OFFITBANK INVESTMENT FUND INC, N-30D, 1997-08-07

OFFITBANK INVESTMENT FUND INC
N-30D, 1997-08-07

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OFFITBANK High Yield Fund

OFFITBANK Emerging Markets Fund

OFFITBANK Latin America Equity Fund

OFFITBANK New York Municipal Fund

OFFITBANK California Municipal Fund

---------------------------

SEMI-ANNUAL REPORT

JUNE 30, 1997

THE

[OFFITBANK LOGO]

INVESTMENT FUND, INC.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------

Dear Shareholders:

We are very pleased to present you with the unaudited Semi-Annual Report for the
OFFITBANK Investment Fund, Inc. for the period ended June 30, 1997.

As you know, this has been a very busy time for The OFFITBANK Investment Fund.
So far this year we have added a new portfolio, the California Municipal Fund,
to our four existing portfolios and in response to client demand, we continue to
launch new funds. On July 1, 1997 we started the U.S. Government Securities Fund
and the Mortgage Securities Fund which brings the total number of Funds in The
OFFITBANK Investment Fund to seven:

OFFITBANK High Yield Fund
OFFITBANK Emerging Markets Fund
OFFITBANK Latin America Equity Fund
OFFITBANK U.S. Government Securities Fund
OFFITBANK Mortgage Securities Fund
OFFITBANK New York Municipal Fund
OFFITBANK California Municipal Fund

Your reception of these Funds is very gratifying, and we thank you for your
support.

The specific results of the respective Funds, along with an investment and
market commentary from each portfolio manager, are part of this Semi-Annual
Report. I believe that each of these commentaries provides useful and
informative insights into our Funds, and I hope that you will find them helpful.

We greatly value your participation in our Funds. Let us know of your interests
and concerns as we continue to try to serve you better. If you have any
questions, please do not hesitate to call.

Sincerely,

[SIG]

Morris W. Offit

July 15, 1997
<PAGE>
OFFITBANK
HIGH YIELD FUND

- --------------------------------------------------------------------------------

The Fund's total return for the second quarter was 4.79%. The June 30, 1997 NAV
price of $10.27 compares favorably to the $10.01 NAV at the end of the first
quarter. The Fund continued to grow during the first half of 1997 as net assets
increased to $1,064 million as of June 30, 1997 from $852 million on December
31, 1996.

Since year end, the high yield market has responded favorably to the strong
equity market and relatively stable interest rates. The yield spread between
high yield and Treasurys has narrowed approximately 130 basis points over the
past 18 months. For the past several months, spreads have remained near their
historic lows. Within the high yield market, lower quality single-B issues
continued to outperform the better quality double-B sector.

The fundamental determinants of high yield spreads all appear positive. The past
few years have provided an excellent environment for high yield credits. A
strong equity market, readily available financing, and a high level of strategic
mergers and acquisitions have all helped. The present mix of monetary and fiscal
policy has reduced the volatility of economic activity. A stable economy
combined with a number of positive credit events has contributed to investor
acceptance of tighter high yield spreads. Credit losses are near record lows and
are expected to stay comfortably below the historic averages for a while.

The technical condition of the high yield market also looks strong. In addition
to record mutual fund cash flows, new investors with long investment horizons
continue to enter the market in growing numbers. Large state and city retirement
funds, foundations and insurance companies are early in the process of making
initial high yield allocations. Leveraged portfolios in the form of CBO's
(collateralized bond obligations) have returned to the market in a big way after
an absence of several years.

New issue supply has risen to record levels to meet the demand. Year-to-date
high yield new issuance exceeds $60 billion. The overall quality of the new
issue calendar is similar to last year's with slightly more single B's than
double B's and approximately 20% deferred pay securities. The trend toward
increased issuance of Rule 144A securities has accelerated this year and
recently accounted for as much as 90% of all new supply. Rule 144A allows
securities not registered with the SEC to be bought and sold by "qualified
institutional buyers." For issuers, Rule 144A enables them to get to market
quickly. A large number of new issues have been used to refinance existing
bonds. Over $10 billion of outstanding high yield debt has been called or
tendered for at premium prices including over $40 million held in the Fund.
Although demand for high yield issues is strong by any measure, there will be
times when new issue supply overwhelms the market. We would expect any spread
widening associated with such imbalances to be short-lived and self-correcting.

Even at today's historically tight yield spreads, we still find high yield
investments attractive. In the absence of either a sharp or prolonged downturn
in the economy and a related move to dramatically lower interest rates, high
yield should continue to add value over investment grade alternatives. The
compounding of the high yield spread creates a nearly insurmountable total
return advantage for time horizons beyond two years.

The long term success of high yield investing is a function of credit
experience. With intramarket quality spreads historically tight, it is difficult
to argue in favor of downgrading quality within the high yield market. It is
important to recognize that the high yield market encompasses a wide spectrum of
qualities with very different credit experiences. The better quality sectors, as
represented by issues initially rated double-B, have an annual loss rate of
approximately 60 to 70 basis points. The middle and lower tiers of the market
have a loss rate 4 to 5 times greater.

We continue to focus on the better quality segment of the high yield market. At
June 30, 1997 approximately 39% of the holdings in the Fund are rated either Ba3
or better by Moody's or BB- or better by Standard & Poor's. Seventy-one percent
of the holdings are rated at least B1 or B+. Many of the lower rated holdings
are either senior or secured where we believe the long term risk of loss is
minimal. For example, the two Repap credits were downgraded to CCC from BB- as
the parent company experienced liquidity problems earlier this year. The bonds
that we hold are secured by a first priority lien on two facilities whose value
we believe is well in excess of the value of the debt outstanding. Other lower
rated credits in which the Fund has large holdings include B2/B Cablevision
Systems, B3/B Adelphia Communications and B3/B Marcus Cable which are all
showing rapidly improving balance sheets. The Fund's largest holding is Stone
Container for which we expect to see major cyclical improvement in the near
future.

2
<PAGE>
- --------------------------------------------------------------------------------

The trend over the past few years has been for good high yield credits to get
better. Upgrades and mergers with better credits for higher quality high yield
issuers have increased and have exceeded downgrades. The Fund experienced a
number of positive credit events during the first half of 1997. Comcast was
upgraded and subsequently Microsoft announced plans to invest $1 billion in the
company. Fort Howard agreed to merge with investment grade rated James River.
And among other positives, Cablevision Systems acquired some cable systems in a
stock transaction that will substantially reduce debt leverage.

The inflows of new monies into the Fund will allow us to take advantage of new
purchase opportunities that we expect to develop as the new issue calendar moves
ahead.

Stephen T. Shapiro

July 15, 1997

3
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE (1.84%)
CORPORATE BONDS
Moog Inc. Sr Sub Notes 10.00%, 05/01/06.................................... $ 2,000,000 $ 2,103,422
Newport News Shipbuilding Sr Sub Notes 9.25%, 12/01/06..................... 3,750,000 3,918,750
Sequa Corp. Sr Notes 8.75%, 12/15/01....................................... 5,600,000 5,698,000
Sequa Corp. Sr Sub Notes 9.375%, 12/15/03.................................. 1,000,000 1,020,000
UNC, Inc. Sr Notes 9.125%, 07/15/03........................................ 6,500,000 6,841,250
-------------
19,581,422
-------------
BROADCAST/TELECOMMUNICATIONS (8.54%)
CORPORATE BONDS
All American Communications Inc. Sr Sub Notes 10.875%, 10/15/01............ 2,000,000 2,092,500
CCPR Services Sr Sub Notes 10.00%, 02/01/07 (144A)......................... 6,500,000(1) 6,467,500
Centennial Cellular Corp. Sr Notes 8.875%, 11/01/01........................ 10,500,000 10,421,250
Comcast Cellular Corp. Sr Notes 9.50%, 05/01/07 (144A)..................... 9,000,000(1) 9,022,500
Granite Broadcasting Corp. Sr Sub Notes 9.375%, 12/01/05................... 6,000,000 5,805,000
Heritage Media Corp. Sr Sub Notes 8.75%, 02/15/06.......................... 4,500,000 4,635,000
MFS Communications Co. Sr Discount Notes 0/9.375%, 01/15/04................ 5,000,000(2) 4,650,000
Paging Network Sr Sub Notes 10.125%, 08/01/07.............................. 11,000,000 10,670,000
PanAmSat L.P. Corp. Sr Sub Discount Notes 0/11.375%, 08/01/03.............. 3,500,000(2) 3,390,625
PriCellular Wireless Sr Notes 10.75%, 11/01/04............................. 3,000,000 3,150,000
Sinclair Broadcast Group Inc. Sr Sub Notes 10.00%, 09/30/05................ 4,000,000 4,120,000
Teleport Communications Group Inc. Sr Discount Notes 0/11.125%, 07/01/07... 10,000,000(2) 7,187,500
Teleport Communications Group Inc. Sr Notes 9.875%, 07/01/06............... 3,000,000 3,195,000
Vanguard Cellular Systems, Inc. Sr Debs. 9.375%, 04/15/06.................. 6,350,000 6,413,500
Viacom Inc. Sub Notes 8.00%, 07/07/06...................................... 10,000,000 9,650,000
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90,870,375
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CABLE (11.53%)
CORPORATE BONDS
Adelphia Communications Corp. Sr Notes 9.50%, 02/15/04..................... 6,826,523(3) 6,587,595
Adelphia Communications Corp. Sr Notes 9.875%, 03/01/07 (144A)............. 6,000,000(1) 5,797,500
Cablevision Systems Corp. Sr Sub Notes 9.25%, 11/01/05..................... 7,500,000 7,706,250
Cablevision Systems Corp. Sr Sub Notes 10.75%, 04/01/04.................... 3,600,000 3,717,000
Century Communications Corp. Sr Notes 8.875%, 01/15/07..................... 3,500,000 3,421,250
Century Communications Corp. Sr Notes 9.75%, 02/15/02...................... 6,500,000 6,727,500
Comcast Corp. Sr Sub Debs. 9.375%, 05/15/05................................ 8,000,000 8,410,000
Fundy Cable Ltd. Sr Notes 11.00%, 11/15/05................................. 3,000,000 3,240,000
Le Groupe Videotron Ltee. Sr Notes 10.625%, 02/15/05....................... 1,000,000 1,105,000
International Cabletel Sr Notes 10.00%, 02/15/07........................... 4,500,000 4,578,750
Jones Intercable Inc. Sr Sub Debs. 10.50%, 03/01/08........................ 7,000,000 7,577,500
Lenfest Communications, Inc. Sr Notes 8.375%, 11/01/05..................... 12,500,000 12,296,875
Marcus Cable Operating Sr Sub Gtd. Discount Notes 0/13.50%, 08/01/04....... 9,000,000(2) 7,807,500
Olympus Communications L.P. Sr Notes 10.625%, 11/15/06..................... 10,000,000 10,500,000
Rogers Cablesystems Ltd. Sr Secured 2nd Priority Notes 9.625%, 08/01/02.... 3,000,000 3,157,500
Rogers Cablesystems Ltd. Sr Secured 2nd Priority Notes 9.65%, 01/15/14..... 2,500,000(a) 1,846,622
Rogers Cablesystems Ltd. Sr Secured 2nd Priority Notes 10.00%, 03/15/05.... 3,000,000 3,232,500
Rogers Communications Inc. Sr Notes 9.125%, 01/15/06....................... 3,500,000 3,535,000
Tele West Plc Sr Discount Debs. 0/11.00%, 10/01/07......................... 12,000,000(2) 8,700,000
Videotron Holdings PLC Sr Discount Debs. 0/11.125%, 07/01/04............... 5,000,000(2) 4,543,750
Videotron Ltee. Sr Sub Notes 10.25%, 10/15/02.............................. 2,500,000 2,650,000
PREFERRED STOCKS
Cablevision Systems Corp. Pfd. 11.125% Series M............................ 54,324(3) 5,486,724
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122,624,816
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
4
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS (3.41%)
CORPORATE BONDS
Borden Chemicals & Plastics Sr Notes 9.50%, 05/01/05....................... $ 5,000,000 $ 5,250,000
Freeport-McMoran Resource Partners, L.P. Sr Sub Notes 8.75%, 02/15/04...... 2,000,000 2,050,000
Harris Chemical North America, Inc. Sr Secured Notes 10.25%, 07/15/01...... 7,500,000 7,743,750
ISP Holdings Inc. Sr Notes 9.00%, 10/15/03................................. 5,000,000 5,181,250
Pioneer Americas Acquisition Sr Secured Notes 9.50%, 06/15/07 (144A)....... 5,000,000(1) 4,925,000
Sifto Canada Inc. Sr Notes 8.50%, 07/15/00................................. 5,000,000 5,025,000
Terra Industries Inc. Sr Notes 10.50%, 06/15/05............................ 3,000,000 3,247,500
Uniroyal Chemical Co., Inc. Sr Notes 9.00%, 09/01/00....................... 2,750,000 2,853,125
-------------
36,275,625
-------------
CONSUMER GROUPS (5.84%)
CORPORATE BONDS
Chiquita Brands International Inc. Sr Notes 9.625%, 01/15/04............... 2,000,000 2,122,500
Chiquita Brands International Inc. Sr Notes 9.125%, 03/01/04............... 5,000,000 5,187,500
Cott Corp. Sr Notes 8.50%, 05/01/07........................................ 4,000,000 3,980,000
Fleming Companies Inc. Floating Rate Sr Notes 8.125%, 12/15/01............. 8,500,000(4) 8,500,000
Host Marriott Travel Plaza Sr Notes 9.50%, 05/15/05........................ 7,000,000 7,315,000
North Atlantic Trading Sr Notes 11.00%, 06/15/04 (144A).................... 2,500,000(1) 2,531,250
Pillowtex Corp. Sr Sub Notes 10.00%, 11/15/06.............................. 2,500,000 2,631,250
Revlon Consumer Products Sr Notes 9.375%, 04/01/01......................... 7,500,000 7,706,250
Revlon Inc. Sr Debs. 10.875%, 07/15/10..................................... 4,500,000 4,567,500
Ryder Transportation Inc. Sr Sub Notes 10.00%, 12/01/06.................... 3,000,000 3,090,000
Sealy Corp. Sr Sub Notes 10.25%, 05/01/03.................................. 3,000,000 3,135,000
Westpoint Stevens, Inc. Sr Sub Notes 9.375%, 12/15/05...................... 6,000,000 6,240,000
PREFERRED STOCKS
Pantry Pride Inc. Pfd. $14.875 Series B.................................... 11,000 1,100,000
CONVERTIBLE BONDS
Ivax Corp. Convertible Sub Notes 6.50%, 11/15/01........................... 4,500,000 3,999,375
-------------
62,105,625
-------------
FINANCIAL SERVICES/INSURANCE (3.26%)
CORPORATE BONDS
Americo Life Inc. Sr Notes 9.25%, 06/01/05................................. 3,000,000 3,060,000
Amresco Inc. Sr Sub Notes 10.00%, 03/15/04................................. 3,000,000 3,045,000
Navistar Financial Corp. Sr Sub Notes 8.875%, 11/15/98..................... 4,500,000 4,580,005
Navistar Financial Corp. Sr Sub Notes 9.00%, 06/01/02 (144A)............... 2,200,000(1) 2,263,250
Presidential Life Corp. Sr Notes 9.50%, 12/15/00........................... 3,500,000 3,622,500
Reliance Group Holdings, Inc. Sr Sub Notes 9.75%, 11/15/03................. 10,500,000 10,920,000
Veritas Holdings Sr Notes 9.625%, 12/15/03 (144A).......................... 7,000,000(1) 7,210,000
-------------
34,700,755
-------------
FOREST & PAPER PRODUCTS (6.58%)
CORPORATE BONDS
Crown Paper Co. Sr Sub Notes 11.00%, 09/01/05.............................. 3,500,000 3,500,000
Doman Industries Ltd. Sr Notes 8.75%, 03/15/04............................. 2,500,000 2,425,000
Fort Howard Corp. Pass Thru Cert. 11.00%, 01/02/02......................... 2,188,880 2,451,546
Fort Howard Corp. Sr Sub Notes 9.00%, 02/01/06............................. 4,500,000 4,736,250
Fort Howard Corp. Variable Rate Term Loan 8.19%, 12/31/02.................. 757,576(4) 761,364
Indah Kiat Finance Mauritius Ltd. Gtd. Sr Notes 10.00%, 07/01/07 (144A).... 5,000,000(1) 4,975,000
Maxxam Group Inc. Sr Notes 0/12.25%, 08/01/03.............................. 2,500,000(2) 2,300,000
Maxxam Group Inc. Sr Secured Notes 11.25%, 08/01/03........................ 3,000,000 3,105,000
Repap New Brunswick 1st Priority Floating Rate Sr Secured Notes 9.125%,
07/15/00.................................................................. 9,000,000(4) 8,910,000
Repap New Brunswick 1st Priority Sr Secured Notes 9.875%, 07/15/00......... 3,000,000 3,015,000
Repap Wisconsin Inc. 1st Priority Sr Secured Notes 9.25%, 02/01/02......... 8,000,000 8,060,000
Stone Container Corp. Sr Secured Notes 10.75%, 10/01/02.................... 5,000,000 5,200,000
Stone Container Corp. Sr Sub Notes 11.00%, 08/15/99........................ 3,500,000 3,587,500
Stone Container Finance Co. Sr Notes 11.50%, 08/15/06 (144A)............... 4,000,000(1) 4,080,000
Stone Container Co. Sr Sub Debs. 12.25%, 04/01/02.......................... 4,500,000 4,635,000
Tembec Finance Corp. Sr Notes 9.875%, 09/30/05............................. 2,000,000 2,062,500
</TABLE>

