<PAGE>
-------------------------------------------
OFFITBANK High Yield Fund
OFFITBANK Emerging Markets Fund
OFFITBANK Latin America Equity Fund
OFFITBANK New York Municipal Fund
OFFITBANK California Municipal Fund
OFFITBANK National Municipal Fund
OFFITBANK U.S. Government Securities Fund
OFFITBANK Mortgage Securities Fund
---------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1999
THE
[OFFITBANK LOGO]
INVESTMENT FUND, INC.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Dear Shareholders:
We are very pleased to present you with the June 30, 1999 Semi-Annual Report for
The OFFITBANK Investment Fund, Inc. As of that date the Funds' investment
portfolios have assets in excess of $2.2 billion, an increase of almost $100
million since year-end.
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. As always, we have tried to make each market commentary informative, and
I hope that you will find them helpful.
OFFITBANK Holdings, Inc. the sole shareholder of OFFITBANK, recently entered
into a definitive agreement to merge OFFITBANK with the Wachovia Corporation.
OFFITBANK will continue to operate under its own name as a distinct Wachovia
company, providing wealth management services in precisely the same manner as it
has for fifteen years. Wachovia is one of the leading banks in the United
States, with a notable presence in the Southeast and a national and
international client base. It is an institution with a pristine reputation for
integrity and commitment to their clients.
The merger of OFFITBANK with Wachovia will provide our clients the benefit of a
broader base of resources and products, as well as the long-term continuity
which is critical in providing trust and estate services. Let me personally
assure you that OFFITBANK will retain its identity following this merger. This
integrity of our investment processes, the character of our professional and
administrative staff, and, most significantly, our personalized relationship
with our clients will continue to be the highest priorities of our firm as a
Wachovia company. The commitment of Wachovia to OFFITBANK will only strengthen
our capacities to serve our clients more comprehensively and effectively.
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, 1999
<PAGE>
OFFITBANK
HIGH YIELD FUND
- --------------------------------------------------------------------------------
High yield materially outperformed investment grade fixed income for the first
half of 1999. High yield returns were positive, despite higher interest rates,
heavy issuance, and an increase in the number of defaults. The Fund's net
investment return for the first half of 1999 after all fees and expenses was
1.91%. The June 30, 1999 NAV price of $9.67 was 2.4% lower than the $9.91 NAV at
the beginning of the year. As of June 30, 1999, the Fund had a 30 day SEC yield
of 9.18%. The Fund continued to grow during the first half of 1999 as net assets
increased to $1,797 million from $1,740 million on December 31, 1998.
After rising 60 basis points in the first quarter, intermediate Treasury yields
rose an additional 55 basis points during the second quarter. As is typical
during periods of rising interest rates, high yield outperformed Treasuries.
Also, as is typical in a rising rate environment, lower quality less interest
sensitive high yield performed best. Lower tier returns are helped by the
cushioning effect of the higher coupons, while higher quality high yield
securities are more sensitive to movements in interest rates.
Broad market high yield spreads have tightened 100 basis points this year
entirely due to the rise in interest rates. However, they are still 100 basis
points wider than a year ago. Today solid double B credits may be purchased at
spreads of 275 to 300 basis points, the same spread at which low double B or
high single B credits were trading a year ago. In addition, due to the backup in
interest rates, today's absolute yields of 8(3)/(4)% to 9% for higher quality
credits are similar to lower quality yields of a year ago.
Current spreads discount further increases in the default rate and incremental
credit problems for the high yield market. Market spreads may stay wider than in
the last few years as high yield credit fundamentals are showing further signs
of deterioration. For the past four quarters, credit downgrades have exceeded
credit upgrades and the market has experienced rising default rates. Domestic
default rates are now approaching their long-term average of approximately 3.3%.
We do not expect the default rate to rise excessively from current levels.
The current increases in credit problems can be partially attributed to the
large number of lower quality new issues brought to market in the last few
years. As we have previously noted, it usually takes a lower tier credit about
two years or so from a new bond offering to experience a credit problem. While
we have taken great care in constructing and monitoring the portfolio, we will
not be immune to the occasional credit disappointment. Another factor that has
influenced market spreads is reduced dealer activity. While liquidity is
markedly improved from year end, it still remains softer than a year ago.
Dealers remain reluctant to commit capital and the market is putting an above
average liquidity premium on high yield. Large better quality credits continue
to command a premium to the broad market.
During the first six months, the technicals of the high yield market were mixed,
as supply remained relatively heavy and demand, as measured by mutual fund
flows, weakened. New issue volume was a healthy $63 billion year to date while
mutual fund flows totaled only $6 billion. In the second quarter, visible demand
fell far behind supply as net mutual fund flows turned negative. However, demand
from new buyers was sufficient that the market was able to absorb the new supply
without any severe dislocations.
The primary new money purchaser of new high yield issues appears to be CBO's.
CBO's or collateralized bond obligations are structured financings originated
and managed by large financial institutions in conjunction with broker-dealers.
A well-diversified portfolio of high yield bonds is used as collateral for a
tiered offering of investment grade debt, subordinated debt and equity. Leverage
ranges from 5 to 1 debt to equity to as much as 12 to 1, depending on the
structure of the CBO. CBO issuance has increased to an estimated $20 billion
this year and has helped provide a cushion against high yield spread widening by
immediately creating demand whenever spreads widen. CBO participation has also
helped increase demand for single B and higher yielding credits.
We are very bullish on the upper tier of the high yield market and believe the
sector offers compelling relative value within high yield and other fixed income
sectors. The large flow of new issues over the past few years has increased the
number of better quality credits for consideration. Recently, new issue quality
has improved with less issuance from the lowest quality sectors. As a result, we
are finding more better quality credits at attractive spreads than we have seen
in the last few years. The market has a lot of room to tighten when interest
rates stabilize or the technicals turn more positive. Supply-demand imbalances
tend to be self-correcting over time.
During the first half, we were able to add to our quality holdings at more
attractive yields. Several positions were increased including Federal Mogul and
Allied Waste at lower prices and higher yields versus earlier in the year. New
positions were established in Lear Corp. and Lyondell Chemical Co. These are
solid double B companies with significant market presence and strong cash flows.
Also, the Fund increased its holdings of bank debt. High yield bank
2
- -------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- --------------------------------------------------------------------------------
debt provides added protection by being senior in the capital structure while
paying floating rate spreads of approximately 300 basis points over Libor.
Positions in the senior tiers of Eurotunnel were increased and are now the
largest holding of the Fund, while new positions in the bank debt of Triad
Hospitals, Nextel Communications and Centennial Cellular Corp. were established.
Several noteworthy developments occurred during the first half which affected
the portfolio. The telecommunications sector continues to benefit from strong
fundamentals and favorable merger activity. Nextel Communications, MetroNet
Communications and Global Crossing Holdings were all beneficiaries of the
positive trends. International cable companies including NTL, Inc., Telewest
Communications and Diamond Cable Holdings also benefited from rapid
consolidation in the United Kingdom cable industry.
On the negative credit side, the Fund's exposure to the healthcare and paging
industry dampened performance. Changes in Medicare reimbursement is having a
much greater impact than previously believed with severe consequences for the
long-term care industry. The paging industry has been suffering from a marked
slowdown in unit growth and stagnant pricing.
Several corporate actions affected the portfolio during the first half of 1999.
A large number of holdings including Echostar Communications, Marcus Cable, J
Ray McDermott and Comcast Cellular announced tenders for their debt securities
at investment grade spreads. Additionally, several issues including Armco Inc.,
Adelphia Communications and Presidential Life were called. During the first half
of 1999, 12 issues totaling approximately $106.1 million were either tendered or
called. Over the past twelve months approximately 13% of average net assets of
the Fund have been either tendered or called.
We continue to focus on the better quality segment of the high yield market. As
of quarter end approximately 42% of the holdings in the Fund are rated either
Ba3 or better by Moody's or BB- or better by Standard & Poor's. Additionally,
65% of the holdings are rated at least B1 or B+. Many of the lower rated or
unrated holdings are senior in the capital structure, including the Eurotunnel
debt. Bank debt now totals approximately 7% of the Fund. The Fund is very well
diversified with over 225 issues. We continue to believe that better quality
high yield credits will outperform fixed income alternatives over time.
Stephen T. Shapiro
July 15, 1999
3
-------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
--------------------------------------------------------------------------------------------
CORPORATE BONDS (92.2%)
AUTOMOTIVE (3.6%)
Delco Remy International Inc. Sr Sub Notes,
10.625%, 08/01/06............................ $ 4,000,000 $ 4,080,000
Exide Corp. Sr Notes, 10.00%, 04/15/05........ 7,000,000 7,035,000
Exide Holding Europe S.A. (144A), 9.125%,
04/15/04..................................... 18,000,000(a)(1) 9,657,115
Federal-Mogul Corp. Notes (144A), 7.375%,
01/15/06..................................... 5,000,000(1) 4,711,800
Federal-Mogul Corp. Notes, 7.875%, 07/01/10... 10,000,000 9,401,900
Hayes Wheels International Inc. Sr Sub Notes,
9.125%, 07/15/07............................. 7,000,000 7,070,000
Lear Corp. Sr Notes (144A), 8.11%, 05/15/09... 11,500,000(1) 11,119,925
Sonic Automotive Sr Sub Notes, 11.00%,
08/01/08..................................... 8,000,000 7,940,000
United Auto Group Inc. Sr Sub Notes, 11.00%,
07/15/07..................................... 4,000,000 3,640,000
--------------
64,655,740
--------------
BROADCAST/MEDIA (4.3%)
Big Flower Press Sr Sub Notes, 8.875%,
07/01/07..................................... 11,000,000 10,340,000
Echostar DBS Corp. Sr Notes (144A), 9.25%,
02/01/06..................................... 12,000,000(1) 12,240,000
Heritage Media Corp. Sr Sub Notes, 8.75%,
02/15/06..................................... 4,500,000 4,635,000
Hollinger International Publishing Sr Sub
Notes, 9.25%, 03/15/07....................... 6,500,000 6,662,500
Lamar Advertising Co. Sr Sub Notes, 9.625%,
12/01/06..................................... 6,500,000 6,630,000
Loral Space & Communication Sr Notes, 9.50%,
01/15/06..................................... 7,500,000 6,562,500
Mail-Well I Corp. Sr Sub Notes, 8.75%,
12/15/08..................................... 5,000,000 4,875,000
MDC Communications Corp. Sr Sub Notes, 10.50%,
12/01/06..................................... 4,750,000 4,821,250
Outdoor Systems Inc. Sr Sub Notes, 8.875%,
06/15/07..................................... 9,000,000 9,393,750
Satelites Mexicanos S.A. Sr Notes, 10.125%,
11/01/04..................................... 2,500,000 2,012,500
Sinclair Broadcast Group Inc. Sr Sub Notes,
10.00%, 09/30/05............................. 4,000,000 4,080,000
World Color Press Sr Sub Notes, 8.375%,
11/15/08..................................... 6,000,000 5,880,000
--------------
78,132,500
--------------
CABLE (6.5%)
Adelphia Communications Corp. Sr Notes, 9.50%,
02/15/04..................................... 1,252,911 1,297,515
Adelphia Communications Corp. Sr Notes,
9.875%, 03/01/07............................. 6,000,000 6,270,000
Century Communications Corp. Sr Notes, 8.875%,
01/15/07..................................... 5,500,000 5,486,250
Century Communications Corp. Sr Notes, 9.75%,
02/15/02..................................... 6,500,000 6,792,500
CSC Holdings Inc. Sr Notes, 9.25%, 11/01/05... 6,500,000 6,695,000
Diamond Holdings PLC Sr Notes, 9.125%,
02/01/08..................................... 5,000,000 5,075,000
Jones Intercable Inc. Sr Sub Debs., 10.50%,
03/01/08..................................... 7,500,000 8,025,000
Lenfest Communications Inc. Sr Notes, 8.375%,
11/01/05..................................... 11,500,000 12,089,375
Mediacom L.L.C./Capital Sr Notes, 8.50%,
04/15/08..................................... 8,000,000 7,440,000
NTL Inc. Sr Notes, 10.00%, 02/15/07........... 6,500,000 6,711,250
NTL Inc. Sr Notes, 0/9.75%, 04/01/08.......... 12,500,000(2) 8,562,500
Olympus Communications L.P. Sr Notes, 10.625%,
11/15/06..................................... 10,000,000 10,950,000
Rogers Cablesystems Ltd. Sr Secured 2nd
Priority Notes, 9.65%, 01/15/14.............. 3,500,000(d) 2,559,880
Rogers Communications Inc. Sr Notes, 9.125%,
01/15/06..................................... 3,500,000 3,543,750
Telewest Communications PLC Sr Discount Debs.,
0/11.00%, 10/01/07........................... 20,000,000(2) 17,850,000
Telewest Communications PLC Sr Notes (144A),
0/9.875%, 04/15/09........................... 8,000,000(e)(1)(2) 8,102,132
--------------
117,450,152
--------------
CHEMICAL (2.9%)
Borden Chemicals & Plastics Sr Notes, 9.50%,
05/01/05..................................... 10,500,000 10,185,000
Huntsman ICI Chemicals Sr Sub (144A), 10.125%,
07/01/09..................................... 8,000,000(b)(1) 8,312,020
Hunstman ICI Chemicals Term B Loan, 8.313%,
06/30/07..................................... 2,500,000(5) 2,496,875
Huntsman ICI Chemicals Term C Loan, 8.563%,
06/30/08..................................... 2,500,000(5) 2,496,875
Lyondell Chemical Co. Sr Secured Notes (144A),
9.875%, 05/01/07............................. 12,000,000(1) 12,300,000
Polymer Group Inc. Sr Sub Notes, 9.00%,
07/01/07..................................... 6,000,000 5,745,000
Terra Industries Inc. Sr Notes, 10.50%,
06/15/05..................................... 10,000,000 9,900,000
--------------
51,435,770
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
CONSUMER GROUPS (6.9%)
Albecca Inc. Sr Sub Notes, 10.75%, 08/15/08... $ 3,000,000 $ 2,460,000
Ameriserve Food Co. Sr Notes, 8.875%,
10/15/06..................................... 7,500,000 6,900,000
Canandaigua Brands Inc. Sr Sub Notes, 8.50%,
03/01/09..................................... 5,500,000 5,293,750
Chiquita Brands International Inc. Sr Notes,
9.125%, 03/01/04............................. 6,000,000 5,850,000
Chiquita Brands International Inc. Sr Notes,
9.625%, 01/15/04............................. 4,000,000 3,970,000
Chiquita Brands International Inc. Sr Notes,
10.00%, 06/15/09............................. 6,000,000 6,030,000
Chiquita Brands International Inc. Sr Notes,
10.25%, 11/01/06............................. 4,000,000 4,060,000
CHS Electronics Inc. Sr Notes, 9.875%,
04/15/05..................................... 7,000,000 4,900,000
Cott Corp. Sr Notes, 8.50%, 05/01/07.......... 4,000,000 3,770,000
Fedders N.A. Sr Sub Notes, 9.375%, 08/15/07... 8,500,000 8,585,000
Fisher Scientific International Inc. Sr Sub
Notes, 9.00%, 02/01/08....................... 7,000,000 6,650,000
Fleming Companies Inc. Sr Sub Notes, 10.50%,
12/01/04..................................... 2,000,000 1,880,000
Fruit of The Loom Sr Notes (144A), 8.875%,
04/15/06..................................... 8,000,000(1) 7,320,000
Host Marriott Travel Plaza Sr Notes, 9.50%,
05/15/05..................................... 9,000,000 9,270,000
Imperial Holly Sr Sub Notes, 9.75%,
12/15/07..................................... 7,500,000 7,237,500
Nash Finch Co. Sr Sub Notes, 8.50%,
05/01/08..................................... 6,500,000 5,817,500
Playtex Products Inc. Sr Notes, 8.875%,
07/15/04..................................... 9,000,000 9,157,500
Revlon Consumer Products Sr Sub Notes, 8.625%,
02/01/08..................................... 12,000,000 11,340,000
Samsonite Corp. Sr Sub Notes, 10.75%,
06/15/08..................................... 5,000,000 4,075,000
United Artists Theatre Pass Through
Certificates, 9.30%, 07/01/15................ 10,389,231 9,038,631
--------------
123,604,881
--------------
FINANCIAL SERVICES/INSURANCE (2.3%)
Americo Life Inc. Sr Sub Notes, 9.25%,
06/01/05..................................... 3,000,000 3,030,000
Amresco Inc. Sr Sub Notes, 9.875%, 03/15/05... 10,000,000 7,700,000
Nationwide Credit Sr Notes, 10.25%,
01/15/08..................................... 4,000,000 2,680,000
Presidential Life Corp. Sr Notes, 7.875%,
02/15/09..................................... 6,250,000 6,050,812
Reliance Group Holdings Inc. Sr Sub Notes,
9.75%, 11/15/03.............................. 8,500,000 8,670,000
United Companies Financial Notes, 7.70%,
01/15/04..................................... 4,000,000(6) 1,160,000
United Companies Financial Sub Notes, 8.375%,
07/01/05..................................... 6,000,000(6) 300,000
Veritas Holdings Sr Notes, 9.625%, 12/15/03... 4,536,000 4,445,280
Willis Corroon Corp. Sr Sub Notes (144A),
9.00%, 02/01/09.............................. 9,000,000(1) 8,673,750
--------------
42,709,842
--------------
FOREST & PAPER PRODUCTS (5.0%)
Container Corp. of America Sr Notes, 9.75%,
04/01/03..................................... 5,000,000 5,243,750
Container Corp. of America Sr Notes, 11.25%,
05/01/04..................................... 3,500,000 3,670,625
Crown Paper Co. Sr Sub Notes, 11.00%,
09/01/05..................................... 3,500,000 2,415,000
Doman Industries Limited Sr Notes, 9.25%,
11/15/07..................................... 8,000,000 4,560,000
Gaylord Container Corp. Sr Notes, 9.75%,
06/15/07..................................... 10,000,000 9,525,000
Maxxam Group Holdings Inc. Sr. Notes, 12.00%,
08/01/03..................................... 4,200,000 4,347,000
Pindo Deli Financial Mauritius Gtd., 10.75%,
10/01/07..................................... 5,500,000 3,767,500
Repap New Brunswick Sr Notes, 9.00%,
06/01/04..................................... 13,000,000 12,252,500
Repap New Brunswick Sr Notes, 8.848%,
06/01/04..................................... 5,000,000(3)(5) 4,700,000
Stone Container Corp. Sr Secured Notes,
10.75%, 10/01/02............................. 7,000,000 7,262,500
Stone Container Corp. Sr Sub Debs., 12.75%,
04/01/02..................................... 7,500,000 7,518,750
Stone Container Corp. Sr Sub Notes, 11.50%,
08/15/99..................................... 3,500,000 3,500,000
Stone Container Finance Co. Sr Notes (144A),
11.50%, 08/15/06............................. 5,500,000(1) 5,898,750
Tembec Finance Corp. Sr Notes, 9.875%,
09/30/05..................................... 8,500,000 8,882,500
U.S. Timberlands Finance Corp. Sr Notes,
9.625%, 11/15/07............................. 6,500,000 6,500,000
--------------
90,043,875
--------------
GENERAL INDUSTRIES/MANUFACTURING (7.3%)
Advanced Micro Devices Sr Notes, 11.00%,
08/01/03..................................... 4,250,000 4,292,500
Allied Waste North America Sr Sub Notes,
7.625%, 01/01/06............................. 10,000,000 9,325,000
American Business Information Sr Sub Notes,
9.50%, 06/15/08.............................. 3,500,000 2,905,000
Atrium Companies Inc. Sr Sub Notes (144A),
10.50%, 05/01/09............................. 7,000,000(1) 6,860,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
----------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
GENERAL INDUSTRIES/MANUFACTURING (CONTINUED)
Ball Corp. Sr Sub Notes, 8.25%, 08/01/08...... $ 5,000,000 $ 4,900,000
Celestica International Sr Sub Notes, 10.50%,
12/31/06..................................... 3,175,000 3,436,937
CEX Holdings Inc. Sr Sub Notes, 9.625%,
06/01/08..................................... 2,500,000 2,343,750
Congoleum Corp. Sr Notes, 8.625%, 08/01/08.... 6,000,000 5,700,000
Decrane Aircraft Hlds. Units, 12.00%,
09/30/08..................................... 3,000,000 3,030,000
Delta Mills Inc. Sr Notes, 9.625%, 09/01/07... 7,000,000 6,650,000
Envirosource Inc. Sr Notes, 9.75%, 06/15/03... 3,000,000 1,890,000
Foamex L.P. Sr Sub Notes, 9.875%, 06/15/07.... 2,500,000 2,125,000
Furon Company Sr Sub Notes, 8.125%,
03/01/08..................................... 5,000,000 4,700,000
Galey & Lord Inc. Sr Sub Notes, 9.125%,
03/01/08..................................... 7,500,000 4,875,000
