liabilities  June 30, 2017 (unaudited)

				First Eagle Overseas Variable Fund
Assets
Investments, at Cost (Note 1)
Investments				$	308,597,542
Gold bullion					23,919,225
Foreign currency					6,059
Total Investments, at Cost					332,522,826
Investments, at Value (Note 1)
Investments					409,105,478
Gold bullion					30,848,075
Foreign currency					6,034
Total Investments, at Value					439,959,587
Cash					351
Receivable for investment securities sold					727,416
Foreign tax reclaims receivable					658,703
Accrued interest and dividends receivable					562,904
Receivable for Fund shares sold					474,084
Unrealized appreciation on forward foreign currency exchange contracts					44,998
Other assets					53,593
Total Assets					442,481,636
Liabilities
Investment advisory fees payable (Note 2)					275,477
Payable for investment securities purchased					685,679
Unrealized depreciation on forward foreign currency exchange contracts					424,430
Payable for Fund shares redeemed					195,102
Distribution fees payable (Note 3)					91,826
Administrative fees payable (Note 2)					46,736
Trustee fees payable					377
Accrued expenses and other liabilities					443,824
Total Liabilities					2,163,451
Net Assets				$	440,318,185
Net Assets Consist of
Capital stock (par value, $0.001 per share)				$	15,829
Capital surplus					317,772,321
Net unrealized appreciation (depreciation) on:
Investments (net of $187,290 deferred capital gain country tax)					107,249,496
Foreign currency transactions					(9,188	)
Forward foreign currency exchange contracts					(379,432	)
Undistributed net realized gains (losses) on investments, commodity, foreign currency and forward contracts					23,391,760
Accumulated net investment loss					(7,722,601	)
Net Assets				$	440,318,185
Shares Outstanding (1,000,000,000 shares authorized):					15,829,138
Net asset value per share and redemption proceeds per share:				$	27.82

See Notes to Financial Statements

Statement of Operations  June 30, 2017 (unaudited)

				First Eagle Overseas Variable Fund
Investment Income
Interest (net of $1,924, foreign taxes withheld)				$	543,473
Dividends: (net of $301,981 foreign taxes withheld)					4,684,996
Total Income					5,228,469
Expenses
Investment advisory fees (Note 2)					1,670,799
Distributions fees (Note 3)					556,933
Shareholder servicing agent fees					305,393
Administrative Costs (Note 2)					139,276
Professional fees					198,536
Custodian and accounting fees					98,213
Shareholder reporting fees					34,752
Trustees' fees					5,836
Other expenses					16,454
Total Expenses					3,026,192
Expense waiver					(27,889	)
Expense reductions due to earnings credits (Note 1)					(9	)
Net Expenses					2,998,294
Net Investment Income (Note 1)					2,230,175
Realized and Unrealized Gains ( Losses) on Investments and Foreign Currency Related Transactions (Note 1)
Net realized gains (losses) from:
Investment transactions (net of capital gain country tax of $6,385)					10,137,038
Foreign currency transactions					1,990,144
Forward foreign currency exchange contracts					(162,731	)
					11,964,451
Changes in unrealized appreciation (depreciation) of:
Investment and commodity related transactions (net of increase in deferred capital gain country tax accruals of $107,492)					28,961,819
Foreign currency translations					63,586
Forward foreign currency exchange contracts					(2,904,086	)
					26,121,319
Net realized and unrealized gains (losses) on investments, commodity, foreign currency and forward contract related transactions					38,085,770
Net Increase in Net Assets Resulting from Operations				$	40,315,945