The accompanying notes are an integral part of the financial statements.
5
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREST & PAPER PRODUCTS (CONTINUED)
PREFERRED STOCKS
Asia Pulp & Paper Pfd. 12.00%, Series A (144A)............................. $ 6,000,000(1) $ 6,180,000
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69,984,160
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GENERAL INDUSTRIES/MANUFACTURING (12.84%)
CORPORATE BONDS
Advanced Micro Devices Sr Notes 11.00%, 08/01/03........................... 3,000,000 3,352,500
Allied Waste N.A. Sr Sub Notes 10.25%, 12/01/06 (144A)..................... 4,500,000(1) 4,815,000
American Standard Companies Inc. Sr Sub Discount Debs 0/10.50%, 06/01/05... 8,000,000(2) 7,870,000
Amphenol Corp. Sr Sub Notes 9.875%, 05/15/07............................... 3,000,000 3,097,500
Calmar Inc. Sr Sub Notes 11.50%, 08/15/05.................................. 2,500,000 2,650,000
Celestica International Sr Sub Notes 10.50%, 12/31/06...................... 5,000,000 5,375,000
Clark Materials Handling Corp. Sr Notes 10.75%, 11/15/06................... 3,500,000 3,701,250
Communication and Power Industries, Inc. Sr Sub Notes 12.00%, 08/01/05..... 2,500,000 2,712,500
Delco Remy International Inc. Sr Sub Notes 10.625%, 08/01/06 (144A)........ 4,000,000(1) 4,240,000
Dominion Textile (USA) Inc. Gtd. Sr Notes 9.25%, 04/01/06.................. 8,500,000 8,861,250
Emcor Group Inc. Notes 11.00%, 12/15/01.................................... 4,000,000 4,180,000
Envirosource Inc. Sr Notes 9.75%, 06/15/03................................. 3,000,000 2,955,000
Essex Group Inc. Sr Notes 10.00%, 05/01/03................................. 4,000,000 4,220,000
Exide Corp. Sr Notes 10.00%, 04/15/05...................................... 7,500,000 7,762,500
Foamex L.P. Sr Sub Notes 9.875%, 06/15/07 (144A)........................... 2,500,000(1) 2,556,250
Hayes Wheels International Inc. Sr Sub Notes 9.125%, 07/15/07 (144A)....... 7,000,000(1) 6,982,500
Intertek Finance Plc Sr Sub Notes 10.25%, 11/01/06......................... 2,000,000 2,085,000
MDC Communications Corp. Sr Sub Notes 10.50%, 12/01/06..................... 4,750,000 5,046,875
Nortek Inc. Sr Sub Notes 9.875%, 03/01/04.................................. 6,000,000 6,105,000
Southdown Inc. Sr Sub Notes 10.00%, 03/01/06............................... 5,500,000 6,008,750
Talley Manufacturing & Technology Inc. Sr Notes 10.75%, 10/15/03........... 2,500,000 2,600,000
Unisys Corp. Sr Notes 15.00%, 07/01/97..................................... 2,200,000 2,200,000
Unisys Corp. Sr Notes 10.625%, 10/01/99.................................... 5,500,000 5,692,500
Unisys Corp. Sr Notes 11.75%, 10/15/04..................................... 5,700,000 6,213,000
US Can Corp. Sr Sub Notes 10.125%, 10/15/06................................ 2,000,000 2,135,000
Viasystems Inc. Sr Sub Notes 9.75%, 06/01/07 (144A)........................ 3,750,000(1) 3,806,250
Vicap S.A. Gtd. Sr Notes 10.25%, 05/15/02 (144A)........................... 4,750,000(1) 4,886,563
Walbro Corp. Sr Notes 9.875%, 07/15/05..................................... 2,000,000 2,060,000
Williams Scotsman Inc. Sr Notes 9.875%, 06/01/07 (144A).................... 8,000,000(1) 8,000,000
CONVERTIBLE BONDS
Computervision Industries Conv. Sub Debs. 8.00%, 12/01/09.................. 6,521,000 4,369,070
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136,539,258
-------------
HEALTH CARE (2.15%)
CORPORATE BONDS
Beverly Enterprises Inc. Sr Notes 9.00%, 02/15/06.......................... 3,500,000 3,605,000
Integrated Health Services, Inc. Sr Sub Notes 9.50%, 09/15/07 (144A)....... 2,500,000(1) 2,556,250
Quest Diagnostic Inc. Sr Sub Notes 10.75%, 12/15/06........................ 3,000,000 3,217,500
Regency Health Services, Inc. Sr Sub Notes 9.875%, 10/15/02................ 4,700,000 4,794,000
Tenet Healthcare Corp. Sr Sub Notes 8.625%, 01/15/07....................... 4,500,000 4,590,000
PREFERRED STOCKS
Fresenius Medical Care Trust Pfd Securities 9.00%, 12/01/06................ 4,000,000 4,080,000
-------------
22,842,750
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
6
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOTELS & GAMING (5.83%)
CORPORATE BONDS
Alliance Gaming Corp. Sr Secured Notes 12.875%, 06/30/03................... $ 2,000,000 $ 2,260,000
Four Seasons Hotels Inc. Sr Notes 9.125%, 07/01/00 (144A).................. 3,000,000(1) 3,206,250
Grand Casinos Inc. 1st Mtg. Notes 10.125%, 12/01/03........................ 4,000,000 4,170,000
Host Marriott Properties Inc. Sr Secured Notes 9.50%, 05/15/05............. 8,000,000 8,320,000
John Q Hammons Hotels L.P. 1st Mtg. Notes 9.75%, 10/01/05.................. 7,000,000 7,297,500
Prime Hospitality Corp. 1st Mtg. Notes 9.25%, 01/15/06..................... 8,000,000 8,240,000
Prime Hospitality Corp. Sr Sub Notes 9.75%, 04/01/07....................... 6,000,000 6,330,000
Red Roof Inns Inc. Sr Notes 9.625%, 12/15/03............................... 4,500,000 4,578,750
Station Casinos Sr Sub Notes 9.625%, 06/01/03.............................. 3,250,000 3,217,500
Sun International Hotels Ltd. Sr Sub Notes 9.00%, 03/15/07................. 6,000,000 6,060,000
Trump Atlantic City 1st Mtg. Notes 11.25%, 05/01/06........................ 8,500,000 8,287,500
-------------
61,967,500
-------------
INDEPENDENT POWER (1.19%)
CORPORATE BONDS
California Energy Co. Inc. Sr Notes 10.25%, 01/15/04....................... 4,500,000 4,848,750
California Energy Co. Inc. Sr Notes 9.50%, 09/15/06........................ 1,500,000 1,601,250
California Energy Co. Inc. Ltd. Recourse Sr Secured Notes 9.875%,
06/30/03.................................................................. 1,800,000 1,908,000
Calpine Corp. Sr Notes 10.50%, 05/15/06.................................... 4,000,000 4,340,000
-------------
12,698,000
-------------
METALS/MINING/IRON/STEEL (5.33%)
CORPORATE BONDS
AK Steel Corp. Sr Notes 9.125%, 12/15/06................................... 5,000,000 5,137,500
Armco Inc. Sr Notes 9.375%, 11/01/00....................................... 5,600,000 5,740,000
CSN Iron S.A. Gtd. Notes 9.125%, 06/01/07 (144A)........................... 8,500,000(1) 8,308,750
EES Coke Battery Co. Inc. Series B, Sr Secured Notes 9.382%, 04/15/07
(144A).................................................................... 5,750,000(1) 5,893,750
Jorgensen Earle M. Co. Sr Notes 10.75%, 03/01/00........................... 2,500,000 2,487,500
Kaiser Aluminum & Chemical Corp. Sr Notes 9.875%, 02/15/02................. 4,500,000 4,623,750
Kaiser Aluminum & Chemical Corp. Sr Notes 10.875%, 10/15/06................ 3,000,000 3,221,250
Northwestern Steel & Wire Co. Sr Notes 9.50%, 06/15/01..................... 2,500,000 2,237,500
Oregon Steel Mills 1st Mtg. Notes 11.00%, 06/15/03......................... 5,000,000 5,387,500
Westmin Resources Ltd. Sr Secured Notes 11.00%, 03/15/07................... 4,500,000 4,702,500
Wheeling-Pittsburgh Corp. Sr Notes 9.375%, 11/15/03........................ 7,000,000 6,755,000
PREFERRED STOCKS
Freeport -- MC. Corp. Pfd Series Gold 08/01/03............................. 70,000 2,178,750
-------------
56,673,750
-------------
OIL/GAS (7.42%)
CORPORATE BONDS
Clark Oil & Refining Sr Notes 10.50%, 12/01/01............................. 4,000,000 4,130,000
Clark Refining & Marketing Holdings Sr Secured Notes 0.00%, 02/15/00....... 13,500,000 10,226,250
Cliffs Drilling Co. Sr Notes 10.25%, 05/15/03.............................. 2,000,000 2,140,000
Crown Central Petroleum Corp. Sr Notes 10.875%, 02/01/05................... 2,400,000 2,520,000
DI Industries Sr Notes 8.875%, 07/01/07.................................... 2,000,000 1,970,000
Energy Corp. of America Sr Sub Notes 9.50%, 05/15/07 (144A)................ 4,500,000(1) 4,455,000
Ferrellgas Partner L.P. Sr Notes 9.375%, 06/15/06.......................... 7,000,000 7,227,500
Giant Industries Inc. Sr Sub Notes 9.75%, 11/15/03......................... 1,800,000 1,845,000
Gulf Canada Resources, Ltd. Sr Sub Debs. 9.25%, 01/15/04................... 4,000,000 4,195,000
J Ray McDermott S.A. Sr Sub Notes 9.375%, 07/15/06......................... 6,500,000 6,678,750
Maxus Energy Corp. Medium Term Notes 11.02%, 05/16/01...................... 1,000,000 1,075,000
Maxus Energy Corp. Sr Notes 9.875%, 10/15/02............................... 1,000,000 1,050,000
Nuevo Energy Co. Sr Sub Notes 9.50%, 04/15/06.............................. 3,000,000 3,150,000
Parker Drilling Co. Sr Notes 9.75%, 11/15/06............................... 8,000,000 8,420,000
Petroleum Heat & Power Sub Notes 10.125%, 04/01/03......................... 4,500,000 4,410,000
Pride Petroleum Services Sr Notes 9.375%, 05/15/07......................... 3,000,000 3,120,000
Transamerican Energy Corp. Sr Secured Notes 11.50%, 06/15/02 (144A)........ 7,000,000(1) 6,772,500
Wainoco Oil Corp. Sr Notes 12.00%, 08/01/02................................ 2,500,000 2,600,000
</TABLE>

The accompanying notes are an integral part of the financial statements.
7
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL/GAS (CONTINUED)
CONVERTIBLE BONDS
Reading & Bates Energy Co. Conv. Eurobonds 8.00%, 12/31/98................. $ 1,871,000 $ 2,928,115
-------------
78,913,115
-------------
PACKAGING/CONTAINERS (3.12%)
CORPORATE BONDS
Container Corp. of America Sr Notes 9.75%, 04/01/03........................ 5,000,000 5,325,000
Container Corp. of America Sr Notes 11.25%, 05/01/04....................... 3,500,000 3,832,500
Gaylord Container Corp. Sr Notes 11.50%, 05/15/01.......................... 6,500,000 6,820,450
Gaylord Container Corp. Sr Notes 9.75%, 06/15/07 (144A).................... 6,500,000(1) 6,483,750
Owens-Illinois Corp. Sr Sub Notes 10.00%, 08/01/02......................... 4,000,000 4,200,000
Riverwood International Corp. Sr Notes 10.25%, 04/01/06.................... 3,000,000 2,977,500
Silgan Corp. Sr Sub Debs. 9.00%, 06/01/09 (144A)........................... 3,500,000(1) 3,513,125
-------------
33,152,325
-------------
PUBLISHING/ADVERTISING (2.92%)
CORPORATE BONDS
Hollinger International Publishing Sr Sub Notes 9.25%, 03/15/07............ 4,000,000 4,080,000
Lamar Advertising Co. Sr Sub Notes 9.625%, 12/01/06........................ 4,500,000 4,612,500
Outdoor Systems Inc. Sr Sub Notes 8.875%, 06/15/07 (144A).................. 9,000,000(1) 8,741,250
Petersen Publishing Sr Sub Notes 11.125%, 11/15/06......................... 3,000,000 3,345,000
Universal Outdoor Inc. Sr Sub Notes 9.75%, 10/15/06........................ 4,500,000 4,657,500
World Color Press Inc. Sr Sub Notes 9.125%, 03/15/03....................... 5,400,000 5,589,000
-------------
31,025,250
-------------
REAL ESTATE (2.31%)
CORPORATE BONDS
Granite Development Partners L.P. Sr Notes 10.83%, 11/15/03................ 2,000,000 1,970,000
Rockefeller Center Properties Sr Notes 0.00%, 12/31/00..................... 12,500,000 8,578,125
MORTGAGE BACKED SECURITY
Nykredit Mtg. Notes 9.00%, 10/01/26........................................ 65,700,000(b) 10,324,710
RTC Mtg. Tr. Series 1994-C1 CL F Mtg. Ln. Bkd. Bonds 8.00%, 06/25/26....... 2,264,279 2,207,672
RTC Mtg. Tr. Series 1994-C2 CL G Mtg. Ln. Bkd. Bonds 8.00%, 04/25/25....... 1,555,632 1,524,519
-------------
24,605,026
-------------
RETAIL (1.91%)
CORPORATE BONDS
Grand Union Co. Sr Notes 12.00%, 09/01/04.................................. 2,000,000 1,480,000
Pathmark Stores Inc. Sr Sub Notes 9.625%, 05/01/03......................... 5,000,000 4,825,000
Petro Stopping Centers Sr Notes 10.50%, 02/01/07 (144A).................... 4,000,000(1) 4,150,000
TLC Beatrice International Holdings Inc. Sr Notes 11.50%, 10/01/05......... 3,500,000 3,937,500
TravelCenters of America Sr Sub Notes 10.25%, 04/01/07..................... 4,000,000 4,100,000
MORTGAGE BACKED SECURITY
National Convenience Realty Co. Secured Notes 9.50%, 06/30/03.............. 1,759,298 1,838,466
-------------
20,330,966
-------------
TRANSPORTATION (3.25%)
CORPORATE BONDS
Coach USA Inc. Sr Sub Notes 9.375%, 07/01/07 (144A)........................ 3,000,000(1) 2,970,000
Eletson Holdings Inc. 1st Pfd. Mtg. Notes 9.25%, 11/15/03.................. 3,000,000 3,037,500
GPA Delaware Inc. Gtd. Notes 8.75%, 12/15/98............................... 4,000,000 4,070,000
Sea Containers Ltd. Sr Notes 9.50%, 07/01/03............................... 3,000,000 3,112,500
Stena AB Sr Notes 10.50%, 12/15/05......................................... 5,000,000 5,443,750
Viking Star Shipping 1st Pfd. Mtg. Notes 9.625%, 07/15/03.................. 2,000,000 2,110,000
</TABLE>