Nortek Inc. Sr Notes, 9.125%, 09/01/07........ 5,000,000 4,937,500
Nortek Inc. Sr Notes (144A), 8.875%,
08/01/08..................................... 4,000,000(1) 3,910,000
Nortek Inc. Sr Sub Notes, 9.875%, 03/01/04.... 6,000,000 6,030,000
Pillowtex Corp. Sr Sub Notes, 10.00%,
11/15/06..................................... 8,000,000 7,920,000
Primark Corp. Sr Sub Notes, 9.25%, 12/15/08... 6,000,000 5,820,000
Sequa Corp. Sr Notes, 8.75%, 12/15/01......... 5,600,000 5,614,000
Unisys Corp. Sr Notes, 11.75%, 10/15/04....... 5,700,000 6,327,000
United Rentals Inc. Sr Sub Notes, 9.50%,
06/01/08..................................... 8,000,000 8,030,000
Wesco Distribution Inc. Sr Sub Notes, 9.125%,
06/01/08..................................... 9,000,000 8,707,500
Williams Scotsman Inc. Sr Notes, 9.875%,
06/01/07..................................... 10,000,000 10,000,000
--------------
130,329,187
--------------
HEALTH CARE (6.1%)
Columbia/HCA Healthcare Medium Term Notes,
8.85%, 01/01/07.............................. 7,500,000 7,478,475
Columbia/HCA Healthcare Notes, 7.00%,
07/01/07..................................... 6,500,000 5,868,915
Columbia/HCA Healthcare Notes, 7.25%,
05/20/08..................................... 6,000,000 5,447,460
Conmed Corp. Sr Sub Notes, 9.00%, 03/15/08.... 8,500,000 8,415,000
Extendicare Health Services Sr Sub Notes,
9.35%, 12/15/07.............................. 7,000,000 5,250,000
Genesis Health Ventures Sr Sub Notes, 9.875%,
01/15/09..................................... 6,500,000 5,200,000
Integrated Health Services Inc. Sr Sub Notes,
9.50%, 09/15/07.............................. 12,000,000 8,760,000
Magellan Health Services Sr Sub Notes, 9.00%,
02/15/08..................................... 7,000,000 5,985,000
Medaphis Corp. Sr Notes, 9.50%, 02/15/05...... 6,500,000 4,810,000
Pharmerica Inc. Sr Sub Notes, 8.375%,
04/01/08..................................... 7,000,000 7,087,500
Quest Diagnostic Inc. Sr Sub Notes, 10.75%,
12/15/06..................................... 3,000,000 3,397,500
Quest Diagnostic Inc. Sr Sub Notes (144A),
9.875%, 07/01/09............................. 9,000,000(1) 9,135,000
Sun Healthcare Group Inc. Sr Sub Notes (144A),
9.375%, 05/01/08............................. 6,000,000(1)(6) 1,080,000
Tenet Healthcare Corp. Sr Sub Notes, 8.125%,
12/01/08..................................... 8,000,000 7,620,000
Tenet Healthcare Corp. Sr Sub Notes, 8.625%,
01/15/07..................................... 8,500,000 8,393,750
Triad Hospitals Term B Loan, 9.00%,
10/06/05..................................... 15,000,000(5) 15,112,500
--------------
109,041,100
--------------
HOTELS & GAMING (6.5%)
Alliance Gaming Corp. Sr Sub Notes, 10.00%,
08/01/07..................................... 6,500,000 4,615,000
Aztar Corp. Sr Sub Notes (144A), 8.875%,
05/15/07..................................... 5,000,000(1) 4,800,000
Felcor Suites L.P. Sr Notes, 7.625%,
10/01/07..................................... 10,000,000 9,067,900
Harrahs Operating Co. Inc. Sr Sub Notes,
7.875%, 12/15/05............................. 7,500,000 7,256,250
HMH Properties Sr Notes, 7.875%, 08/01/08..... 12,500,000 11,531,250
Hollywood Casino Corp. Sr Secured Notes
(144A), 11.25%, 05/01/07..................... 7,000,000(1) 7,000,000
Hollywood Park Operating Inc. Sr Sub Notes,
9.50%, 08/01/07.............................. 9,000,000 8,955,000
International Game Technology Sr Notes (144A),
8.375%, 05/15/09............................. 6,500,000(1) 6,386,250
John Q. Hammons Hotels L.P. First Mtg. Notes,
8.875%, 02/15/04............................. 10,500,000 9,712,500
John Q. Hammons Hotels L.P. First Mtg. Notes,
9.75%, 10/01/05.............................. 7,000,000 6,667,500
Park Place Entertainment Sr Sub Notes, 7.875%,
12/15/05..................................... 8,000,000 7,600,000
Prime Hospitality Corp. First Mtg. Notes,
9.25%, 01/15/06.............................. 8,000,000 8,080,000
Prime Hospitality Corp. Sr Sub Notes, 9.75%,
04/01/07..................................... 6,000,000 6,000,000
Sun International Hotels Ltd. Sr Sub Notes,
9.00%, 03/15/07.............................. 7,000,000 7,000,000
Trump Atlantic City First Mtg. Notes, 11.25%,
05/01/06..................................... 8,500,000 7,628,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
- ----------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
HOTELS & GAMING (CONTINUED)
Trump Atlantic City First Mtg. Notes II,
11.25%, 05/01/06............................. $ 5,000,000 $ 4,487,500
--------------
116,787,900
--------------
METALS & MINING (7.3%)
AK Steel Corp. Sr Notes, 9.125%, 12/15/06..... 11,000,000 11,330,000
Armco Inc. Sr Notes, 8.875%, 12/01/08......... 8,000,000 8,190,000
Armco Inc. Sr Notes, 9.00%, 09/15/07.......... 10,000,000 10,225,000
Centaur Mining Exploration Sr Secured Notes,
11.00%, 12/01/07............................. 7,500,000 6,881,250
EES Coke Battery Co. Inc. Series B Sr Secured
Notes, (144A), 9.382%, 04/15/07.............. 5,750,000(1) 5,635,000
Freeport McMoran C&G Debs., 7.20%, 11/15/26... 8,500,000 6,290,000
Glencore Nickel Pty Ltd. Sr Secured Bonds,
9.00%, 12/01/14.............................. 16,000,000 14,080,000
Great Central Mines Ltd. Sr Notes, 8.875%,
04/01/08..................................... 7,500,000 7,106,250
Inland Steel Co. First Mortgage, 7.90%,
01/15/07..................................... 7,000,000 6,807,500
Kaiser Aluminum & Chemical Corp. Sr Notes,
9.875%, 02/15/02............................. 5,500,000 5,582,500
Kaiser Aluminum & Chemical Corp. Sr Notes,
10.875%, 10/15/06............................ 6,000,000 6,240,000
LTV Corp. Sr Notes, 8.20%, 09/15/07........... 13,500,000 12,555,000
National Steel Corp. First Mtg. Bonds, 8.375%,
08/01/06..................................... 9,235,000 9,061,844
Oregon Steel Mills First Mtg. Notes, 11.00%,
06/15/03..................................... 5,000,000 5,225,000
Wheeling-Pittsburgh Corp. Sr Notes, 9.25%,
11/15/07..................................... 10,000,000 9,575,000
WHX Corporation Sr Notes, 10.50%, 04/15/05.... 7,000,000 6,685,000
--------------
131,469,344
--------------
OIL/GAS (5.7%)
Clark R&M Inc. Sr Notes, 8.625%, 08/15/08..... 5,000,000 4,650,000
Clark R&M Inc. Sr Sub Notes, 8.875%,
11/15/07..................................... 6,000,000 5,280,000
Crown Central Petroleum Corp. Sr Notes,
10.875%, 02/01/05............................ 2,400,000 2,088,000
Energy Corp of America Sr Sub Notes, 9.50%,
05/15/07..................................... 5,000,000 4,562,500
Ferrellgas Partner L.P. Sr Notes, 9.375%,
06/15/06..................................... 8,500,000 8,330,000
Frontier Oil Corp. Sr Notes, 9.125%,
02/15/06..................................... 3,500,000 3,342,500
Giant Industries Services Inc. Sr Sub Notes,
9.00%, 09/01/07.............................. 10,000,000 9,200,000
Grey Wolf Inc. Sr Notes, 8.875%, 07/01/07..... 7,500,000 6,637,500
Gulf Canada Resources Ltd. Sr Sub Debs.,
9.25%, 01/15/04.............................. 10,000,000 10,172,800
KCS Energy Inc. Sr Notes, 11.00%, 01/15/03.... 11,000,000 6,600,000
Newpark Resources Inc. Sr Sub Notes, 8.625%,
12/15/07..................................... 10,000,000 9,600,000
Parker Drilling Co. Sr Notes, 9.75%,
11/15/06..................................... 8,000,000 7,360,000
RBF Finance Co. Sr Secured Notes (144A),
11.375%, 03/15/09............................ 6,000,000(1) 6,240,000
Tesoro Petroleum Corp. Sr Sub Notes, 9.00%,
07/01/08..................................... 9,000,000 8,752,500
Trico Marine Services Sr Notes, 8.50%,
08/01/05..................................... 10,000,000 9,100,000
--------------
101,915,800
--------------
REAL ESTATE & HOME BUILDING (3.9%)
CB Richard Ellis Sr Sub Notes, 8.875%,
06/01/06..................................... 10,500,000 10,185,000
Forest City Enterprises Sr Notes, 8.50%,
03/15/08..................................... 8,500,000 8,160,000
LNR Property Corp. Sr Sub Notes, 10.50%,
01/15/09..................................... 6,500,000 6,500,000
MDC Holdings Inc. Sr Notes, 8.375%,
02/01/08..................................... 8,500,000 8,160,000
NVR Inc. Sr Notes, 8.00%, 06/01/05............ 8,000,000 7,760,000
Rockefeller Center Properties Sr Notes, 0.00%,
12/31/00..................................... 24,000,000 19,560,000
Tanger Properties L.P. Sr Notes, 7.875%,
10/24/04..................................... 10,500,000 9,830,625
--------------
70,155,625
--------------
RETAIL (2.7%)
Finlay Fine Jewelry Corp. Sr Notes, 8.375%,
05/01/08..................................... 9,000,000 8,685,000
G&G Retail Inc. Units (144A), 11.00%,
05/15/06..................................... 6,000,000(1) 5,588,400
Nine West Group Inc. Sr Notes, 8.375%,
08/15/05..................................... 6,000,000 6,120,000
Petro Stopping Centers Sr Notes, 10.50%,
02/01/07..................................... 6,000,000 6,300,000
Phillips Van-Heusen Sr Sub Notes, 9.50%,
05/01/08..................................... 6,000,000 5,940,000
The Pantry Inc. Sr Sub Notes, 10.25%,
10/15/07..................................... 4,500,000 4,522,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
----------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
RETAIL (CONTINUED)
Travelcenters of America Inc. Sr Sub Notes,
10.25%, 04/01/07............................. $ 6,000,000 $ 6,000,000
Zale Corp. Sr Notes, 8.50%, 10/01/07.......... 5,000,000 4,950,000
--------------
48,105,900
--------------
TELECOMMUNICATIONS-WIRELESS (6.5%)
Arch Escrow Corp. Sr Notes (144A), 13.75%,
04/15/08..................................... 8,000,000(1) 7,200,000
CCPR Services Inc. Sr Notes, 10.00%,
02/01/07..................................... 4,875,000 5,216,250
Centennial Cellular Corp. Sr Sub Notes (144A),
10.75%, 12/15/08............................. 6,000,000(1) 6,225,000
Centennial Cellular Corp. Term 1B Loan, 8.50%,
05/31/07..................................... 4,975,001(5) 4,987,437
Centennial Cellular Corp. Term 1C Loan, 8.75%,
11/30/07..................................... 4,975,001(5) 4,987,437
Globalstar L.P. Capital Corp. Sr Notes,
10.75%, 11/01/04............................. 6,000,000 3,960,000
Ico Global Communications Units, 15.00%,
08/01/05..................................... 6,000,000 2,460,000
Metrocall Inc. Sr Sub Notes (144A), 11.00%,
09/15/08..................................... 6,000,000(1) 4,710,000
Nextel Communications Sr Discount Notes,
0/10.65%, 09/15/07........................... 24,000,000(2) 17,520,000
Nextel Communications Term D Loan, 8.438%,
03/31/07..................................... 12,500,000(5) 12,512,500
Nextel Partners Inc. Sr Discount Notes (144A),
0/14.00%, 02/01/09........................... 6,000,000(1)(2) 3,435,000
Orange PLC Sr Notes, 8.00%, 08/01/08.......... 12,000,000 11,460,000
Paging Network Sr Sub Notes, 10.125%,
08/01/07..................................... 12,500,000 9,625,000
Price Communications Wireless Sr Notes,
9.125%, 12/15/06............................. 12,000,000 12,240,000
Rogers Cantel Inc. Sr Sub Notes, 8.80%,
10/01/07..................................... 10,500,000 10,473,750
--------------
117,012,374
--------------
TELECOMMUNICATIONS-WIRELINE (4.3%)
Alaska Communications Sr Sub Notes (144A),
9.375%, 05/15/09............................. 9,000,000(1) 8,662,500
Call Net Enterprises Sr Discount Notes,
0/8.94%, 08/15/08............................ 10,000,000(2) 5,600,000
E. Spire Communications Sr Discount Notes,
0/10.625%, 07/01/08.......................... 6,000,000(2) 2,280,000
Flag Limited Sr Notes, 8.25%, 01/30/08........ 12,000,000 11,280,000
Intermedia Communications Sr Discount Notes,
0/12.50%, 05/15/06........................... 10,000,000(2) 8,300,000
Intermedia Communications Sr Discount Notes,
0/11.25%, 07/15/07........................... 16,000,000(2) 11,520,000
IXC Communications Inc. Sr Sub Notes, 9.00%,
04/15/08..................................... 7,000,000 6,693,750
Metronet Communications Corp. Sr Discount
Notes, 0/9.95%, 06/15/08..................... 10,000,000(2) 7,400,000
Nextlink Communications Sr Notes, 10.75%,
11/15/08..................................... 7,500,000 7,650,000
Psinet Inc. Sr Notes, 10.00%, 02/15/05........ 8,000,000 7,960,000
--------------
77,346,250
--------------
TRANSPORTATION (7.5%)
Canadian Airlines Corp. Sr Notes, 10.00%,
05/01/05..................................... 6,000,000 4,440,000
Coach USA Inc. Sr Sub Notes, 9.375%,
07/01/07..................................... 8,500,000 8,882,500
Eletson Holdings Inc. First Pfd. Mtg. Notes,
9.25%, 11/15/03.............................. 5,000,000 4,750,000
Eurotunnel Finance Tier 1, 5.28%, 01/15/12.... 222,006,204(c)(5) 28,969,393
Eurotunnel Finance Tier 2, 5.28%, 12/31/18.... 213,000,000(c)(5) 25,115,224
Eurotunnel Finance Tier 1, 7.03%, 01/15/12.... 5,623,452(e)(5) 7,401,599
Eurotunnel Finance Tier 2, 7.03%, 12/31/18.... 18,623,452(e)(5) 22,016,971
Navigator Gas Transport First Priority Ship
Mtg. Notes (144A), 10.50%, 06/30/07.......... 6,000,000(1) 3,120,000
Piedmont Aviation Inc. Equipment Trust
Certificates 1988 Series A, 9.80%,
01/15/00..................................... 942,000 949,602
Piedmont Aviation Inc. Equipment Trust
Certificates 1988 Series F, 10.15%,
03/28/03..................................... 1,000,000 1,036,530
Sea Containers Ltd. Sr Notes, 7.875%,
02/15/08..................................... 7,500,000 7,275,000
Sea Containers Ltd. Sr Notes, 9.50%,
07/01/03..................................... 3,000,000 3,052,500
Stena AB Sr Notes, 10.50%, 12/15/05........... 5,000,000 5,000,000
Stena Line AB Sr Notes, 10.625%, 06/01/08..... 6,000,000 4,515,000
U.S. Air Inc. Equipment Trust Certificates
1988 Series B, 9.80%, 01/15/00............... 654,000 659,278
U.S. Air Inc. Equipment Trust Certificates
1988 Series B, 10.00%, 01/15/02.............. 1,334,000 1,368,977
U.S. Air Inc. Equipment Trust Certificates
1990 Series A, 11.20%, 03/19/05.............. 3,160,567 3,366,004
U.S. Air Inc. Equipment Trust Certificates
1990 Series B, 10.33%, 06/27/02.............. 803,000 833,763
U.S. Air Inc. Equipment Trust Certificates
1990 Series D, 10.28%, 06/27/01.............. 837,000 859,214
U.S. Air Inc. Equipment Trust Certificates
1990 Series D, 10.43%, 06/27/04.............. 1,014,000 1,064,183
--------------
134,675,738
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
- ----------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
UTILITIES (2.9%)
AES Corp. Sr Notes, 8.00%, 12/31/08........... $ 6,000,000 $ 5,640,000
AES Corp. Sr Sub Notes, 8.375%, 08/15/07...... 4,000,000 3,750,000
AES Corp. Sr Sub Notes, 8.50%, 11/01/07....... 7,500,000 7,050,000
AES Eastern Energy Pass Through Certs. (144A),
9.00%, 07/02/17.............................. 8,000,000(1) 7,920,000
Caithness Coso Fund Corp. Sr Secured Notes
(144A), 9.05%, 12/15/09...................... 8,000,000(1) 7,920,000
Calpine Corp. Sr Notes, 8.75%, 07/15/07....... 8,500,000 8,627,500
Calpine Corp. Sr Notes, 10.50%, 05/15/06...... 5,500,000 5,885,000
Tucson Electric Power Company, Springerville
Unit 1, 10.211%, 01/01/09.................... 5,526,015 5,802,315
--------------
52,594,815
--------------
TOTAL CORPORATE BONDS (COST $1,738,920,360)... 1,657,466,793
--------------
ASSET-BACKED SECURITIES (1.5%)
REAL ESTATE (0.6%)
First Plus Home Loan Owner Trust 1997-4 Class
B1, 7.69%, 09/11/23.......................... 4,000,000 3,303,750
First Plus Home Loan Owner Trust 1998-4 Class
B1, 8.21%, 09/10/24.......................... 3,000,000 2,438,437
National Convenience Realty Co. Secured Notes,
9.50%, 06/30/03.............................. 782,516 802,079
RTC Mtg. Tr. Series 1994-C1 Class F Mortgage
Loan Backed Bonds, 8.00%, 06/25/26........... 1,950,341 1,945,465
RTC Mtg. Tr. Series 1994-C2 Class G Mortgage
Loan Backed Bonds, 8.00%, 04/25/25........... 1,372,074 1,368,644
--------------
9,858,375
--------------
STRUCTURED FINANCE (0.9%)
Carlyle High Yield Partners Sr Sub Secured
Notes Class C (144A), 8.74%, 05/15/07........ 8,000,000(1) 7,880,000
DLJ CBO Ltd. Sr Secured Fixed Rate Notes Class
B (144A), 8.345%, 04/15/11................... 8,500,000(1) 8,298,125
--------------
16,178,125
--------------
TOTAL ASSET-BACKED SECURITIES (COST
$25,363,306)................................. 26,036,500
--------------
PREFERRED STOCKS (2.7%)
CABLE (0.4%)
CSC Holdings Inc. Pfd., 11.125%, Series M,
04/01/08..................................... 69,536(4) 7,788,028
--------------
FINANCIAL SERVICES (0.3%)
IBJ Preferred Cap Co. LLC Series A (144A),
8.79%, 06/30/08.............................. (6,0001)(3) 5,100,000
--------------
HEALTH CARE (0.8%)
Fresenius Medical Care Capital Trust II Pfd.,
7.875%, 02/01/08............................. 5,000 4,750,000
Fresenius Medical Care Capital Trust Pfd.,
9.00%, 12/01/06.............................. 10,000 10,100,000
--------------
14,850,000
--------------
METALS & MINING (0.1%)
Freeport McMoran Corp. Series Gold,
08/01/03..................................... 75,500 1,179,687
--------------
TELECOMMUNICATIONS-WIRELINE (0.5%)
Global Crossing Holding Ltd Sr Exchangeable
Pfd., 10.5%.................................. 74,000(4) 7,918,000
--------------
TELECOMMUNICATIONS-WIRELESS (0.6%)
Centaur Funding Corp. Pfc. Series B (144A),
9.08%, 04/21/20.............................. 10,000(1) 11,150,000
--------------
TOTAL PREFERRED STOCKS (COST $46,343,256)..... 47,985,715
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
----------------
<PAGE>
OFFITBANK
HIGH YIELD FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (1.7%)
Bank of New York Repurchase Agreement, 4.70%,
07/01/99 (dated 06/30/99; proceeds
$31,084,558, collateralized by $31,800,000
U.S. Treasury Notes, 5.875%, due 11/15/05,
valued at $31,879,500)....................... $ 31,080,500 $ 31,080,500
--------------
TOTAL REPURCHASE AGREEMENT (COST
$31,080,500)................................. 31,080,500
--------------
TOTAL INVESTMENTS (COST $1,841,707,422) (+) --
98.1%........................................ 1,762,569,508
OTHER ASSETS IN EXCESS OF LIABILITIES 1.9%.... 34,433,081
--------------
TOTAL NET ASSETS -- 100.0%.................... $1,797,002,589
--------------
--------------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 15,238,632
Unrealized depreciation .......................... (94,376,546)
------------
Net unrealized depreciation ...................... $(79,137,914)
------------
------------
</TABLE>
(a) Deutsche Mark
(b) Euro
(c) French Franc
(d) Canadian Dollar
(e) British Pound
(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) Interest rate in effect at June 30, 1999.
(4) Payment In Kind Security.
(5) Illiquid Security.
(6) Security in default.
The accompanying notes are an integral part of the financial statements.
10
- ----------------
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
The year-to-date total return of the OFFITBANK Emerging Markets Fund through
June 30, 1999 was 11.23%. For the quarter ending June 30, 1999, the Fund
generated a total return of 3.81%. As of June 30, 1999, the Fund had a net asset
value per share of US $8.60 and a 30 day SEC yield of 14.77%. The Fund is
invested solely in DOLLAR-DENOMINATED BONDS, of which 80% are issued by top-tier
Latin American corporations and the remainder are obligations of governments
from the region. As of quarter end the allocation across Latin America is
approximately as follows: Brazil, 50%; Argentina, 21%; and Mexico, 28%.
The second quarter was dominated by two broad themes: The surprisingly sharp
recovery in Brazil; and increasing fears of rising interest rates in the United
States.
I) Despite a traumatic currency devaluation in January, which resulted in a
45% depreciation of the REAL, Brazil has managed to contain inflation to
well within 8% per annum, and has moderated the expected economic
contraction. This in turn has stabilized the currency and allowed the
monetary authorities to lower domestic interest rates dramatically.
II) As the quarter drew to a close, concern over U.S. interest rate increases
began to rise, although the Federal Reserve's decision to raise rates by
only 25 basis points and move to a neutral bias has largely ameliorated
these concerns.
Looking ahead to the remainder of the year, we believe that the three countries
in which we are invested -- Brazil, Mexico, and Argentina -- will continue to
offer attractive risk-adjusted returns.
- Mexico continues to enjoy solid growth driven by the export sector and
foreign direct investment. Furthermore, Mexico has arranged a US $24
billion external financing facility in order to boost market confidence
since its financing needs are backstopped through next year's presidential
election.
- In anticipation of the political noise surrounding the upcoming
presidential election in Argentina in October and current economic
difficulties stemming from Brazil's recession, we have reduced the Fund's
exposure to Argentine government bonds. As a result, the Fund's exposure
to Argentina is derived mostly from its investments in companies with
credit fundamentals that remain solid despite the country's temporary
economic difficulties.
- We believe Brazil's better than expected economic performance will
continue and that economic growth will reignite in the second half of this
year. In our opinion, Brazil currently offers some of the best
risk-adjusted return opportunities in all of Emerging Markets.
The Fund's distinctive investment strategy will continue to be invested in
top-tier corporate bonds within Latin America which offer attractive value. Our
credit selection process is based strictly on rigorous credit discipline
focusing on underlying fundamental creditworthiness, as well as the strategic
value of these corporate franchises. These dollar-denominated corporate bonds
currently offer yields-to-maturity ranging from 12-15%.