See Notes to Financial Statements

Statements of Changes in Net Assets

				First Eagle Overseas Variable Fund
				For the Six Months ended June 30, 2017 (Unaudited)				Year ended December 31, 2016
Operations
Net investment income				$	2,230,175			$	2,749,587
Net realized gain from investments, commodity, foreign currency and forward contract related transactions					11,964,451				16,668,155
Change in unrealized appreciation (depreciation) of investments, commodity, foreign currency and forward contract related translations					26,121,319				4,352,210
Net increase in net assets resulting from operations					40,315,945				23,769,952
Distributions to Shareholders
Dividends paid from net investment income					—				(2,471,398	)
Distributions paid from net realized gains from investment transactions					—				(8,549,700	)
Decrease in net assets resulting from distributions					—				(11,021,098	)
Fund Share Transactions
Net proceeds from shares sold					16,021,174				36,095,741
Net asset value of shares issued for reinvested dividends and distributions					—				11,073,166
Cost of shares redeemed					(56,001,890	)			(100,156,539	)
Decrease in net assets from Fund share transactions					(39,980,716	)			(52,987,632	)
Net increase (decrease) in net assets					335,229				(40,238,778	)
Net Assets (Note 1)
Beginning of period					439,982,956				480,221,734
End of period				$	440,318,185			$	439,982,956
Accumulated net investment loss				$	(7,722,601	)		$	(9,952,776	)
Changes in Shares Outstanding
Shares outstanding, beginning of period					17,300,155				19,355,096
Shares sold					593,285				1,392,333
Shares issued on reinvestment of distributions					—				437,227
Shares redeemed					(2,064,302	)			(3,884,501	)
Shares outstanding, end of period					15,829,138				17,300,155

See Notes to Financial Statements

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First Eagle Overseas Variable Fund

Financial Highlights

				Per share operating performance*
				Investment operations																Less dividends and distributions
Selected per share data for the period ended:				Net asset value, beginning of period				Net investment income				Net realized and unrealized gains (losses) on investments				Total investment operations				From net investment income				From capital gains				Total distributionss				Net asset value, end of period
Six Months Ended June 30, 2017 (unaudited)				$	25.43				0.13				2.26				2.39				—				—				—			$	27.82
December 31, 2016				$	24.81				0.16				1.12				1.28				(0.15	)			(0.51	)			(0.66	)		$	25.43
December 31, 2015				$	26.31				0.17				0.29				0.46				(0.18	)			(1.78	)			(1.96	)		$	24.81
December 31, 2014				$	29.76				0.17				(0.59	)			(0.42	)			(0.85	)			(2.18	)			(3.03	)		$	26.31
December 31, 2013				$	28.26				0.22				3.47				3.69				(0.54	)			(1.65	)			(2.19	)		$	29.76
December 31, 2012				$	26.23				0.22				3.64				3.86				(0.22	)			(1.61	)			(1.83	)		$	28.26

*  Per share amounts have been calculated using the average shares method.

**  Performance data quoted herein does not reflect charges imposed by variable annuity contracts and variable life insurance policies issued by the life insurance companies through which the Fund is offered. If those account-level fees and expenses were reflected, performance would be lower.

(a)  Not Annualized

(b)  Annualized

See Notes to Financial Statements.

												Ratios/Supplemental data
												Ratios to Average Net Assets of
Selected per share data for the period ended:				Total Return**				Net assets, end of period (thousands)				Operating expenses excluding earnings credits and/or fee waivers				Operating expenses including earnings credits and/or fee waivers				Net investment income excluding earnings credits and/or fee waivers				Net investment income including earnings credits and/or fee waivers				Portfolio turnover rate
Six Months Ended June 30, 2017 (unaudited)					9.40	%(a)		$	440,318				1.36	%(b)			1.35	%(b)			0.99	%(b)			1.00	%(b)			6.06	%(a)
December 31, 2016					5.17	%		$	439,983				1.30	%			1.30	%			0.60	%			0.60	%			6.44	%
December 31, 2015					1.84	%		$	480,222				1.30	%			1.30	%			0.61	%			0.61	%			11.86	%
December 31, 2014					(1.23	)%		$	545,000				1.28	%			1.28	%			0.54	%			0.54	%			15.23	%
December 31, 2013					13.25	%		$	609,998				1.26	%			1.26	%			0.73	%			0.73	%			12.14	%
December 31, 2012					14.83	%		$	611,625				1.26	%			1.26	%			0.79	%			0.79	%			10.11	%

Notes to Financial Statements (unaudited)

Note 1 — Significant Accounting Policies

First Eagle Variable Funds (the "Trust") is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended ("1940 Act"). The Trust consists of one portfolio, First Eagle Overseas Variable Fund (the "Fund"). The Trust is a Delaware statutory trust and was until March 31, 2004 a Maryland Corporation operating under the name First Eagle Variable Funds, Inc. The First Eagle Overseas Variable Fund seeks long-term growth of capital by investing primarily in equities, including common and preferred stocks, warrants or other similar rights, and convertible securities, issued by non-U.S. companies. The shares of the Fund may be purchased only by the separate accounts of insurance companies for the purpose of funding variable life insurance policies and variable annuity contracts. At June 30, 2017, the Fund is offered as an investment option by two insurance companies and accordingly a decision by any insurance company to withdraw its participation may have a negative impact on the Fund.