The accompanying notes are an integral part of the financial statements.
8
<PAGE>
OFFITBANK
HIGH YIELD FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION (CONTINUED)
TRUST CERTIFICATES
Piedmont Aviation Inc. Equipment Trust Certificates 1988 Series A 9.80%,
01/15/00.................................................................. $ 942,000 $ 956,130
Piedmont Aviation Inc. Equipment Trust Certificates 1988 Series F 10.15%,
03/28/03.................................................................. 1,000,000 1,010,000
U.S. Air Inc. Equipment Trust Certificates 1988 Series B 9.80%, 01/15/00... 654,000 662,175
U.S. Air Inc. Equipment Trust Certificates 1988 Series B 10.00%,
01/15/02.................................................................. 1,334,000 1,370,685
U.S. Air Inc. Equipment Trust Certificates 1990 Series A 11.20%,
03/19/05.................................................................. 3,697,140 3,974,425
U.S. Air Inc. Equipment Trust Certificates 1990 Series B 10.33%,
06/27/02.................................................................. 803,000 835,120
U.S. Air Inc. Equipment Trust Certificates 1990 Series D 10.28%,
06/27/01.................................................................. 837,000 864,203
U.S. Air Inc. Equipment Trust Certificates 1990 Series D 10.43%,
06/27/04.................................................................. 1,014,000 1,072,305
U.S. Air Inc. Sr Notes 10.00%, 07/01/03.................................... 3,000,000 3,105,000
-------------
34,593,793
-------------
UTILITIES -- ELECTRIC (2.27%)
CORPORATE BONDS
Beaver Valley Funding Corp. Debs. 8.625%, 06/01/07......................... 1,499,000 1,543,970
Cleveland Electric Illum Medium Term Notes 8.16%, 11/30/98................. 3,500,000 3,561,250
Cleveland Electric Illum Medium Term Notes 9.25%, 07/29/99................. 1,000,000 1,042,500
Cleveland Electric Illum 1st Mtg. Bonds 9.50%, 05/15/05.................... 4,000,000 4,260,000
CTC Mansfield Funding Corp. Secured Lease Obligation Bonds 10.25%,
03/30/03.................................................................. 4,192,000 4,244,400
Long Island Lighting Co. Debs. 7.125%, 06/01/05............................ 4,000,000 3,950,740
Tucson Electric Power Company, Springerville Unit 1 Series B-6 10.21%,
01/01/09.................................................................. 2,725,878 2,725,878
Tucson Electric Power Company, Springerville Unit 1 Series B-5 10.21%,
01/01/09.................................................................. 945,473 945,473
Tucson Electric Power Company, Springerville Unit 1 Series B-7 10.21%,
01/01/09.................................................................. 697,082 697,082
Tucson Electric Power Company, Springerville Unit 1 Series B-4 10.21%,
01/01/09.................................................................. 554,905 554,905
Tucson Electric Power Company, Springerville Unit 1 Series B-2 10.21%,
01/01/09.................................................................. 356,492 356,492
Tucson Electric Power Company, Springerville Unit 1 Series B-3 10.21%,
01/01/09.................................................................. 246,185 246,182
-------------
24,128,872
-------------
SHORT TERM INVESTMENTS (7.66%)
The Bank of New York Repurchase Agreement 5.50%, 07/01/97 (dated 06/30/97;
proceeds $81,539,956, collateralized by $50,000,000 U.S. Treasury Notes,
6.50%, due 05/15/05, and $32,850,000 U.S. Treasury Notes, 5.875%, due
11/15/99, valued at $50,320,036 and $32,854,920, respectively)............ 81,527,500 81,527,500
-------------
TOTAL INVESTMENTS (COST $1,016,227,684) (99.20%)........................... 1,055,140,883
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (0.80%)..................... 8,522,022
-------------
TOTAL NET ASSETS (100.00%)................................................. $1,063,662,905
-------------
-------------
</TABLE>

- ---------------
Principal denominated in the following currencies:
(a) Canadian Dollar (b) Danish Krone

(1) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

(2) Step-Up bond.

(3) Payment In Kind Security.

(4) Interest rate reflected is rate in effect at June 30, 1997.

The accompanying notes are an integral part of the financial statements.
9
<PAGE>
OFFITBANK
EMERGING MARKETS FUND

- --------------------------------------------------------------------------------

The OFFITBANK Emerging Markets Fund produced a total return of 6.88% for the
period of March 31, 1997 to June 30, 1997. The year-to-date total return as of
June 30, 1997 was 9.45%. The J. P. Morgan Emerging Markets Index Plus and J. P.
Morgan Latin Eurobond Index returned 9.42% and 6.56% over the second quarter and
10.27% and 8.42% year-to-date, respectively. Our chosen benchmark of a 50%/50%
composite of the two indices returned 7.99% for the second quarter and 9.34%
year-to-date.

As of June 30, 1997, the NAV was $11.50 and the 30 day SEC yield was 8.41%. As
of June 30, 1997 the Fund's approximate average maturity was 7.35 years and
average duration of 4 years.

The Fund continues to focus on good quality corporate Eurobonds and local market
issues in the Latin American region where we see some of the most attractive
investment opportunities in Emerging Markets. Emerging Markets corporate
Eurobonds, which constitute what we consider "International High Yield,"
continue to offer spreads of 250 - 400 basis points over similar duration U.S.
Treasurys for Single B to Double B rated or equivalent issues.

At quarter end, the Fund's assets were allocated 52% to Eurobonds, 36% to Brady
and pre-Brady sovereign debt, 9% to local market instruments, and 3% in cash and
accrued income. The Fund maintained a 94% allocation to Latin America assets
with the largest allocations to Brazil (32%), Mexico (20%), and Argentina (21%).
The Fund also remains focused on dollar-denominated assets which comprised 92%
of the overall portfolio (including the 1% cash holding).

The second quarter of 1997 continued to experience a resurgence of interest in
Emerging Markets investments among global investors. By mid-April, concern over
the direction of U.S. interest rates and the de-leveraging among hedge fund
investors and cross-over buyers from other sectors (domestic High Yield and
other non-traditional Emerging Markets investors) had run its course resulting
in oversold conditions. The net result was that exceptional value could be found
in Emerging Markets debt, especially among corporate dollar-denominated
Eurobonds.

In early June, the Brazilian government issued US$3 billion in Eurobonds and
retired approximately US$2.25 billion in Brady bonds. We see these transactions
as further evidence of declining importance of Brady assets and the increasing
significance of corporates in the Emerging Markets debt universe.

The Fund selectively took advantage of good quality new issues and attractive
opportunities presented by the repricing of the market. This is evidenced by the
increase in Eurobond exposure in the Fund to 52% at June 30, from 40% at March
31. We remain positive on overall macroeconomic and political trends in the
major markets in which we are invested, as well as the increasing
competitiveness of those companies whose debt the Fund holds.

If you have any questions regarding the portfolio, or our strategy, please call
us.

Richard M. Johnston Wallace Mathai-Davis

July 15, 1997

10
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT
ARGENTINA (15.58%)
Argentina Peso Bocon Pro-1 Floating Rate Bonds, 3.2424%, 04/01/07.......... $ 5,000,000(d)(4) $ 5,260,789
Argentina Brady Discount Floating Rate Bonds, 6.875%, 03/31/23............. 3,000,000(4) 2,591,250
Argentina Brady Floating Rate Bonds, 6.75%, 03/31/05....................... 9,942,500(4) 9,345,950
City of Buenos Aires Bonds, 11.25%, 04/11/07 (144A)........................ 4,000,000(1) 4,340,000
Republic of Argentina Global Bonds, 10.50%, 11/14/02....................... 4,500,000(c) 2,961,274
Republic of Argentina Global Bonds, 11.375%, 01/30/17...................... 2,000,000 2,229,000
-------------
26,728,263
-------------
BRAZIL (17.33%)
Brazil Brady Capitalization Step-Up Bonds, 4.50/8.00%, 04/15/14............ 10,253,948(3) 8,241,610
Brazil Brady DCB Floating Rate Bonds, 6.9375%, 04/15/12.................... 12,000,000(4) 9,900,000
Brazil Brady Discount Z Floating Rate Bonds, 6.875%, 04/15/24.............. 7,500,000(4) 6,309,375
Brazilian BBC Discount Note, 0%, 09/03/97.................................. 2,007,000(a) 1,792,366
Brazilian LTN Notes, 08/01/97.............................................. 630,000(a) 571,787
Brazilian NTN-D Dollar Indexed, 07/01/97................................... 2,617,000(a) 2,906,986
-------------
29,722,124
-------------
DOMINICAN REPUBLIC (2.04%)
Dominican Republic Brady PDI Floating Rate Bonds, 6.4375%, 08/30/09........ 4,000,000(4) 3,495,000
-------------
ECUADOR (3.63%)
Ecuador Brady Discount Floating Rate Bonds, 6.4375%, 02/28/25.............. 6,500,000(4) 4,647,500
Republic of Ecuador Bonds, 11.25%, 04/25/02................................ 1,500,000 1,582,500
-------------
6,230,000
-------------
MEXICO (2.87%)
Mexican Global Bonds, 11.50%, 05/15/26..................................... 1,700,000 1,942,250
United Mexican States Bonds, 10.375%, 01/29/03............................. 4,500,000(c) 2,971,601
-------------
4,913,851
-------------
MOROCCO (0.92%)
Morocco Snap Notes, 11.50%, 01/29/09....................................... 2,500,000(c) 1,570,568
-------------
PERU (3.47%)
Peru Brady FLIRB Floating Rate Bonds, 3.25%, 03/07/17...................... 2,750,000(4) 1,646,562
Peru Brady PDI Floating Rate Bonds, 4.00%, 03/07/17........................ 6,645,000(4) 4,302,637
-------------
5,949,199
-------------
VENEZUELA (9.12%)
Venezuela Brady FLIRB Floating Rate Bonds, 4.1875%, 03/31/07............... 9,047,619(4) 8,414,286
Venezuela Deutschemark Linked Notes, 10.00%, 11/24/03...................... 5,750,000(c) 3,673,006
Venezuela Republic Bonds, 10.25%, 10/04/03................................. 5,500,000(c) 3,557,803
-------------
15,645,095
-------------
AUTO PARTS (3.06%)
BRAZIL
Abril S.A., 12.00%, 10/25/03............................................... 2,000,000 2,215,000
Iochpe Maxion S.A., 12.375%, 11/08/02...................................... 3,000,000 3,026,250
-------------
5,241,250
-------------
BANKS (7.19%)
ARGENTINA
Banco Credito Argentino, 9.50%, 04/24/00 (144A)............................ 1,000,000(1) 1,035,000
Banco Roberts, 11.75%, 11/16/00............................................ 300,000 324,000
-------------
1,359,000
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
11
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS (CONTINUED)
CHILE
Citibank Chilean Peso-Linked Time Deposit, UF+4.25%, 08/08/97.............. $ 418,100,000(b)(2) $ 1,015,037
Citibank Chilean Peso-Linked Time Deposit, UF+5.35%, 10/30/97.............. 540,767,641(b)(2) 1,396,339
Citibank Chilean Peso-Linked Time Deposit, UF+4.80%, 12/02/97.............. 774,521,000(b)(2) 1,869,800
Citibank Chilean Peso-Linked Time Deposit, UF+4.95%, 05/14/98.............. 700,561,311(b)(2) 1,698,155
-------------
5,979,331
-------------
MEXICO
Grupo Financiero Banamex Convertible, 11.00%, 07/15/03 (144A).............. 400,000(1) 427,000
-------------
MOROCCO
Morocco Tranche A Loan, 6.8125%, 01/01/09.................................. 5,000,000(2)(4) 4,575,000
-------------
BUILDING MATERIALS (2.03%)
MEXICO
Cemex, 12.75%, 07/15/06.................................................... 700,000 812,000
Cemex, 12.75%, 07/15/06 (144A)............................................. 2,300,000(1) 2,668,000
-------------
3,480,000
-------------
CONSTRUCTION (2.65%)
ARGENTINA
Compania Latinoamericano de Infraestructura & Servicios S.A., 11.625%,
06/01/04 (144A)........................................................... 2,000,000(1) 2,100,000
-------------
MEXICO
Empresas ICA Sociedad, 11.875%, 05/30/01 (144A)............................ 2,000,000(1) 2,180,000
Empresas ICA Sociedad, 11.875%, 05/30/01................................... 250,000 272,500
-------------
2,452,500
-------------
HOTEL (2.11%)
MEXICO
Grupo Posadas S.A., 10.375%, 02/13/02 (144A)............................... 3,500,000(1) 3,613,750
-------------
INDUSTRIAL (6.94%)
BRAZIL
Arisco Producto Alimenticios, 10.75%, 05/22/05............................. 4,500,000 4,601,250
-------------
MEXICO
Cydsa S.A., 9.375%, 06/25/02 (144A)........................................ 3,000,000(1) 2,988,750
Vicap S.A., 10.25%, 05/15/02 (144A)........................................ 3,500,000(1) 3,587,500
Vicap S.A., 10.25%, 05/15/02............................................... 700,000 717,500
-------------
7,293,750
-------------
IRON/STEEL (8.74%)
ARGENTINA
Acindar S.A., 11.25%, 02/15/04............................................. 4,250,000 4,494,375
Industrias Metalurgicas Pescarm, 9.50%, 05/31/02 (144A).................... 2,500,000(1) 2,500,000
-------------
6,994,375
-------------
BRAZIL
CSN Iron, 9.125%, 06/01/07 (144A).......................................... 5,000,000(1) 4,862,500
-------------
MEXICO
ISPAT Mexicana S.A., 10.375%, 03/15/01..................................... 3,000,000 3,146,250
-------------
MEDIA (7.37%)
BRAZIL
Globo Communicacoes, 10.50%, 12/20/06 (144A)............................... 2,500,000(1) 2,656,250
RBS Participacoes S.A., Putable 11.00%, 04/01/07 (144A).................... 2,000,000(1) 2,095,000
RBS Participacoes S.A., Putable 14.00%, 12/15/03........................... 1,780,000 2,069,250
RBS Participacoes S.A., Putable 14.00%, 12/15/03 (144A).................... 500,000(1) 581,250
-------------
7,401,750
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
12
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
MEXICO
Grupo Televisa S.A. Step-Up Callable Bonds, 0/13.25%, 05/15/08 (Reg)....... $ 1,000,000(3) $ 690,000
Grupo Televisa S.A. Step-Up Callable Bonds, 0/13.25%, 05/15/08............. 3,150,000(3) 2,173,500
Grupo Televisa S.A. Step-Up Callable Bonds, 0/13.25%, 05/15/08 (144A)...... 850,000(1)(3) 586,500
T.V. Azteca S.A., 10.125%, 02/15/04 (144A)................................. 1,750,000(1) 1,787,187
-------------
5,237,187
-------------
PAPER/PULP (2.60%)
MEXICO
Grupo Industrial Durango, 12.00%, 07/15/01................................. 1,000,000 1,087,500
Grupo Industrial Durango, 12.625%, 08/01/03................................ 3,000,000 3,367,500
-------------
4,455,000
-------------
PETROCHEMICALS (1.32%)
BRAZIL
Opp Petroquimica, Putable 11.50%, 02/23/04 (144A).......................... 2,150,000(1) 2,262,875
-------------
UTILITIES (0.55%)
BRAZIL
Companhia Energetica Sao Paolo, 9.25%, 05/10/01............................ 1,500,000(c) 938,898
-------------
OPTIONS (0.09%)
Brazilian Capitalization Bond Put Option, 10/31/97............................ 112,610 146,396
Brazilian Real Put Option, 11/03/97........................................... 30,000 13,500
-------------
159,896
-------------
SHORT TERM INVESTMENTS (1.12%)
Chase Manhattan Bank Repurchase Agreement, 5.50%, 07/01/97 (dated 06/30/97;
proceeds $1,914,761, collateralized by $1,950,000 U.S. Treasury Notes,
5.125%, due 04/30/98, valued at $1,940,555).................................. 1,914,468 1,914,468
-------------
TOTAL INVESTMENTS (COST $165,703,175) (100.73%)............................ 172,750,130
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (-0.73%).................... (1,259,046)
-------------
TOTAL NET ASSETS (100.00%)................................................. $ 171,491,084
-------------
-------------
</TABLE>

- ---------------
Principal denominated in the following currencies:
(a) Brazilian Real (b) Chilean Peso (c) German Deutschemark (d)
Argentine Peso
(1) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

(2) Illiquid Security.

(3) Step-Up bond.

(4) Interest rate reflected is rate in effect at June 30, 1997.

The accompanying notes are an integral part of the financial statements.
13
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND

- --------------------------------------------------------------------------------

The OFFITBANK Latin America Equity Fund, for the period of March 31, 1997 to
June 30, 1997, produced a total return of 18.04%; the total return year-to-date
as of June 30, 1997 was 32.35%. The net asset value per share as of June 30,
1997 was $15.32. The Barings Emerging Markets Latin America Equity Index
(BEMILAM) returned 21.81% for the second quarter and 40.28% year-to-date as of
June 30, 1997.

As you know, the Fund's shareholders approved, effective May 1, 1997, changing
the investment objective of the Fund to permit 100% equity investment in order
to take advantage of the increasing attractiveness of Latin American equity. Our
clients now have a clearer choice when making their own asset allocation
decisions. The Fund's name was also changed from the OFFITBANK Latin America
Total Return Fund to the OFFITBANK Latin America Equity Fund to better reflect
its new objective.