Richard M. Johnston Wallace Mathai-Davis
July 15, 1999
11
-------------
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
------------------------------------------------------------------------------------
CORPORATE BONDS (79.8%)
AUTOMOTIVE (2.5%)
BRAZIL (2.5%)
Ford Brasil Ltd, 9.25%, 01/22/07............ $ 4,000,000 $ 3,560,000
-------------
BANKS (1.2%)
ARGENTINA (1.2%)
Banco Hipotecario S.A. (144A), 12.25%,
03/15/02................................... 1,800,000(1) 1,782,000
-------------
BUILDING MATERIALS (1.9%)
MEXICO (1.9%)
Cemex International Capital L.L.C., 9.66%,
11/29/49................................... 1,250,000 1,150,000
Cemex International Capital L.L.C. (144A),
9.66%, 11/29/49............................ 1,750,000(1) 1,610,000
-------------
2,760,000
-------------
CABLE (3.2%)
ARGENTINA (3.2%)
Cablevision S.A. (144A), 13.75%, 05/01/09... 25,000(1) 22,625
Cablevision S.A., 13.75%, 05/01/09.......... 5,000,000 4,525,000
-------------
4,547,625
-------------
FOOD (10.1%)
ARGENTINA (4.6%)
Mastellone Hermanos S.A., 11.75%,
04/01/08................................... 9,275,000 6,585,250
-------------
BRAZIL (5.5%)
Arisco Products Alimenticios, 10.75%,
05/22/05................................... 9,690,000 7,945,800
-------------
14,531,050
-------------
INDUSTRIAL (8.5%)
MEXICO (8.5%)
Sanluis Corp. S.A., 8.875%, 03/18/08........ 3,550,000 2,911,000
Sanluis Corp. S.A. (144A), 8.875%,
03/18/08................................... 4,000,000(1) 3,280,000
Vicap S.A., 11.375%, 05/15/07............... 6,800,000 6,052,000
-------------
12,243,000
-------------
INFRASTRUCTURE (2.2%)
ARGENTINA (2.2%)
Cia Latino Americana, 11.625%, 06/01/04..... 6,050,000 3,146,000
-------------
MANUFACTURING (3.7%)
MEXICO (3.7%)
International de Ceramica S.A., 9.75%,
08/01/02................................... 7,150,000 5,362,500
-------------
MEDIA (6.5%)
BRAZIL (6.5%)
Global Communicacoes Participacoes, 10.50%,
12/20/06................................... 3,250,000 2,348,125
Global Communicacoes Participacoes (144A),
10.625%, 12/05/08.......................... 850,000(1) 603,500
Global Communicacoes Participacoes, 10.625%,
12/05/08................................... 4,870,000 3,457,700
RBS Participacoes S.A., 11.00%, 04/01/07.... 4,500,000 3,015,000
-------------
9,424,325
-------------
METALS & MINING (0.7%)
BRAZIL (0.7%)
Companhia Vale do Rio Doce, 10.00%,
04/02/04................................... 1,000,000 991,250
-------------
PACKAGING (4.9%)
MEXICO (4.9%)
Grupo Industrial Durango, 12.625%,
08/01/03................................... 7,315,000 7,058,975
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
- ----------------
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
PETROCHEMICALS (3.4%)
BRAZIL (3.4%)
Copene Petroquimica, 9.00%, 06/25/07........ $ 4,395,000 $ 3,603,900
Trikem S.A., 10.625%, 07/24/07.............. 2,350,000 1,292,500
-------------
4,896,400
-------------
RETAIL (1.6%)
ARGENTINA (1.6%)
Disco S.A., 9.125%, 05/15/03................ 450,000 400,500
Disco S.A., 9.875%, 05/15/08................ 2,400,000 1,920,000
-------------
2,320,500
-------------
STEEL (13.8%)
ARGENTINA (3.5%)
Acindar, 11.25%, 02/15/04................... 7,000,000 5,110,000
-------------
BRAZIL (6.8%)
CSN Iron S.A., 9.125%, 06/01/07............. 10,000,000 7,625,000
Metalurgica Gerdau, 11.125%, 05/24/04....... 2,250,000 2,205,000
-------------
9,830,000
-------------
MEXICO (3.5%)
Hylsa S.A. de CV, 9.25%, 09/15/07........... 6,600,000 5,082,000
-------------
20,022,000
-------------
TELECOMMUNICATIONS (6.9%)
ARGENTINA (2.8%)
Impsat Corp., 12.125%, 07/15/03............. 4,500,000 4,014,945
-------------
MEXICO (4.1%)
Alestra S.A. de CV (144A), 12.625%,
05/15/09................................... 125,000(1) 118,750
Alestra S.A. de CV, 12.625%, 05/15/09....... 6,050,000 5,747,500
-------------
9,881,195
-------------
UTILITIES (8.7%)
ARGENTINA (0.8%)
IEBA, 9.00%, 09/16/04....................... 1,700,000 1,105,000
-------------
BRAZIL (7.9%)
Companhia Energia Minas Gerais, 9.125%,
11/18/04................................... 4,025,000 3,542,000
Companhia Paranaense de Energia, 9.75%,
05/02/05................................... 2,750,000 2,406,250
Furnas Centrais Electrica, 9.00%,
05/23/05................................... 1,000,000 917,500
SABESP, 10.00%, 07/28/05.................... 5,890,000 4,446,950
-------------
11,312,700
-------------
12,417,700
-------------
TOTAL CORPORATE BONDS (COST $134,119,191)... 114,944,520
-------------
FOREIGN GOVERNMENTS (16.8%)
SOVEREIGN DEBT (16.8%)
ARGENTINA (0.9%)
Republic of Argentina, 11.75%, 04/07/09..... 1,400,000 1,260,875
-------------
BRAZIL (15.9%)
Republic of Brazil, 11.625%, 04/15/04....... 14,700,000 13,818,000
Republic of Brazil EI, Floating Rate Notes,
5.875%, 04/15/06........................... 11,495,000(2) 9,081,050
-------------
22,899,050
-------------
TOTAL FOREIGN GOVERNMENTS (COST
$24,527,967)............................... 24,159,925
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
----------------
<PAGE>
OFFITBANK
EMERGING MARKETS FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS/WARRANTS (0.0%)
BANKS (0.0%)
ARGENTINA (0.0%)
Banco Hipotecario........................... $ 18,000 $ 11,700
-------------
TOTAL RIGHTS/WARRANTS (COST $10,800)........ 11,700
-------------
REPURCHASE AGREEMENT (1.2%)
UNITED STATES (1.2%)
Chase Manhattan Bank Repurchase Agreement,
3.75%, 07/01/99 (dated 06/30/99; proceeds
$1,641,364, collaterized by $1,605,000 U.S.
Treasury Bond 12.00% due 08/15/13, valued
at $2,257,533)............................. 1,641,193 1,641,193
-------------
TOTAL REPURCHASE AGREEMENT (COST
$1,641,193)................................ 1,641,193
-------------
TOTAL INVESTMENTS (COST $160,299,151) (+) --
97.8%...................................... 140,757,338
OTHER ASSETS IN EXCESS OF LIABILITIES
2.2%....................................... 3,237,037
-------------
TOTAL NET ASSETS -- 100.0%.................. $ 143,994,375
-------------
-------------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 1,795,373
Unrealized depreciation .......................... (21,337,186)
------------
Net unrealized depreciation ...................... $(19,541,813)
------------
------------
</TABLE>
(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) Interest rate in effect at June 30, 1999.
Country Diversification (as a percentage of Total Investments):
<TABLE>
<S> <C>
Argentina ....................................... 21.23%
Brazil .......................................... 50.34%
Mexico .......................................... 27.26%
United States ................................... 1.17%
-----
100.00%
-----
-----
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
- ----------------
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- --------------------------------------------------------------------------------
The year to date performance of the OFFITBANK Latin America Equity Fund as of
June 30, 1999 was 17.85%. For the quarter ending June 30, 1999, the Fund
generated a total return of 12.35%. As of June 30, 1999, the Fund had a net
asset value per share of US $8.65.
As of June 30, 1999, the Fund was fully invested and remained diversified across
the three largest economies in Latin America: Brazil (52%), Mexico (40%), and
Argentina (6%). The Fund was invested across 11 industries with the largest
allocations to Telecommunications (21%), Retail (16%), Banks (13%) and Utilities
(9%).
Looking ahead to the remainder of the year, we believe that the three countries
we are invested in, Brazil, Mexico, and Argentina, will continue to offer the
best fundamental investment opportunities in Latin America.
- Mexico continues to enjoy solid growth driven by the export sector and
foreign direct investment. Mexico has arranged approximately US$ 24
billion in external financing to see the country safely through next
year's elections. We believe that rising employment and falling interest
rates will allow domestic consumption to generate strong growth in the
second half of this year.
- In anticipation of the coming presidential elections and current economic
difficulties stemming from Brazil's recession, we have reduced exposure to
Argentina. We remain invested in companies whose medium term earnings
fundamentals remain sound despite general economic difficulties.
- We believe Brazil's better than expected economic performance will
continue and that economic growth will re-ignite in the second half of
this year as lower interest rates take hold. We continue to focus on
companies emerging from privatizations and those benefiting from industry
consolidation. These companies should demonstrate strong earnings leverage
as economic growth accelerates.
Our investment philosophy remains to continue to be fully invested. Our emphasis
is on earnings growth, the strength of an underlying business franchise and
valuations. We believe the companies we have focused on will deliver the
earnings that ultimately drive equity valuations over the medium term.
Richard M. Johnston
July 15, 1999
15
-------------
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
------------------------------------------------------------------------------------
COMMON STOCKS (48.6%)
BANKS (2.0%)
ARGENTINA (2.0%)
Banco de Galicia y Buenos Aires S.A. de CV
-- ADR..................................... 18,818 $ 381,064
-------------
BEVERAGES (3.1%)
MEXICO (3.1%)
Coca-Cola Femsa S.A. -- ADR................. 31,300 606,437
-------------
BREWERY (4.3%)
MEXICO (4.3%)
Grupo Modelo S.A. de CV Series C............ 290,100 825,989
-------------
BUILDING MATERIALS (5.4%)
MEXICO (5.4%)
Cemex S.A. de CV............................ 211,495 1,039,825
-------------
ENTERTAINMENT (0.8%)
MEXICO (0.8%)
Corporacion Interamericana de
Entretenimiento S.A. Class B*.............. 46,000 149,476
-------------
FINANCIAL SERVICES (1.7%)
MEXICO (1.7%)
Grupo Financiero Bancomer S.A. de CV........ 902,000 325,563
-------------
FOOD (4.6%)
MEXICO (4.6%)
Grupo Industrial Bimbo S.A. de CV Series
A.......................................... 402,222 894,045
-------------
IRON & STEEL (3.8%)
BRAZIL (1.4%)
Gerdau S.A. -- ADR.......................... 16,500 264,000
-------------
MEXICO (2.4%)
Hylsamex S.A................................ 96,000 299,756
Industrias CH S.A.*......................... 50,700 167,431
-------------
467,187
-------------
731,187
-------------
MEDIA (3.1%)
MEXICO (3.1%)
Grupo Televisa S.A. -- GDR.................. 13,400 600,488
-------------
OIL/GAS (2.9%)
ARGENTINA (2.9%)
Perez Companc S.A. Class B.................. 97,750 562,136
-------------
RETAIL (10.5%)
MEXICO (10.5%)
Cifra S.A. de CV Series V*.................. 309,757 616,387
Grupo Elektra S.A. de CV -- GDR............. 64,050 376,294
Organizacion Soriana S.A. de CV Class B..... 219,200 1,027,824
-------------
2,020,505
-------------
TELECOMMUNICATIONS (5.0%)
BRAZIL (1.7%)
Carso Global Telecommunication Class A...... 51,292 324,114
-------------
MEXICO (3.3%)
Telefonos de Mexico S.A. Series L -- ADR.... 8,000 646,500
-------------
970,614
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
- ----------------
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES (1.4%)
BRAZIL (1.4%)
Companhia Paranaense de Energia............. 52,800 $ 262,072
-------------
TOTAL COMMON STOCKS (COST $8,266,636)....... 9,369,401
-------------
PREFERRED STOCKS (47.9%)
BANKS (8.8%)
BRAZIL (8.8%)
Banco Bradesco S.A. Class A................. 113,685 570,685
Banco Itau S.A. Class A..................... 953 489,145
Unibanco Class A -- GDR..................... 26,740 643,431
-------------
1,703,261
-------------
IRON & STEEL (1.0%)
BRAZIL (1.0%)
Gerdau S.A. Class A......................... 12,000 199,667
-------------
METALS & MINING (4.4%)
BRAZIL (4.4%)
Companhia Vale do Rio Doce S.A. Class A..... 43,250 848,924
-------------
OIL/GAS (5.0%)
BRAZIL (5.0%)
Petroleo Brasileiro S.A. Class A............ 6,160 955,470
-------------
RETAIL (5.0%)
BRAZIL (5.0%)
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar Class A...................... 51,436 955,930
-------------
STEEL (0.8%)
BRAZIL (0.8%)
Gerdau Metalurgica S.A...................... 5,000 150,878
-------------
TELECOMMUNICATIONS (15.4%)
ARGENTINA (1.3%)
Telefonica de Argentina S.A. Class B --
ADR........................................ 7,820 245,352
-------------
BRAZIL (14.1%)
Embratel Participacoes S.A. Class A......... 48,000 666,009
Telecomunicacoes Brasileiras S.A. -- ADR.... 2,800 252,525
Telecomunicacoes de Sao Paulo S.A. Class
A.......................................... 5,382 634,458
Telesp Celular Participacoes S.A. Class A... 10,810 113,408
Telesp Celular S.A. Class B................. 16,126 818,592
Telesp Participacoes S.A. Class A........... 10,580 241,682
-------------
2,726,674
-------------
2,972,026
-------------
UTILITIES (7.5%)
BRAZIL (7.5%)
Companhia Energetica de Minas Gerais Class
A.......................................... 39,589 830,647
Companhia Energetica do Ceara Class A....... 135,884 344,893
Companhia Paranaense de Energia Class B..... 34,700 280,074
-------------
1,455,614
-------------
TOTAL PREFERRED STOCKS (COST $11,458,991)... 9,241,770
-------------
RIGHTS/WARRANTS (0.0%)
METALS & MINING (0.0%)
BRAZIL (0.0%)
Companhia Vale do Rio Doce S.A.............. 40,400 0
-------------
TOTAL RIGHTS/WARRANTS (COST $0)............. 0
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
----------------
<PAGE>
OFFITBANK
LATIN AMERICA EQUITY FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (2.0%)
UNITED STATES (2.0%)
Chase Manhattan Bank Repurchase Agreement,
3.75%, 07/01/99 (dated 06/30/99; proceeds
$376,189, collateralized by $375,000 U.S.
Treasury Bond 6.375% due 09/30/01, valued at
$389,616).................................... $ 376,149 $ 376,149
-------------
TOTAL REPURCHASE AGREEMENT (COST $376,149).... 376,149
-------------
TOTAL INVESTMENTS (COST $20,101,776) (+) --
98.5%........................................ 18,987,320
OTHER ASSETS IN EXCESS OF LIABILITIES 1.5%.... 294,381
-------------
TOTAL NET ASSETS -- 100.0%.................... $ 19,281,701
-------------
-------------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 1,912,205
Unrealized depreciation .......................... (3,026,661)
------------
Net unrealized depreciation ...................... $ (1,114,456)
------------
------------
</TABLE>
* Denotes non-income producing security.
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
Country Diversification (as a percentage of Total Investments):
<TABLE>
<S> <C>
Argentina ........................................ 6.26%
Brazil ........................................... 51.86%
Mexico ........................................... 39.90%
United States .................................... 1.98%
-----
100.00%
-----
-----
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
- ----------------
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- --------------------------------------------------------------------------------
The first six months of 1999 were difficult for the domestic fixed income
markets as yields increased in anticipation of stronger economic growth and
higher inflation. The total return of The OFFITBANK New York Municipal Fund in
this first half of 1999 was negative 1.1%. The Lehman Brothers Five and Seven
Year Municipal Indices had total returns of negative .21% and negative .86%,
respectively. The small underperformance of the Fund relative to these indices
is due to the Fund's marginally longer duration. The average annual return for
the Fund since inception on April 3, 1995 was 5.76%. For comparative purposes,
the annualized return of the Lehman Brothers Five Year Municipal Index was
5.52%.
In a rising rate environment, our objective is to protect the portfolio value
without jeopardizing our longer term yield and return objectives. Our primary
objectives are to earn income and increase the value of the portfolio over the
long term. The June 30, 1999 NAV of $10.49 was approximately 3% lower than the
$10.82 NAV at the beginning of the year. Reflective of the higher market yields
and lower prices, the 30 day SEC yield increased to 4.25% from 3.85% on December
31, 1998. The net assets of the Fund increased to $74 million from $68 million
at December 31, 1998.
Since year end the municipal market went through two different phases. The year
began with municipals attractively priced relative to Treasurys and supply
non-existent in many states, including New York. Yields declined through the end
of February. In March, the municipal market's seasonal increase in supply was
accompanied by compelling evidence that the economy's growth would result in
higher inflation. Municipal yields at first lagged the sharp increases in
Treasury yields. By mid-year, however, municipal yield ratios to treasurys
increased to greater than 80-85% and absolute yield levels of 5% reappeared.
Although municipal interest rates increased only half as much as Treasury rates,
a diverse list of New York issues became available at attractive prices. We used
the opportunity to broaden our list of holdings and to develop larger and more
marketable position sizes. The Fund today owns the securities of 42 issuers.
These issuers are located throughout the state and are a blend of revenue and
general obligation bonds. In executing the changes, we realized some of the
embedded gains, but we were also able to offset most of those gains with losses.
As of June 30th, the realized gain per share is minimal. We continue to
emphasize credit quality and are pleased to note that we did not own Nassau
County because we were aware of their financial weaknesses. The portfolio's
average credit rating is AA.
Technically, the municipal market story is somewhat mixed. Municipal issuance
through June 30, 1999 is over 20% less than last year's issuance. Refundings are
a smaller component of the issuance partially because most of the eligible bonds
have been refunded and because the mathematics do not work at the higher rates.
New York supply is unique as many borrowings cannot be completed until the State
budget is approved. It is likely that in the second half, issuance will
increase. On the demand side, the primary purchasers are currently individuals.
The property and casualty companies have special regulatory requirements and
have been enticed by high Treasury yields relative to municipal yields. Assuming
no major catastrophes, we expect that when Treasury yields decline and the
supply of municipals increases, these buyers will return to the market.
At the beginning of the year, we were neutral towards the market but stated that
we would extend the portfolio if yields increased to more compelling levels, or
if the economy showed signs of slowing. By mid June, we reached the 5% and above
levels and have extended the portfolio to have an effective average maturity of
7.4 years and a duration of 5.8 years.