First Eagle Investment Management, LLC (the "Adviser"), a subsidiary of First Eagle Holdings, Inc. ("First Eagle Holdings"), manages the Fund. Private equity funds managed by The Blackstone Group, LP and Corsair Capital LLC and certain co-investors own a controlling interest in First Eagle Holdings.

The following is a summary of significant accounting policies adhered to by the Fund. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946—Investment Companies, which is part of U.S. generally accepted accounting principles ("GAAP").

a)  Investment valuation — The Fund computes its net asset value once daily as of the close of trading on each day the New York Stock Exchange ("NYSE") is open for trading. The net asset value per share is computed by dividing the total current value of the assets of the Fund, less its liabilities, by the total number of shares outstanding at the time of such computation.

A portfolio security (including an option), other than a bond, which is traded on a U.S. national securities exchange or a securities exchange abroad is generally valued at the price of the last sale on the exchange as of the close of business on the date on which assets are valued. If there are no sales on such date, such portfolio investment will be valued at the mean between the closing bid and asked prices (and if there is only a bid or only an asked price on such date, valuation will be at such bid or asked price for long or short positions, respectively). Securities, other than bonds, traded in the over-the-counter market are valued at the mean between the last bid and asked prices prior to the time of valuation (and if there is only a bid or only an asked price on such date, valuation will be at such bid or asked price for long or short positions, respectively), except if such unlisted security traded on the NASDAQ in which case it is valued at its last sale price (or, if available, the NASDAQ Official Closing Price). Such prices are provided by approved pricing vendors or other independent pricing sources.

All bonds, whether listed on an exchange or traded in the over-counter-market, for which market quotations are readily available, are generally priced at the evaluated bid price. Broker-Dealers or pricing services use multiple valuation techniques to determine value. In instances

Notes to Financial Statements (unaudited)

where sufficient market activity exists, dealers or pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the dealers or pricing services also utilize proprietary valuation models which may consider market transactions in comparable securities and the various relationships between securities in determining value and/or market characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon-rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair values. Short-term investments, maturing in sixty days or less, are valued at evaluated bid prices.

Commodities (such as physical metals) are valued at the spot price at the time trading on the NYSE closes (normally 4:00 p.m. E.S.T.), as provided by an independent pricing source.

Forward foreign currency exchange contracts are valued at the current cost of covering or offsetting such contracts by reference to forward currency rates at the time the NYSE closes (normally 4:00 p.m. E.S.T.), as provided by an independent pricing source.

The exchange rates as of the NYSE Close (normally 4:00 p.m. E.S.T.) are used to convert foreign security prices into U.S. dollars.

Any security that is listed or traded on more than one exchange (or traded in multiple markets) is valued at the relevant quotation on the primary exchange or market on which they are traded. In the absence of such a quotation, a security may be valued at the last quoted sales price on the most active exchange or market. The Fund uses pricing services to identify the market prices of publicly traded securities in its portfolio. When market prices are determined to be "stale" as a result of limited market activity for a particular holding, or in other circumstances when market prices are unavailable, such as for private placements, or determined to be unreliable for a particular holding, such holdings may be "fair valued" in accordance with procedures approved by the Board of Trustees ("Board"). The values assigned to the Fund's holdings therefore may differ on occasion from reported market values.

The Fund has adopted procedures under which movements in the prices for U.S. securities occurring after the close of a foreign market may require fair valuation of securities traded in that foreign market. The determination of whether a particular foreign investment should be fair valued will be based on review of a number of factors, including developments in foreign markets and security-specific events. The values assigned to the Fund's holdings therefore may differ on occasion from reported market values. The Board and the Adviser believe relying on the procedures as just described will result in prices that are more reflective of the fair market value of portfolio securities held by the Fund as of 4:00 p.m. E.S.T.

The Fund adopted provisions surrounding fair value measurements and disclosures that define fair value, establish a framework for measuring fair value in GAAP and expand disclosures about fair value measurements. This applies to fair value measurements that are already required or permitted by other accounting standards and is intended to increase consistency of those measurements and applies broadly to securities and other types of assets and liabilities.