As of June 30, 1997, the Fund's assets were allocated 98.4% to equity, 0.4% to
fixed income, and 1.2% to cash and accrued interest. The Fund was diversified
across 6 countries with the highest weightings concentrated in the largest
economies of Brazil (41%), Mexico (21%), and Argentina (19%). The Fund held 81
separate issues and was diversified across 18 industries with its largest
positions in Telecommunications (20%), Electric Utilities (19%), and Iron/Steel
(11%) and Oil/Gas (7%). The Fund's focus on basic industries reflects the
dynamism of these sectors in the ongoing transformation of Latin American
economies.

The second quarter of 1997 continued the trend of increasing international
interest in investing in Latin American equities, prompted by accelerating
economic growth in the region and several important equity issuances in the
international markets.

We believe that positive local news on privatization, economic reform, and
growth will be the main drivers of the Latin American equity markets for the
remainder of 1997. Furthermore, additional equity offerings in international
markets will continue to raise awareness of Latin America's investment potential
through year end.

If you have any questions regarding the portfolio or our strategy, please call
me.

Richard M. Johnston

July 15, 1997

14
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
EQUITY SECURITIES (98.60%)
AGRICULTURE (0.66%)
BRAZIL
Fertilizantes Fosfatados S.A. -- Preferred Stock.......................... 78,800(b) $ 444,292
-------------
AUTO PARTS/RELATED (3.10%)
BRAZIL
Iochpe Maxion S.A. -- Preferred Stock..................................... 4,600(b) 544,228
-------------
MEXICO
Corporacion Sanluis S.A. de C.V. -- Common Stock.......................... 114,200(a) 845,979
-------------
PERU
Ferreyros S.A. -- Common Stock............................................ 613,600(d) 706,219
-------------
BANKS (6.92%)
ARGENTINA
Banco Frances del Rio de la Plata S.A. -- ADR............................. 24,480(2) 795,600
Banco de Galicia -- ADR................................................... 29,634(2) 781,597
Banco del Suquia S.A. -- Common Stock..................................... 140,000(c) 544,682
-------------
2,121,879
-------------
BRAZIL
Banco Bradesco S.A. -- Preferred Stock.................................... 70,800(b) 703,485
Banco Itau S.A. -- Preferred Stock........................................ 1,103(b) 620,877
Uniao de Bancos Brasileiras -- Preferred Stock............................ 14,190(b) 518,075
-------------
1,842,437
-------------
MEXICO
Grupo Financiero Banorte -- Class B Common Stock.......................... 475,000(a) 509,528
-------------
PERU
Banco de Credito del Peru S.A. -- Common Stock............................ 100,000(d) 200,000
-------------
BEVERAGES (5.06%)
CHILE
Embotelladora Andina -- ADR............................................... 43,300(2) 928,244
Vina Concha y Toro -- ADR................................................. 13,400(2) 414,562
-------------
1,342,806
-------------
MEXICO
Coca-Cola Femsa -- ADR.................................................... 21,300(2) 1,099,612
Panamerican Beverages Inc. -- ADR......................................... 29,600(2) 973,100
-------------
2,072,712
-------------
BREWERY (3.74%)
ARGENTINA
Quilmes Industrial S.A. -- ADR............................................ 49,400(2) 574,275
-------------
BRAZIL
Companhia Cervejaria Brahma -- Preferred Stock............................ 750(b) 569,831
-------------
MEXICO
Grupo Modelo S.A. -- Common Stock......................................... 130,800(a) 909,525
-------------
PERU
Union Cerveceria Backus & Johnston S.A. -- Common Stock................... 452,000(d) 470,762
-------------
BUILDING MATERIALS (3.06%)
ARGENTINA
Corcemar S.A. -- Common Stock............................................. 125,761(c) 798,702
Juan Minetti S.A. -- Common Stock......................................... 98,000(c) 470,471
-------------
1,269,173
-------------
CHILE
Maderas y Sinteticos S.A. -- ADR.......................................... 14,400(2) 239,400
-------------
MEXICO
Cementos Apasco S.A. de C.V. -- Common Stock.............................. 77,000(a) 556,802
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
15
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES (CONTINUED)
CHEMICALS (0.87%)
CHILE
Quimica Y Minera Chile S.A. -- ADR........................................ 8,900(2) $ 588,512
-------------
CONSTRUCTION (0.88%)
MEXICO
Empresas ICA Sociedad S.A. de C.V. -- ADR................................. 37,000(2) 594,312
-------------
FOOD PROCESSING (0.74%)
BRAZIL
Perdigao S.A. -- Preferred Stock.......................................... 211,400(b) 498,262
-------------
INDUSTRIAL (3.70%)
MEXICO
Desc S.A. -- ADR.......................................................... 43,496(2) 1,266,821
Grupo Alfa S.A. -- Class A Common Stock................................... 181,114(a) 1,234,247
-------------
2,501,068
-------------
IRON/STEEL (10.62%)
ARGENTINA
Acindar S.A. -- Common Stock.............................................. 430,493(c) 1,097,922
Siderar S.A. -- Common Stock.............................................. 322,400(c)(4) 1,315,589
Siderca S.A. -- Common Stock.............................................. 212,500(c) 550,457
-------------
2,963,968
-------------
BRAZIL
Companhia Siderurgica Nacional S.A. -- Common Stock....................... 17,300(b) 567,659
Gerdau S.A. -- Preferred Stock............................................ 67,580(b) 1,186,819
-------------
1,754,478
-------------
MEXICO
Hylsamex S.A. de C.V. -- Common Stock..................................... 203,480(a) 1,065,676
Industrias CH, S.A. -- Common Stock....................................... 107,000(a)(4) 430,079
Tubos de Acero de Mexico -- ADR........................................... 51,650(2) 955,525
-------------
2,451,280
-------------
MANUFACTURING (1.82%)
BRAZIL
Ericsson Telecomunicacoes S.A. -- Preferred Stock......................... 20,400(b) 1,225,621
-------------
MEDIA (0.30%)
MEXICO
Grupo Radio Centro S.A. -- ADR............................................ 17,400(2) 204,450
-------------
METALS AND MINING (3.43%)
BRAZIL
Companhia Vale do Rio Doce S.A. -- Preferred Stock........................ 40,400(b) 903,669
-------------
MEXICO
Compania Minera Autlan -- Series B Common Stock........................... 839,000(a) 384,347
-------------
PERU
Minas Buenaventura -- ADR................................................. 11,000(2) 216,562
Southern Peru Copper Corp. -- ADR......................................... 41,800(2) 815,100
-------------
1,031,662
-------------
OIL/GAS (7.00%)
ARGENTINA
Astra S.A. -- Common Stock................................................ 243,240(c) 504,799
Perez Companc S.A. -- ADR................................................. 82,302(2) 1,313,540
YPF S.A. -- ADR........................................................... 35,800(2) 1,100,850
-------------
2,919,189
-------------
BRAZIL
Petroleo Brasileiro -- Preferred Stock.................................... 6,540(b) 1,807,492
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
16
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES (CONTINUED)
PAPER & PULP (0.57%)
BRAZIL
Aracruz Cellulose S.A. -- ADR............................................. 19,000(2) $ 387,125
-------------
RETAIL (8.23%)
ARGENTINA
Importadora Y Exportadora de la Patagonia -- Common Stock................. 52,084(c) 773,563
-------------
BRAZIL
Companhia Brasileira Distributor Pao de Acucar -- Preferred Stock......... 43,000(b) 973,750
-------------
CHILE
Santa Isabel -- ADR....................................................... 25,130(2) 810,442
-------------
MEXICO
Cifra S.A. -- Class B Common Stock........................................ 570,640(a) 1,058,608
Grupo Elektra S.A. -- GDR................................................. 37,900(3) 833,800
Organizacion Soriana S.A. -- Class B Common Stock......................... 439,900(a) 1,108,077
-------------
3,000,485
-------------
TELECOMMUNICATIONS (19.54%)
ARGENTINA
Telecom Argentina S.A. -- ADR............................................. 20,500(2) 1,076,250
Telefonica de Argentina S.A. -- ADR....................................... 30,840(2) 1,067,835
-------------
2,144,085
-------------
BRAZIL
Companhia Riograndense Telecom -- Preferred Stock......................... 1,800(b) 271,190
Telecomunicacoes Brasileiras S.A. -- ADR.................................. 23,400(2) 3,550,950
Telecomunicacoes Brasileiras S.A. -- ON................................... 9,600(b) 1,322,030
Telecomunicacoes de Minas Gerais S.A. -- Preferred Stock.................. 3,837(b) 672,459
Telecomunicacoes do Rio de Janeiro -- Preferred Stock..................... 6,830(b) 1,019,607
Telecomunicacoes de Sao Paulo -- Preferred Stock.......................... 4,143(b) 1,344,110
-------------
8,180,346
-------------
CHILE
Compania de Telecomunicaciones de Chile S.A. -- ADR....................... 31,125(2) 1,027,125
-------------
PERU
Telefonica del Peru S.A. -- ADR........................................... 40,095(2) 1,047,482
-------------
VENEZUELA
Compania Anonima Nacional Telefonos de Venezuela -- ADR................... 18,600(2) 802,125
-------------
UTILITIES (18.36%)
BRAZIL
Cemig S.A. -- ADR......................................................... 7,800(2) 400,296
Cemig S.A. -- Preferred Stock............................................. 13,500(b) 695,027
Centrais Electricas Brasileiras -- ADR.................................... 36,500(2) 1,101,205
Companhia Electrica de Energia Electrica da Bahia -- Common Stock......... 5,280(b) 483,638
Companhia Paranaense de Energia S.A. -- Common Stock...................... 56,200(b) 960,994
Companhia Paranaense de Energia S.A. -- Preferred Stock................... 26,300(b) 486,182
Companhia Paulista de Forca e Luz -- Common Stock......................... 7,312(b) 1,216,463
Companhia Saneamento Basico de Sao Paolo -- Common Stock.................. 1,050(b) 316,388
Electricidade de Sao Paolo -- Class B Preferred Stock..................... 5,720(b)(4) 1,665,350
Light Servicios de Electricidade S.A. -- Common Stock..................... 2,450(b) 1,200,203
-------------
8,525,746
-------------
CHILE
Chilectra S.A. -- ADR..................................................... 25,300(2) 727,628
Chilgener S.A. -- ADR..................................................... 8,800(2) 246,400
Endesa S.A. -- ADR........................................................ 32,200(2) 726,512
Enersis S.A. -- ADR....................................................... 15,700(2) 558,331
-------------
2,258,871
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
17
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
SHARES/PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES (CONTINUED)
UTILITIES (CONTINUED)
VENEZUELA
Citibank Equity Pass-Through Note Linked to C.A. La Electricidad de
Caracas.................................................................... 1,087,285(e) $ 1,620,321
-------------
TOTAL EQUITY SECURITIES............................................. 66,599,624
-------------
DEBT SECURITIES (0.37%)
TEXTILES (0.37%)
VENEZUELA
Sudamtex de Venezuela Convertible Callable Bonds, 11.00%, 03/19/01
(144A)..................................................................... $ 250,000(1) 250,000
-------------
SHORT TERM INVESTMENTS (1.19%)
Chase Manhattan Bank Repurchase Agreement, 5.50%, 07/01/97 (dated
06/30/97; proceeds $801,387, collateralized by $820,000 U.S. Treasury
Notes, 5.125%, due 04/30/98, valued at $816,028)......................... 801,265 801,265
-------------
TOTAL INVESTMENTS (COST $55,618,177)(100.16%)....................... 67,650,889
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (-0.16%)............. (105,768)
-------------
TOTAL NET ASSETS (100.00%).......................................... $ 67,545,121
-------------
-------------
</TABLE>

- ---------------
Securities traded in the following currencies:
(a) Mexican Peso (b) Brazilian Real (c) Argentine Peso (d) Peruvian
Sol (e) Venezuelan Bolivar
(1) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(2) American Depository Receipts.
(3) Global Depository Shares.
(4) Non-Income Producing.

The accompanying notes are an integral part of the financial statements.
18
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND

- --------------------------------------------------------------------------------

The 1997 first half total return for the New York Municipal Fund was 2.82%. The
return for the past 12 months was 6.79%. For comparative purposes the Lehman
Brothers 5 Year Municipal Index returned 2.42% for the first half and 6.17% for
the past 12 months. Since the Fund's inception on April 3, 1995, the annualized
total return was 6.54% versus the Index's 6.22% annualized return. The 30-day
SEC yield for the month ending June 30, 1997, was 4.41%.

The Fund's NAV of $10.46 at June 30th is slightly higher than the $10.40 at year
end 1996. Net assets of the Fund continue to grow and at June 30th were slightly
below $28 million which is up from approximately $20 million at year end 1996,
and $12 million as of December 31, 1995. Given that the Fund's assets are now
greater than $25 million, the NAV, its daily change, and return data are
published daily in THE WALL STREET JOURNAL.

In the first quarter of 1997 a stronger than expected economy was the impetus
for a sharp increase in U.S. Treasury interest rates which continued until early
in the second quarter when economic releases indicated that the economy was
growing at a slower rate of growth. This pattern of an above trend growth rate
for a quarter or two followed by a quarter of more modest growth has been a
familiar course in the last few years. Over a longer period of time the
economy's rate of growth has been stable and inflation continues to be held back
by restrictive fiscal policies, a resolute Fed, and global competition.

Although the magnitude of their change was smaller, municipal yields increased
and decreased along with Treasury yields in the first half of 1997. We used the
increase in municipal yields in the first quarter and the beginning of the
second quarter as an opportunity to invest in intermediate term (5-10 year)
bonds at yields that were 5.5% or greater. Believing that economic growth would
slow and that inflation would be controlled, we also lengthened the portfolio.
As of June 30, 1997 the portfolio duration was 5.6 years, up from 5 years as of
December 31, 1996.

Along with interest rates, the New York municipal market has developed some
peculiar seasonal factors that we cannot ignore when managing the portfolio. In
addition to the excess demand for bonds at midyear caused by bond calls, the New
York municipal investor must also contend with a large number of coupon
payments, and at least a three month delay in the passage of the state budget.
This delay forces several New York municipal entities to postpone their
borrowings until the state adopts its budget and can officially inform these
entities of the moneys they will receive. Unfortunately this scarcity of New
York bonds can be exacerbated when yields are declining. Anticipating this
situation, we ended the second quarter with a small cash equivalent position.

We continue to concentrate the portfolio's holdings in stable or improving
credits. As of June 30th, the Fund's average credit rating was AA. The portfolio
is under-weighted in the Northwestern part of the state because of the weak
economic conditions that have persisted while most of the nation has rebounded.
We continue to overweight essential purpose revenue bonds such as those issued
by power, water, environmental protection, and transportation entities. We also
recently established a small position in New York City bonds as we believe that
the short term outlook for the City has been bolstered by the financial sector's
strength. Important to the performance of City bonds is the flow of supply.
Typically the amount of bonds issued is substantial, forcing yields higher and
providing us with an ideal purchasing opportunity. As the supply is absorbed,
the yields on the City bonds decline resulting in higher prices.

So far this year, the primary factor affecting the municipal market is economic
growth. We continue to believe that low inflationary growth will keep municipal
bond yields in a narrow trading range in the months ahead.