Carolyn N. Dolan
July 15, 1999
19
-------------
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
------------------------------------------------------------------------------------
FLOATING RATE NOTES (6.2%)
TRANSPORTATION REVENUE (3.8%)
New York State Thruway Authority (FGIC),
3.40%, 01/01/24, 1-Day Notes*................ $ 500,000 $ 500,000
Port Authority of New York & New Jersey Bonds
Series 86, 3.40%, 06/01/20*.................. 2,300,000 2,300,000
-------------
2,800,000
-------------
WATER & SEWER REVENUE (2.4%)
New York City Municipal Water Financial
Authority Water & Sewer System Revenue Bonds
Series G (FGIC), 3.40%, 06/05/24, 1-Day
Notes*....................................... 1,800,000 1,800,000
-------------
TOTAL FLOATING RATE NOTES (COST $4,600,000)... 4,600,000
-------------
MUNICIPAL BONDS (92.7%)
EDUCATION REVENUE (4.2%)
New York State Dormitory Authority Revenue
Bonds Columbia University, 5.00%, 07/01/02... 500,000 511,250
New York State Dormitory Authority Revenue
Bonds Columbia University, 5.25%, 07/01/06... 500,000 519,375
New York State Dormitory Authority Revenue
Bonds Cornell University, 4.80%, 07/01/03.... 250,000 254,687
New York State Dormitory Authority Revenue
Bonds Cornell University, 5.25%, 07/01/07.... 350,000 361,812
New York State Dormitory Authority Revenue
Bonds New York University (MBIA), 5.50%,
07/01/04..................................... 390,000 407,062
New York State Dormitory Authority Revenue
Bonds Rockefeller University, 5.00%,
07/01/10..................................... 500,000 505,625
New York State Dormitory Authority Revenue
Bonds Vassar College, 5.00%, 07/01/09........ 500,000 501,250
-------------
3,061,061
-------------
GENERAL OBLIGATIONS (31.4%)
Albany County General Obligation Bonds (FGIC),
4.80%, 10/01/02.............................. 850,000 864,875
Albany County General Obligation Bonds Series
B (FGIC), 5.60%, 03/15/07.................... 300,000 316,500
Albany County General Obligation Bonds Series
B (FGIC), 5.60%, 03/15/09.................... 400,000 418,500
Dutchess County General Obligation Bonds,
4.90%, 08/01/04.............................. 215,000 219,569
Hempstead General Obligation Bonds (AMBAC),
5.00%, 02/15/09.............................. 500,000 501,250
Hempstead General Obligation Bonds (AMBAC),
5.00%, 02/15/10.............................. 1,000,000 997,500
Hempstead General Obligation Bonds Series B
(FGIC), 5.625%, 02/01/01..................... 245,000 250,512
Hempstead General Obligation Bonds Series B
(FGIC), 5.625%, 02/01/04..................... 140,000 146,650
Islip General Obligation Bonds (FGIC), 5.00%,
07/15/10..................................... 1,000,000 1,000,000
Islip General Obligation Bonds (FGIC), 6.00%,
11/01/05..................................... 100,000 106,625
Monroe County General Obligation Bonds, 4.25%,
06/01/06..................................... 475,000 462,531
Monroe County General Obligation Bonds, 4.25%,
03/01/09..................................... 1,500,000 1,419,375
Monroe County General Obligation Bonds, 5.50%,
06/01/09..................................... 300,000 311,625
New Castle General Obligation Bonds, 4.75%,
06/01/08..................................... 210,000 209,212
New York City General Obligation Bonds Series
B, 5.25%, 08/01/14........................... 2,080,000 2,048,800
New York City General Obligation Bonds Series
D, 5.75%, 08/01/07........................... 325,000 342,875
New York City General Obligation Bonds Series
G, 5.35%, 08/01/13........................... 1,025,000 1,025,000
New York City General Obligation Bonds Series
I, 5.875%, 03/15/11.......................... 1,000,000 1,045,000
New York City General Obligation Bonds Series
I, 6.00%, 04/15/08........................... 805,000 861,350
New York City General Obligation Bonds Series
K, 4.875%, 08/01/08.......................... 2,000,000 1,982,500
New York State General Obligation Bonds,
5.00%, 10/15/06.............................. 1,260,000 1,285,200
New York State General Obligation Bonds Series
A, 5.70%, 03/15/10........................... 400,000 416,000
New York State General Obligation Bonds Series
F, 5.25%, 09/15/11........................... 2,000,000 2,015,000
Onondaga County General Obligation Bonds,
5.00%, 05/01/11.............................. 1,000,000 991,250
Onondaga County General Obligation Bonds,
5.40%, 04/01/01.............................. 150,000 153,375
Ontario County General Obligation Bonds
(FGIC), 5.00%, 08/15/02...................... 250,000 255,625
Orange County General Obligation Bonds, 5.00%,
09/01/01..................................... 500,000 509,375
Orange County General Obligation Bonds, 6.00%,
11/15/08..................................... 470,000 511,125
Oyster Bay General Obligation Bonds (MBIA),
5.70%, 02/15/07.............................. 360,000 382,050
Putnam County General Obligation Bonds, 4.15%,
04/15/05..................................... 695,000 682,358
Rochester General Obligation Bonds (FGIC),
5.00%, 10/01/03.............................. 450,000 461,812
Rochester General Obligation Bonds Series A,
4.25%, 09/15/01.............................. 500,000 501,875
Schenectady County General Obligation Bonds,
6.00%, 08/15/05.............................. 200,000 215,500
Westchester County General Obligation Bonds
Series A, 5.85%, 11/15/04.................... 250,000 266,875
-------------
23,177,669
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
- ----------------
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
HEALTH CARE (1.0%)
New York State Medical Care Facility Finance
Authority (FHA), 6.20%, 08/15/14............. $ 650,000 $ 711,750
-------------
HOUSING REVENUE (4.5%)
New York State Mortgage Agency Revenue Bonds
Series 28 (AMT), 6.45%, 10/01/20............. 125,000 128,110
New York State Mortgage Agency Revenue Bonds
Series 37-A, 5.85%, 10/01/06................. 125,000 131,406
New York State Mortgage Agency Revenue Bonds
Series 37-A, 5.95%, 04/01/07................. 100,000 105,000
New York State Mortgage Agency Revenue Bonds
Series 46 (AMT), 5.75%, 04/01/04............. 200,000 208,250
New York State Mortgage Agency Revenue Bonds
Series 50 (AMT), 5.80%, 10/01/06............. 200,000 209,000
New York State Mortgage Agency Revenue Bonds
Series 53, 5.35%, 04/01/07................... 240,000 246,900
New York State Mortgage Agency Revenue Bonds
Series 61, 5.60%, 10/01/11................... 650,000 664,625
New York State Mortgage Agency Revenue Bonds
Series 67 (AMT), 5.30%, 10/01/10............. 585,000 587,194
New York State Mortgage Agency Revenue Bonds
Series 69 (AMT), 4.90%, 04/01/08............. 1,000,000 993,750
-------------
3,274,235
-------------
POWER AUTHORITY REVENUE (5.9%)
Long Island Power Authority Revenue Bonds,
4.25%, 04/01/03.............................. 2,000,000 1,977,500
Long Island Power Authority Revenue Bonds,
5.00%, 04/01/02.............................. 1,300,000 1,319,812
New York State Power Authority Revenue Bonds
Series A, 5.00%, 02/15/04.................... 1,050,000 1,073,625
-------------
4,370,937
-------------
PREREFUNDED (3.0%)
New York State Environmental Facilities
Corporation Pollution Control Revenue,
Prerefunded 06/15/04, 6.875%, 06/15/14....... 370,000 413,013
New York State Power Authority Revenue Bonds
Series CC (MBIA), Prerefunded 01/01/03,
4.90%, 01/01/06.............................. 200,000 207,000
New York State Power Authority Revenue Bonds
Series CC, Prerefunded 01/01/03, 4.80%,
01/01/05..................................... 500,000 515,000
New York State Power Authority Revenue Bonds
Series CC, Prerefunded 01/01/03, 4.90%,
01/01/06..................................... 500,000 517,500
New York State Power Authority Revenue Bonds
Series Y, Prerefunded 01/01/01, 6.25%,
01/01/05..................................... 100,000 105,125
Niagara Falls Bridge Commission New York
Revenue Bonds (FGIC), Prerefunded 10/01/02,
6.125%, 10/01/19............................. 415,000 446,125
-------------
2,203,763
-------------
SALES TAX REVENUE (13.8%)
Grand Central District Management Association
Inc. New York Special Assessment Bonds,
6.50%, 01/01/22.............................. 150,000 160,688
Municipal Assistance Corp. for City of New
York Revenue Bonds Series I, 6.25%,
07/01/07..................................... 750,000 821,250
Municipal Assistance Corp. for City of New
York Revenue Bonds Series O, 5.25%,
07/01/08..................................... 3,000,000 3,078,840
New York City Transitional Finance Authority
Revenue Bonds Series B, 5.00%, 11/15/10...... 2,900,000 2,874,625
New York State Local Government Assistance
Corp. Revenue Bonds Series A (AMBAC), 5.00%,
04/01/05..................................... 500,000 510,000
New York State Local Government Assistance
Corp. Revenue Bonds Series A, 5.00%,
04/01/06..................................... 100,000 101,500
New York State Local Government Assistance
Corp. Revenue Bonds Series A, 6.75%,
04/01/02..................................... 315,000 333,506
New York State Local Government Assistance
Corp. Revenue Bonds Series B (MBIA), 5.25%,
04/01/04..................................... 1,750,000 1,806,875
New York State Local Government Assistance
Corp. Revenue Bonds Series D, 4.75%,
04/01/04..................................... 500,000 505,000
-------------
10,192,284
-------------
TELECOMMUNICATION REVENUE (0.9%)
Puerto Rico Telephone Authority Revenue Bonds
Series L, 5.75%, 01/01/08.................... 500,000 523,125
Puerto Rico Telephone Authority Revenue Bonds
Series M (AMBAC), 5.05%, 01/01/04............ 150,000 155,625
-------------
678,750
-------------
TRANSPORTATION REVENUE (19.6%)
Metropolitan Transit Authority Revenue Bonds
Series A (MBIA), 5.00%, 07/01/09............. 800,000 801,000
Metropolitan Transit Authority Revenue Bonds
Series A (MBIA), 5.25%, 04/01/09............. 300,000 306,375
Metropolitan Transit Authority Revenue Bonds
Series B-1 (AMBAC), 5.00%, 07/01/10.......... 500,000 497,500
Metropolitan Transit Authority Revenue Bonds
Series C-1 (FGIC), 5.00%, 07/01/08........... 1,000,000 1,006,250
New York State Bridge Authority Revenue Bonds,
5.00%, 01/01/11.............................. 1,500,000 1,486,875
New York State Thruway, Highway & Bridge Trust
Fund Bonds Series A, 5.80%, 04/01/09......... 300,000 321,375
New York State Thruway, Highway & Bridge Trust
Fund Bonds Series B (FGIC), 5.80%,
04/01/07..................................... 600,000 644,250
New York State Thruway, Highway & Bridge Trust
Fund Bonds Series B (FSA), 5.00%, 04/01/04... 500,000 510,000
New York State Thruway, Highway & Bridge Trust
Fund Bonds Series B (MBIA), 5.75%,
04/01/06..................................... 200,000 211,750
New York State Thruway, Highway & Bridge Trust
Fund Bonds Series C (FGIC), 5.75%,
01/01/09..................................... 500,000 536,875
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
----------------
<PAGE>
OFFITBANK
NEW YORK MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
TRANSPORTATION REVENUE (CONTINUED)
Port Authority of New York & New Jersey Bonds
Series 79, 5.80%, 07/15/03................... $ 200,000 $ 210,750
Port Authority of New York & New Jersey Bonds
Series 81, 5.70%, 08/01/07................... 270,000 280,125
Port Authority of New York & New Jersey Bonds
Series 86, 5.00%, 07/01/06................... 250,000 255,625
Port Authority of New York & New Jersey Bonds
Series 104 (AMBAC), 5.125%, 07/15/12......... 2,000,000 1,997,500
Port Authority of New York & New Jersey Bonds
Series 112 (AMT), 5.00%, 12/01/09............ 1,250,000 1,245,313
Triborough Bridge & Tunnel Authority General
Purpose Bonds Series A, 4.75%, 01/01/05...... 375,000 376,875
Triborough Bridge & Tunnel Authority General
Purpose Bonds Series B, 5.75%, 01/01/05...... 1,000,000 1,055,190
Triborough Bridge & Tunnel Authority General
Purpose Bonds Series Y, 5.625%, 01/01/04..... 1,000,000 1,042,500
Triborough Bridge & Tunnel Authority General
Purpose Bonds Series Y, 5.75%, 01/01/05...... 170,000 178,925
Triborough Bridge & Tunnel Authority Special
Obligation Bonds Series A (FGIC), 5.25%,
01/01/13..................................... 1,500,000 1,513,125
-------------
14,478,178
-------------
WATER & SEWER REVENUE (8.4%)
Erie County Water Authority Improvement
Revenue Bonds, 5.75%, 12/01/08............... 650,000 671,938
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series A, 4.90%, 06/15/02.................... 200,000 203,500
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series A, 5.35%, 06/15/09.................... 225,000 230,063
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series A, 7.00%, 06/15/07.................... 105,000 110,513
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series B, 4.75%, 06/15/01.................... 650,000 658,125
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series B, 5.20%, 06/15/05.................... 500,000 515,625
New York City Municipal Water Financing
Authority Water & Sewer System Revenue Bonds
Series D, 5.00%, 06/15/05.................... 1,805,000 1,843,356
New York State Environmental Facilities
Corporation Pollution Control Revenue Bonds,
5.40%, 05/15/06.............................. 250,000 262,188
New York State Environmental Facilities
Corporation State Clean Water & Drinking
Revenue Bonds Series F, 5.00%, 06/15/05...... 1,000,000 1,022,500
Suffolk County Water Revenue Bonds (MBIA),
5.10%, 06/01/05.............................. 250,000 256,250
Suffolk County Water Revenue Bonds (MBIA),
5.10%, 06/01/06.............................. 400,000 409,000
-------------
6,183,058
-------------
TOTAL MUNICIPAL BONDS (COST $68,870,592)...... 68,331,685
-------------
MONEY MARKET FUND (0.1%)
Dreyfus NY Municipal Money Market Fund........ 39,839 39,839
-------------
TOTAL MONEY MARKET FUND (COST $39,839)........ 39,839
-------------
TOTAL INVESTMENTS (COST $73,510,431) (+) --
99.0%........................................ 72,971,524
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%.... 767,997
-------------
TOTAL NET ASSETS -- 100.0%.................... $ 73,739,521
-------------
-------------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 500,788
Unrealized depreciation .......................... (1,039,695)
------------
Net unrealized depreciation ...................... $ (538,907)
------------
------------
</TABLE>
* Interest rate in effect at June 30, 1999.
AMBAC -- AMBAC Indemnity Corporation.
AMT -- Interest on securities subject to Federal Alternative Minimum Tax.
FGIC -- Insured by Financial Guaranty Insurance Corp.
FHA -- Insured by Federal Housing Administration.
FSA -- Financial Security Assurance.
MBIA -- Municipal Bond Insurance Association.
The accompanying notes are an integral part of the financial statements.
22
- ----------------
<PAGE>
OFFITBANK
CALIFORNIA MUNICIPAL FUND
- --------------------------------------------------------------------------------
Total return for the OFFITBANK California Municipal Fund in the second quarter
was (1.91%) and 5.44% average annual return since inception. Over those two
periods, the Lehman Five-Year Municipal Index returned (1.24%) and 5.34%,
respectively. The Fund's net asset value was $10.25 on June 30, 1999, compared
to $10.54 on December 31, 1998. The 30 day SEC yield for the Fund at quarter-end
was 4.02%.
On the last day of the quarter, the Federal Reserve partly ratified increases in
open market interest rates by increasing the Federal Funds rate from 4.75% to
5.00%. The Fed also removed its bias toward further tightening. The relatively
mild monetary therapy prompted a minor rally in bond prices, but Treasury,
municipal and corporate rates remain well above year-end levels and, indeed,
above the levels which existed prior to the emerging markets crisis of last
fall.
It seems clear that much of the rate increases were due to a reversal of the
apocalyptic assumptions built into economic forecasts after Asian and Russian
financial markets collapsed. Since then, Asian economies (particularly the
Japanese) have shown tentative strength and the major Latin American economies
have outperformed expectations. Most notably, U.S. consumption has continued on
a high level and manufacturing has rebounded. The results have been gradually
rising industrial commodities prices (especially oil), import prices, employment
and private credit demands.
From year-end through June 30th, municipal yields have increased much less than
Treasury yields. For example, the yield on a typical seven-year, AAA-rated
municipal increased 63 basis points while the yield on a seven-year Treasury
note increased 128 basis points. Municipals have been resistant to interest rate
pressures for several reasons: 1) municipals are a purely domestic investment
vehicle; 2) there has been a sharp reduction in new issues by municipalities;
and 3) the robust economy has resulted in higher credit quality.
In the present environment, the short-term objective is to minimize the
portfolio's decline in principal and to seek value that will allow the portfolio
to participate when rates decline. Our conviction that current rates discount
anticipated Fed moves has caused us to lengthen the duration of the Fund during
the second quarter to 5.5 years. The average credit quality remains high at AA2.
Although the bond market may continue to struggle for a while,
inflation-adjusted yields are attractive and inflation will remain subdued. A
weaker housing market may be showing that higher rates are beginning to bite and
the U.S. dollar remains well bid in the currency markets. The Fund had a 12%
cash position at quarter-end, giving us flexibility to take advantage of the
higher yields.
John H. Haldeman, Jr.
July 15, 1999
23
-------------
<PAGE>
OFFITBANK
CALIFORNIA MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------
FLOATING RATE NOTES (8.2%)
POLLUTION CONTROL REVENUE (8.2%)
California Pollution Control
Financing Authority Pollution
Control Revenue Series B, 3.35%,
02/28/08*.......................... $ 500,000 $ 500,000
California Pollution Control
Financing Authority Pollution
Control Revenue Series C, 3.35%,
02/28/08*.......................... 100,000 100,000
California Pollution Control
Financing Authority Pollution
Control Revenue Series D, 3.35%,
02/28/08*.......................... 600,000 600,000
-----------
TOTAL FLOATING RATE NOTES (COST
$1,200,000)........................ 1,200,000
-----------
MUNICIPAL BONDS (86.7%)
EDUCATION REVENUE (8.3%)
California Educational Facilities
Authority Revenue Santa Clara
University, 5.30%, 09/01/05........ 175,000 183,094
California Educational Facilities
Authority Revenue Santa Clara
University, 5.40%, 09/01/06........ 75,000 78,187
California State Public Works
Revenue BRD Lease Series B, 5.25%,
11/01/12........................... 500,000 507,500
California State Public Works
Revenue BRD Lease Series C, 5.125%,
10/01/12........................... 450,000 450,000
-----------
1,218,781
-----------
GENERAL OBLIGATIONS (26.3%)
Berkeley, California Series A,
5.55%, 09/01/07.................... 50,000 53,250
California State, 5.00%, 10/01/06... 500,000 515,625
California State, 5.00%, 02/01/12... 250,000 248,437
California State (FGIC), 5.25%,
10/01/11........................... 125,000 127,969
Cotati-Rohnert Park Uniform School
District Series D (FSA), 6.00%,
08/01/04........................... 100,000 106,500
Cupertino Uniform School District
Series B (FGIC), 6.125%,
08/01/03........................... 50,000 53,562
Fresno, California Uniform School
District Series D (FSA), 5.25%,
08/01/05........................... 300,000 313,875
Los Angeles, California Series A
(FGIC), 5.25%, 09/01/11............ 500,000 511,250
Los Angeles Uniform School District
Series A (FGIC), 4.50%, 07/01/05... 200,000 201,250
Palo Alto Uniform School District
Series B, 5.25%, 08/01/03.......... 100,000 103,875
Pasadena, California Uniform School
District Series A (FGIC), 5.00%,
05/01/05........................... 375,000 386,719
San Diego, California Uniform School
District Series A (FGIC), 0.00%,
07/01/08........................... 900,000 585,000
San Francisco, California City and
County (MBIA), 5.30%, 06/15/07..... 175,000 180,250
San Francisco City & County (FGIC),
5.30%, 06/15/07.................... 250,000 259,687
Santa Monica - Malibu Uniform School
District, 5.00%, 08/01/08.......... 150,000 153,000
-----------
3,800,249
-----------
HOUSING REVENUE (1.4%)
California Housing Finance Agency
Revenue Home Mortgage Series B
(AMT) (MBIA), 5.15%, 08/01/05...... 75,000 75,469
California Housing Finance Agency
Single Family Mortgage Issue B-2
(AMT), 5.20%, 08/01/04............. 125,000 126,406
-----------
201,875
-----------
POLLUTION CONTROL REVENUE (0.3%)
California Pollution Control
Financing Authority Southern
California Edison Series C, 6.85%,
12/01/08........................... 50,000 51,074
-----------
POWER AUTHORITY REVENUE (0.7%)
Southern California Public Power San
Juan Unit 3 Series A (MBIA),
5.125%, 01/01/05................... 100,000 103,625
-----------
PREREFUNDED (1.8%)
Santa Monica - Malibu Uniform School
District, Prerefunded 08/01/03,
5.40%, 08/01/08.................... 300,000 317,250
-----------
RECREATION FACILITIES (1.4%)
Los Angeles County California Public
Works Financing Authority Revenue
Series A, 5.375%, 10/01/06......... 200,000 210,750
-----------
SALES TAX REVENUE (17.3%)
Contra Costa Transportation
Authority Sales Tax Revenue Series
A (FGIC), 5.50%, 03/01/08.......... 50,000 51,875
Los Angeles, California Municipal
Inprovement Corporation Lease
Revenue Series D (FGIC), 4.25%,
09/01/09........................... 500,000 475,625
Orange County California Local
Transportation Authority Sales Tax
Revenue, 5.50%, 02/15/11........... 500,000 521,875
Orange County California Local
Transportation Authority Sales Tax
Revenue, 5.70%, 02/15/03........... 350,000 367,062
Riverside County California
Transportation Commission Sales Tax
Revenue Series A, 6.50%,
06/01/00........................... 175,000 179,744
San Francisco Bay Area Rapid
Transportation District Sales Tax
Revenue, 5.25%, 07/01/10........... 250,000 256,562
San Francisco Bay Area Rapid
Transportation District Sales Tax
Revenue, 5.50%, 07/01/05........... 250,000 264,687
San Francisco Bay Area Rapid
Transportation District Sales Tax
Revenue (FGIC), 6.10%, 07/01/00.... 250,000 256,735
San Mateo County California
Transportation District Sales Tax
Revenue Series A, 5.00%,
06/01/10........................... 165,000 166,031
-----------
2,540,196
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
- ----------------
<PAGE>
OFFITBANK
CALIFORNIA MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
TELECOMMUNICATION REVENUE (1.1%)
Puerto Rico Telephone Authority
Revenue Bonds Series L, 5.75%,
01/01/08........................... $ 150,000 $ 156,938
-----------
TRANSPORTATION REVENUE (10.9%)
Long Beach, California Harbor
Revenue (AMT), 4.60%, 05/15/03..... 250,000 252,188
Long Beach, California Harbor
Revenue (MBIA) (AMT), 5.75%,
05/15/07........................... 100,000 106,625
Los Angeles, California Department
of Airports Refunding Revenue
Series A (FGIC), 5.375%,
05/15/07........................... 300,000 314,250
San Diego, California Open Space
Parking Facilities District, 5.60%,
01/01/05........................... 325,000 343,688
San Francisco City & County Airport
Community International Airport
Revenue (MBIA), 5.00%, 05/01/07.... 250,000 256,563
San Francisco City & County Airport
Revenue Series 6 (AMBAC) (AMT),
6.25%, 05/01/11.................... 200,000 214,000
San Francisco City & County Airports
Commission International Airport
(AMBAC), 6.30%, 05/01/11........... 100,000 106,663
-----------
1,593,977
-----------
WATER & SEWER REVENUE (17.2%)
California State Department of Water
Resources Series S, 5.00%,
12/01/04........................... 300,000 310,125
California State Department of Water
Resources Series S, 5.00%,
12/01/14........................... 250,000 246,250
California State Department of Water
Resources Series T, 5.125%,
12/01/12........................... 200,000 200,750
California State Department of Water
Resources Series U, 5.00%,
12/01/09........................... 300,000 304,125
Contra Costa Water District Water
Revenue Series G (MBIA), 6.00%,
10/01/09........................... 50,000 53,688
Long Beach, California Water Revenue
Series A (MBIA), 4.35%, 05/01/05... 200,000 199,750
Los Angeles, California Department
of Water and Power Revenue, 5.80%,
07/15/04........................... 150,000 158,813
Los Angeles County Sanitation
District Financing Authority
Revenue Capital Projects Series A,
5.25%, 10/01/10.................... 100,000 102,125
Metropolitan Water Distribution
Southern California Waterworks
Revenue Series A, 5.25%,
03/01/13........................... 300,000 305,625
Metropolitan Water Distribution
Southern California Waterworks
Revenue Series A (MBIA), 5.40%,
07/01/08........................... 250,000 260,313
Sacramento County Sanitation
District Financing Authority
Revenue, 5.125%, 12/01/13.......... 200,000 200,000
San Diego, California Water
Utilities Fund (FGIC), 4.25%,
08/01/06........................... 175,000 171,500
-----------
2,513,064
-----------
TOTAL MUNICIPAL BONDS (COST
$12,934,880)....................... 12,707,779
-----------
MONEY MARKET FUNDS (3.9%)
Dreyfus Tax Exempt Cash Management
Money Market Fund.................. 69,722 69,722
Federated California Municipal
Fund............................... 500,000 500,000
-----------
TOTAL MONEY MARKET FUNDS (COST
$569,722).......................... 569,722
-----------
TOTAL INVESTMENTS (COST $14,704,602)
(+) -- 98.8%....................... 14,477,501
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.2%................... 181,591
-----------
TOTAL NET ASSETS -- 100.0%.......... $14,659,092
-----------
-----------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 36,173
Unrealized depreciation ......................... (263,274)
-----------
Net unrealized depreciation ..................... $ (227,101)
-----------
-----------
</TABLE>
* Interest rate in effect at June 30, 1999.
AMBAC -- AMBAC Indemnity corporation.
AMT -- Interest on securities subject to Federal Alternative Minimum Tax.
FGIC -- Insured by Financial Guaranty Insurance Corp.
FSA -- Financial Security Asurance.
MBIA -- Municipal Bond Insurance Association.
The accompanying notes are an integral part of the financial statements.
25
----------------
<PAGE>
OFFITBANK
NATIONAL MUNICIPAL FUND
- --------------------------------------------------------------------------------
The total return for The OFFITBANK National Municipal Fund year-to-date through
June 30, 1999 was (0.85%). For comparative purposes, the universe of
intermediate municipal debt funds monitored by Lipper, Inc. returned (1.27%) for
the same period. While 1999 has been a difficult year for the municipal market
so far, the Fund's performance relative to its peers has been impressive. The
OFFITBANK National Municipal Fund's performance over the last year ranks 5th out
of 133 funds with the same investment objectives. Over the longer time period
from inception on October 20, 1997, the Fund had an average annual return of
8.83% versus the 6.84% return of the Lehman Five-Year G.O. Index.