Notes to Financial Statements (unaudited)

The Fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs or assumptions to valuation techniques used to measure fair value. These inputs are used in determining the value of the Fund's investments and are summarized in the following fair value hierarchy:

Level 1 — Quoted prices in active markets for identical securities.

Level 2 — Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3 — Other significant unobservable inputs (including the Fund's own assumption in determining the fair value of investments).

The significant unobservable inputs that may be used in determining valuations for investments identified within Level 3 are market comparables and the enterprise value of a company. Indications of value and quotations may be observable at any given time, but are currently treated by the Fund as unobservable. Significant changes in any of the unobservable inputs may significantly impact the fair value measurement. The impact is based on the relationship between each unobservable input and the fair value measurement.

Significant increases (decreases) in enterprise multiples may increase (decrease) the fair value measurement. Significant increases (decreases) in the discount for marketability, probability of insolvency and probability of default may decrease (increase) the fair value measurement.

Fair valuation of securities, other financial investments or other assets (collectively, "securities") held by the Fund shall be determined in good faith under the supervision and responsibility of the Board. The Board has created a Board Valuation Committee (the "Committee") to oversee the execution of the valuation and liquidity procedures for the Fund.

It is the policy of the Fund to recognize significant transfers between Levels 1, 2 and 3 and to value those transfers as of the beginning of the period.

The following is a summary of the Fund's inputs used to value the Fund's investments as of June 30, 2017:

Description				Level 1				Level 2(a)				Level 3				Totals
Assets:†
Common Stocks				$	69,186,387			$	253,833,512			$	—			$	323,019,899
Commodity*					30,848,075				—				—				30,848,075
Foreign Government Securities					—				10,846,816				769,956	(b)			11,616,772
Short-Term Investments					8,934				74,459,873				—				74,468,807
Forward Foreign Currency Exchange Contracts**					—				44,998				—				44,998
Total				$	100,043,396			$	339,185,199			$	769,956			$	439,998,551
Liabilities:
Forward Foreign Currency Exchange Contracts**				$	—			$	(424,430	)		$	—			$	(424,430	)
Total				$	—			$	(424,430	)		$	—			$	(424,430	)

Notes to Financial Statements (unaudited)

(a)  Transfers into/out of Level 2 represent value as of the beginning of the period. International common stocks valued at $247,269,824 were transferred from Level 1 to Level 2 during the six-month period ended June 30, 2017. At December 31, 2016, these securities were valued using quoted market prices in active markets; at June 30, 2017, these securities were valued based on fair value adjustment factors. There was no security transfer activity from Level 2 to Level 1 as of the six-month period ended June 30, 2017.

(b)  This investment is valued by brokers and pricing services. The inputs for this investment are not readily available or cannot be reasonably estimated and are generally those inputs described in Note 1(a).

†  See Schedule of Investments for additional detailed categorizations.

*  Represents gold bullion.

**  Forward Foreign Currency Exchange Contracts are valued at net unrealized appreciation (depreciation) on the investment.

Fair Value Level 3 activity for the six-month period ended June 30, 2017 was as follows:

				Foreign Government Securities				Rights				Total
Beginning Balance — market value				$	746,138			$	35,037			$	781,175
Purchases(1)					—				—				—
Sales(2)					—				(35,037	)			(35,037	)
Transfer In — Level 3					—				—				—
Transfer Out — Level 3					—				—				—
Accrued Amortization					(2,937	)			—				(2,937	)
Realized Gains (Losses)					—				—				—
Change in Unrealized Appreciation (Depreciation)					26,755				—				26,755
Ending Balance — market value				$	769,956			$	—			$	769,956
Change in unrealized gains or (losses) relating to assets still held at reporting date				$	26,755			$	—			$	26,755

(1)  Purchases include all purchases of securities and securities received in corporate actions.

(2)  Sales include all sales of securities, maturities, paydowns and securities tendered in corporate actions.

b)  Investment transactions and income — Investment transactions are accounted for on a trade date basis. The specific identification method is used in determining realized gains and losses from investment 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 accretes discounts and amortizes premiums on debt obligations using the effective yield method. Payments received from certain investments held by the Fund may be comprised of dividends, capital gains and return of capital. The Fund originally estimates the expected classification of such payments. The amounts may subsequently be reclassified upon receipt of information from the issuer.

c)  Expenses — Certain expenses are shared with the First Eagle Funds, an affiliated fund group. Such costs are generally allocated using the ratio of the Fund's average daily net assets relative