Carolyn N. Dolan
July 15, 1997

19
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS (94.94%)
EDUCATION REVENUE (5.54%)
New York State Dormitory Authority Revenue Bonds Columbia University Series
A, 4.60%, 07/01/06........................................................ $ 100,000 $ 98,375
New York State Dormitory Authority Revenue Bonds Cornell University 4.80%,
07/01/03.................................................................. 250,000 254,375
New York State Dormitory Authority Revenue Bonds Cornell University 5.25%,
07/01/07.................................................................. 350,000 360,938
New York State Dormitory Authority Revenue Bonds New York University
(MBIA), 5.50%, 07/01/04................................................... 315,000(4) 328,781
New York State Dormitory Authority Revenue Bonds VASSAR College (MBIA),
5.00%, 07/01/09........................................................... 500,000(4) 498,125
-------------
1,540,594
-------------
GENERAL OBLIGATIONS (27.65%)
Albany County General Obligation Bonds Series B, 5.60%, 03/15/07........... 300,000 314,625
Albany County General Obligation Bonds Series B, (FGIC), 5.60%, 03/15/09... 400,000(2) 413,500
Dutchess County General Obligation Bonds, (FGIC), 7.20%, 01/01/02.......... 250,000(2) 270,000
Dutchess County General Obligation Bonds 4.90%, 08/01/04................... 215,000 217,419
Hempstead General Obligation Bonds Series B, (FGIC), 5.625%, 02/01/01...... 245,000(2) 253,575
Hempstead General Obligation Bonds Series B, (FGIC), 5.625%, 02/01/04...... 140,000(2) 147,000
Hempstead General Obligation Bonds Series B, (AMBAC), 5.00%, 02/15/09...... 500,000(1) 496,875
Islip General Obligation Bonds, (FGIC), 6.00%, 11/01/05.................... 100,000(2) 107,375
Monroe County General Obligation Bonds 5.50%, 06/01/09..................... 300,000 310,500
New Castle General Obligation Bonds 4.75%, 06/01/08........................ 210,000 205,538
New York City General Obligation Bonds Series B, 5.375%, 08/15/04.......... 500,000 503,750
New York City General Obligation Bonds Series B, 6.10%, 10/01/00........... 500,000 518,125
New York City General Obligation Bonds Series I, 6.00%, 04/15/08........... 555,000 577,894
New York City General Obligation Bonds Series L, 5.00%, 08/01/01........... 435,000 436,088
New York State General Obligation Bonds 5.50%, 11/15/01.................... 200,000 207,250
New York State General Obligation Bonds 5.60%, 08/15/07.................... 350,000 364,000
Onondaga County General Obligation Bonds 5.40%, 04/01/01................... 150,000 155,250
Onondaga County General Obligation Bonds 5.00%, 05/01/08................... 260,000 260,975
Onondaga County General Obligation Bonds Series B, 5.85%, 02/15/00......... 390,000 405,600
Ontario County General Obligation Bonds, (FGIC), 5.00%, 08/15/02........... 250,000(2) 255,313
Oyster Bay General Obligation Bonds 4.00%, 02/15/99........................ 400,000 399,500
Oyster Bay General Obligation Bonds, (MBIA), 5.70%, 02/15/07............... 360,000(4) 382,050
Schenectady County (N.Y.) General Obligation Bonds 6.00%, 08/15/05......... 200,000 217,250
Westchester County General Obligation Bonds Series A, 5.85%, 11/15/04...... 250,000 270,000
-------------
7,689,452
-------------
HEALTH CARE (0.56%)
New York Medical Care Facility Finance Authority, (FHA), 6.20%, 08/15/14... 150,000(3) 156,000
-------------
HOUSING (5.07%)
New York State Mortgage Agency Revenue Bonds Series 53, 5.35%, 04/01/07... 240,000 246,300
New York State Mortgage Agency Revenue Bonds Series 37-A, 5.80%,
10/01/06................................................................... 200,000 210,000
New York State Mortgage Agency Revenue Bonds Series 37-A, 5.85%,
10/01/06................................................................... 125,000 133,281
New York State Mortgage Agency Revenue Bonds Series 37-A, 5.95%,
04/01/07................................................................... 100,000 106,625
New York State Mortgage Agency Revenue Bonds Series 46, 5.75%, 04/01/04... 200,000 207,000
New York State Mortgage Agency Revenue Bonds Series 61, 5.60%, 10/01/11... 500,000 506,250
-------------
1,409,456
-------------
PREREFUNDED/ESCROWED TO MATURITY (3.91%)
Erie County Water Authority Improvement Revenue Bonds 5.75%, 12/01/08...... 450,000 470,812
Grand Central District Management Association Inc. New York Special
Assessment Bonds 6.50%, 01/01/22.......................................... 150,000 164,438
Niagara Falls Bridge Commission New York Revenue Bonds, (FGIC), 6.125%,
10/01/19.................................................................. 415,000(2) 452,350
-------------
1,087,600
-------------
PUBLIC POWER (4.63%)
New York State Power Authority Revenue Bonds Series BB, 6.30%, 01/01/07.... 375,000 400,313
New York State Power Authority Revenue Bonds Series CC, 4.80%, 01/01/05.... 180,000 179,775
New York State Power Authority Revenue Bonds Series CC, (MBIA), 4.90%,
04/01/06.................................................................. 200,000(4) 200,000
New York State Power Authority Revenue Bonds Series CC, (MBIA), 4.90%,
01/01/06.................................................................. 400,000(4) 400,500
New York State Power Authority Revenue Bonds Series Y, 6.25%, 01/01/05..... 100,000 106,000
-------------
1,286,588
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
20
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL OBLIGATIONS (CONTINUED)
SALES TAX REVENUE (15.29%)
Grand Central District Management Association Inc. New York Special
Assessment Bonds 6.20%, 01/01/00.......................................... $ 120,000 $ 124,800
Grand Central District Management Association Inc. New York Special
Assessment Bonds 5.10%, 01/01/08.......................................... 330,000 327,937
Municipal Assistance Corp. for City of New York Revenue Bonds Series E,
5.20%, 07/01/08........................................................... 375,000 380,370
Municipal Assistance Corp. for City of New York Revenue Bonds Series D,
(AMBAC), 5.00%, 07/01/03.................................................. 250,000(1) 255,312
Municipal Assistance Corp. for City of New York Revenue Bonds Series I,
(AMBAC), 6.25%, 07/01/07.................................................. 400,000(1) 440,000
Municipal Assistance Corp. for City of New York Revenue Bonds Series E,
(AMBAC), 4.70%, 07/01/02.................................................. 500,000(1) 502,500
Municipal Assistance Corp. for City of New York Revenue Bonds Series L,
(AMBAC), 4.50%, 07/01/01.................................................. 500,000(1) 499,375
New York State Local Government Assistance Corp. Revenue Bonds Series A,
(AMBAC), 5.00%, 04/01/05.................................................. 500,000(1) 505,000
New York State Local Government Assistance Corp. Revenue Bonds Series A,
6.75%, 04/01/02........................................................... 315,000 340,987
New York State Local Government Assistance Corp. Revenue Bonds Series D,
4.75%, 04/01/04........................................................... 500,000 496,875
New York State Local Government Assistance Corp. Revenue Bonds Series A,
5.00%, 04/01/06........................................................... 100,000 100,000
New York State Local Government Assistance Corp. Revenue Bonds Series D,
6.75%, 04/01/07........................................................... 250,000 277,187
-------------
4,250,343
-------------
TELECOMMUNICATIONS (0.55%)
Puerto Rico Telephone Authority Revenue Bonds Series M, (AMBAC), 5.05%,
01/01/04.................................................................. 150,000(1) 153,000
-------------
TRANSPORTATION REVENUE (14.98%)
Metropolitan Transit Authority Bonds Series A, (MBIA), 5.25%, 04/01/09..... 300,000(4) 302,625
New York State Bridge Authority Revenue Bonds, 5.00%, 01/01/08............. 500,000 500,000
New York State Thruway, Highway & Bridge Trust Fund Bonds Series B, (FGIC),
6.40%, 04/01/04........................................................... 200,000(2) 218,750
New York State Thruway, Highway & Bridge Trust Fund Bonds Series A, (FGIC),
5.80%, 04/01/09........................................................... 300,000(2) 310,125
New York State Thruway, Highway & Bridge Trust Fund Bonds Series B, (MBIA),
5.75%, 04/01/06........................................................... 200,000(4) 212,000
New York State Thruway, Highway & Bridge Trust Fund Bonds Series B, 5.80%,
04/01/07.................................................................. 600,000 636,000
New York State Thruway, Highway & Bridge Trust Fund Bonds Series B, (FGIC),
5.75%, 01/01/09........................................................... 500,000(2) 522,500
Port Authority of New York & New Jersey Bonds Series 79, 5.80%, 07/15/03... 200,000 213,000
Port Authority of New York & New Jersey Bonds Series 86, 5.00%, 07/01/06... 250,000 253,437
Port Authority of New York & New Jersey Bonds Series 81, 5.70%, 08/01/07... 270,000 282,150
Triborough Bridge & Tunnel Authority General Purpose Bonds Series A, 4.70%,
01/01/07.................................................................. 550,000 534,875
Triborough Bridge & Tunnel Authority General Purpose Bonds, 5.75%,
01/01/05.................................................................. 170,000 180,412
-------------
4,165,874
-------------
WATER/SEWER (16.76%)
New York City Municipal Water Financing Authority Water & Sewer Unrefunded
System Revenue Bonds 7.00%, 06/15/07...................................... 105,000 114,450
New York City Municipal Water Financing Authority Water & Sewer System
Revenue Bonds Series B, (AMBAC), 5.375%, 06/15/07......................... 350,000(1) 359,625
New York City Municipal Water Financing Authority Water & Sewer System
Revenue Bonds 5.35%, 06/15/09............................................. 225,000 226,125
New York City Municipal Water Financing Authority Water & Sewer System
Revenue Bonds 5.20%, 06/15/05............................................. 500,000 512,500
New York City Municipal Water Financing Authority Water & Sewer System
Revenue Bonds 4.75%, 06/15/01............................................. 300,000 303,375
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds 6.40%, 06/15/03............................................. 200,000 216,250
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds 6.50%, 06/15/04............................................. 150,000 162,375
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds 6.50%, 06/15/14............................................. 500,000 536,875
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds Series E, 6.60%, 06/15/05................................... 250,000 271,563
New York State Environmental Facilities Corporation Pollution Control
System Revenue Bonds 7.20%, 06/15/06...................................... 250,000 276,563
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds 5.40%, 05/15/06............................................. 250,000 260,625
New York State Environmental Facilities Corporation Pollution Control
Revenue Bonds 6.875%, 06/15/14............................................ 500,000 552,500
New York State Municipal Water Finance Authority Series A, 4.90%,
06/15/02.................................................................. 200,000 203,500
Suffolk County Water Revenue Bonds, (MBIA), 5.10%, 06/01/05................ 250,000(4) 255,625
Suffolk County Water Revenue Bonds, (MBIA), 5.10%, 06/01/06................ 400,000(4) 407,000
-------------
4,658,951
-------------
TOTAL MUNICIPAL OBLIGATIONS......................................... 26,397,858
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
21
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES (3.96%)
New York City Municipal Water Financing Authority Water & Sewer System Revenue
Bonds Series G, Variable Rate Bonds, 06/15/25, 1-Day Notes................... $ 200,000 $ 200,000
New York City Municipal Water Financing Authority Water & Sewer System Revenue
Bonds Series G, Variable Rate Bonds, 06/15/24, 1-Day Notes................... 400,000 400,000
Port Authority of New York & New Jersey Bonds Series 86, 06/01/20............. 500,000 500,000
-------------
1,100,000
-------------
SHORT TERM INVESTMENTS (1.85%)
Dreyfus New York Municipal Cash Management.................................... 15,175 15,175
Muniyield New York Quality Preferred 7-Day Auction............................ 500,000 500,000
-------------
515,175
-------------
TOTAL INVESTMENTS (COST $27,595,779)(100.75%)....................... 28,013,033
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (-0.75%)............. (208,025)
-------------
NET ASSETS (100.00%)................................................ $ 27,805,008
-------------
-------------
</TABLE>

- ---------------

(1) Insured as to principal and interest by the American Municipal Bond
Assurance Corporation.
(2) Insured as to principal and interest by the Finance Guarantee Insurance
Corporation.
(3) Insured by the Federal Housing Administration.
(4) Insured as to principal and interest by the Municipal Bond Insurance
Association.

The accompanying notes are an integral part of the financial statements.
22
<PAGE>
OFFITBANK
CALIFORNIA MUNICIPAL FUND

- --------------------------------------------------------------------------------

The OFFITBANK California Municipal Fund began operating on April 2, 1997, a date
coinciding approximately with the end of a two month decline in municipal
prices. With yields at attractive levels and the supply of high-grade California
municipals scarce, we elected to invest in issues with a duration at the long
end of our normal arena. The average duration was 6.0 years on June 30. The
difficulty we experienced in finding issues meeting our stringent credit
criteria resulted in an average money market position higher than may be
expected in the future. Despite these difficulties, the Fund's total return for
the quarter was 2.83%. For comparative purposes, the Lehman Five-Year Municipal
Index had a total return of 2.42%.

The NAV of $10.17 at June 30, 1997 was 1.7% above the $10.00 value at the
beginning of the quarter. The 30 day SEC yield for the Fund was 4.49% for the
month ending June 30, 1997. Because of the need to keep cash invested, we used
some short-term taxable issues to provide a competitive after-tax return.
Therefore, the amount of taxable interest during this start-up period was also
higher than we expect in the future.

The Treasury market led a strong rally in the credit markets in the second
quarter. Yields declined about 40 basis points in the intermediate range as
economic activity abated after two strong quarters. Inflation remains subdued
and the prospect of Fed tightening has been pushed farther into the future.
Although yields on intermediate term municipals dropped about one quarter of one
percent, the steeper decline in Treasury rates has left municipals attractively
priced by comparison. The municipal market will continue to benefit by the very
healthy financial standing of many issuers and by a strong technical condition.
California in particular has enjoyed a strong economy and many of the state's
issuers have performed well as a result.

The Fund's average credit rating is AA with no rating less than A. The very
small incremental yields offered on lower rated bonds give no incentive to
downgrade. The portfolio is broadly diversified by type of borrower. Despite the
lower yields, we remain optimistic about the municipal market and hold few bonds
due in less than five years.

Jack Haldeman
July 15, 1997

23
<PAGE>
OFFITBANK
CALIFORNIA MUNICIPAL FUND
- ---------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS (96.40%)
EDUCATION REVENUE (8.84%)
California Educational Facilities Authority Revenue Santa Clara University
5.40%, 09/01/06........................................................... $ 75,000 $ 77,250
California Educational Facilities Authority Revenue Stanford University
Series J 5.50%, 11/01/00.................................................. 50,000 52,062
-------------
129,312
-------------
GENERAL OBLIGATIONS (23.69%)
Berkeley California General Obligation Series A 5.55%, 09/01/07............ 50,000 52,250
California State General Obligation 5.25%, 10/01/11 (FGIC)................. 125,000(2) 125,000
Cotati--Rohnert Park Uniform School District Series A 6.00%, 08/01/12
(FGIC).................................................................... 60,000(2) 63,375
Cupertino Uniform School District Series B 6.125%, 08/01/03 (FGIC)......... 50,000(2) 54,000
Palo Alto Uniform School District Series B 5.375%, 08/01/08................ 50,000 51,812
-------------
346,437
-------------
HOUSING (5.12%)
California Housing Finance Agency Revenue Home Mortgage Series B 5.15%,
08/01/05 (MBIA)........................................................... 75,000(3) 74,812
-------------
POLLUTION CONTROL REVENUE (3.64%)
California Pollution Control Financing Authority Southern California Edison
Series C 6.85%, 12/01/08.................................................. 50,000 53,188
-------------
RECREATION FACILITIES (7.01%)
California Statewide Community Development Corp. Certificate Participation
5.00%, 10/01/11........................................................... 50,000 48,875
Los Angeles County Public Works Financing Authority Revenue Regional Park &
Open Space
District A 5.875%, 10/01/06.............................................. 50,000 53,563
-------------
102,438
-------------
SALES TAX REVENUE (12.16%)
Contra Costa Transportation Authority Sales Tax Revenue Series A 5.50%,
03/01/08 (FGIC)........................................................... 50,000(2) 51,573
Los Angeles County Transportation Commission Sales Tax Revenue Series A
6.90%, 07/01/21........................................................... 25,000 27,781
Riverside County Transportation Series A 6.00%, 06/01/06 (FGIC)............ 90,000(2) 98,437
-------------
177,791
-------------
TRANSPORTATION REVENUE (10.81%)
San Francisco Bay Area Rapid Transit District Sales Tax Revenue 6.40%,
07/01/05 (FGIC)........................................................... 50,000(2) 54,000
San Francisco City & County International Airport Revenue Second Series
Issue 1 6.30%, 05/01/11 (AMBAC)........................................... 50,000(1) 53,438
San Francisco City & County International Airport Revenue Second Series
Issue 12-A, 5.625%, 05/01/11 (FGIC)....................................... 50,000(2) 50,688
-------------
158,126
-------------
WATER & SEWER (25.13%)
Contra Costa Water District Water Revenue Series G 6.00%, 10/01/09
(MBIA).................................................................... 50,000(3) 53,500
Los Angeles County Sanitation District Financing Authority Revenue Capital
Projects Series A 5.25%, 10/01/10......................................... 100,000 100,625
Los Angeles Department of Water & Electric Plant Revenue 5.70%, 09/01/11
(FGIC).................................................................... 50,000(2) 51,000
Los Angeles Wastewater System Revenue Series A 6.125%, 12/01/05 (FGIC)..... 50,000(2) 53,687
Metropolitan Water District Southern California Water Works Revenue 5.60%,
07/01/06.................................................................. 55,000 57,269
Santa Clara Valley Water District Water Utility System Revenue Series A
5.20%, 06/01/02........................................................... 50,000 51,438
-------------
367,519
-------------
TOTAL MUNICIPAL OBLIGATIONS......................................... 1,409,623
-------------
SHORT TERM INVESTMENTS (2.13%)
Federated California Municipal Fund........................................... 31,177 31,177
-------------
TOTAL INVESTMENTS (COST $1,421,685) (98.53%)........................ 1,440,800
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (1.47%).............. 21,436
-------------
TOTAL NET ASSETS (100.00%).......................................... $ 1,462,236
-------------
-------------
</TABLE>

- ---------------

(1) Insured as to principal and interest by the American Municipal Bond
Assurance Corporation.
(2) Insured as to principal and interest by the Finance Guarantee Insurance
Corporation.
(3) Insured as to principal and interest by the Municipal Bond Insurance
Association.