The June 30, 1999 net asset value of $10.15 was approximately 2.7% lower than
the $10.43 NAV at the beginning of the year. Reflective of the higher market
yields and lower prices, the 30 day SEC yield rose to 4.08% from 3.78%. The
Fund's duration as of June 30, 1999 was 6.05 years, and the average credit
quality was AA.
The first six months of 1999 have been difficult for fixed income investors. The
U.S. bond market has concerned itself with the inflationary implications
associated with strong U.S. economic growth. That concern manifested itself in
the U.S. Treasury market where the "flight-to-quality" buying that supported
prices in the latter half of 1998 totally reversed course. A good gauge of that
reversal could be seen in the ten-year Treasury note which ended 1998 yielding
4.63% and now yields 5.80%.
The municipal market historically outperforms the Treasury market when prices
are falling and 1999 has been no exception. For instance, the five-year insured
municipal lost (0.82%) versus a five-year Treasury decline of (2.26%). The
outperformance was even greater on the long end of the curve where the 30-year
municipal total return was (3.71%) versus (10.00%) for the benchmark 30-year
Treasury.
One of the more interesting developments in the municipal market over the last
several months relates to demand. In years past, institutional investors, and
specifically funds and property and casualty companies were the most dominant
buyers of municipals. Today's most influential buyers are clearly individual
investors who are building their own personal portfolios as a "hedge" against
historically high equity valuations. Therefore, we have overweighted the Fund
with securities that are attractive to the individual investor.
Another interesting development that has emerged in the municipal market this
year relates to Y2K readiness. We believe that the concern over the "millennium
bug" has yet to factor into the spreads at which individual municipal credits
currently trade. As we get closer to year-end, our assumption is that demand
will shift out of smaller, less sophisticated issuers into larger and more
prepared issuers. In particular, we believe that general obligations bonds will
be perceived as "safer" due to their full faith and credit pledge.
Moving forward, we believe that at current yields the municipal market is
attractive. We think the recent negative sentiment in the U.S. bond market is
unwarranted. The market has currently priced in a "V" shaped recovery for the
global economy. We are of the opinion that despite the vigorous rebound in the
foreign equity markets this year, overseas economies are essentially entering a
phase of prolonged below trend growth. Therefore, we intend to buy into any
weakness that may occur moving forward. It has been our observation that as
absolute yields reach levels that are available today, municipal supply begins
to contract while demand tends to accelerate.
Michael Pietronico
July 15, 1999
26
- -------------
<PAGE>
OFFITBANK
NATIONAL MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------
FLOATING RATE NOTES (14.5%)
POLLUTION CONTROL REVENUE (4.3%)
CALIFORNIA (4.3%)
California Pollution Control
Financing Authority Pollution
Control Revenue Series A, 3.35%,
02/28/08*........................ $ 100,000 $ 100,000
California Pollution Control
Financing Authority Pollution
Control Revenue Series C, 3.35%,
02/28/08*........................ 800,000 800,000
-----------
900,000
-----------
TRANSPORTATION REVENUE (5.9%)
NEW YORK (5.9%)
Port Authority of New York & New
Jersey Bonds Series 86, 3.40%,
06/01/20 *....................... 1,200,000 1,200,000
-----------
WATER & SEWER REVENUE (4.3%)
NEW YORK (4.3%)
New York City Municipal Water
Financing Authority Water & Sewer
System Revenue Bonds Series A
(FGIC), 3.55%, 06/15/25 *........ 100,000 100,000
New York City Municipal Water
Financing Authority Water & Sewer
System Revenue Bonds Series G
(FGIC), 3.40%, 06/15/24 *........ 800,000 800,000
-----------
900,000
-----------
TOTAL FLOATING RATE NOTES (COST
$3,000,000)...................... 3,000,000
-----------
MUNICIPAL BONDS (87.3%)
EDUCATION REVENUE (1.1%)
CALIFORNIA (1.1%)
Los Angeles, California Series A
(FGIC), 6.00%, 07/01/08.......... 200,000 218,750
-----------
GENERAL OBLIGATIONS (47.6%)
ALABAMA (0.6%)
Huntsville, Alabama Series E,
5.85%, 08/01/05.................. 115,000 121,612
-----------
CALIFORNIA (2.7%)
San Diego, California Unified
School District Series A (FGIC),
0.00%, 07/01/05.................. 720,000 550,800
-----------
COLORADO (1.9%)
Douglas County Colorado
Reorganized School District 1,
0.00%, 12/15/04.................. 500,000 390,625
-----------
ILLINOIS (0.2%)
Chicago, Illinois Project Series B
(FGIC), 6.00%, 01/01/03.......... 50,000 52,437
-----------
MARYLAND (0.7%)
Maryland National Capital Park &
Planning Commission Prince
Georges County Maryland
Unrefunded Balance Series S-2,
5.00%, 07/01/08.................. 150,000 152,062
-----------
NEVADA (2.4%)
Clark County Nevada-Las Vegas
Convention & Visitor (MBIA),
4.80%, 07/01/01.................. 75,000 75,937
Clark County Nevada-Las Vegas
Convention & Visitor Series A,
5.00%, 07/01/08.................. 120,000 121,950
Nevada State Municipal Bond
Projects 66 & 67 - A, 5.25%,
05/15/10......................... 300,000 304,125
-----------
502,012
-----------
NEW YORK (10.9%)
New York City Series K, 4.875%,
08/01/08......................... 1,000,000 991,250
New York State, 5.25%, 03/01/11... 1,000,000 1,006,250
New York, New York Series G,
5.75%, 10/15/10.................. 105,000 109,462
New York, New York Series H,
5.75%, 03/15/10.................. 150,000 155,625
-----------
2,262,587
-----------
PENNSYLVANIA (6.0%)
Pennsylvania State First Series,
5.00%, 03/01/10.................. 1,000,000 995,000
West Chester, Pennsylvania, 5.30%,
01/15/07......................... 250,000 254,375
-----------
1,249,375
-----------
TEXAS (1.6%)
Texas State Financial Authority,
4.80%, 10/01/09.................. 325,000 322,156
-----------
VIRGINIA (6.1%)
Arlington County Virginia, 5.125%,
06/01/11......................... 1,000,000 1,008,750
Fairfax County Virginia Series C,
5.25%, 05/01/07.................. 250,000 257,187
-----------
1,265,937
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
----------------
<PAGE>
OFFITBANK
NATIONAL MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
GENERAL OBLIGATIONS (CONTINUED)
WASHINGTON (6.6%)
Seattle, Washington Series A,
5.375%, 12/01/11................. $ 1,280,000 $ 1,308,800
Washington State Series 1995C,
5.35%, 07/01/06.................. 55,000 56,788
-----------
1,365,588
-----------
WISCONSIN (7.9%)
Milwaukee, Wisconsin Series L,
5.00%, 12/15/10.................. 1,640,000 1,631,800
-----------
9,612,616
-----------
HOUSING REVENUE (2.8%)
NEW YORK (2.4%)
New York Mortgage Agency Series 71
(AMT), 4.80%, 10/01/08........... 500,000 493,125
-----------
PENNSYLVANIA (0.4%)
Pennsylvania Housing Finance
Agency Series 61A (AMT), 4.90%,
10/01/08......................... 100,000 99,125
-----------
592,250
-----------
POLLUTION CONTROL REVENUE (2.9%)
MICHIGAN (2.5%)
Michigan Authority Revenue Clean
Water, 5.25%, 10/01/10........... 520,000 529,100
-----------
NEW YORK (0.4%)
New York Environmental Pollution
Corp., 6.50%, 06/15/08........... 70,000 76,388
-----------
605,488
-----------
POWER AUTHORITY REVENUE (9.3%)
NEW YORK (4.8%)
Long Island Power Authority New
York Electric System Revenue
Bonds (MBIA), 5.125%, 04/01/12... 1,000,000 995,000
-----------
TEXAS (0.1%)
San Antonio, Texas Electric & Gas,
4.70%, 02/01/05.................. 20,000 20,450
-----------
WASHINGTON (4.4%)
Washington State Public Power
Supply System Nuclear Project
2-B, 5.00%, 07/01/01............. 500,000 506,875
Washington State Public Power
Supply System Nuclear Project
3-A, 5.00%, 07/01/01............. 200,000 202,750
Washington State Public Power
Supply System Nuclear Project
3-C, 4.60%, 07/01/01............. 200,000 201,250
-----------
910,875
-----------
1,926,325
-----------
PREREFUNDED (0.2%)
MARYLAND (0.2%)
Maryland National Capital Park &
Planning Commission Prince
Georges County Maryland,
Prerefunded 07/01/05, 5.00%,
07/01/08......................... 50,000 51,438
-----------
RECREATION FACILITIES (1.0%)
CALIFORNIA (1.0%)
Los Angeles County Public Works
Financing Authority Revenue
Series A, 5.50%, 10/01/09........ 200,000 210,500
-----------
SALES TAX REVENUE (5.2%)
CONNECTICUT (0.6%)
Connecticut Special Tax Obligation
Series A, 5.25%, 09/01/07........ 120,000 124,050
-----------
ILLINOIS (3.4%)
Illinois State Series Q, 5.50%,
06/15/03......................... 200,000 208,250
Illinois State Series V, 6.375%,
06/15/14......................... 450,000 491,625
-----------
699,875
-----------
NEW MEXICO (1.2%)
New Mexico State Severance Tax
Series B, 4.75%, 07/01/06........ 250,000 250,313
-----------
1,074,238
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
28
- ----------------
<PAGE>
OFFITBANK
NATIONAL MUNICIPAL FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
TRANSPORTATION REVENUE (10.1%)
CALIFORNIA (1.0%)
Long Beach, California (AMT)
(MBIA), 5.50%, 05/15/10.......... $ 200,000 $ 205,500
-----------
ILLINOIS (1.3%)
Illinois State, 5.50%, 08/01/03... 250,000 260,000
-----------
MICHIGAN (1.4%)
Wayne Charter County Michigan
Airport Series A (AMT), 5.25%,
12/01/11......................... 300,000 300,375
-----------
NEW YORK (1.5%)
Metropolitan Transportation
Authority Series A (FGIC), 5.00%,
04/01/03......................... 200,000 203,750
New York State Thruway, Highway &
Bridge Trust Fund Bonds Series B
(FSA), 5.50%, 04/01/09........... 100,000 104,375
-----------
308,125
-----------
OHIO (4.9%)
Ohio State Turnpike Commission
Series B (FGIC), 5.25%,
02/15/10......................... 1,000,000 1,016,250
-----------
2,090,250
-----------
WATER & SEWER REVENUE (7.1%)
MISSOURI (3.7%)
Kansas City, Missouri Water
Revenue Series A, 5.00%,
12/01/09......................... 550,000 552,750
Kansas City, Missouri Water
Revenue Series B, 5.00%,
12/01/08......................... 225,000 226,969
-----------
779,719
-----------
NEW YORK (0.5%)
New York City Municipal Water
Finance Authority Series B,
5.00%, 06/15/03.................. 100,000 102,250
-----------
TENNESSEE (0.9%)
Metropolitan Government Nashville
& Davidson County Water & Sewer
Revenue (AMBAC), 5.75%,
01/01/15......................... 170,000 178,925
-----------
TEXAS (2.0%)
Texas Water Development Board
Revenue Series A, 5.00%,
07/15/07......................... 105,000 106,575
Texas Water Development Board
Revenue Series B, 4.20%,
07/15/02......................... 50,000 49,938
Texas Water Financial Assistance
Series C, 5.00%, 08/01/09........ 250,000 251,563
-----------
408,076
-----------
1,468,970
-----------
TOTAL MUNICIPAL BONDS (COST
$18,286,172)..................... 18,105,200
-----------
MONEY MARKET FUNDS (2.5%)
Dreyfus Tax Exempt Cash Management
Money Market Fund.................. 6,979 6,979
The J.P. Morgan Institutional
Service Tax Exempt Cash Fund....... 6,238 6,238
Nuveen Premiere Income Fund, 3.75%,
12/31/99........................... 500,000 500,000
-----------
TOTAL MONEY MARKET FUNDS (COST
$513,217).......................... 513,217
-----------
TOTAL INVESTMENTS (COST $21,799,389)
(+) -- 104.3%...................... 21,618,417
LIABILITIES IN EXCESS OF OTHER
ASSETS (4.3%)...................... (889,701)
-----------
TOTAL NET ASSETS -- 100.0%.......... $20,728,716
-----------
-----------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 15,360
Unrealized depreciation .......................... (196,332)
-----------
Net unrealized depreciation ...................... $ (180,972)
-----------
-----------
</TABLE>
* Interest rate in effect at June 30, 1999.
AMBAC -- AMBAC Indemnity Corporation.
AMT -- Interest on securities subject to Federal Alternative Minimum Tax.
FGIC -- Insured by Financial Guaranty Insurance Corp.
FHA -- Insured by Federal Housing Administration.
FSA -- Financial Security Assurance.
MBIA -- Municipal Bond Insurance Association.
The accompanying notes are an integral part of the financial statements.
29
----------------
<PAGE>
OFFITBANK
U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
The total return of the U.S. Government Securities Fund was (2.58%) for the
first six months of 1999. This compares with a return of (2.41%) for the Merrill
Lynch 5 Year Treasury Index. The 30 day SEC yield for the Fund at quarter-end
was 5.62%.
The investments in the Fund are in U.S. Treasury and U.S. Agency securities. The
average maturity of the Fund is approximately 5.3 years and the duration is 4.1
years.
Looking forward, we believe that the Federal Reserve will remain committed to
domestic price stability and that this will limit increases in bond yields from
current levels. Also, as discussed in our June Research Note, FED POLICY FOCUS:
DOMESTIC OR GLOBAL?, we believe that current bond yields sufficiently discount
higher rates in the future so as to make the market attractive.
While we expect Fed actions to cushion the current bear market in bonds, we are
not yet prepared to significantly increase portfolio sensitivity to changes in
interest rates. The U.S. economy remains solid while Japan and Germany are
showing tentative signs of recovery. Should global economic growth strengthen
appreciably, interest rates could rise in this country, even in the absence of
inflation.
In sum, we view interest rate risk as now being balanced. Therefore, the
duration of the portfolio is neutral to the market.
Jack D. Burks
July 15, 1999
30
- -------------
<PAGE>
OFFITBANK
U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------
FEDERAL HOME LOAN BANK (3.7%)
Federal Home Loan Bank, Discount
Note, 4.60%, 07/01/99.............. $ 1,625,000 $ 1,625,000
-----------
TOTAL FEDERAL HOME LOAN BANK (COST
$1,625,000)........................ 1,625,000
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (8.5%)
Federal Home Loan Mortgage Corp.,
5.00%, 02/15/01.................... 3,800,000 3,760,242
-----------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION (COST $3,795,863)...... 3,760,242
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (8.6%)
Federal National Mortgage
Association, 5.625%, 03/15/01...... 3,770,000 3,763,896
-----------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION (COST $3,821,482)...... 3,763,896
-----------
U.S. TREASURY NOTES (77.8%)
Inflation Indexed Notes, 3.875%,
01/15/09........................... 2,100,000 2,104,221
Notes, 5.75%, 10/31/02.............. 3,300,000 3,301,677
Notes, 5.75%, 04/30/03.............. 4,300,000 4,293,771
Notes, 5.875%, 11/15/05............. 7,430,000 7,407,179
Notes, 6.125%, 08/15/07............. 1,500,000 1,515,647
Notes, 6.25%, 02/15/07.............. 1,200,000 1,222,423
Notes, 6.50%, 10/15/06.............. 7,000,000 7,223,999
Notes, 7.00%, 07/15/06.............. 6,810,000 7,211,817
-----------
TOTAL U.S. TREASURY NOTES (COST
$35,392,897)....................... 34,280,734
-----------
MONEY MARKET FUND (0.1%)
Bank of New York Cash Reserve....... 41,665 41,665
-----------
TOTAL MONEY MARKET FUND (COST
$41,665)........................... 41,665
-----------
TOTAL INVESTMENTS (COST
$44,676,907)(+) -- 98.7%........... 43,471,537
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.3%................... 581,119
-----------
TOTAL NET ASSETS -- 100.0%.......... $44,052,656
-----------
-----------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 22,950
Unrealized depreciation .......................... (1,228,320)
-----------
Net unrealized depreciation ...................... $(1,205,370)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
----------------
<PAGE>
OFFITBANK
MORTGAGE SECURITIES FUND
- --------------------------------------------------------------------------------
The total return of the Mortgage Securities Fund was (0.89%) for the first six
months of 1999. This compares with a return of 0.31% for the Merrill Lynch
Mortgage Master Index. The 30 day SEC yield for the Fund at quarter-end was
5.76%.
The underperformance for the most recent period was caused by the Fund's
larger-than-market weightings to 15 Year Pass-Thrus and Government National
Mortgage Association securities, both of which lagged other mortgage products in
the Index. The Fund is maintaining these holdings, as we believe that the market
is undervaluing the positive characteristics of these securities.
The investments in the Fund are 37% Government National Mortgage Association,
26% Federal Home Loan Mortgage Corporation, 28% Federal National Mortgage
Association, and 9% Cash Equivalents. The average maturity of the Fund is
approximately 8 years and the duration is 3.5 years.
Looking forward, we believe that the Federal Reserve will remain committed to
domestic price stability and that this will limit increases in bond yields from
current levels. Also, as discussed in our June Research Note, FED POLICY FOCUS:
DOMESTIC OR GLOBAL?, we believe that current bond yields sufficiently discount
higher rates in the future so as to make the market attractive.
While we expect Fed actions to cushion the current bear market in bonds, we are
not yet prepared to significantly increase portfolio sensitivity to changes in
interest rates. The U.S. economy remains solid while Japan and Germany are
showing tentative signs of recovery. Should global economic growth strengthen
appreciably, interest rates could rise in this country, even in the absence of
inflation.
In sum, we view interest rate risk as now being balanced. Therefore, the
duration of the portfolio is neutral to the market.
Jack D. Burks
July 15, 1999
32
- -------------
<PAGE>
OFFITBANK
MORTGAGE SECURITIES FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------
FEDERAL HOME LOAN BANK (8.4%)
Federal Home Loan Bank, Discount
Notes, 4.60%, 07/01/99............. $ 4,975,000 $ 4,975,000
-----------
TOTAL FEDERAL HOME LOAN BANK
($4,975,000)....................... 4,975,000
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (25.5%)
Federal Home Loan Mortgage Corp.,
6.00%, 04/01/03, Gold Pool
#M90534............................ 993,694 935,936
Federal Home Loan Mortgage Corp.,
6.00%, 12/01/13, Gold Pool
#E00592............................ 875,163 857,386
Federal Home Loan Mortgage Corp.,
6.00%, 12/01/13, Gold Pool
#E73827............................ 1,944,866 1,877,404
Federal Home Loan Mortgage Corp.,
7.50%, 01/01/18, Gold Pool
#C90203............................ 953,388 920,318
Federal Home Loan Mortgage Corp.,
6.00%, 02/01/24, Gold Pool
#C80110............................ 187,906 190,079
Federal Home Loan Mortgage Corp.,
6.00%, 01/01/26, Gold Pool
#D67671............................ 16,586 15,622
Federal Home Loan Mortgage Corp.,
6.00%, 02/01/26, Gold Pool
#D68418............................ 511,360 481,637
Federal Home Loan Mortgage Corp.,
6.00%, 03/01/26, Gold Pool
#D69408............................ 428,951 404,018
Federal Home Loan Mortgage Corp.,
6.00%, 03/01/26, Gold Pool
#D69088............................ 380,109 358,015
Federal Home Loan Mortgage Corp.,
6.00%, 04/01/26, Gold Pool
#C80395............................ 416,620 392,403
Federal Home Loan Mortgage Corp.,
6.00%, 05/01/26, Gold Pool
#D71231............................ 401,507 378,169
Federal Home Loan Mortgage Corp.,
7.50%, 06/01/26, Gold Pool
#D72344............................ 42,466 39,998
Federal Home Loan Mortgage Corp.,
7.50%, 11/01/26, Gold Pool
#C80444............................ 250,611 253,508
Federal Home Loan Mortgage Corp.,
7.50%, 04/01/27, Gold Pool
#G00693............................ 40,390 40,857
Federal Home Loan Mortgage Corp.,
7.50%, 05/01/27, Gold Pool
#G00702............................ 823,480 833,001
Federal Home Loan Mortgage Corp.,
7.50%, 06/01/27, Gold Pool
#D80669............................ 327,477 331,263
Federal Home Loan Mortgage Corp.,
6.00%, 10/01/27, Gold Pool
#D82901............................ 667,254 674,969
Federal Home Loan Mortgage Corp.,
6.00%, 12/01/27, Gold Pool
#C00583............................ 297,875 280,561
Federal Home Loan Mortgage Corp.,
7.50%, 04/01/28, Gold Pool
#C00612............................ 645,450 607,933
Federal Home Loan Mortgage Corp.,
6.00%, 05/01/28, Gold Pool
#C00614............................ 130,872 132,385
Federal Home Loan Mortgage Corp.,
6.00%, 05/01/28, Gold Pool
#D89955............................ 466,657 439,533
Federal Home Loan Mortgage Corp.,
6.00%, 05/01/28, Gold Pool
#D89506............................ 476,909 449,189
Federal Home Loan Mortgage Corp.,
6.00%, 07/01/28, Gold Pool
#C12759............................ 499,789 470,739
Federal Home Loan Mortgage Corp.,
6.00%, 07/01/28, Gold Pool
#C00635............................ 973,706 917,109
Federal Home Loan Mortgage Corp.,
6.00%, 08/01/28, Gold Pool
#C13742............................ 67,107 63,207
Federal Home Loan Mortgage Corp.,
6.00%, 10/01/28, Gold Pool
#C16785............................ 56,509 53,224
Federal Home Loan Mortgage Corp.,
7.50%, 10/01/28, Gold Pool
#C16855............................ 876,701 825,743
Federal Home Loan Mortgage Corp.,
6.00%, 12/01/28, Gold Pool
#C19286............................ 30,614 30,968
Federal Home Loan Mortgage Corp.,
6.00%, 01/01/29, Gold Pool
#C00702............................ 1,986,443 1,870,981
-----------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION (COST $15,587,889)..... 15,126,155
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (28.2%)
Federal National Mortgage Assoc.,
6.50%, 11/01/03, Pool #356437...... 67,424 66,749
Federal National Mortgage Assoc.,
6.50%, 01/01/04, Pool #359915...... 250,867 248,358
Federal National Mortgage Assoc.,
6.50%, 09/01/04, Pool #393759...... 260,149 257,547
Federal National Mortgage Assoc.,
6.50%, 10/01/04, Pool #398370...... 353,406 349,872
Federal National Mortgage Assoc.,
6.00%, 09/01/10, Pool #250376...... 75,925 73,291
Federal National Mortgage Assoc.,
6.00%, 04/01/11, Pool #339774...... 82,839 79,966
Federal National Mortgage Assoc.,
6.00%, 03/01/13, Pool #419336...... 795,940 768,331
Federal National Mortgage Assoc.,
6.00%, 03/01/13, Pool #379876...... 91,771 88,588
Federal National Mortgage Assoc.,
6.00%, 04/01/13, Pool #411502...... 864,525 834,537
Federal National Mortgage Assoc.,
6.00%, 04/01/13, Pool #425916...... 1,360,842 1,313,638
Federal National Mortgage Assoc.,
6.00%, 05/01/13, Pool #429019...... 903,341 872,006
Federal National Mortgage Assoc.,
6.00%, 06/01/13, Pool #426763...... 729,705 704,394
Federal National Mortgage Assoc.,
6.00%, 09/01/13, Pool #439280...... 79,434 76,679
Federal National Mortgage Assoc.,
6.00%, 09/01/13, Pool #440197...... 493,761 476,633
Federal National Mortgage Assoc.,
6.00%, 09/01/13, Pool #439280...... 247,282 238,704
Federal National Mortgage Assoc.,
6.00%, 09/01/13, Pool #440240...... 476,074 459,560
Federal National Mortgage Assoc.,
6.00%, 10/01/13, Pool #436691...... 371,495 358,609
Federal National Mortgage Assoc.,
6.00%, 01/01/14, Pool #459015...... 197,631 190,775
Federal National Mortgage Assoc.,
6.00%, 01/01/14, Pool #480977...... 283,689 273,848
Federal National Mortgage Assoc.,
6.00%, 02/01/14, Pool #440778...... 484,968 468,146
Federal National Mortgage Assoc.,
6.50%, 05/01/26, Pool #345964...... 159,116 153,597
Federal National Mortgage Assoc.,
6.50%, 08/01/27, Pool #378287...... 434,190 419,129
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
----------------
<PAGE>
OFFITBANK
MORTGAGE SECURITIES FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(CONTINUED)
Federal National Mortgage Assoc.,
6.50%, 11/01/27, Pool #397998...... $ 802,709 $ 774,865
Federal National Mortgage Assoc.,
6.50%, 04/01/28, Pool #421090...... 22,331 21,556
Federal National Mortgage Assoc.,
6.50%, 04/01/28, Pool #419955...... 421,258 406,645
Federal National Mortgage Assoc.,
6.50%, 05/01/28, Pool #425761...... 958,805 925,546
Federal National Mortgage Assoc.,
6.50%, 05/01/28, Pool #426090...... 23,793 22,968
Federal National Mortgage Assoc.,
6.50%, 06/01/28, Pool #427634...... 1,590,164 1,535,005
Federal National Mortgage Assoc.,
6.50%, 07/01/28, Pool #251813...... 895,351 864,294
Federal National Mortgage Assoc.,
6.50%, 10/01/28, Pool #446616...... 339,215 327,448
Federal National Mortgage Assoc.,
6.50%, 10/01/28, Pool #447986...... 620,860 599,324
Federal National Mortgage Assoc.,
6.50%, 12/01/28, Pool #252255...... 793,349 765,830
Federal National Mortgage Assoc.,
6.50%, 12/01/28, Pool #456699...... 194,178 187,443
Federal National Mortgage Assoc.,
6.50%, 02/01/29, Pool #483395...... 1,006,112 971,213
Federal National Mortgage Assoc.,
6.50%, 04/01/29, Pool #483944...... 499,033 481,723
Federal National Mortgage Assoc.,
6.50%, 12/01/99, Pool #303111...... 83,721 82,884
-----------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION (COST $17,241,622)..... 16,739,701
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (37.3%)
Government National Mortgage Assoc.,
7.00%, 10/15/07, Pool #297658...... 62,031 62,419
Government National Mortgage Assoc.,
7.00%, 07/15/08, Pool #266910...... 29,324 29,507
Government National Mortgage Assoc.,
6.00%, 02/15/09, Pool #335278...... 94,794 91,595
Government National Mortgage Assoc.,
7.00%, 09/15/09, Pool #380616...... 200,319 201,571
Government National Mortgage Assoc.,
7.00%, 07/15/10, Pool #780193...... 635,004 639,370
Government National Mortgage Assoc.,
7.00%, 10/15/10, Pool #377618...... 280,288 282,040
Government National Mortgage Assoc.,
7.00%, 02/15/11, Pool #292339...... 364,338 366,615
Government National Mortgage Assoc.,
6.00%, 05/15/11, Pool #412601...... 41,785 40,374
Government National Mortgage Assoc.,
6.00%, 06/15/11, Pool #424501...... 164,001 158,466
Government National Mortgage Assoc.,
7.00%, 06/15/11, Pool #347186...... 314,381 316,346
Government National Mortgage Assoc.,
6.00%, 01/15/13, Pool #407233...... 759,634 733,997
Government National Mortgage Assoc.,
6.00%, 02/15/13, Pool #460756...... 606,054 585,599
Government National Mortgage Assoc.,
6.00%, 01/15/24, Pool #345932...... 153,984 144,023
Government National Mortgage Assoc.,
6.00%, 01/15/24, Pool #376364...... 436,182 407,966
Government National Mortgage Assoc.,
6.00%, 05/15/24, Pool #352981...... 183,823 171,932
Government National Mortgage Assoc.,
7.00%, 09/15/25, Pool #410280...... 82,626 81,568
Government National Mortgage Assoc.,
9.00%, 09/15/25, Pool #405492...... 431,542 457,974
Government National Mortgage Assoc.,
6.00%, 01/15/26, Pool #780312...... 516,845 483,734
Government National Mortgage Assoc.,
7.00%, 02/15/26, Pool #347156...... 40,934 40,410
Government National Mortgage Assoc.,
6.00%, 03/15/26, Pool #426301...... 24,112 22,553
Government National Mortgage Assoc.,
7.00%, 06/15/26, Pool #780518...... 22,035 21,767
Government National Mortgage Assoc.,
8.00%, 06/15/26, Pool #428867...... 349,538 359,041
Government National Mortgage Assoc.,
8.00%, 07/15/26, Pool #432905...... 73,361 75,355
Government National Mortgage Assoc.,
8.00%, 08/15/26, Pool #419634...... 31,030 31,873
Government National Mortgage Assoc.,
8.00%, 08/15/26, Pool #421763...... 166,054 170,568
Government National Mortgage Assoc.,
8.00%, 09/15/26, Pool #398884...... 541,257 555,972
Government National Mortgage Assoc.,
8.00%, 11/15/26, Pool #415657...... 142,515 146,389
Government National Mortgage Assoc.,
8.00%, 11/15/26, Pool #442131...... 245,277 251,945
Government National Mortgage Assoc.,
8.00%, 11/15/26, Pool #438875...... 270,221 277,567
Government National Mortgage Assoc.,
7.00%, 12/15/26, Pool #442642...... 161,479 159,410
Government National Mortgage Assoc.,
8.00%, 12/15/26, Pool #437256...... 55,349 56,854
Government National Mortgage Assoc.,
8.00%, 12/15/26, Pool #442190...... 328,960 337,904
Government National Mortgage Assoc.,
8.00%, 01/15/27, Pool #780497...... 659,517 677,860
Government National Mortgage Assoc.,
8.00%, 01/15/27, Pool #444261...... 39,926 41,012
Government National Mortgage Assoc.,
8.00%, 02/15/27, Pool #436363...... 491,425 504,786
Government National Mortgage Assoc.,
9.00%, 03/15/27, Pool #399193...... 9,927 10,535
Government National Mortgage Assoc.,
8.00%, 06/15/27, Pool #447202...... 59,608 61,228
Government National Mortgage Assoc.,
8.00%, 08/15/27, Pool #455387...... 138,207 141,964
Government National Mortgage Assoc.,
7.00%, 12/15/27, Pool #460653...... 32,090 31,679
Government National Mortgage Assoc.,
7.00%, 12/15/27, Pool #443779...... 519,923 513,262
Government National Mortgage Assoc.,
7.00%, 01/15/28, Pool #460690...... 374,340 369,544
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
- ----------------
<PAGE>
OFFITBANK
MORTGAGE SECURITIES FUND
- -------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- ------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(CONTINUED)
Government National Mortgage Assoc.,
7.00%, 01/15/28, Pool #463365...... $ 398,142 $ 393,041
Government National Mortgage Assoc.,
7.00%, 01/15/28, Pool #458763...... 293,164 289,408
Government National Mortgage Assoc.,
7.00%, 02/15/28, Pool #433595...... 440,881 435,233
Government National Mortgage Assoc.,
6.00%, 04/15/28, Pool #452780...... 380,724 356,096
Government National Mortgage Assoc.,
6.00%, 04/15/28, Pool #473500...... 245,662 229,770
Government National Mortgage Assoc.,
6.00%, 04/15/28, Pool #433722...... 354,821 331,869
Government National Mortgage Assoc.,
6.00%, 05/15/28, Pool #465359...... 451,505 422,298
Government National Mortgage Assoc.,
7.00%, 05/15/28, Pool #475480...... 870,158 859,009
Government National Mortgage Assoc.,
6.00%, 06/15/28, Pool #449548...... 488,907 457,280
Government National Mortgage Assoc.,
6.00%, 06/15/28, Pool #476330...... 37,570 35,140
Government National Mortgage Assoc.,
7.00%, 07/15/28, Pool #464696...... 625,468 617,454
Government National Mortgage Assoc.,
9.00%, 08/15/28, Pool #473752...... 498,738 529,286
Government National Mortgage Assoc.,
6.00%, 09/15/28, Pool #433994...... 85,921 80,417
Government National Mortgage Assoc.,
6.00%, 09/15/28, Pool #780864...... 508,917 475,996
Government National Mortgage Assoc.,
6.00%, 09/15/28, Pool #457821...... 465,241 435,146
Government National Mortgage Assoc.,
6.00%, 10/15/28, Pool #465564...... 367,813 344,020
Government National Mortgage Assoc.,
6.00%, 10/15/28, Pool #484473...... 469,909 439,512
Government National Mortgage Assoc.,
6.00%, 10/15/28, Pool #490686...... 457,965 428,341
Government National Mortgage Assoc.,
6.00%, 10/15/28, Pool #467286...... 487,420 455,890
Government National Mortgage Assoc.,
6.00%, 10/15/28, Pool #475620...... 1,130,571 1,057,437
Government National Mortgage Assoc.,
7.00%, 12/15/28, Pool #472893...... 479,852 473,704
Government National Mortgage Assoc.,
7.00%, 12/15/28, Pool #491307...... 727,436 718,116
Government National Mortgage Assoc.,
7.00%, 12/15/28, Pool #426720...... 339,613 335,262
Government National Mortgage Assoc.,
7.00%, 01/15/29, Pool #467844...... 495,669 489,319
Government National Mortgage Assoc.,
8.00%, 01/15/29, Pool #495502...... 426,586 438,183
Government National Mortgage Assoc.,
6.00%, 03/15/29, Pool #459014...... 378,806 354,302
Government National Mortgage Assoc.,
6.00%, 03/15/29, Pool #466453...... 532,724 498,264
-----------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (COST $22,773,333)..... 22,094,367
-----------
MONEY MARKET FUND (0.1%)
Bank of New York Cash Reserve....... 38,672 38,672
-----------
TOTAL MONEY MARKET FUND (COST
$38,672)........................... 38,672
-----------
TOTAL INVESTMENTS (COST $60,616,516)
(+)-- 99.5%........................ 58,973,895
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.5%................... 299,187
-----------
TOTAL NET ASSETS -- 100.0%.......... $59,273,082
-----------
-----------
</TABLE>
- ---------------
+ Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $ 617
Unrealized depreciation .......................... (1,643,238)
-----------
Net unrealized depreciation ...................... $(1,642,621)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
----------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
HIGH EMERGING
YIELD MARKETS
FUND FUND
<S> <C> <C>
- -------------------------------------------------------
ASSETS:
Investments, at market
value (1)............ $1,762,569,508 $140,757,338
Interest and dividends
receivable........... 36,383,269 3,860,251
Receivable for capital
shares sold.......... 20,513,675 208,058
Receivable for
investment securities
sold................. 4,403,219 8,337,247
Deferred organization
expenses............. -- --
Net unrealized
appreciation on
forward foreign
currency contracts
(Note 2)............. 2,885,589 --
Prepaid expenses and
other assets......... 49,591 5,008
-------------- ------------
Total Assets......... 1,826,804,851 153,167,902
-------------- ------------
LIABILITIES:
Dividends payable...... 4,137,532 1,898,247
Payable for investment
securities
purchased............ 18,562,574 7,142,982
Payable for capital
shares redeemed...... 5,725,215 --
Investment advisory
fees payable......... 1,025,021 --
Custody fees payable... 69,674 47,151
Professional fees
payable.............. 18,223 38,593
Administration fees
payable.............. 103,461 23,344
Transfer agent fees
payable.............. 34,081 10,906
Fund accounting fees
payable.............. 1,250 2,500
Other payables and
accrued expenses..... 125,231 9,804
-------------- ------------
Total Liabilities.... 29,802,262 9,173,527
-------------- ------------
NET ASSETS:.............. $1,797,002,589 $143,994,375
-------------- ------------
-------------- ------------
Net Assets consist of:
Shares of capital
stock, $0.001 par
value per share...... $ 185,924 $ 16,745
Additional paid-in
capital.............. 1,868,164,689 209,155,774
Distributions in excess
of net investment
income............... (1,435,436) (2,210,458)
Accumulated
undistributed net
investment income.... -- --
Accumulated
undistributed net
realized gains (loss)
on investments and
foreign currency
transactions......... 6,355,310 (43,425,873)
Net unrealized
depreciation of
investments and
foreign currency
transactions......... (76,267,898) (19,541,813)
-------------- ------------
NET ASSETS............. $1,797,002,589 $143,994,375
-------------- ------------
-------------- ------------
SELECT SHARES:
NET ASSETS............. $1,797,002,589 $143,994,375
-------------- ------------
-------------- ------------
SHARES OF CAPITAL STOCK
OUTSTANDING.......... 185,924,370 16,744,993
-------------- ------------
-------------- ------------
NET ASSET VALUE
(OFFERING AND
REDEMPTION PRICE PER
SHARE)............... $9.67 $8.60
-------------- ------------
-------------- ------------
(1) Investments at
cost................. $1,841,707,422 $160,299,151
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
JUNE 30, 1999
<TABLE>
<CAPTION>
LATIN AMERICA NEW YORK CALIFORNIA NATIONAL U.S. GOVERNMENT MORTGAGE
EQUITY MUNICIPAL MUNICIPAL MUNICIPAL SECURITIES SECURITIES
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at market
value (1)............ $ 18,987,320 $ 72,971,524 $ 14,477,501 $ 21,618,417 $ 43,471,537 $ 58,973,895
Interest and dividends
receivable........... 131,050 1,070,845 178,827 198,605 681,333 301,211
Receivable for capital
shares sold.......... -- 500,000 -- -- 9,804 75,000
Receivable for
investment securities
sold................. 1,102,952 -- -- 224,828 -- --
Deferred organization
expenses............. 13,461 4,968 23,835 22,049 12,848 12,848
Net unrealized
appreciation on
forward foreign
currency contracts
(Note 2)............. -- -- -- -- -- --
Prepaid expenses and
other assets......... 9,144 20,670 6,329 6,340 9,539 10,843
-------------- ------------ ------------ ------------ ---------------- -------------
Total Assets......... 20,243,927 74,568,007 14,686,492 22,070,239 44,185,061 59,373,797
-------------- ------------ ------------ ------------ ---------------- -------------
LIABILITIES:
Dividends payable...... -- 35,719 9,727 13,726 21,792 39,280
Payable for investment
securities
purchased............ 874,578 741,223 -- 1,308,679 -- --
Payable for capital
shares redeemed...... -- -- -- -- 80,000 21,000
Investment advisory
fees payable......... -- 14,836 1,234 2,008 5,504 10,007
Custody fees payable... 44,029 2,520 155 816 495 978
Professional fees
payable.............. 35,210 15,151 10,446 8,476 13,215 13,351
Administration fees
payable.............. 1,145 5,759 -- 1,650 3,172 4,521
Transfer agent fees
payable.............. 3,880 4,643 2,418 2,530 2,600 2,850
Fund accounting fees
payable.............. -- 1,250 -- -- 1,250 1,250
Other payables and
accrued expenses..... 3,384 7,385 3,420 3,638 4,377 7,478
-------------- ------------ ------------ ------------ ---------------- -------------
Total Liabilities.... 962,226 828,486 27,400 1,341,523 132,405 100,715
-------------- ------------ ------------ ------------ ---------------- -------------
NET ASSETS:.............. $ 19,281,701 $ 73,739,521 $ 14,659,092 $ 20,728,716 $ 44,052,656 $ 59,273,082
-------------- ------------ ------------ ------------ ---------------- -------------
-------------- ------------ ------------ ------------ ---------------- -------------
Net Assets consist of:
Shares of capital
stock, $0.001 par
value per share...... $ 2,230 $ 7,032 $ 1,430 $ 2,043 $ 4,421 $ 5,988
Additional paid-in
capital.............. 37,761,982 74,247,755 14,867,176 20,916,729 45,818,573 60,954,152
Distributions in excess
of net investment
income............... -- -- -- -- -- --
Accumulated
undistributed net
investment income.... 227,185 -- -- -- --
Accumulated
undistributed net
realized gains (loss)
on investments and
foreign currency
transactions......... (17,564,367) 23,641 17,587 (9,084) (564,968) (44,437)
Net unrealized
depreciation of
investments and
foreign currency
transactions......... (1,145,329) (538,907) (227,101) (180,972) (1,205,370) (1,642,621)
-------------- ------------ ------------ ------------ ---------------- -------------
NET ASSETS............. $ 19,281,701 $ 73,739,521 $ 14,659,092 $ 20,728,716 $ 44,052,656 $ 59,273,082
-------------- ------------ ------------ ------------ ---------------- -------------
-------------- ------------ ------------ ------------ ---------------- -------------
SELECT SHARES:
NET ASSETS............. $ 19,281,701 $ 73,739,521 $ 14,659,092 $ 20,728,716 $ 44,052,656 $ 59,273,082
-------------- ------------ ------------ ------------ ---------------- -------------
-------------- ------------ ------------ ------------ ---------------- -------------
SHARES OF CAPITAL STOCK
OUTSTANDING.......... 2,230,024 7,032,413 1,429,691 2,043,137 4,420,974 5,987,589
-------------- ------------ ------------ ------------ ---------------- -------------
-------------- ------------ ------------ ------------ ---------------- -------------
NET ASSET VALUE
(OFFERING AND
REDEMPTION PRICE PER
SHARE)............... $8.65 $10.49 $10.25 $10.15 $9.96 $9.90
-------------- ------------ ------------ ------------ ---------------- -------------
-------------- ------------ ------------ ------------ ---------------- -------------
(1) Investments at
cost................. $ 20,101,776 $ 73,510,431 $ 14,704,602 $ 21,799,389 $ 44,676,907 $ 60,616,516
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
HIGH EMERGING
YIELD MARKETS
FUND FUND
<S> <C> <C>
- -----------------------------------------------------
INVESTMENT INCOME:
Interest............... $ 85,362,795 $ 9,312,381
Dividends (2).......... 695,072 --
------------ ------------
Total income......... 86,057,867 9,312,381
------------ ------------
EXPENSES:
Advisory............... 6,235,806 623,682
Administration......... 626,395 86,623
Amortization of
organization
expenses............. -- --
Custody................ 137,440 9,965
Fund accounting........ 7,500 7,500
Professional........... 62,560 41,753
Transfer agent and
shareholder servicing
fees................. 68,636 20,269
Miscellaneous.......... 172,227 9,900
------------ ------------
Total expenses before
waivers/reimbursements... 7,310,564 799,692
Less expenses
waived/reimbursed... -- (20,790)
------------ ------------
Net expenses......... 7,310,564 778,902
------------ ------------
NET INVESTMENT INCOME.... 78,747,303 8,533,479
------------ ------------
REALIZED AND UNREALIZED
GAINS (LOSS) ON
INVESTMENTS:
Net realized gains
(loss) on investment
and foreign currency
transactions......... 6,418,208 (15,543,848)
Net change in
unrealized
appreciation
(depreciation) of
investments.......... (55,293,910) 20,355,555
Net change in
unrealized
appreciation
(depreciation) of
foreign currency
transactions......... 2,933,998 --
------------ ------------
Net realized and
unrealized gains (loss)
on investments......... (45,941,704) 4,811,707
------------ ------------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS........ $ 32,805,599 $ 13,345,186
------------ ------------
------------ ------------
(2) Foreign witholding
tax.................... $ -- $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
LATIN AMERICA NEW YORK CALIFORNIA NATIONAL U.S. GOVERNMENT MORTGAGE
EQUITY MUNICIPAL MUNICIPAL MUNICIPAL SECURITIES SECURITIES
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest............... $ 4,971 $ 1,630,886 $ 263,363 $ 521,444 $ 983,904 $ 1,806,923
Dividends (2).......... 254,602 854 2,678 1,099 1,223 2,041
-------------- ----------- ---------- ---------- ---------------- -------------
Total income......... 259,573 1,631,740 266,041 522,543 985,127 1,808,964
-------------- ----------- ---------- ---------- ---------------- -------------
EXPENSES:
Advisory............... 82,578 126,279 21,770 42,382 67,532 100,544
Administration......... 10,322 45,100 7,775 15,136 24,119 35,908
Amortization of
organization
expenses............. 2,896 3,258 4,163 3,258 2,172 2,172
Custody................ (14,787) 5,825 759 2,555 2,619 3,438
Fund accounting........ 7,500 7,500 7,500 7,500 7,500 7,500
Professional........... 32,203 15,888 9,711 10,497 13,276 13,646
Transfer agent and
shareholder servicing
fees................. 9,000 9,000 9,000 9,000 9,000 9,000
Miscellaneous.......... 8,160 13,954 6,757 8,032 9,401 16,256
-------------- ----------- ---------- ---------- ---------------- -------------
Total expenses before
waivers/reimbursements... 137,872 226,804 67,435 98,360 135,619 188,464
Less expenses
waived/reimbursed... (18,508) (46,405) (36,383) (37,815) (39,145) (44,830)
-------------- ----------- ---------- ---------- ---------------- -------------
Net expenses......... 119,364 180,399 31,052 60,545 96,474 143,634
-------------- ----------- ---------- ---------- ---------------- -------------
NET INVESTMENT INCOME.... 140,209 1,451,341 234,989 461,998 888,653 1,665,330
-------------- ----------- ---------- ---------- ---------------- -------------
REALIZED AND UNREALIZED
GAINS (LOSS) ON
INVESTMENTS:
Net realized gains
(loss) on investment
and foreign currency
transactions......... (2,967,359) 23,641 17,587 (9,084) (583,063) (46,132)
Net change in
unrealized
appreciation
(depreciation) of
investments.......... 5,630,330 (2,395,168) (411,081) (530,348) (1,246,804) (2,104,242)
Net change in
unrealized
appreciation