The accompanying notes are an integral part of the financial statements.
24
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997
HIGH YIELD FUND

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
ASSETS:
Investments, at market value (Cost $1,016,227,684) (Note
1a)...................................................... $ 1,055,140,883
Cash and foreign currency................................. 13,554,699
Interest receivable....................................... 18,078,755
Receivable for investments sold........................... 5,356,500
Unrealized appreciation on forward currency contracts
(Note 5)................................................. 177,497
---------------
Total Assets............................................ $ 1,092,308,334
LIABILITIES:
Payable for investments purchased......................... 20,365,243
Income distribution payable............................... 7,237,573
Investment advisory fee payable (Note 2).................. 628,363
Administrative services fee payable (Note 2).............. 64,917
Other payables and accrued expenses....................... 349,333
---------------
Total Liabilities....................................... 28,645,429
---------------
NET ASSETS.................................................. $ 1,063,662,905
---------------
---------------
Net assets consist of:
Shares of capital stock, $0.001 par value per share,
103,609,721 issued and outstanding (Note 4).............. $ 103,610
Additional paid-in capital................................ 1,018,618,272
Accumulated distributions in excess of net investment
income................................................... (717,171)
Accumulated net realized gain on investments.............. 6,622,757
Net unrealized appreciation on investments and foreign
currency transactions.................................... 39,035,437
---------------
NET ASSETS SELECT SHARES.................................... $ 1,063,662,905
---------------
---------------
NET ASSET VALUE PER SHARE SELECT SHARES..................... $10.27
---------------
---------------
</TABLE>

EMERGING MARKETS FUND

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
ASSETS:
Investments, at market value (Cost $165,703,175) (Note
1a)...................................................... $ 172,750,130
Cash...................................................... 83,754
Interest receivable....................................... 3,993,945
Receivable for investments sold........................... 1,604,506
Unrealized appreciation on forward currency contracts
(Note 5)................................................. 344,709
---------------
Total Assets............................................ $ 178,777,044
LIABILITIES:
Income distribution payable............................... 3,946,073
Payable for investments purchased......................... 2,975,828
Investment advisory fee payable (Note 2).................. 127,254
Administrative services fee payable (Note 2).............. 10,605
Other payables and accrued expenses....................... 226,200
---------------
Total Liabilities....................................... 7,285,960
---------------
NET ASSETS.................................................. $ 171,491,084
---------------
---------------
Net assets consist of:
Shares of capital stock, $0.001 par value per share,
14,912,856 issued and outstanding (Note 4)............... $ 14,913
Additional paid-in capital................................ 157,293,511
Accumulated net realized gain on investments and foreign
currency transactions.................................... 6,824,767
Net unrealized appreciation on investments and foreign
currency transactions.................................... 7,357,893
---------------
NET ASSETS SELECT SHARES.................................... $ 171,491,084
---------------
---------------
NET ASSET VALUE PER SHARE SELECT SHARES..................... $11.50
---------------
---------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
25
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 1997

LATIN AMERICA EQUITY FUND

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
ASSETS:
Investments, at market value (Cost $55,618,177) (Note
1a)...................................................... $ 67,650,889
Cash and foreign currency................................. 118,394
Interest receivable....................................... 145,081
Receivable for investments sold........................... 109,886
Deferred organization expense............................. 20,948
----------------
Total Assets............................................ $ 68,045,198
LIABILITIES:
Income distribution payable............................... 306,762
Investment advisory fee payable (Note 2).................. 51,344
Payable for investments purchased......................... 7,603
Organization expense payable.............................. 4,776
Administrative services fee payable (Note 2).............. 3,851
Other payables and accrued expenses....................... 125,741
----------------
Total Liabilities....................................... 500,077
----------------
NET ASSETS.................................................. $ 67,545,121
----------------
----------------
Net assets consist of:
Shares of capital stock, $0.001 par value per share,
4,408,840 issued and outstanding (Note 4)................ $ 4,409
Additional paid-in capital................................ 55,477,915
Accumulated distributions in excess of net investment
income................................................... (10,380)
Accumulated net realized gain on investments and foreign
currency transactions.................................... 41,982
Net unrealized appreciation on investments and foreign
currency transactions.................................... 12,031,195
----------------
NET ASSETS.................................................. $ 67,545,121
----------------
----------------
SELECT SHARES:
NET ASSETS................................................ $ 67,534,982
----------------
----------------
SHARES OF CAPITAL STOCK OUTSTANDING....................... 4,408,178
----------------
----------------
NET ASSET VALUE PER SHARE................................. $15.32
----------------
----------------
ADVISOR SHARES:
NET ASSETS................................................ $10,139
----------------
----------------
SHARES OF CAPITAL STOCK OUTSTANDING....................... 662
----------------
----------------
NET ASSET VALUE PER SHARE................................. $15.32
----------------
----------------
</TABLE>

NEW YORK MUNICIPAL FUND

<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
ASSETS:
Investments, at market value (Cost $27,595,779) (Note
1a)...................................................... $ 28,013,033
Interest receivable....................................... 419,526
Deferred organization expense............................. 29,927
-------------
Total Assets............................................ $ 28,462,486
LIABILITIES:
Receivable for investments sold........................... 501,730
Income distribution payable............................... 98,212
Organization expense payable.............................. 26,784
Other payables and accrued expenses....................... 30,752
-------------
Total Liabilities....................................... 657,478
-------------
NET ASSETS.................................................. $ 27,805,008
-------------
-------------
Net assets consist of:
Shares of capital stock, $0.001 par value per share,
2,658,222 issued and outstanding (Note 4)................ $ 2,658
Additional paid-in capital................................ 27,318,093
Accumulated distributions in excess of net investment
income................................................... (2,717)
Accumulated net realized gain on investments.............. 69,720
Net unrealized appreciation on investments................ 417,254
-------------
NET ASSETS SELECT SHARES.................................... $ 27,805,008
-------------
-------------
NET ASSET VALUE PER SHARE SELECT SHARES..................... $10.46
-------------
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
26
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 1997

CALIFORNIA MUNICIPAL FUND

<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
ASSETS:
Investments, at market value (Cost $1,421,685) (Note
1a)...................................................... $ 1,440,800
Deferred organization expense............................. 39,502
Interest receivable....................................... 21,940
Receivable from Adviser (Note 2).......................... 15,588
-------------
Total Assets............................................ $ 1,517,830
LIABILITIES:
Organization expense payable.............................. 41,549
Income distribution payable............................... 5,383
Other payables and accrued expenses....................... 8,662
-------------
Total Liabilities....................................... 55,594
-------------
NET ASSETS.................................................. $ 1,462,236
-------------
-------------
Net assets consist of:
Shares of capital stock, $0.001 par value per share,
143,817 issued and outstanding (Note 4).................. $ 144
Additional paid-in capital................................ 1,442,377
Accumulated net realized gain on investments.............. 600
Net unrealized appreciation on investments................ 19,115
-------------
NET ASSETS SELECT SHARES.................................... $ 1,462,236
-------------
-------------
NET ASSET VALUE PER SHARE SELECT SHARES..................... $10.17
-------------
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
27
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
HIGH YIELD FUND

NET INVESTMENT INCOME........................................................... 40,009,224
----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.............................................. 6,000,230
Net change in unrealized appreciation on investments.......................... 5,169,252
Net change in unrealized appreciation on foreign currency transactions........ 108,480
----------------
Net realized and unrealized gain on investments and foreign currency
transactions.................................................................. 11,277,962
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 51,287,186
----------------
----------------
</TABLE>

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
JUNE 30, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign tax withholding of $18,025).......................... $ 8,045,930
----------------
Total income................................................................ $ 8,045,930
EXPENSES:
Advisory (Note 2)............................................................. 640,025
Custodian..................................................................... 156,814
Administrative services (Note 2).............................................. 106,671
Registration.................................................................. 34,118
Professional.................................................................. 27,174
Fund accounting (Note 2)...................................................... 15,000
Printing...................................................................... 13,483
Transfer and shareholder servicing agent (Note 2)............................. 4,588
Insurance..................................................................... 2,244
Directors..................................................................... 2,091
Miscellaneous................................................................. 4,606
----------------
Total expenses before waivers............................................... 1,006,814
Less expenses waived (Note 2)............................................... (53,336)
----------------
Net expenses................................................................ 953,478
----------------

NET INVESTMENT INCOME........................................................... 7,092,452
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.............................................. 7,492,744
Net realized loss on foreign currency transactions............................ (344,709)
Net change in unrealized depreciation on investments.......................... (754,958)
Net change in unrealized depreciation on foreign currency transactions........ (487,602)
----------------
Net realized and unrealized gain on investments and foreign currency
transactions.................................................................. 5,905,475
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 12,997,927
----------------
----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
28
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)

LATIN AMERICA EQUITY FUND

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
JUNE 30, 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend...................................................................... $ 474,577
Interest...................................................................... 263,660
---------
Total income................................................................ $ 738,237
EXPENSES:
Advisory (Note 2)............................................................. 209,912
Custodian..................................................................... 69,000
Registration.................................................................. 33,595
Administrative services (Note 2).............................................. 31,487
Professional.................................................................. 26,746
Fund accounting (Note 2)...................................................... 16,157
Printing...................................................................... 5,226
Amortization of organization expenses......................................... 2,869
Transfer and shareholder servicing agent (Note 2)............................. 1,680
Insurance..................................................................... 559
Directors..................................................................... 546
Miscellaneous................................................................. 1,643
---------
Total expenses before waivers............................................... 399,420
Less expenses waived (Note 2)............................................... (15,743)
---------
Net expenses................................................................ 383,677
---------
NET INVESTMENT INCOME........................................................... 354,560
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.............................................. 71,637
Net realized gain on foreign currency transactions............................ 68,152
Net change in unrealized appreciation on investments.......................... 10,985,429
Net change in unrealized depreciation on foreign currency transactions........ (1,516)
---------
Net realized and unrealized gain on investments and foreign currency
transactions.................................................................. 11,123,702
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $11,478,262
---------
---------
</TABLE>

NEW YORK MUNICIPAL FUND

NET INVESTMENT INCOME........................................................... 523,451
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.............................................. 58,825
Net change in unrealized appreciation on investments.......................... 128,165
---------
Net realized and unrealized gain on investments................................. 186,990
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 710,441
---------
---------
</TABLE>

The accompanying notes are an integral part of the financial statements.
29
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)

CALIFORNIA MUNICIPAL FUND

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 2, 1997*
THROUGH JUNE 30, 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest...................................................................... $ 14,385
---------
Total income................................................................ $ 14,385
EXPENSES:
Fund accounting (Note 2)...................................................... 7,934
Professional.................................................................. 5,020
Amortization of organization expenses......................................... 2,048
Registration.................................................................. 1,647
Advisory (Note 2)............................................................. 1,069
Administrative services (Note 2).............................................. 442
Custodian..................................................................... 74
Transfer and shareholder servicing agent (Note 2)............................. 52
Printing...................................................................... 16
Directors..................................................................... 7
Miscellaneous................................................................. 280
---------
Total expenses before waivers/reimbursements................................ 18,589
Less expenses waived/reimbursed (Note 2).................................... (17,099)
---------
Net expenses................................................................ 1,490
---------

NET INVESTMENT INCOME........................................................... 12,895
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.............................................. 600
Net unrealized appreciation on investments.................................... 19,115
---------
Net realized and unrealized gain on investments................................. 19,715
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 32,610
---------
---------
</TABLE>

- ---------------

* Commencement of operations.

The accompanying notes are an integral part of the financial statements.
30
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
HIGH YIELD FUND

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income.......................................... $ 40,009,224 $ 57,226,940
Net realized gain on investments and foreign currency
transactions.................................................. 6,000,230 5,036,933
Net change in unrealized appreciation on investments and
foreign currency transactions................................. 5,277,732 17,933,182
------------ -----------
Net increase in net assets resulting from operations........... 51,287,186 80,197,055
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................... (40,009,224) (57,640,317)
Realized gains................................................. 0 (4,650,440)
------------ -----------
Total dividends and distributions to shareholders.............. (40,009,224) (62,290,757)
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets from capital share transactions..... 200,664,739 354,723,525
------------ -----------
Total increase in net assets................................... 211,942,701 372,629,823

NET ASSETS:
Beginning of period............................................ 851,720,204 479,090,381
------------ -----------
End of period.................................................. $1,063,662,905 $851,720,204
----------------------- -----------------
----------------------- -----------------
</TABLE>

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income.......................................... $ 7,092,452 $ 8,116,698
Net realized gain on investments and foreign currency
transactions.................................................. 7,148,035 5,650,631
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions................. (1,242,560) 5,867,944
----------- -----------
Net increase in net assets resulting from operations........... 12,997,927 19,635,273
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income Select Shares............................ (7,092,127) (8,116,698)
Net investment income Advisor Shares........................... (325) 0
Realized gains Select Shares................................... 0 (4,209,138)
----------- -----------
Total dividends and distributions to shareholders.............. (7,092,452) (12,325,836)
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets from capital share transactions..... 49,441,443 59,584,284
----------- -----------
Total increase in net assets................................... 55,346,918 66,893,721
NET ASSETS:
Beginning of period............................................ 116,144,166 49,250,445
----------- -----------
End of period.................................................. $171,491,084 $116,144,166
----------------------- -----------------
----------------------- -----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

31
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
LATIN AMERICA EQUITY FUND

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MONTHS FROM
ENDED FEBRUARY 13, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income......................................... $ 354,560 $ 105,925
Net realized gain on investments and foreign currency
transactions................................................. 139,789 398,414
Net change in unrealized appreciation on investments and
foreign currency transactions................................ 10,983,913 1,047,282
---------- ----------
Net increase in net assets resulting from operations.......... 11,478,262 1,551,621
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income......................................... (364,940) (105,925)
Realized gains................................................ 0 (496,221)
---------- ----------
Total dividends and distributions to shareholders............. (364,940) (602,146)
CAPITAL STOCK TRANSACTIONS (NOTE 4):
Net increase in net assets from capital share transactions.... 43,124,082 12,358,222
---------- ----------
Total increase in net assets.................................. 54,237,404 13,307,697

NET ASSETS:
Beginning of period........................................... 13,307,717 20
---------- ----------
End of period................................................. $67,545,121 $13,307,717
----------------------- ------------------
----------------------- ------------------
</TABLE>

NEW YORK MUNICIPAL FUND

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income.......................................... $ 523,451 $ 750,678
Net realized gain on investments............................... 58,825 13,921
Net change in unrealized appreciation (depreciation) on
investments................................................... 128,165 (10,829)
---------- ----------
Net increase in net assets resulting from operations........... 710,441 753,770
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................... (523,451) (750,678)
Realized gains................................................. 0 (11,455)
---------- ----------
Total dividends and distributions to shareholders.............. (523,451) (762,133)
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets from capital share transactions..... 7,460,386 7,650,088
---------- ----------
Total increase in net assets................................... 7,647,376 7,641,725

NET ASSETS:
Beginning of period............................................ 20,157,632 12,515,907
---------- ----------
End of period.................................................. $27,805,008 $20,157,632
----------------------- -----------------
----------------------- -----------------
</TABLE>

- ---------------
* Commencement of operations.

The accompanying notes are an integral part of the financial statements.

32
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
CALIFORNIA MUNICIPAL FUND

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
APRIL 2, 1997*
THROUGH JUNE 30,
1997
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income............................................. $ 12,895
Net realized gain on investments.................................. 600
Net unrealized appreciation on investments........................ 19,115
---------
Net increase in net assets resulting from operations.............. 32,610
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................................. (12,895)
---------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets from capital share transactions........ 1,442,471
---------
Total increase in net assets...................................... 1,462,186

NET ASSETS:
Beginning of period............................................... 50
---------
End of period..................................................... $1,462,236
--------------------
--------------------
</TABLE>

- ---------------
* Commencement of operations.

The accompanying notes are an integral part of the financial statements.