(depreciation) of
foreign currency
transactions......... (24,433) -- -- -- -- --
-------------- ----------- ---------- ---------- ---------------- -------------
Net realized and
unrealized gains (loss)
on investments......... 2,638,538 (2,371,527) (393,494) (539,432) (1,829,867) (2,150,374)
-------------- ----------- ---------- ---------- ---------------- -------------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS........ $ 2,778,747 $ (920,186) $ (158,505) $ (77,434) $ (941,214) $ (485,044)
-------------- ----------- ---------- ---------- ---------------- -------------
-------------- ----------- ---------- ---------- ---------------- -------------
(2) Foreign witholding
tax.................... $ 31,553 $ -- $ -- $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
HIGH YIELD FUND
---------------------------------
FOR THE SIX
MONTHS FOR THE YEAR
ENDED ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
<S> <C> <C>
- ------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment
income............... $ 78,747,303 $ 137,392,018
Net realized gains
(loss) on investment
and foreign currency
transactions......... 6,418,208 (903,338)
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
transactions......... (52,359,912) (75,066,948)
--------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... 32,805,599 61,421,732
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (78,747,303) (137,392,018)
Excess of net
investment income.... -- --
Net realized gains..... -- --
Excess of net realized
gains................ -- --
--------------- ---------------
Total dividends and
distributions to
shareholders......... (78,747,303) (137,392,018)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares
issued............... 343,862,555 769,293,164
Dividends reinvested... 53,315,912 95,379,400
Cost of shares
redeemed............. (293,863,401) (395,641,025)
--------------- ---------------
Net increase (decrease)
in net assets from
capital share
transactions......... 103,315,066 469,031,539
--------------- ---------------
Total increase
(decrease) in net
assets............... 57,373,362 393,061,253
NET ASSETS:
Beginning of period.... 1,739,629,227 1,346,567,974
--------------- ---------------
End of Period.......... $ 1,797,002,589 $ 1,739,629,227
--------------- ---------------
--------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL FUND
----------------------------------
FOR THE SIX
MONTHS FOR THE YEAR
ENDED ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1998
<S> <C> <C>
- -------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment
income............... $ 234,989 $ 318,365
Net realized gains
(loss) on investment
and foreign currency
transactions......... 17,587 39,740
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
transactions......... (411,081) 108,350
---------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations........... (158,505) 466,455
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (234,989) (318,365)
Excess of net
investment income.... -- (9,756)
Net realized gains..... -- (39,704)
Excess of net realized
gains................ -- --
---------------- ----------------
Total dividends and
distributions to
shareholders......... (234,989) (367,825)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares
issued............... 4,041,454 8,055,789
Dividends reinvested... 178,789 297,972
Cost of shares
redeemed............. (233,500) (2,178,623)
---------------- ----------------
Net increase (decrease)
in net assets from
capital share
transactions......... 3,986,743 6,175,138
---------------- ----------------
Total increase
(decrease) in net
assets............... 3,593,249 6,273,768
NET ASSETS:
Beginning of period.... 11,065,843 4,792,075
---------------- ----------------
End of Period.......... $ 14,659,092 $ 11,065,843
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS FUND LATIN AMERICA EQUITY FUND NEW YORK MUNICIPAL FUND
------------------------------- -------------------------------- --------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS FOR THE YEAR MONTHS FOR THE YEAR MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment
income............... $ 8,533,479 $ 23,350,270 $ 140,209 $ 935,060 $ 1,451,341 $ 2,333,812
Net realized gains
(loss) on investment
and foreign currency
transactions......... (15,543,848) (26,279,756) (2,967,359) (12,397,589) 23,641 358,577
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
transactions......... 20,355,555 (39,570,678) 5,605,897 (11,258,757) (2,395,168) 668,521
-------------- -------------- --------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... 13,345,186 (42,500,164) 2,778,747 (22,721,286) (920,186) 3,360,910
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (8,533,479) (22,781,139) -- (773,732) (1,451,341) (2,333,812)
Excess of net
investment income.... -- -- -- -- -- (9,835)
Net realized gains..... -- -- -- (40,064) -- (358,577)
Excess of net realized
gains................ -- (625,832) -- -- -- (14,521)
-------------- -------------- --------------- --------------- --------------- ---------------
Total dividends and
distributions to
shareholders......... (8,533,479) (23,976,102) -- (813,796) (1,451,341) (2,716,745)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares
issued............... 22,858,357 101,711,812 2,550,187 6,292,203 15,544,745 46,233,943
Dividends reinvested... 4,637,038 16,044,606 -- 445,995 1,236,329 2,328,952
Cost of shares
redeemed............. (37,218,239) (113,151,233) (2,403,365) (21,899,202) (8,462,972) (23,459,800)
-------------- -------------- --------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets from
capital share
transactions......... (9,722,844) 4,605,185 146,822 (15,161,004) 8,318,102 25,103,095
-------------- -------------- --------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets............... (4,911,137) (61,871,081) 2,925,569 (38,696,086) 5,946,575 25,747,260
NET ASSETS:
Beginning of period.... 148,905,512 210,776,593 16,356,132 55,052,218 67,792,946 42,045,686
-------------- -------------- --------------- --------------- --------------- ---------------
End of Period.......... $ 143,994,375 $ 148,905,512 $ 19,281,701 $ 16,356,132 $ 73,739,521 $ 67,792,946
-------------- -------------- --------------- --------------- --------------- ---------------
-------------- -------------- --------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL FUND U.S. GOVERNMENT SECURITIES FUND MORTGAGE SECURITIES FUND
---------------------------------- -------------------------------- --------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS FOR THE YEAR MONTHS FOR THE YEAR MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment
income............... $ 461,998 $ 545,835 $ 888,653 $ 881,214 $ 1,665,330 $ 1,966,420
Net realized gains
(loss) on investment
and foreign currency
transactions......... (9,084) 119,562 (583,063) 705,098 (46,132) 55,332
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
transactions......... (530,348) 307,333 (1,246,804) 10,941 (2,104,242) 379,496
---------------- ---------------- --------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... (77,434) 972,730 (941,214) 1,597,253 (485,044) 2,401,248
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (461,998) (545,835) (888,653) (881,214) (1,665,330) (1,966,420)
Excess of net
investment income.... -- (6,615) -- (4,391) -- (21,491)
Net realized gains..... -- (122,483) -- (690,853) -- (55,332)
Excess of net realized
gains................ -- -- -- -- -- (27,956)
---------------- ---------------- --------------- --------------- --------------- ---------------
Total dividends and
distributions to
shareholders......... (461,998) (674,933) (888,653) (1,576,458) (1,665,330) (2,071,199)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares
issued............... 8,186,186 31,253,540 10,759,867 39,744,486 8,153,028 38,457,330
Dividends reinvested... 343,483 630,967 771,069 1,476,753 1,432,599 1,911,337
Cost of shares
redeemed............. (16,996,022) (5,252,890) (5,007,551) (5,837,572) (2,623,631) (3,274,675)
---------------- ---------------- --------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets from
capital share
transactions......... (8,466,353) 26,631,617 6,523,385 35,383,667 6,961,996 37,093,992
---------------- ---------------- --------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets............... (9,005,785) 26,929,414 4,693,518 35,404,462 4,811,622 37,424,041
NET ASSETS:
Beginning of period.... 29,734,501 2,805,087 39,359,138 3,954,676 54,461,460 17,037,419
---------------- ---------------- --------------- --------------- --------------- ---------------
End of Period.......... $ 20,728,716 $ 29,734,501 $ 44,052,656 $ 39,359,138 $ 59,273,082 $ 54,461,460
---------------- ---------------- --------------- --------------- --------------- ---------------
---------------- ---------------- --------------- --------------- --------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
HIGH YIELD FUND
<TABLE>
<CAPTION>
SELECT SHARES(D)
---------------------------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, 1999 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.91 $ 10.34 $ 10.15 $ 9.92 $ 9.25
----------------- ---------------- ---------------- -------- --------
Net investment
income............... 0.43 0.88 0.87 0.89 0.90
Net realized and
unrealized gain
(loss)............... (0.24) (0.43) 0.31 0.29 0.67
----------------- ---------------- ---------------- -------- --------
Total income (loss)
from investment
operations........... 0.19 0.45 1.18 1.18 1.57
----------------- ---------------- ---------------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTION FROM:
Net investment
income............... (0.43) (0.88) (0.87) (0.89) (0.89)
Net realized gains..... -- -- (0.12) (0.06) (0.01)
----------------- ---------------- ---------------- -------- --------
Total dividends and
distributions.......... (0.43) (0.88) (0.99) (0.95) (0.90)
----------------- ---------------- ---------------- -------- --------
Net change in net asset
value per share...... (0.24) (0.43) 0.19 0.23 0.67
----------------- ---------------- ---------------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 9.67 $ 9.91 $ 10.34 $ 10.15 $ 9.92
----------------- ---------------- ---------------- -------- --------
----------------- ---------------- ---------------- -------- --------
TOTAL RETURN (A)......... 1.91%(b) 4.49% 12.09% 12.46% 17.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period
(in thousands)....... $1,797,003 $1,739,622 $1,346,553 $851,720 $479,090
Ratios to average net
assets:
Expenses............... 0.81%(c) 0.84%** 0.87%** 0.98%** 1.05%**
Net investment
income............... 8.77%(c) 8.67% 8.46% 8.86% 9.38%
PORTFOLIO TURNOVER
RATE................... 17% 36% 47% 41% 34%
<CAPTION>
ADVISOR SHARES
FOR THE PERIOD -----------------------------------
FROM MARCH 2, FOR THE FOR THE
1994* THROUGH PERIOD ENDED PERIOD*** ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1998 1997
<S> <C> <C> <C>
- -------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.00(e) $10.34 $10.37
-------- ------ ------
Net investment
income............... 0.72 0.60 0.32
Net realized and
unrealized gain
(loss)............... (0.75) (0.43) 0.09
-------- ------ ------
Total income (loss)
from investment
operations........... (0.03) 0.17 0.41
-------- ------ ------
LESS DIVIDENDS AND
DISTRIBUTION FROM:
Net investment
income............... (0.72) (0.60) (0.32)
Net realized gains..... -- -- (0.12)
-------- ------ ------
Total dividends and
distributions.......... (0.72) (0.60) (0.44)
-------- ------ ------
Net change in net asset
value per share...... (0.75) (0.43) (0.03)
-------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 9.25 $ 9.91 $10.34
-------- ------ ------
-------- ------ ------
TOTAL RETURN (A)......... (0.27%)(b) 0.67%(b) 3.93%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period
(in thousands)....... $222,317 $ 7 $ 15
Ratios to average net
assets:
Expenses............... 1.14%(c)** 0.93%(c)** 1.03%(c)**
Net investment
income............... 8.97%(c) 9.54%(c) 7.87%(c)
PORTFOLIO TURNOVER
RATE................... 42% 36% 47%
</TABLE>
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
SELECT SHARES(D)
-----------------------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
JUNE 30, 1999 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 8.20 $ 10.46 $ 11.03 $ 9.91 $ 8.84
-------- -------- -------- -------- --------
Net investment
income............... 0.51 0.99 1.15 1.00 0.90
Net realized and
unrealized gain
(loss)............... 0.40 (2.23) -- 1.55 1.07
-------- -------- -------- -------- --------
Total income (loss)
from investment
operations........... 0.91 (1.24) 1.15 2.55 1.97
-------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment
income............... (0.51) (0.97) (1.15) (1.00) (0.60)
Excess of net
investment income.... -- -- (0.04) -- --
Net realized gains..... -- -- (0.53) (0.43) --
Excess of realized
gains................ -- (0.03) -- -- --
Return of capital...... -- (0.02) -- -- (0.30)
-------- -------- -------- -------- --------
Total dividends and
distributions.......... (0.51) (1.02) (1.72) (1.43) (0.90)
-------- -------- -------- -------- --------
Net change in net asset
value per share...... 0.40 (2.26) (0.57) 1.12 1.07
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 8.60 $ 8.20 $ 10.46 $ 11.03 $ 9.91
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN(a).......... 11.23%(b) (11.92%) 10.67% 26.56% 23.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands)........... $143,994 $148,908 $210,777 $116,144 $ 49,250
Ratios to average net
assets:
Expenses**............. 1.12%(c) 1.10% 1.29% 1.16% 1.50%
Net investment
income............... 12.31%(c) 10.53% 9.49% 9.62% 9.97%
PORTFOLIO TURNOVER
RATE................... 61% 77% 179% 136% 60%
<CAPTION>
FOR THE PERIOD
FROM MARCH 8,
1994*THROUGH
DECEMBER 31, 1994
<S> <C>
- -------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.00(e)
--------
Net investment
income............... 0.81
Net realized and
unrealized gain
(loss)............... (1.16)
--------
Total income (loss)
from investment
operations........... (0.35)
--------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment
income............... (0.81)
Excess of net
investment income.... --
Net realized gains..... --
Excess of realized
gains................ --
Return of capital...... --
--------
Total dividends and
distributions.......... (0.81)
--------
Net change in net asset
value per share...... (1.16)
--------
NET ASSET VALUE, END OF
PERIOD................. $ 8.84
--------
--------
TOTAL RETURN(a).......... (3.82%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands)........... $ 28,117
Ratios to average net
assets:
Expenses**............. 1.50%(c)
Net investment
income............... 10.39%(c)
PORTFOLIO TURNOVER
RATE................... 47%
</TABLE>
- ---------------
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements had not
occurred, the ratio would have been higher.
*** Sales of Advisor Shares began on August 14, 1997.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) As of June 30, 1999 there were no Advisor Shares outstanding.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
42
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
LATIN AMERICA EQUITY FUND
<TABLE>
<CAPTION>
SELECT SHARES(d)
------------------------------------------------------------------------- ADVISOR SHARES
FOR THE SIX FOR THE YEAR FOR THE YEAR FOR THE PERIOD FROM ---------------------
MONTHS ENDED ENDED ENDED FEBRUARY 13, 1996* FOR THE
JUNE 30, 1999 DECEMBER 31, DECEMBER 31, THROUGH PERIOD *** ENDED
(UNAUDITED) 1998 1997 DECEMBER 31, 1996 DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 7.34 $ 14.13 $ 11.66 $ 10.00(e) $ 15.11
------------- --------------- ------- ------- --------
Net investment income
(loss)............... 0.06 0.27 0.09 0.20 (0.21)
Net realized and
unrealized gain
(loss)............... 1.25 (6.82) 2.74 2.11 (0.50)
------------- --------------- ------- ------- --------
Total income (loss)
from investment
operations........... 1.31 (6.55) 2.83 2.31 (0.71)
------------- --------------- ------- ------- --------
LESS DIVIDENDS AND
DISTRIBUTION FROM:
Net investment income
(loss)............... -- (0.23) (0.09) (0.20) (0.01)
Excess of net
investment income.... -- -- (0.02) -- --
Net realized gains..... -- (0.01) (0.25) (0.45) (0.25)
------------- --------------- ------- ------- --------
Total dividends and
distributions.......... -- (0.24) (0.36) (0.65) (0.26)
------------- --------------- ------- ------- --------
Net change in net asset
value per share...... 1.31 (6.79) 2.47 1.66 (0.97)
------------- --------------- ------- ------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 8.65 $ 7.34 $ 14.13 $ 11.66 $ 14.14
------------- --------------- ------- ------- --------
------------- --------------- ------- ------- --------
TOTAL RETURN(a).......... 17.85%(b) (46.96%) 24.22% 23.36%(b) (4.64%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands)........... $19,282 $ 16,356 $55,034 $13,308 $ 18
Ratios to average net
assets
Expenses**............. 1.45%(c) 1.97% 1.60% 2.00%(c) 1.73%(c)
Net investment income
(loss)............... 1.70%(c) 2.53% 0.26% 1.97%(c) (0.73%)(c)
PORTFOLIO TURNOVER
RATE................... 41% 53% 98% 133% 98%
</TABLE>
NEW YORK MUNICIPAL FUND
<TABLE>
<CAPTION>
SELECT SHARES(d)
---------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD FROM
MONTHS ENDED ENDED ENDED ENDED APRIL 3, 1995* THROUGH
JUNE 30, 1999 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.82 $ 10.69 $ 10.40 $ 10.47 $ 10.00(e)
------------- ------- ------- ------- -------
Net investment
income............... 0.21 0.44 0.46 0.44 0.33
Net realized and
unrealized gain
(loss)............... (0.33) 0.19 0.34 (0.06) 0.47
------------- ------- ------- ------- -------
Total income (loss)
from investment
operations........... (0.12) 0.63 0.80 0.38 0.80
------------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment
income............... (0.21) (0.44) (0.46) (0.44) (0.32)
Net realized gains..... -- (0.06) (0.05) (0.01) (0.01)
------------- ------- ------- ------- -------
Total dividends and
distributions.......... (0.21) (0.50) (0.51) (0.45) (0.33)
------------- ------- ------- ------- -------
Net change in net asset
value per share...... (0.33) 0.13 0.29 (0.07) 0.47
------------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 10.49 $ 10.82 $ 10.69 $ 10.40 $ 10.47
------------- ------- ------- ------- -------
------------- ------- ------- ------- -------
TOTAL RETURN(a).......... (1.10%)(b) 6.03% 7.84% 3.72% 8.13%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands)........... $73,740 $67,793 $42,046 $20,158 $12,516
Ratios to average net
assets:
Expenses**............. 0.50%(c) 0.50% 0.50% 0.55% 0.54%(c)
Net investment
income............... 4.02%(c) 4.08% 4.22% 4.28% 4.20%(c)
PORTFOLIO TURNOVER
RATE................... 71% 132% 144% 33% 35%
</TABLE>
- ---------------
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements had not
occurred, the ratio would have been higher.
*** Sales of Advisor Shares began on June 23, 1997.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) As of June 30, 1999 there were no Advisor Shares outstanding.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
43
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
CALIFORNIA MUNICIPAL FUND
<TABLE>
<CAPTION>
SELECT SHARES(d)
------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR FOR THE PERIOD FROM
JUNE 30, 1999 ENDED APRIL 2, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.54 $ 10.37 $10.00(e)
------- ------- ------
Net investment income............ 0.20 0.40 0.33
Net realized and unrealized
gains.......................... (0.29) 0.22 0.38
------- ------- ------
Total income (loss) from
investment operations.......... (0.09) 0.62 0.71
------- ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income............ (0.20) (0.40) (0.33)
Excess of net investment
income......................... -- (0.01) --
Net realized gains............... -- (0.04) (0.01)
------- ------- ------
Total dividends and
distributions.................... (0.20) (0.45) (0.34)
------- ------- ------
Net change in net asset value per
share.......................... (0.29) 0.17 0.37
------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $ 10.25 $ 10.54 $10.37
------- ------- ------
------- ------- ------
TOTAL RETURN(a).................... (0.92%)(b) 6.14% 7.14%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands)..................... $14,659 $11,066 $4,792
Ratios to average net assets:
Expenses**....................... 0.50%(c) 0.50% 0.50%(c)
Net investment income............ 3.78%(c) 3.87% 4.15%(c)
PORTFOLIO TURNOVER RATE............ 23% 51% 41%
</TABLE>
NATIONAL MUNICIPAL FUND
<TABLE>
<CAPTION>
SELECT SHARES(d)
---------------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR FOR THE PERIOD FROM
JUNE 30, 1999 ENDED OCTOBER 20, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCES:
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.43 $ 10.19 $10.00(e)
------- ------- ------
Net investment income............ 0.19 0.40 0.08
Net realized and unrealized
gains.......................... (0.28) 0.29 0.19
------- ------- ------
Total income (loss) from
investment operations.......... (0.09) 0.69 0.27
------- ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income............ (0.19) (0.40) (0.08)
Net realized gains............... -- (0.05) --
------- ------- ------
Total dividends and
distributions:................... (0.19) (0.45) (0.08)
------- ------- ------
Net change in net asset value per
share.......................... (0.28) 0.24 0.19
------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $ 10.15 $ 10.43 $10.19
------- ------- ------
------- ------- ------
TOTAL RETURN(a).................... (0.85%)(b) 6.91% 2.70%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands)..................... $20,729 $29,735 $2,805
Ratios to average net assets
Expenses**....................... 0.50%(c) 0.50% 0.50%(c)
Net Investment Income............ 3.82%(c) 3.90% 3.95%(c)
PORTFOLIO TURNOVER RATE............ 262% 226% 46%
</TABLE>
- ---------------
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/ or reimbursements had not occurred,
the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) As of June 30, 1999, there were no Advisor Shares outstanding.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
44
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
U.S. GOVERNMENT SECURITIES
<TABLE>
<CAPTION>
SELECT SHARES(d)
-----------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR FOR THE PERIOD FROM
JUNE 30, 1999 ENDED JULY 1, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.46 $ 10.17 $10.00(e)
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.23 0.50 0.27
Net realized and unrealized
gains.......................... (0.50) 0.48 0.19
------- ------- ------
Total income (loss) from
investment operations.......... (0.27) 0.98 0.46
------- ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income............ (0.23) (0.50) (0.27)
Excess of net investment
income......................... -- -- (0.01)
Net realized gains............... -- (0.19) (0.01)
------- ------- ------
Total dividends and
distributions.................... (0.23) (0.69) (0.29)
------- ------- ------
Net change in net asset value per
share.......................... (0.50) 0.29 0.17
------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $ 9.96 $ 10.46 $10.17
------- ------- ------
------- ------- ------
TOTAL RETURN(a).................... (2.58%)(b) 9.82% 4.71%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands)..................... $44,053 $39,359 $3,955
Ratios to average net assets:
Expenses**....................... 0.50%(c) 0.50% 0.50%(c)
Net investment income............ 4.61%(c) 4.59% 5.32%(c)
PORTFOLIO TURNOVER RATE............ 107% 423% 153%
</TABLE>
MORTGAGE SECURITIES FUND
<TABLE>
<CAPTION>
SELECT SHARES(d)
-----------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR FOR THE PERIOD
JUNE 30, 1999 ENDED JULY 1, 1997* THROUGH
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.28 $ 10.17 $ 10.00(e)
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.29 0.58 0.29
Net realized and unrealized
gains.......................... (0.38) 0.14 0.22
------- ------- -------
Total income (loss) from
investment operations.......... (0.09) 0.72 0.51
------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income............ (0.29) (0.58) (0.29)
Excess of net investment
income......................... -- (0.01) (0.01)
Net realized gains............... -- (0.02) (0.04)
------- ------- -------
Total dividends and
distributions.................... (0.29) (0.61) (0.34)
------- ------- -------
Net change in net asset value per
share.......................... (0.38) 0.11 0.17
------- ------- -------
NET ASSET VALUE, END OF PERIOD..... $ 9.90 $ 10.28 $ 10.17
------- ------- -------
------- ------- -------
TOTAL RETURN(a).................... (0.89%)(b) 7.26% 5.10%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands)..................... $59,273 $54,461 $17,037
Ratios to average net assets:
Expenses**....................... 0.50%(c) 0.50% 0.50%(c)
Net investment income............ 5.80%(c) 5.72% 5.77%(c)
PORTFOLIO TURNOVER RATE............ 0% 78% 81%
</TABLE>
- ---------------
* Commencement of operations.