33
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
HIGH YIELD FUND
<TABLE>
<CAPTION>
SELECT SHARES
-----------------------------------------------------------------------------
SELECTED RATIOS AND DATA FOR A SHARE FOR THE SIX MONTHS
OF CAPITAL STOCK OUTSTANDING ENDED JUNE 30, 1997 FOR THE YEAR ENDED FOR THE YEAR ENDED
THROUGH THE PERIOD: (UNAUDITED) DECEMBER 31, 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.15 $ 9.92 $ 9.25
----------- ---------- ----------
Net investment income..................... 0.43 0.89 0.90
Net realized and unrealized gain (loss)... 0.12 0.29 0.67
----------- ---------- ----------
Total from investment operations.......... 0.55 1.18 1.57
----------- ---------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.43) (0.89) (0.89)
Realized gains............................ 0 (0.06) (0.01)
----------- ---------- ----------
Total dividends and distributions......... (0.43) (0.95) (0.90)
----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD.............. $ 10.27 $ 10.15 $ 9.92
----------- ---------- ----------
----------- ---------- ----------
TOTAL INVESTMENT RETURN**:.................. 5.51% 12.46% 17.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... 1$,063,663 $851,720 $479,090
Ratios to average net assets:
Expenses.................................. 0.92%(1)(2) 0.98%(2) 1.05%(2)
Net investment income..................... 8.48%(1) 8.86% 9.38%
PORTFOLIO TURNOVER RATE..................... 19% 41% 34%

SELECTED RATIOS AND DATA FOR A SHARE FOR THE PERIOD FROM
OF CAPITAL STOCK OUTSTANDING MARCH 2, 1994*
THROUGH THE PERIOD: THROUGH DECEMBER 31, 1994
- --------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.00
----------
Net investment income..................... 0.72
Net realized and unrealized gain (loss)... (0.75)
----------
Total from investment operations.......... (0.03)
----------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.72)
Realized gains............................ 0
----------
Total dividends and distributions......... (0.72)
----------
NET ASSET VALUE, END OF PERIOD.............. $ 9.25
----------
----------
TOTAL INVESTMENT RETURN**:.................. (0.27%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $222,317
Ratios to average net assets:
Expenses.................................. 1.14%(1)(2)
Net investment income..................... 8.97%(1)
PORTFOLIO TURNOVER RATE..................... 42%
</TABLE>

- -----------------
* Commencement of operations.
** Total return is based on the change in net assets value during the period
and assumes reinvestment of all dividends and distributions.
(1) Annualized.
(2) If the Fund had borne all expenses that were assumed or waived by the
Administrator, the above expense ratios would have been 1.00% (annualized),
1.06%, 1.13% and 1.22% (annualized) for the six months ended June 30, 1997,
years ended December 31, 1996, and December 31, 1995, and period ended
December 31, 1994, respectively.

EMERGING MARKETS FUND
<TABLE>
<CAPTION>
SELECT SHARES
-----------------------------------------------------------------------------
SELECTED RATIOS AND DATA FOR A SHARE FOR THE SIX MONTHS FOR THE YEAR FOR THE YEAR
OF CAPITAL STOCK OUTSTANDING ENDED JUNE 30, 1997 ENDED ENDED
THROUGH THE PERIOD: (UNAUDITED) DECEMBER 31, 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 11.03 $ 9.91 $ 8.84
---------- ---------- -------
Net investment income..................... 0.45 1.00 0.90
Net realized and unrealized gain (loss)... 0.47 1.55 1.07
---------- ---------- -------
Total from investment operations.......... 0.92 2.55 1.97
---------- ---------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.45) (1.00) (0.60)
Realized gains............................ 0 (0.43) 0
Return of capital......................... 0 0 (0.30)
---------- ---------- -------
Total dividends and distributions......... (0.45) (1.43) (0.90)
---------- ---------- -------
NET ASSET VALUE, END OF PERIOD.............. $ 11.50 $ 11.03 $ 9.91
---------- ---------- -------
---------- ---------- -------
TOTAL INVESTMENT RETURN**:.................. 9.45% 26.56% 23.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $171,491 $116,144 $ 49,250
Ratios to average net assets:
Expenses.................................. 1.34%(1)(2) 1.16%(2) 1.50%(2)
Net investment income..................... 9.97%(1) 9.62% 9.97%
PORTFOLIO TURNOVER RATE..................... 146% 136% 60%

SELECTED RATIOS AND DATA FOR A SHARE FOR THE PERIOD FROM
OF CAPITAL STOCK OUTSTANDING MARCH 8, 1994*
THROUGH THE PERIOD: THROUGH DECEMBER 31, 1994
- --------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.00
-------
Net investment income..................... 0.81
Net realized and unrealized gain (loss)... (1.16)
-------
Total from investment operations.......... (0.35)
-------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.81)
Realized gains............................ 0
Return of capital......................... 0
-------
Total dividends and distributions......... (0.81)
-------
NET ASSET VALUE, END OF PERIOD.............. $ 8.84
-------
-------
TOTAL INVESTMENT RETURN**:.................. (3.82%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $ 28,117
Ratios to average net assets:
Expenses.................................. 1.50%(1)(2)
Net investment income..................... 10.39%(1)
PORTFOLIO TURNOVER RATE..................... 47%
</TABLE>

- -----------------
* Commencement of operations.
** Total return is based on the change in net assets value during the period
and assumes reinvestment of all dividends and distributions.
(1) Annualized.
(2) If the Fund had borne all expenses that were assumed or waived by the
Adviser and Administrator, the above expense ratios would have been 1.42%
(annualized), 1.24%, 1.73% and 1.80% (annualized) for the six months ended
June 30, 1997, years ended December 31, 1996, and December 31, 1995, and
period ended December 31, 1994, respectively.

The accompanying notes are an integral part of the financial statements.
34
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)

LATIN AMERICA EQUITY FUND

<TABLE>
<CAPTION>
SELECT SHARES ADVISOR SHARES
--------------------------------------------------- -----------------------
SELECTED RATIOS AND DATA FOR A SHARE FOR THE SIX MONTHS FOR THE PERIOD FROM FOR THE PERIOD ENDED
OF CAPITAL STOCK OUTSTANDING ENDED JUNE 30, 1997 FEBRUARY 13, 1996* JUNE 30, 1997**
THROUGH THE PERIOD: (UNAUDITED) THROUGH DECEMBER 31, 1996 (UNAUDITED)
<S> <C> <C> <C>
- --------------------------------------------------------------------- ------------------------- -----------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 11.66 $ 10.00 $ 15.11
------- ------- -------
Net investment income..................... 0.11 0.20 0.00
Net realized and unrealized gain.......... 3.66 2.11 0.21
------- ------- -------
Total from investment operations.......... 3.77 2.31 0.21
------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.11) (0.20) 0
Realized gains............................ 0 (0.45) 0
------- ------- -------
Total dividends and distributions......... (0.11) (0.65) 0
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............. $ 15.32 $ 11.66 $ 15.32
------- ------- -------
------- ------- -------
TOTAL INVESTMENT RETURN***:................. 32.35% 23.36% 1.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $ 67,535 $ 13,308 $ 10
Ratios to average net assets:
Expenses.................................. 1.83%(1)(2) 2.00%(1)(2) 1.75%(1)(2)
Net investment income..................... 1.69%(1) 1.97%(1) 0.13%(1)
PORTFOLIO TURNOVER RATE..................... 55% 133% 55%
AVERAGE COMMISSION RATE+.................... $ 0.047 $ 0.026 $ 0.047
</TABLE>

- -----------------
* Commencement of operations.
** Sales of Advisor Shares began on June 23, 1997.
*** Total return is based on the change in net assets value during the period
and assumes reinvestment of all dividends and distributions.
(1) Annualized.
(2) If the Fund had borne all expenses that were assumed or waived by the
Adviser and Administrator, the above expense ratios would have been 1.91%
(annualized) and 3.14% (annualized) for the six months ended June 30, 1997,
and period ended December 31, 1996, respectively for Select Shares; the
ratio would have been 1.83% (annualized) for Advisor Shares for the period
ended June 30, 1997.
+ A fund is required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary from
period to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.

NEW YORK MUNICIPAL FUND

<TABLE>
<CAPTION>
SELECT SHARES
-------------------------------------------------
SELECTED RATIOS AND DATA FOR A SHARE FOR THE SIX MONTHS FOR THE PERIOD FROM APRIL
OF CAPITAL STOCK OUTSTANDING ENDED JUNE 30, 1997 FOR THE YEAR ENDED 3, 1995* THROUGH DECEMBER
THROUGH THE PERIOD: (UNAUDITED) DECEMBER 31, 1996 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.40 $ 10.47 $ 10.00
------- ------- -------
Net investment income..................... 0.23 0.44 0.33
Net realized and unrealized gain (loss)... 0.06 (0.06) 0.47
------- ------- -------
Total from investment operations.......... 0.29 0.38 0.80
------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income..................... (0.23) (0.44) (0.32)
Realized gains............................ 0 (0.01) (0.01)
------- ------- -------
Total dividends and distributions......... (0.23) (0.45) (0.33)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............. $ 10.46 $ 10.40 $ 10.47
------- ------- -------
------- ------- -------
TOTAL INVESTMENT RETURN**:.................. 2.82% 3.72% 8.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $ 27,805 $ 20,158 $ 12,516
Ratios to average net assets:
Expenses.................................. 0.53%(1)(2) 0.55%(2) 0.54%(1)(2)
Net investment income..................... 4.46%(1) 4.28% 4.20%(1)
PORTFOLIO TURNOVER RATE..................... 20% 33% 35%
</TABLE>

- -----------------
* Commencement of operations.
** Total return is based on the change in net assets value during the period
and assumes reinvestment of all dividends and distributions.
(1) Annualized.
(2) If the Fund had borne all expenses that were assumed or waived by the
Adviser and Administrator, the above expense ratios would have been 1.06%
(annualized), 1.20% and 2.09% (annualized) for the six months ended June 30,
1997, year ended December 31, 1996, and period ended December 31, 1995,
respectively.

The accompanying notes are an integral part of the financial statements.
35
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)

CALIFORNIA MUNICIPAL FUND

<TABLE>
<CAPTION>
SELECT SHARES
-----------------------
FOR THE PERIOD FROM
SELECTED RATIOS AND DATA FOR A SHARE APRIL 2, 1997*
OF CAPITAL STOCK OUTSTANDING THROUGH JUNE 30, 1997
THROUGH THE PERIOD: (UNAUDITED)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.00
------
Net investment income..................... 0.11
Net realized and unrealized gain.......... 0.17
------
Total from investment operations.......... 0.28
------
LESS DIVIDENDS FROM:
Net investment income..................... (0.11)
------
NET ASSET VALUE, END OF PERIOD.............. $ 10.17
------
------
TOTAL INVESTMENT RETURN**:.................. 2.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $ 1,462
Ratios to average net assets:
Expenses.................................. 0.50%(1)(2)
Net investment income..................... 4.38%(1)
PORTFOLIO TURNOVER RATE..................... 6%
</TABLE>

- -----------------
* Commencement of operations.
** Not annualized. Total return is based on the change in net assets value
during the period and assumes reinvestment of all dividends and
distributions.
(1) Annualized.
(2) If the Fund had borne all expenses that were assumed or waived by the
Adviser and Administrator, the above expense ratio would have been 6.31%
(annualized) for the period ended June 30, 1997.

The accompanying notes are an integral part of the financial statements.
36
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- -----------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES. The OFFITBANK Investment Fund, Inc. (the
"Company") was incorporated in Maryland on September 8, 1993. The Company is
registered under the Investment Company Act of 1940, as amended (the "1940" Act)
and operates as a non-diversified, no-load and open-end management company. The
Company consists of eleven separately managed funds, of which five, OFFITBANK
High Yield Fund, OFFITBANK Emerging Markets Fund, OFFITBANK Latin America Equity
Fund (formerly "OFFITBANK Latin America Total Return Fund"), OFFITBANK New York
Municipal Fund, and OFFITBANK California Municipal Fund have commenced
operations. Effective May 1, 1996, all of the outstanding shares of each of the
Funds then in existence were reclassified as "Select Shares" and each Fund began
offering a new class of shares, designated as "Advisor Shares." The per-share
net asset value of each class of shares in a Fund is calculated separately and
may differ as between classes as a result of different fees or expenses payable
by the classes and the allocation of certain class-specific expenses to the
appropriate class to which such expenses apply. Each class of shares outstanding
bears the same voting, dividend, liquidation and other rights and conditions. No
Advisor Shares were outstanding at June 30, 1997, other than the Advisor Shares
of OFFITBANK Latin America Equity Fund, which were first issued on June 23,
1997. The OFFITBANK U.S. Government Securities Fund and the OFFITBANK Mortgage
Securities Fund commenced operations on July 1, 1997.

The following are significant accounting policies followed by the Company in the
preparation of its financial statements:

a. VALUATION OF SECURITIES. Equity securities held by a Fund are valued at the
last sale price on the exchange or in the principal over-the-counter market in
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. Debt securities held by a Fund generally are valued based on quoted bid
prices. Short-term debt investments having maturities of 60 days or less are
amortized to maturity based on their cost and, if applicable, adjusted for
foreign exchange translation. Securities for which market quotations are not
readily available are valued at fair value determined in good faith by or under
the direction of the Company's Board of Directors. Securities quoted in foreign
currencies initially will be valued in the currency in which they are
denominated and then will be translated into U.S. dollars at the prevailing
foreign exchange rate. Securities may be valued by independent pricing services
which use prices provided by market-makers or estimates of market value obtained
from yield data relating to instruments or securities with similar
characteristics.

b. FOREIGN EXCHANGE TRANSACTIONS. The books and records of the Funds are
maintained in U.S. dollars as follow:

i. market value of investment securities and other assets and liabilities -- at
the exchange rate on the valuation date.

ii. purchase and sales of investment securities, income and expenses -- at the
exchange rate prevailing on the respective date of such transactions.

The resultant foreign exchange gains and losses are included in the Statement of
Operations. The Funds do not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market price of
securities.

c. ORGANIZATIONAL EXPENSES. Costs incurred in connection with the organization
and initial registration of the Latin America Equity, the New York Municipal and
the California Municipal Funds have been deferred and are being amortized on a
straight-line basis over sixty months beginning with each Fund's commencement of
operations.

OFFITBANK assumed the organizational expenses for the High Yield and the
Emerging Markets Funds.

d. DETERMINATION OF NET ASSET VALUE AND ALLOCATION OF EXPENSES. Expenses
directly attributed to a Fund are charged to that Fund. Other expenses are
allocated proportionately among each Fund in relation to the net assets of each
Fund or on another reasonable basis. In calculating net asset value per share of
each class, investment income, realized and unrealized gains and losses and
expenses other than class specific expenses, are allocated daily to each class
of shares based upon the proportion of net assets of each class at the beginning
of each day. Shareholder servicing fees are borne solely by Advisor Shares and
there are no other class specific expenses.

e. SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex dividend date and interest income, including, where
applicable, amortization of premium and accretion of discount on investments, is
accrued daily.

f. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment
income are declared daily and paid quarterly in the cases of the Emerging
Markets and Latin America Equity Funds and monthly for the High Yield, New York
Municipal and California Municipal Funds. Effective July 1, 1997 the Latin
America Equity Fund will declare and pay dividends quarterly. Distributions of
net realized gains, if any, are normally

37
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------

declared and paid at least annually. The Funds record dividends and
distributions to shareholders on the ex dividend date.

The amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These "book/tax"
differences are either temporary or permanent in nature, and to the extent such
differences are permanent in nature, these amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require a reclassification. Dividends and distributions which
exceed net investment income and net realized gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized gains. To the
extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of paid-in capital.

g. FEDERAL INCOME TAXES. Each Fund intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
and distributes all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.

h. USE OF ESTIMATES. Estimates and assumptions are required to be made regarding
assets, liabilities, and changes in net assets resulting from operations when
financial statements are prepared in accordance with generally accepted
accounting principles. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ from these amounts.

2. INVESTMENT ADVISORY, ADMINISTRATION AND DISTRIBUTION AGREEMENTS. OFFITBANK
(the "Adviser") provides investment advisory services to the Funds pursuant to
Investment Advisory Agreements with the Company (the "Advisory Agreements").
Subject to such policies as the Company's Board of Directors may determine, the
Adviser makes investment decisions for the Funds. The Advisory Agreements
provide that, as compensation for services, the Adviser is entitled to receive
from each Fund a monthly fee at the following annual rates based upon the
average daily net assets of such Fund: 0.85% for the first $200,000,000 of
assets, 0.75% for the next $400,000,000, and 0.65% for amounts in excess of
$600,000,000 in the case of the High Yield Fund; 0.90% for the first
$200,000,000 of assets and 0.80% for amounts in excess thereof in the case of
the Emerging Markets Fund; 1.00% for the Latin America Equity Fund; 0.35% in the
case of the New York Municipal Fund and the California Municipal Fund (Prior to
May 1, 1997 was 0.40% for both Funds). For the six months ended June 30, 1997,
the Adviser earned fees of $3,464,515 for the High Yield Fund, $640,025 for the
Emerging Markets Fund and $209,912 for the Latin America Equity Fund. The
Adviser earned and waived fees of $44,835 for the New York Municipal Fund and
$1,069 for the California Municipal Fund.