** During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements had not
occurred, the ratio would have been higher.
(a) Total return is based on the change in net asset value during the period
and assumes reinvestment of all dividends and distributions.
(b) Not annualized.
(c) Annualized.
(d) As of June 30, 1999, there were no Advisor Shares outstanding.
(e) Initial offering price.
The accompanying notes are an integral part of the financial statements.
45
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
- -----------------------------------------------------------------------------
1. ORGANIZATION. 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 investment company. The
Company consists of eleven separately managed funds, of which eight, 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, OFFITBANK California Municipal Fund, OFFITBANK National
Municipal Fund, OFFITBANK U.S. Government Securities Fund and OFFITBANK Mortgage
Securities Fund (individually, a "Fund", and collectively, the "Funds") have
commenced operations. The Funds have the following inception dates:
<TABLE>
<S> <C>
High Yield Fund......................... March 2, 1994
Emerging Markets Fund................... March 8, 1994
Latin America Equity Fund............... February 13, 1996
New York Municipal Fund................. April 3, 1995
California Municipal Fund............... April 2, 1997
National Municipal Fund................. October 20, 1997
U.S. Government Securities Fund......... July 1, 1997
Mortgage Securities Fund................ July 1, 1997
</TABLE>
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." Each class of shares
outstanding bears the same voting, dividend, liquidation and other rights and
conditions, except that the Advisor shares are expected to bear additional
shareholder servicing expenses.
The High Yield Fund's primary investment objective is high current income with
capital appreciation as a secondary objective. The Emerging Markets Fund seeks
to provide investors with a competitive total return by focusing on current
yield and opportunities for capital appreciation. The Latin America Equity
Fund's primary investment objective is capital appreciation with current income
as a secondary objective. The New York Municipal Fund seeks to maximize total
after-tax return for New York residents, consistent with a prudent level of
credit risk. The California Municipal Fund seeks to maximize total after-tax
return for California residents, consistent with a prudent level of credit risk.
The National Municipal Fund seeks to maximize total after-tax return, consistent
with a prudent level of credit risk. The U.S. Government Securities Fund seeks
to provide shareholders with current income. The Mortgage Securities Fund's
investment objective is to maximize total return from a combination of
investment income and capital appreciation.
OFFITBANK (the "Adviser") serves as the Funds' investment adviser. PFPC Inc.
("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp., provides
administrative, fund accounting, transfer and dividend disbursing agent services
for the Funds. OFFIT Funds Distributor, Inc. (the "Distributor") serves as the
distributor of the Funds' shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of significant
accounting policies followed by the Funds in the preparation of their financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
PORTFOLIO VALUATIONS:
Equity securities held by a Fund are valued at the last reported sales price on
the securities 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
valued at amortized cost, which approximates market value, 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
may be valued by independent pricing services, approved by the Company's Board
of Directors, which use prices provided by market-makers or estimates of market
value obtained from yield data relating to instruments or securities with
similar characteristics.
SECURITIES TRANSACTIONS AND RELATED INCOME:
The Funds record security transactions on a trade date basis. Interest income,
including accretion of discount and amortization of premium, is accrued daily.
Dividend income is recognized on the ex-dividend date. Realized gains and losses
from security transactions are recorded on the identified cost basis.
EXPENSES:
The Company accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund, while general
Company expenses are allocated among the Company's respective portfolios based
on relative net assets.
The investment income and expenses of a Fund (other than class specific
expenses) and realized and unrealized gains and losses on investments of a Fund
are allocated to each class of shares based upon their relative net asset value
on the date income is earned or expenses are realized and unrealized gains and
losses are incurred.
46
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------
ORGANIZATIONAL COSTS:
Costs incurred in connection with the organization and initial registration of
the Funds have been deferred and are being amortized on a straight-line basis
over a sixty-month period beginning with each of the Fund's commencement of
operations.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from the High Yield, New York Municipal, California Municipal,
National Municipal, U.S. Government Securities and Mortgage Securities Funds'
net investment income, if any, are declared daily and paid monthly. Dividends
from the Emerging Markets Fund's net investment income, if any, are declared
daily and paid quarterly. Dividends from the Latin America Equity Fund's net
investment income, if any, are declared and paid quarterly. Net realized gains
on portfolio securities, if any, are distributed at least annually by each Fund.
However, to the extent net realized gains can be offset by capital loss
carryovers, such gains will not be distributed. Distributions are recorded by
the Funds on the ex-dividend date.
The amount of dividends from net investment income and distributions from 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 considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based on their federal tax-basis treatment;
temporary differences do not require reclassification. Distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or net realized gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of capital.
FEDERAL INCOME TAXES:
It is the Funds' policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute timely, all
of their net investment company taxable income and net capital gains to
shareholders. Therefore, no federal income tax provision is required.
Capital and currency losses incurred within the Funds' fiscal year but after
October 31 are deemed to arise on the first business day of the following fiscal
year for tax purposes. The following Funds have incurred and will elect to defer
capital and currency losses as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS CURRENCY LOSS
FUND DEFERRED DEFERRED
- ------------------------------- ------------ -------------
<S> <C> <C>
Emerging Markets Fund.......... $4,470,549 $ 192,085
Latin America Fund............. 3,107,405 11,802
U.S. Government Securities
Fund......................... 24,619 --
Mortgage Securities Fund....... 7,361 --
</TABLE>
For federal income tax purposes, the following Funds had capital loss
carryforwards:
<TABLE>
<CAPTION>
DATE OF
FUND CLCF EXPIRATION
- ---------------------------- ---------- -----------------
<S> <C> <C>
High Yield Fund............. $ 62,898 December 31, 2006
Emerging Markets Fund....... 23,411,476 December 31, 2006
Latin America Equity Fund... 11,489,603 December 31, 2006
</TABLE>
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net gains have been realized in excess of the aggregate of each amount.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the Funds are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the current rate of
exchange to determine the value of investments, assets and liabilities.
Purchases and sales of securities, and income and expenses are translated at the
prevailing rate of exchange on the respective dates of such transactions. The
Funds do not isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gains or losses from investments. However,
the Funds do isolate the effect of fluctuations in foreign exchange rates when
determining the gain or loss upon the sale or maturity of foreign currency
denominated debt obligations pursuant to U.S. federal income tax regulations.
Such amount is categorized as foreign exchange gain or loss for both financial
reporting and income tax reporting purposes.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities and forward currency contracts, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities,
resulting from changes in exchange rates.
REPURCHASE AGREEMENTS:
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 Funds to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.
DERIVATIVE INSTRUMENTS:
Each Fund (other than the Municipal Funds) may invest in various financial
instruments including positions in
47
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------
forward currency contracts, enter into currency swaps and purchase foreign
currency options. The Funds enter into such contracts for the purposes of
hedging exposure to changes in foreign currency exchange rates on their
portfolio holdings.
The Municipal Funds may, in order to further their investment objectives,
purchase or sell futures contracts on (a) U.S. Government Securities and (b)
municipal bond indices. Such Funds reserve the right to conduct futures
transactions based on an index, which may be developed in the future to
correlate with price movements in municipal obligations.
A forward foreign exchange contract is a commitment to sell or buy a foreign
currency at a future date at a negotiated exchange rate. A 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 related 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,
1999 are recorded for financial reporting purposes as unrealized gains and
losses by the Funds.
The table below indicates the High Yield Fund's outstanding forward currency
contract positions at June 30, 1999:
<TABLE>
<CAPTION>
VALUE ON VALUE AT UNREALIZED
CONTRACT MATURITY ORIGINATION JUNE 30, APPRECIATION
CURRENCY AMOUNTS DATE DATE 1999 (DEPRECIATION)
----------- ------------ ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Buy CAD $ 2,216,000 07/26/99 $ 1,518,973 $ 1,500,745 $ (18,228)
Sell CAD (6,000,000) 07/26/99 (4,054,054) (4,063,389) (9,335)
Sell DEM (18,731,000) 07/26/99 (10,213,752) (9,901,990) 311,762
Buy EUR 8,068,000 07/26/99 8,378,259 8,339,105 (39,154)
Sell EUR (16,068,000) 07/26/99 (16,816,806) (16,607,924) 208,882
Sell FRF (340,342,500) 07/26/99 (55,200,393) (53,646,751) 1,553,642
Sell GBP (24,889,000) 07/26/99 (40,102,586) (39,224,566) 878,020
--------------
Net unrealized appreciation on forward positions............................. $ 2,885,589
--------------
--------------
</TABLE>
Currency Abbreviations:
<TABLE>
<S> <C> <C>
CAD -- Canadian Dollar
DEM -- German Deutsche Mark
EUR -- Euro
FRF -- French Franc
GBP -- British Pound
</TABLE>
The Emerging Markets Fund may also invest 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.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES: The Company has entered
into investment advisory agreements (the "Investment Advisory Agreements") with
the Adviser. Pursuant to the terms of the Investment Advisory Agreements, the
Adviser is entitled to a fee that is calculated daily and paid monthly based on
the average daily net assets of each Fund, at the annual rate of: 0.85% of 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, the California Municipal Fund,
the National Municipal Fund, the U.S. Securities Fund and the Mortgage
Securities Fund.
<TABLE>
<CAPTION>
ADVISORY FEE
--------------------------------------------------------------
HIGH YIELD EMERGING MARKETS LATIN AMERICA NEW YORK
FUND FUND EQUITY FUND MUNICIPAL FUND
----------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
Gross Fee... $6,235,806 $ 623,682 $ 82,578 $ 126,279
Waiver...... -- -- -- (35,274)
----------- -------- ------------- ---------------
Net Fee..... $6,235,806 $ 623,682 $ 82,578 $ 91,005
----------- -------- ------------- ---------------
----------- -------- ------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
U.S.
CALIFORNIA GOVERNMENT
MUNICIPAL NATIONAL SECURITIES MORTGAGE
FUND MUNICIPAL FUND FUND SECURITIES FUND
----------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
Gross Fee... $ 21,770 $ 42,382 $ 67,532 $ 100,544
Waiver...... (17,162) (24,685) (30,474) (33,671)
----------- -------- ------------- ---------------
Net Fee..... $ 4,608 $ 17,697 $ 37,058 $ 66,873
----------- -------- ------------- ---------------
----------- -------- ------------- ---------------
</TABLE>
PFPC provides the Company with administrative services pursuant to an
administration agreement (the "Administration Agreement"). The services under
the Administration Agreement are subject to the supervision of the Company's
Board of Directors and officers and include the day-to-day administration of
matters related to the corporate existence of the Company, maintenance of its
records, preparation of reports, supervision of the Company's arrangements with
its custodians and assistance in the preparation of the Company's registration
statements under federal and state laws. Pursuant to the Administration
Agreement, the Company pays PFPC a monthly fee for its services at an annual
rate of 0.125% of each Portfolio's first $300 million in average daily net
assets; 0.11% of each Portfolio's next $300 million in average daily net assets;
0.08% of each Portfolio's next $300 million in average daily net assets; 0.05%
of each Portfolio's next $300 million in average daily net assets; and 0.0275%
of each Portfolio's average daily net assets in excess of $1.2 billion. From
time to time, PFPC may waive all or a portion of its fee.
<TABLE>
<CAPTION>
ADMINISTRATION FEE
----------------------------------------------------------------
HIGH YIELD EMERGING MARKETS LATIN AMERICA NEW YORK
FUND FUND EQUITY FUND MUNICIPAL FUND
----------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gross Fee... $ 626,395 $ 86,623 $ 10,322 $ 45,100
Waiver...... -- (20,790) (8,967) (10,824)
----------- -------- ------- ---------------
Net Fee..... $ 626,395 $ 65,833 $ 1,355 $ 34,276
----------- -------- ------- ---------------
----------- -------- ------- ---------------
</TABLE>
48
- -------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
MUNICIPAL NATIONAL U.S. GOVERNMENT MORTGAGE
FUND MUNICIPAL FUND SECURITIES FUND SECURITIES FUND
----------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gross Fee... $ 7,775 $ 15,136 $ 24,119 $ 35,908
Waiver...... (7,775) (3,632) (5,789) (8,618)
----------- -------- ------- ---------------
Net Fee..... $ -- $ 11,504 $ 18,330 $ 27,290
----------- -------- ------- ---------------
----------- -------- ------- ---------------
</TABLE>
PFPC provides the Funds with fund accounting and related services pursuant to a
fund accounting agreement with the Company. For these services PFPC is entitled
a fee of $1,250 per month per Fund plus out of pocket expenses. From time to
time, PFPC may waive all or a portion of its fee.
<TABLE>
<CAPTION>
FUND ACCOUNTING FEE
--------------------------------------------------------------------
HIGH YIELD EMERGING MARKETS LATIN AMERICA NEW YORK
FUND FUND EQUITY FUND MUNICIPAL FUND
----------- ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Gross Fee... $ 7,500 $ 7,500 $ 7,500 $ 7,500
Waiver...... -- -- (7,500) --
----------- ------- ------- ------
Net Fee..... $ 7,500 $ 7,500 $ -- $ 7,500
----------- ------- ------- ------
----------- ------- ------- ------
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA
MUNICIPAL NATIONAL MUNICIPAL U.S. GOVERNMENT MORTGAGE
FUND FUND SECURITIES FUND SECURITIES FUND
----------- ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Gross Fee... $ 7,500 $ 7,500 $ 7,500 $ 7,500
Waiver...... (7,500) (5,773) -- --
----------- ------- ------- ------
Net Fee..... $ -- $ 1,727 $ 7,500 $ 7,500
----------- ------- ------- ------
----------- ------- ------- ------
</TABLE>
PFPC also serves as transfer agent for the Funds and receives reimbursement of
certain expenses plus a fee for related services pursuant to a transfer agency
agreement with the Company. From time to time, PFPC may waive all or a portion
of its fee.
<TABLE>
<CAPTION>
TRANSFER AGENT FEE
------------------------------------------------------------
NEW YORK
HIGH YIELD EMERGING MARKETS LATIN AMERICA MUNICIPAL
FUND FUND EQUITY FUND FUND
----------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
Gross Fee........ $ 68,636 $ 20,269 $ 9,000 $ 9,000
Waiver........... -- -- (2,041) (307)
----------- ------- ------- -----------
Net Fee.......... $ 68,636 $ 20,269 $ 6,959 $ 8,693
----------- ------- ------- -----------
----------- ------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA MORTGAGE
MUNICIPAL NATIONAL U.S. GOVERNMENT SECURITIES
FUND MUNICIPAL FUND SECURITIES FUND FUND
----------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
Gross Fee........ $ 9,000 $ 9,000 $ 9,000 $ 9,000
Waiver........... (3,946) (3,725) (2,882) (2,541)
----------- ------- ------- -----------
Net Fee.......... $ 5,054 $ 5,275 $ 6,118 $ 6,459
----------- ------- ------- -----------
----------- ------- ------- -----------
</TABLE>
Shares in each Fund are sold on a continuous basis by the Distributor. Solely,
for the purpose of reimbursing the Distributor for activities primarily intended
to result in the sale of its shares, the Advisor class of each Fund is
authorized to spend up to 0.25% of its net assets annually 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, 1999, 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, 1999, no shareholder servicing fees were
incurred.
4. SECURITIES TRANSACTIONS. For the six months ended June 30, 1999, the cost of
purchases and the proceeds from sales of the Funds' portfolio securities
(excluding short-term investments), were as follows:
<TABLE>
<CAPTION>
COMMON STOCKS U.S. GOVERNMENT
AND CORPORATE BONDS OBLIGATIONS
------------------------ ----------------------
PURCHASES SALES PURCHASES SALES
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
High Yield Fund....... $498,173,796 $286,947,736 $ -- $ --
Emerging Markets
Fund................. 82,420,297 91,013,789 -- --
Latin America Equity
Fund................. 7,105,913 6,693,521 -- --
New York Municipal
Fund................. 60,841,493 50,886,066 -- --
California Municipal
Fund................. 6,762,687 2,879,481 -- --
National Municipal
Fund................. 64,785,635 70,461,783 -- --
U.S. Government
Securities Fund...... -- -- 47,271,422 40,321,744
Mortgage Securities
Fund................. -- -- 16,745,202 --
</TABLE>
5. 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, 1999 and for the year
ended December 31, 1998, were as follows:
<TABLE>
<CAPTION>
HIGH YIELD FUND SELECT SHARES
---------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Shares issued....... 34,834,200 $343,862,555 74,958,569 $769,112,164
Shares reinvested... 5,417,939 53,315,912 9,400,869 95,379,400
Shares redeemed..... (29,867,813) (293,856,292) (39,058,920) (395,454,066)
----------- ------------ ----------- -----------
Net increase........ 10,384,326 $103,322,175 45,300,518 $469,037,498
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>
49
-------------
<PAGE>
THE OFFITBANK INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND ADVISOR SHARES
------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Shares issued.................... - $ - 17,980 $ 181,000
Shares reinvested................ - - - -
Shares redeemed.................. (715) (7,109) (18,711) (186,959)
----- ----------- ----------- ---------
Net decrease..................... (715) $ (7,109) (731) $ (5,959)
----- ----------- ----------- ---------
----- ----------- ----------- ---------
<CAPTION>
EMERGING MARKETS FUND SELECT SHARES
------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Shares issued............ 2,661,638 $22,858,357 10,089,980 $101,711,812
Shares reinvested........ 540,939 4,637,038 1,812,672 16,044,606
Shares redeemed.......... (4,607,849) (37,218,239) (13,898,524) (113,151,233)
---------- ----------- ---------- ------------
Net increase
(decrease).............. (1,405,272) $(9,722,844) (1,995,883) $ 4,605,185
---------- ----------- ---------- ------------
---------- ----------- ---------- ------------
<CAPTION>
LATIN AMERICA EQUITY FUND SELECT SHARES
-------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued............. 313,351 $2,550,187 628,612 $ 6,292,203
Shares reinvested......... - -- 39,391 445,995
Shares redeemed........... (312,305) (2,403,365) (2,332,653) (21,881,263)
--------- ---------- ---------- -----------
Net increase (decrease)... 1,046 $ 146,822 (1,664,650) $(15,143,065)
--------- ---------- ---------- -----------
--------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
LATIN AMERICA EQUITY
FUND ADVISOR SHARES
--------------------
PERIOD ENDED
DECEMBER 31, 1998
--------------------
SHARES AMOUNT
--------- ---------
<S> <C> <C>
Shares issued.............................................. - $ -
Shares redeemed............................................ (1,277) (17,939)
--------- ---------
Net decrease............................................... (1,277) $ (17,939)
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
NEW YORK MUNICIPAL FUND SELECT SHARES
------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Shares issued.......... 1,437,056 $15,544,745 4,296,577 $46,233,943
Shares reinvested...... 115,086 1,236,329 215,897 2,328,952
Shares redeemed........ (785,100) (8,462,972) (2,179,819) (23,459,800)
----------- ---------- ---------- -----------
Net increase........... 767,042 $8,318,102 2,332,655 $25,103,095
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
<CAPTION>
CALIFORNIA MUNICIPAL FUND SELECT SHARES
------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Shares issued................. 384,761 $4,041,454 763,930 $8,055,789
Shares reinvested............. 17,076 178,789 30,165 297,972
Shares redeemed............... (22,300) (233,500) (206,273) (2,178,623)
--------- --------- --------- ----------
Net increase.................. 379,537 $3,986,743 587,822 $6,175,138
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
NATIONAL MUNICIPAL FUND SELECT SHARES
-------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares issued............ 783,177 $ 8,186,186 3,017,817 $31,253,540
Shares reinvested........ 33,027 343,483 60,611 630,967
Shares redeemed.......... (1,623,850) (16,996,022) (502,883) (5,252,890)
---------- ----------- --------- ----------
Net increase
(decrease).............. (807,646) $(8,466,353) 2,575,545 $26,631,617
---------- ----------- --------- ----------
---------- ----------- --------- ----------
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND SELECT SHARES
----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares issued............. 1,072,871 $10,759,867 3,790,582 $39,744,486
Shares reinvested......... 75,937 771,069 141,379 1,476,753
Shares redeemed........... (490,816) (5,007,551) (557,911) (5,837,572)
--------- ---------- --------- ----------
Net increase.............. 657,992 $6,523,385 3,374,050 $35,383,667
--------- ---------- --------- ----------
--------- ---------- --------- ----------
<CAPTION>
MORTGAGE SECURITIES FUND SELECT SHARES
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Shares issued.............. 806,308 $8,153,028 3,757,709 $38,457,330
Shares reinvested.......... 141,734 1,432,599 186,150 1,911,337
Shares redeemed............ (260,647) (2,623,631) (319,246) (3,274,675)
--------- ---------- --------- ----------
Net increase............... 687,395 $6,961,996 3,624,613 $37,093,992
--------- ---------- --------- ----------
--------- ---------- --------- ----------
</TABLE>
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. Such investments involve risk not typically
involved in domestic investments. Such risks include fluctuations in the foreign
exchange rates, inability to convert proceeds into U.S. dollars, application of
foreign tax laws, foreign investment 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 State 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 or California or any of their local
government entities are unable to meet their financial obligations, the income
derived by the Funds and their ability to preserve capital and liquidity could
be adversely affected.
50
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<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
Dr. Wallace Mathai-Davis
SECRETARY AND TREASURER
Stephen Brent Wells
ASSISTANT TREASURER
Vincent M. Rella
ASSISTANT TREASURER
David D. Marky
ASSISTANT TREASURER
David C. Lebisky
ASSISTANT SECRETARY
Gary M. Gardner
ASSISTANT SECRETARY
INVESTMENT ADVISER
OFFITBANK
520 Madison Avenue
New York, New York 10022
DISTRIBUTOR
OFFIT Funds Distributor, Inc.
Four Falls Corporate Center, 6th Floor
West Conshohocken, Pennsylvania 19428-2961
ADMINISTRATOR
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
CUSTODIANS
The Chase Manhattan Bank
3 MetroTech Center, 8th Floor South
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
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
<PAGE>
This report is submitted for the information of the shareholders of the Funds.
It is not authorized for distribution to prospective investors in the Funds
unless preceded or accompanied by an effective prospectus which includes
information regarding the Funds' objectives and policies, charges, expenses and
other data. Please read the prospectus carefully before you invest or send
money.
The OFFITBANK Investment Fund, Inc.
400 Bellevue Parkway, Suite 108
Wilmington, DE 19809
(800) 618-9510