BISYS Fund Services Limited Partnership ("BISYS") serves as the Company's
administrator and generally assists the Company in all aspects of its
administration and operations. As compensation for its administrative services,
BISYS receives a monthly fee based upon an annual rate of 0.15% of the aggregate
average daily net assets of the Funds. For the six months ended June 30, 1997,
BISYS was entitled to fees of $707,955 for the High Yield Fund, $106,671 for the
Emerging Markets Fund, $31,487 for the Latin America Equity Fund, $17,625 for
the New York Municipal Fund and $442 for the California Municipal Fund. BISYS
waived fees of $353,978 for the High Yield Fund, $53,336 for the Emerging
Markets Fund, $15,743 for the Latin America Equity Fund, $17,625 for the New
York Municipal Fund and $442 for the California Municipal Fund.

BISYS Fund Services, Inc., an affiliate of BISYS, provides fund accounting
services for the Company. For these services BISYS Fund Services, Inc. is
entitled to receive a fee of $2,500 per month per Fund. For the six months ended
June 30, 1997, BISYS Fund Services, Inc. earned fees, including reimbursement of
out of pocket expenses, of $26,142, $15,000, $16,157, $20,825 and $7,934 for the
High Yield Fund, the Emerging Markets Fund, the Latin America Equity Fund, the
New York Municipal Fund and the California Municipal Fund, respectively.

BISYS Fund Services, Inc. also provides transfer agency services for the Company
and receives reimbursement of certain expenses plus a per account fee of $15.00
per year. For the six months ended June 30, 1997, BISYS Fund Services, Inc.
earned fees, including reimbursement of out of pocket expenses, of $27,870,
$4,588, $1,680, $1,317 and $52 for the High Yield Fund, the Emerging Markets
Fund, the Latin America Equity Fund, the New York Municipal Fund and the
California Municipal Fund, respectively.

OFFITBANK has voluntarily agreed to limit the expenses ratio for the California
Municipal Fund at 0.50%. In order to maintain this ratio, the Adviser has waived
its advisory fee and has also agreed to reimburse the Fund $15,588.

Shares in each Fund are sold on a continuous basis by the Company's distributor,
OFFIT Funds Distributor, Inc. (the "Distributor"), a wholly-owned subsidiary of
BISYS. Solely for the purpose of reimbursing the Distributor for activities
primarily intended to result in the sale of its shares, each Fund is authorized
to spend up to 0.25% of its net assets annually with respect to each class

38
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------
of shares of the Fund in accordance with a Plan of Distribution (the "Plan")
pursuant to Rule 12b-1 promulgated under the 1940 Act. Activities for which the
Distributor may be reimbursed include (but are not limited to) the development
and implementation of direct mail promotions and advertising for the Funds and
the preparation, printing and distribution of prospectuses for the Funds to
recipients other than existing shareholders. For the six months ended June 30,
1997, no distribution costs were incurred.

Pursuant to a Shareholder Servicing Plan adopted by the Board of Directors of
the Company, the Company may enter into Shareholder Servicing Agreements with
financial institutions ("Shareholder Servicing Agents") with respect to Advisor
Shares. Shareholder administrative support services will be performed by
Shareholder Servicing Agents for their customers who beneficially own Advisor
Shares. For the services provided, the Company's Shareholder Servicing Plan
permits each Fund to pay fees to Shareholder Servicing Agents at an annual rate
of up to 0.25% of the average daily net asset value of Advisor Shares of the
Fund for which such Shareholder Servicing Agents provide services for the
benefit of customers. Shareholder Servicing Agents will provide their customers
with a schedule of any credits, fees or of the terms or conditions that may be
applicable to the investments of customers assets in each Fund's Advisor Shares.
For the six months ended June 30, 1997, no shareholder servicing fees were
incurred.

3. INVESTMENTS. Purchases and sales of securities for the six months ended June
30, 1997, other than short-term securities, aggregated $374,923,077 and
$166,773,138 for the High Yield Fund, $335,290,026 and $187,992,166 for the
Emerging Markets Fund, $66,221,658 and $23,132,568 for the Latin America Equity
Fund, $11,587,164 and $4,595,423 for the New York Municipal Fund, and $1,541,769
and $51,481 for the California Municipal Fund. The cost of securities is
substantially the same for Federal income tax purposes as it is for financial
reporting purposes.

<TABLE>
<CAPTION>
NEW YORK CALIFORNIA
HIGH YIELD EMERGING LATIN AMERICA MUNICIPAL MUNICIPAL
FUND MARKETS FUND EQUITY FUND FUND FUND
------------- ------------ ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Aggregate Cost....... $1,016,227,684 $165,703,175 $55,618,177 $27,595,779 $1,421,685
------------- ------------ ------------- ----------- ----------
------------- ------------ ------------- ----------- ----------
Gross unrealized
appreciation........ $ 42,480,246 $ 7,336,656 $12,107,616 $ 426,588 $ 20,120
Gross unrealized
depreciation........ 3,567,047 289,701 74,904 9,334 1,005
------------- ------------ ------------- ----------- ----------
Net unrealized
appreciation........ $ 38,913,199 $ 7,046,955 $12,032,712 $ 417,254 $ 19,115
------------- ------------ ------------- ----------- ----------
------------- ------------ ------------- ----------- ----------
</TABLE>

The Funds may purchase instruments from financial institutions, such as banks
and broker-dealers, subject to the seller's agreement to repurchase them at an
agreed upon time and price ("repurchase agreements"). The seller under a
repurchase agreement is required to maintain the value of the securities subject
to the agreement at not less than the repurchase price. Default by the seller
would, however, expose the relevant Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.

A Fund's net investment income from foreign issuers may be subject to non-U.S.
withholding taxes, thereby reducing the Fund's net investment income.

4. CAPITAL STOCK TRANSACTIONS. The Company's Articles of Incorporation, permit
the Company to issue ten billion shares (par value $0.001). Transactions in
shares of common stock for the six months ended June 30, 1997 and year ended
December 31, 1996 were as follows:

<TABLE>
<CAPTION>
HIGH YIELD FUND SELECT SHARES
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold........... 25,822,951 $262,721,624 41,432,333 $ 412,849,673
Shares issued in
reinvestment in
dividends and
distributions........ 2,209,973 22,400,653 4,197,280 41,938,736
Shares redeemed....... (8,310,920) (84,457,538) (10,052,610) (100,064,884)
---------- ------------ ----------- -------------
Net increase.......... 19,722,004 $200,664,739 35,577,003 $ 354,723,525
---------- ------------ ----------- -------------
---------- ------------ ----------- -------------
</TABLE>

<TABLE>
<CAPTION>
EMERGING MARKETS FUND SELECT SHARES
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 5,825,169 $ 65,616,335 6,960,725 $ 73,997,689
Shares issued in
reinvestment in
dividends and
distributions.......... 187,492 2,066,166 820,976 8,976,597
Shares redeemed......... (1,630,318) (18,243,492) (2,220,079) (23,390,002)
---------- ------------ ---------- ------------
Net increase............ 4,382,343 $ 49,439,009 5,561,622 $ 59,584,284
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>

<TABLE>
<CAPTION>
EMERGING MARKETS
FUND ADVISOR SHARES
--------------------
PERIOD ENDED
JUNE 30, 1997
--------------------
SHARES AMOUNT
--------- ---------
<S> <C> <C>
Shares sold.............................................. 15,214 $ 175,030
Shares redeemed.......................................... (15,214) (172,596)
--------- ---------
Net increase............................................. 0 $ 2,434
--------- ---------
--------- ---------
</TABLE>

<TABLE>
<CAPTION>
LATIN AMERICA EQUITY FUND SELECT SHARES
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, 1996
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................ 3,291,556 $43,430,384 1,214,457 $13,192,197
Shares issued in
reinvestment in dividends
and distributions......... 3,410 44,503 36,887 427,936
Shares redeemed............ (27,752) (360,805) (110,382) (1,261,911)
--------- ----------- --------- -----------
Net increase............... 3,267,214 $43,114,082 1,140,962 $12,358,222
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>

<TABLE>
<CAPTION>
LATIN AMERICA
EQUITY FUND ADVISOR
SHARES
------------------------
PERIOD ENDED
JUNE 30, 1997
------------------------
SHARES AMOUNT
----------- -----------
<S> <C> <C>
Shares sold................................................. 662 $ 10,000
Shares redeemed............................................. 0 0
----- -----------
Net increase................................................ 662 $ 10,000
----- -----------
----- -----------
</TABLE>

39
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
NEW YORK MUNICIPAL FUND SELECT SHARES
----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................. 1,056,348 $10,954,876 957,098 $ 9,898,661
Shares issued in
reinvestment in dividends
and distributions.......... 35,116 363,795 57,067 589,238
Shares redeemed............. (371,108) (3,858,285) (272,129) (2,837,811)
--------- ----------- --------- -----------
Net increase................ 720,356 $ 7,460,386 742,036 $ 7,650,088
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>

<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL
FUND SELECT SHARES
---------------------
PERIOD ENDED
JUNE 30, 1997
---------------------
SHARES AMOUNT
--------- ----------
<S> <C> <C>
Shares sold............................................. 143,071 $1,435,000
Shares issued in reinvestment in dividends.............. 745 7,512
Shares redeemed......................................... (4) (41)
--------- ----------
Net increase............................................ 143,812 $1,442,471
--------- ----------
--------- ----------
</TABLE>

5. DERIVATIVE INSTRUMENTS. Each Fund (other than the Municipal Funds) may invest
in various financial instruments including positions in forward currency
contracts, enter into currency swaps and purchase foreign currency options. The
Funds enter into such contracts for the purposes of hedging exposures to changes
in foreign currency exchange rates on their portfolio holdings.

Each of the Funds (other than the Municipal Funds) is also permitted to enter
into swap agreements to manage interest rate or currency exposure. Swap
agreements involve the commitment to exchange with another party cash flows
which are based upon the application of interest rates, currency movements or
other financial indices to a notional principal amount. Gains and losses
associated with currency swap transactions entered into by the Emerging Markets
Fund and the Latin America Equity Fund are included in realized gains and losses
on foreign currency transactions.

A forward foreign exchange contract is a commitment to sell or buy a foreign
currency at a future date at a negotiated exchange rate. The Fund bears the
market risk which arises from possible changes in foreign exchange values. Risks
may arise from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of the foreign
currency relative to the U.S. dollar. Forward foreign exchange contracts may
involve market or credit risk in excess of the amounts reflected on the Fund's
statement of assets and liabilities.

The gain or loss from the difference between the cost of original contracts and
the amount realized upon the closing of such contracts is included in net
realized gain on foreign currency transactions. Fluctuations in the value of
forward contracts held at June 30, 1997 are recorded for financial reporting
purposes as unrealized gains and losses by the Funds.

The tables below indicate the High Yield Fund's and Emerging Markets Fund's
outstanding forward currency contract positions at June 30, 1997.

HIGH YIELD FUND

<TABLE>
<CAPTION>
VALUE ON VALUE AT
CONTRACT MATURITY ORIGINATION JUNE 30, UNREALIZED
CURRENCY AMOUNTS DATE DATE 1997 APPRECIATION
----------- ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sell CAD 2,550,000 9-25-97 $ (1,870,461) $(1,857,463) $ 12,998
Sell DAK 67,150,000 7-1-97 (10,214,481) (10,117,523) 96,958
Sell DAK 69,450,000 10-1-97 (10,577,215) (10,509,674) 67,541
------------
Net unrealized appreciation on forward positions........................... $ 177,497
------------
------------
</TABLE>

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
VALUE ON VALUE AT UNREALIZED
CONTRACT MATURITY ORIGINATION JUNE 30, APPRECIATION
CURRENCY AMOUNTS DATE DATE 1997 (DEPRECIATION)
----------- ----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sell DEM (2,900,000) 7-22-97 ($1,706,987) $(1,666,675) $ 40,312
Sell DEM (1,110,000) 7-22-97 (646,495) (637,934) 8,561
Sell DEM (4,754,000) 7-22-97 (2,778,492) (2,732,197) 46,295
Sell DEM (17,005,000) 7-22-97 (9,927,029) (9,756,167) 170,862
Sell DEM (1,182,500) 7-22-97 (692,451) (679,601) 12,850
Sell DEM (1,480,000) 7-22-97 (876,154) (850,579) 25,575
Sell DEM (4,147,500) 7-22-97 (2,448,925) (2,383,632) 65,293
Sell DEM (1,210,000) 7-22-97 (702,671) (695,406) 7,265
Buy DEM 3,485,000 7-22-97 2,032,188 2,002,883 (29,305)
Buy DEM 210,000 7-22-97 123,689 120,690 (2,999)
-------------
Net unrealized appreciation on forward positions........................... $ 344,709
-------------
-------------
</TABLE>

A purchased option contract gives the Fund the right to sell (puts) or purchase
(calls) a specified amount of foreign currency at a fixed price. The maximum
exposure to loss for any purchased option is limited to the premium initially
paid for the option. Such options are reflected at value in the Fund's portfolio
of investments.

The Emerging Markets Fund also is invested in indexed securities whose value is
linked directly to changes in foreign currencies, interest rates and other
financial indices. Indexed securities may be more volatile than the underlying
instrument but the risk of loss is limited to the amount of the original
investment.

6. OTHER MATTERS. The High Yield Fund, the Emerging Markets Fund and the Latin
America Equity Fund invest in obligations of foreign entities and securities
denominated in foreign currencies involve risk not typically involved in
domestic investments. Such risks include fluctuations in foreign exchange rates,
ability to convert proceeds into U.S. dollars, application of foreign tax laws,
foreign investments restrictions, less publicly available information about
foreign financial instruments, less liquidity resulting from substantially less
trading volume, more volatile prices and generally less government supervision
of foreign securities markets and issuers.

The New York Municipal and California Municipal Funds invest primarily in
municipal obligations issued by the States of New York and California,
respectively, and their agencies, instrumentalities and various political
subdivisions, the Funds are more susceptible to factors adversely affecting
issuers of such obligations than comparable municipal securities funds that are
not so concentrated. If either New York and California States or any of their
local governmental entities are unable to meet their financial obligations, the
income derived by the Funds and their ability to perserve capital and liquidity
could be adversely affected.

40
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
- -----------------------------------------------------------------------------

INDEX DESCRIPTIONS:

The Barings Emerging Markets Latin America Equity Index is generally
representative of Latin American Equity Markets.

The J.P. Morgan Emerging Markets Bond Index Plus is generally representative of
external currency denominated debt instruments of Emerging Markets countries.

The J.P. Morgan Latin Eurobond Index is generally representative of U.S.
dollar-dominated Eurobonds issued by Latin American corporate and sovereign
borrowers.

The Lehman Brothers 5 Year Municipal Index is generally representative of the
intermediate municipal market.

All indices are unmanaged.

RISKS:

The High Yield Fund's yield may be significantly higher than other fixed income
funds that purchase higher rated securities because of the increased risk of
credit default and share price decline in an adverse environment.

PERFORMANCE:

The performance data shown represents past performance and is not an indication
of future results. The investment return and Net Asset Value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than the
original cost.

41
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.

- -----------------------------------------------------------------------------

DIRECTORS AND OFFICERS
Morris W. Offit
CHAIRMAN OF THE BOARD, PRESIDENT AND
DIRECTOR

Edward J. Landau
DIRECTOR

The Very Reverend
James Parks Morton
DIRECTOR

Wallace Mathai-Davis
SECRETARY AND TREASURER

Ellen F. Stoutamire
ASSISTANT SECRETARY

Alaina V. Metz
ASSISTANT SECRETARY

Kristine Kelly
ASSISTANT SECRETARY

Matthew Constancio
ASSISTANT SECRETARY

Stephen Brent Wells
ASSISTANT TREASURER

Vincent M. Rella
ASSISTANT TREASURER

Michael Sakala
ASSISTANT TREASURER

INVESTMENT ADVISER
OFFITBANK
520 Madison Avenue
New York, New York 10022

DISTRIBUTOR
OFFIT Funds Distributor, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

ADMINISTRATOR
BISYS Fund Services Limited Partnership
125 West 55th Street
New York, New York 10019

TRANSFER AND DIVIDEND DISBURSING AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

CUSTODIANS
The Chase Manhattan Bank
4 MetroTech Center, 18th Floor
Brooklyn, New York 11245
(OFFITBANK EMERGING MARKETS FUND AND
OFFITBANK LATIN AMERICA EQUITY FUND)

The Bank of New York
48 Wall Street
New York, New York 10286
(ALL OTHER OFFITBANK FUNDS)

LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
<PAGE>
This report is submitted for the information of the shareholders of The
OFFITBANK Investment Fund, Inc. It is not authorized for distribution to
prospective investors in the Fund unless preceded or accompanied by an effective
prospectus which includes information regarding the Fund's objectives and
policies, record, management and other data.

THE OFFITBANK INVESTMENT FUND, INC.
125 WEST 55TH STREET, NEW YORK, NY 10019
(212) 758 - 9600
OF897
<PAGE>
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